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Bringing Lean Thinking to R&D at Goodyear

by Norbert Majerus
August 11, 2015

Bringing Lean Thinking to R&D at Goodyear

by Norbert Majerus
August 11, 2015 | Comments (9)

For improving manufacturing processes, Lean typically has been focused on cost reductions and eliminating the myriad wastes of which we are all now familiar, and it has usually delivered on that approach. But beyond manufacturing, a cost-reduction mindset tends to obscure — or even harm — the potential good that Lean can provide. Yet too often, in need of a template for how to get started, individuals in non-manufacturing functions rely on the model that worked best in manufacturing: cost reductions.

At The Goodyear Tire & Rubber Company, we realized that the best approach for Lean with our product development processes was to focus on the value-creation role of R&D and innovation. Leading our initiative as an engineer learning Lean — not a lean expert trying to learn R&D — gave me no choice but to view our processes first through R&D eyes and what is best for innovation. That turned out to be a huge benefit, opening my eyes to what many miss.

Multiple disciplines are involved in developing a tire: product design, materials development, mold manufacturing, prototype building and testing, and production. For this value stream, many critical decisions are established by R&D — choice of materials, designs, features, complexity, manufacturability — that have a profound effect on a product’s value to customers as well as corporate objectives of growth and profitability. For example, material choices affect the base cost of the product; design decisions affect the manufacturing process and conversion cost; features affect the selling price and sales volumes. R&D designs products, but it also designs the processes and activities by which products deliver value to customers. Why not focus on this vast territory for lean improvements? The numbers should convince you.

Materials and conversion account for about 80 percent of direct costs at Goodyear — so it makes sense to attack these on the plant floor. R&D accounts for just 2 percent of direct costs. Reducing that sliver, even if well-done, would have delivered small returns and left all of those involved disenchanted and unmotivated to proceed with Lean (as happens at many companies). But at Goodyear, we recognized the huge “shadow” that R&D casts across many other corporate activities, influencing the delivery of customer value and our ability to achieve corporate objectives (see R&D Shadow). R&D clearly casts the longest shadow in a manufacturing company, but other functions, such as finance, HR, and procurement, are subject to the same shadow perspective.

R&D Shadow

RD

The red area in the vertical bars is the direct effect that Lean can have on the cost of the functions — it is barely visible for R&D (inspired by the work of Munro & Associates)

 

Knowing where to apply Lean in our innovation processes — the shadow activities and decisions that indirectly impact profitability — did not tell us how best to create value through lean thinking and practice. As with any initiative at Goodyear, we focused first on safety and quality. That one was easy since Goodyear had an excellent record in both areas and a good program to improve performance. Next, after much debate, we went after service (on-time delivery to the business and customers) and then efficiency (learning cycles and cycle time). We looked to what we call the “Womack Wheel” (adapted from Lean Thinking) for an implementation model:

  1. specify value for the customer while providing opportunity for growth
  2. identify the value stream
  3. create flow and speed
  4. implement pull and standardize, and
  5. work to perfection.

When I told Jim Womack about this, he was surprised to learn he had a wheel!

We repeatedly turned the Womack Wheel, driving toward each of our objectives, and then we’d start again, gaining improvements upon improvements. We came to realize that many of our objectives were connected, such as efficiency and speed, and found many collateral gains (employee satisfaction, improved collaboration) along the way. After addressing value-creation activities, we moved on to the cost side and captured R&D savings there.

Goodyear’s corporate success has dramatically benefitted from this work. It helped that during the recession our leadership continued to invest in innovation, recognizing that we needed to be ready with great products when the economy improved. As the economy improved, so did Goodyear R&D — driven by our lean initiative — and our innovation performance improved as well:

  • Industry-leading safety record got even better
  • Warranty returns hit an all-time low
  • On-time delivery to the business was improved from 30 percent to 95 percent
  • Cycle time was reduced by more than 70 percent
  • Throughput (learning cycles by engineer) was increased by a factor of three
  • Goodyear technical performance is at an all-time high — we received more innovation awards than ever before.

Ibook should note that our increase in R&D funding was below inflation adjustments during our lean improvement activities. We were creating innovation capability (knowledge) and capacity by reinvesting functional savings. And counter to perceptions within the R&D community, we were able to implement lean concepts, such as standardized processes and visual kanbans, without killing creativity. There is a balance, and I believe we found it.

Many key events contributed to our success in R&D, but here are three. (These are not unique to Goodyear, and can be found or created in any company):

  • Kaikaku
    We used events, like a labor strike and leadership changes, as opportunities for kaikaku (Japanese for “radical change”). For example, a new project portfolio was created to address the business situation after the strike, which also was the appropriate time to introduce a new management process.
  • Principles
    I knew virtually nothing about Lean when asked to begin our initiative in 2006. So I read many books, attended conferences, talked to consultants, and generally got confused. Gradually I began to understand that there were scientific principles behind most lean concepts. Only by learning, understanding, and teaching these sometimes counterintuitive principles to our process experts were we able to figure out where and how to apply them in an R&D environment. Today, Goodyear conducts four tiers of lean training, and everyone in the company starts with Lean 101.
  • Support
    Lean thinking hasn’t been easy, and we’re certainly not done. Changing the culture in a large global company such as Goodyear and truly institutionalizing it across R&D — with three globally dispersed innovation centers and more than 2,500 R&D professionals — resulted in many challenges. As Goodyear’s lean R&D champion, I took some lumps along the way. But despite the barriers and occasional setbacks, our lean effort earned the continuous support of leadership. We had tried many improvement approaches over the years and Lean is the only one that has shown significant results that track to the bottom line. Although constantly evolving, our lean improvement activities will continue for a long time to come.

There is so much more to tell about Goodyear’s lean R&D story, and I hope to share more of it with you.

Learn more in Majerus's book, Lean-Driven Innovation: Powering Product Development at The Goodyear Tire & Rubber Company here.

 

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
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9 Comments | Post a Comment
John Dix August 11, 2015

Norbet,

Congratulations and well done! (John)

 



Reply »

Keith Leitner August 11, 2015
3 People AGREE with this comment

Having recently met the author and heard this story, I can highly recommend this material as "must read" for anyone looking to gain a competitive advantage in today's market!



Reply »

Michael Bremer August 11, 2015
1 Person AGREES with this comment

Good article Norbert.  Glad to see you continued to evolve and customize lean concepts to fit your business situation.  Looks like you and the team accomplished some significant results.  Hopefully will see you in Cincinnati this year.
Best wishes,
Michael



Reply »

Peter Fritz August 11, 2015

Norbert,

Very well done!



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cigdem gurer August 11, 2015

Congrats Norbert. I am sure it is an awesome book. I have ordered my copy but did not recive it yet.

You have summarized the "soul of lean". When applied to fulfill the 5 principles that you have listed, lean becomes synonomus with customer satisfaction. No wonder it had a marked impact at Goodyear. I am sure revenues followed, because innovation is a strong driver for growth.

Keep your posts coming. They are very interesting.



Reply »

Bob Melvin August 11, 2015

Norbert,

Can't wait to read your book.  Really enjoy learning together whenever me meet and I'm sure I will find some great insights in your book.  Congratulations!

Bob



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Norman Firchau August 13, 2015

Great Article.

Great lean R&D story.

Can't wait to read the book.



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Rick Bohan August 17, 2015

Good article.  I think the application of lean concepts and methods to 1.) new product development in larger companies and 2.) the inquiry/design/proposal process for smaller companies is an arena that is underdeveloped.  

I'm looking forward to the day when such discussions don't involve "cost discussions" at all but are presented only in the context of mission and strategy.  As in, "lean concepts help us get more new and better products to our customers and potential customers more quickly and that's what keeps us in business".  



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Durward Sobek August 18, 2015
3 People AGREE with this comment

Norbert, I really like your focus on adding value as opposed to reducing costs when apply lean principle to R&D.  That truly is where the excitement for lean product-process development should be!



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Search Posts:
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Dave LaHote, David Meier, Ernie Richardson, Joe Murli, Karl Ohaus, Michael Hoseus, Tom Shuker & Tracey Richardson
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By Allen C. Ward and Durward K. Sobek II
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