Conventional wisdom says that without CEO buy-in, any lean initiative is doomed to failure. Jacob Stoller, a journalist who specializes in Lean, set out recently to find out if this is true. In March, he sat down with LEI’s own CEO and Chairman John Shook who offers a dissenting view. Yes, CEOs are important, Shook says, but they may not be as important as we think.
Jacob Stoller: I hear again and again that only 5% of organizations are successful with their lean initiatives, and that the chief culprit is a lack of buy-in from the CEO. What’s your take?
John Shook: Well, I’m not sure we’re looking for the right thing. Even if we accept that 5% figure, I wonder if we’re focusing too much on the CEO. The question really should be, what are the most useful things to focus on?
Organizations are ultimately collections of individuals, so we have to look at each individual, where they need to go. That applies to the CEO, and it also applies to the managers, workers, and also, indirectly, to customers and shareholders.
Is the CEO the most influential person in an organization? Sure, but I think we tend to worry about them too much. This is, by the way, an extreme minority view among my colleagues. People like Art Byrne, George Koenigsaecker, or John Toussaint are going to argue with me on that.
Why do you think we are so hung up on CEOs?
I think this is a disguised residue of command and control thinking on part of the observers. All of us are affected – there are underlying assumptions that we all have and that we don’t recognize. And although I know our description of what lean leaders should do is not command and control, I think we are still inviting the same fallacies when we when we look to the CEO as the savior of our lean transformation.
Part of this thinking, this underlying assumption, is that we tend to see organizations as big machines. Thomas Johnson did a very good job of challenging that notion in his book Profit Beyond Measure. He used the idea of ecosystem – more of an organic model.
How does this affect how you help organizations?
I like to use the analogy of a physician. When organizations come to us for help, I think we need to be in a position to take the patients as they come. The belief that “really we only focus on companies where the CEO is wanting to change” is the equivalent of a physician saying “I’m only going to work with patients who will do what I say.”
Of course a physician who chooses patients that way will have a good success rate. There’s no doubt that patients who stop smoking, stop drinking too much, who get lots of exercise—they’re going to get better results from that physician’s care. It’s the same if we say, “I’m only going to work with companies whose CEO is going to change.” Of course, this is the minority.
That leads to the question of why is it that CEOs don’t change. Again, it’s a matter of the person they are today, especially when they’re in their 50s or 60s and used to working a certain way for many many years. Whether that person is the CEO, VP operations, or the union representative.
The point is, at whatever level you start your lean transformation, you will run into problems with the other levels. If you start with the CEO, middle management is going to be the problem. If you start with middle management, it will be the CEO. The problem is when you move from making progress from one level to another.
Is the CEO the most influential person? Yes. Is the CEO more influential than a thousand middle managers? I don’t know about that at all. Each situation in that regard is probably unique.
Another thing I think is worth mentioning is that when we say “CEO”, most people tend to think of the publicly-owned company. Of course, that’s not what all companies are by any means. So the reasons why a CEO won’t embrace lean can vary depending on whether a company is a publicly-owned multinational, a privately-owned company, or even a startup using venture capital. As you grasp the situation, these factors take you on a very different path of understanding.
Does the CEO have to repudiate the command and control idea?
I’m not sure about that. The idea of the CEO as servant leader is the popular antithesis to command and control, and aspects of it make sense—that individual is a steward for sure. But beyond that, I’m not sure.
What I find is that when you actually break it down and ask what we need the CEO to do, often folks haven’t thought that through. And often what we need from them is not as much as we might imagine. What those things are, however, can be fundamental. There are things they can do that destroy a lean transformation. There’s no doubt about that. And if that’s happening, then that’s one scenario. But it’s certainly not the only scenario.
What about the situation where you need an executive push to get different silos to sit down at the table together?
Often the point where that has to happen is one level beneath the CEO. Getting people on the same page and in the same room talking honestly also requires trust, and some technical understanding of what improvement is all about. That lack of trust and technical understanding is still so broken in companies that I see, and that’s where I wind up focusing a lot of my attention.
And you could make the argument that this is something that the CEO has got to fix. I can understand that view—that this has to be part of an integrated, company-wide strategy.
Another aspect of this is the drawing the line between companies that are truly committed to lean and the pretenders who merely use the tools. How can we draw that line?
Lean change has to have to have that flow dimension, which is continuous improving towards better and better flow towards the customer. And it’s going to have an employee engagement and development component, which means individuals and the organization learning their way forward. If it doesn’t have those two things, I’m going to say someone’s grabbing some tools and using them.
However, you also see a lot of other things happening. If anything, I see just as much of the opposite problem, which is people who do a good job of kind of thinking about the learning organization components without actually doing the hard work to improve flow. I think that is just as common and just as off track.
When I go into an organization, I don’t look for the tools much. I don’t look for the jargon. I look to see employees engaged in some type of PDCA occurring in service of the customer. Are they defining gaps, and continuously working through them, and then, especially then, there’s the focusing mechanism of the aim of achieving flow? If those things are there, then I’m happy to call that lean.
Any last thoughts?
Lean happens in a lot of different ways, and we have to be very practical. It’s easier to act your way into a way of thinking than to think your way into a way of acting. So how can we act, what can we do? What’s useful? What can we do now to make things a little bit better for the customer? Or for the worker? You do something, and through the doing, you reflect PDCA. And moving forward in that way takes us in the direction we want to go. I think that’s lean more than anything else.
Jacob Stoller explores this topic in depth in the upcoming book, The Lean CEO, which features insights from 25 CEOs who have led lean transformations. The Lean CEO will be released in early 2015 by McGraw-Hill Education. Learn more.
Jim Luckman, Margie Hagene & Tom Foco
Jim Luckman, Margie Hagene & Tom Foco