The Lean Enterprise Institute (LEI) received hundreds of questions during our webinar “Lean Management and the Role of Lean Leadership.” After reviewing all of them, several major themes emerged. We’ve summarized them below with answers from Jim Womack, LEI founder and chairman.
Q. Can lean management and traditional management co-exist or does one defeat the other?
Q. What is the role of finance in a transformation to lean management?
More pro-actively, many folks in the accounting community are now working energetically to see how finance can play a positive role in the lean transformation. I just spoke at the second Lean Accounting Summit (Sept. 2006), where attendance was up by 60% from last year and real energy was present. Both Orry Fiume and Jean Cunningham spoke and you might want to check out their recent book, Real Numbers.
Q. I am trying to apply lean principles in a sales organization. What’s your advice to help senior managers shift from focusing only on the quarterly numbers and more on the process?
Q. Who does the value-stream manager report to? The Operations VP maybe? Should value-stream managers be long-term jobs or temporary?
But a value-stream manager could also be responsible for the complete flow of value for a product family through product development, fulfillment, and the supply chain. The first task can easily be handled by someone reporting to a plant manager, typically someone with another job who occasionally checks on the current state of the value stream for a given product family, envisions a better future state, and oversees implementation of the future state. The second task would typically be a job for the product-line manager who might be responsible for profit and loss for that product. The important point is to design the job to suit the need and to make the plan-do-check-act (PDCA) process to get from current state to future state a permanent part of management. The belief that someone just performs this task once and moves on to the next thing is a major cause of false starts and failures to advance toward a lean enterprise.
Q. Who does the Chief Engineer report to?
But stating the formal relationship this way misses the point. Toyota realizes that the Chief Engineer job is probably the most important one in the company because the Chief Engineer listens to the customer and then determines what the functions need to do to address the customer’s desires. Thus the power of the Chief Engineer is very large even though he (and they are all men so far) has no direct reports other than a secretary and a few assistants who are themselves being trained to be chief engineers.
The job of the Chief Engineer is to determine the needs of the product and then to negotiate with the heads of body engineering, drive train engineering, manufacturing engineering, production, purchasing, etc., about what their function needs to do to fully support the product. Once an agreement is reached, the Chief Engineer continually watches to make sure that the functions are following through. In the event there is an irreconcilable difference between Chief Engineer and function head, the issue can be elevated to a very high level, but apparently this doesn’t happen.
Q. How long should implementation take?
Q. How do you get top management on board?
In any case, we are all struggling with how we get senior managers with financial or strategic orientations to try something totally different. I’m an optimist by nature but the path is never going to be easy.
Q. Even though lean is a continuous journey, how do I assess where my company is? What are some good ways to measure the success of a lean transformation?
Those are the questions to ask rather than what everyone else is doing or how quickly everyone else is progressing. Shingo Prizes and lean certifications are fine if they help motivate your people but the only measure that counts is what your efforts have done to make your company competitive.
Q. Many people seem to confuse lean, value-stream mapping, and the Toyota Production System (TPS) and don’t relate them together. Is it accurate to look at lean as the overall concept and vision, value-stream mapping as the process flow from start to finish, and TPS as more of a tool for improving the individual sub-processes within the value stream?
Q. How do you create a crisis for starting a lean transformation? Isn’t this dangerous for your firm and your career?
In 1996 the then head of the Boeing Commercial Airplane Company set out to make sure that Boeing garnered a 2/3 share of the global large aircraft market as the airframe industry emerged from the sales trough of 1995. He quickly sold more airplanes than the company was able to deliver unless the production system was fundamentally transformed toward lean enterprise, particularly in the management of the supply base.
Unfortunately, as a salesman by background and instinct he had absolutely no concept of how actually to transform the production system and supplier management. Despite some excellent consultant advice from Toyota-trained advisors – advice that has paid off for the company in the past few years – the effort was a failure. Production ground to a halt as suppliers failed to keep up with final assembly in 1998. The president was then fired.
In 2004 Toyota noted in its annual report that the success of its hybrid technology was double edged. Consumers loved it and the company’s image has been greatly enhanced by the technical success of the concept but the cost of the technology was more than customers were willing to pay with gasoline prices in the $2 to $3 range. If Toyota was to avoid subsidizing this technology now tied to its image, it was imperative to cut the fundamental cost of the hybrid elements of vehicles like the Prius by 50% in two years, from $4,000 to $2,000. So a stretch goal was set in very public way. Two weeks ago Kazuo Okamoto, Toyota’s head of research and development, announced that the third generation hybrid technology now ready for production will be half the size, half the weight, and half the cost of the system in current vehicles. Surely setting such a public goal created a crisis inside Toyota that led to additional leaps in lean thinking. The difference between Boeing and Toyota was that Toyota had a method for responding to a crisis while Boeing didn’t. You, of course, need to judge whether your organization can respond to any crisis you might create.
Q. Do you think that we will ever be able to move away from short-term management-by-objectives and go to a long-term, sustained continuous improvement culture in the U.S. and Europe?
Q. Look beyond lean; what’s next?
But looked at another way, there is something next. Lean thinking so far has mostly been applied inside firms. Indeed, it has usually been applied inside only the production operations portion of firms. So there is lots of “next” in introducing lean product development and lean supplier management and lean customer management and lean policy deployment.
And beyond that Dan Jones and I see big opportunities for rethinking the fundamental unit of consumption. Most firms are now configured to provide isolated goods and services to customers who are mostly strangers. In our recently published book Lean Solutions (Free Press), we make the case that what consumers want today is for companies to completely solve their problems as partners rather than pushing products as strangers. Fortunately, lean tools for value-stream analysis make it much easier to see how firms will need to work together to completely solve customer problems. This is the “next” – and a very big “next” – that I’m anticipating.