Home > The Lean Post> Ask Art: Why do so few companies that implement lean do it successfully?

Ask Art: Why do so few companies that implement lean do it successfully?

by Art Byrne
April 25, 2017

Ask Art: Why do so few companies that implement lean do it successfully?

by Art Byrne
April 25, 2017 | Comments (33)

Let’s start with the fact that there are no exact statistics on:

  • how many companies have started down the lean path, and
  • how many have been successful at becoming lean enterprises

Even so, I think if you asked most of the lean consultants or others who have studied the lean movement that most would say that the number is 5-7 percent. That seems about right to me. That doesn’t mean, however, that a higher percentage have not gotten some gains from their lean work; it’s hard not to. But, very few have made lean the basis of everything they do in every part of the company, meaning that they could therefore be considered lean enterprises.

So, why is this? Why do far more companies fail than succeed? I guess I could oversimplify and just say that lean is “easy to explain but very hard to do.” After all, lean is all about people. It is the people that you are trying to convert, and people are complicated. They are the ones that built the system that you currently have and they are resistant to change. No surprise there but let's try to be more specific. The list of things that create failure in implementing lean is a long one, too long for this article, so let me just highlight some of the more major issues that I see over and over. 

  1. FOCUS ON COST REDUCTION. I would say that 90-95 percent of all companies that start down the lean path do it primarily as a cost-reduction effort. They fail to understand the strategic nature of lean and the need to focus on removing waste in order to deliver more value to their customers. They probably have always had some cost-reduction efforts underway, but hey, maybe applying the lean toolbox will help them cut out more costs faster. So it is sort of the "same old, same old" of just using some new tools and buzz words. This narrow focus has nothing to do with the customer and the real problems the company needs to be solving, such as having a 6-8 week lead time.
  2. DROP LEAN ON A BATCH SYSTEM. If you are going to make a lean turnaround you have to understand that everything has to change. This is way beyond what most companies can grasp. They just want to cut costs, and so they try to drop lean on top of a traditional batch system without changing anything else. The sales force is still incented to go out and get large orders and to offer volume discounts. The factory floor still produces to a forecast using MRP and ships 50 percent of orders in the last week of the month, even though the lean efforts are aimed at level-loading the factory. Finance, HR, IT, product development etc. all stay the same. Lean is just added as another of the top ten strategies. This of course will never work and will just cause confusion everywhere as one part of the organization goes in a totally different direction than everyone else.
  3. LACK OF LEADERSHIP. Lean is a ‘learn-by-doing’ approach that needs to be led from the top in a hands on, out front manner. The leader needs to be in the work place [gemba], participating on kaizen events, talking and listening to his/her people, learning the details, setting stretch targets and pushing the organization forward. Instead the traditional manager tries to continue to "lead from behind," staying in the office and delegating the lean turnaround to someone on his/her staff like the VP of Operations. “You have my full support. Keep me informed.”
  4. NO STRUCTURAL CHANGE. Switching from a traditional functional organization to a value-stream organization where the company’s operational excellence targets can be pushed down closer to the value adding and get all the value adding associates to own them is a critical step to take early on in a lean turnaround. Unfortunately you rarely see this. Instead the manufacturer tries to keep all similar equipment in functional departments, or the hospital wants to stick with its silo structure despite having natural value streams for things like the heart, orthopedics, cancer, babies etc. The result is that when the company tries to switch from its traditional batch approach to lean’s more efficient flow, its own structure gets in the way and causes lots of problems.
  5. NO TEAMWORK. Most people fail to realize that lean is a team sport. When you try to work to takt time at the pull of the customer, make everything in a one piece flow, establish standard work and pull everything through the system from your vendors to your customers using the lean principle of “sell-one-make-one”, then you better have everyone on the same page and working together. Unfortunately, the traditional management-by-objective approach is more the norm. This often pits one part of the company against another without anyone being aware of the contradictions. For example, telling the VP of Operations to lower inventory and the VP of Purchasing to lower the cents for each cost of raw material, which of course he does by purchasing in huge quantities, thus driving inventory up.
  6. DUMP THE LEAN CONSULTANTS TOO SOON. Implementing lean without having the lean knowledge internally is almost impossible. Someone has to push you through the barriers that keep you at your current state. This usually means that you will need some outside consulting [training] help. Most companies do this, but after a few kaizen sessions they say, “Oh, I got this.” Then they fire the consultants on the mistaken idea they will save costs, and before you know it they are right back to where they started.
  7. OTHER PROBLEMS. As I said, the list of why companies fail is a long one. A few other items are;
    • Trying to implement lean and keeping a traditional standard cost accounting approach even though standard cost accounting incentivizes all the things you are trying to get rid of with lean
    • Continuing the focus on “make-the-month” instead of focusing on removing the waste from the processes that created last month’s results so that future results can be better
    • Going at too slow a pace like running one kaizen every six weeks and even then focusing on small out of the way issues instead of the main product families
    • Continuing to try and solve problems with automation and IT which often results in just automating the waste.

In any event, I think you get the picture. The list of why companies fail at becoming lean enterprises is a long one. But don’t be discouraged. Just try and avoid all of these traps and you will have great success. Remember, focus on your process not your results. Your results already happened. You can’t do anything about them now. You can, however, do something about your future results by improving your processes.

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
Search Posts:
Design the Work, Design the Experience
Alice Lee, Hollie Jensen, Josh Howell, Karen Gaudet & Matthew Savas
The Work of Management
By Jim Lancaster
March 22, 2018 | 4 Comments
Was this post... Click all that apply
HELPFUL INTERESTING INSPIRING ACCURATE
43 people say YES
36 people say YES
22 people say YES
32 people say YES
Related Posts
33 Comments | Post a Comment
Ortwin Verreydt April 25, 2017
2 People AGREE with this comment

What is the influence of the failure of Lean experts (internal and external) on the transformation to your opinion. Any valueable lessons to be learned?

regards, Ortwin



Reply »

art byrne April 25, 2017
3 People AGREE with this reply

Ortwin, thanks for your comment. I think most of the time it is not the lean experts that cause the failure but the lack of leadership. Without leadership pushing for the change even the best experts won't be very successful as the organizations fear of change and belief that "this is the only way to do this" will argue against any change. Without a determined leader they will always win. Art.



Reply »

jim davidson April 25, 2017
1 Person AGREES with this comment

How do you fix these things?



Reply »

art byrne April 25, 2017

Jim, great question. In fact for understanding why most companies are not successful with lean it is THE question. The short answer is of course lack of leadership combined with a lack of understanding of the strategic nature of lean. If you think of it as just a cost reduction program you won't get very far. Art.



Reply »

James Phillips April 25, 2017

Thank you, I wrote a response to this on Linked in, https://www.linkedin.com/pulse/high-reliability-careful-really-phillips-jr-pmp-cfcm-ncma-fellow

The authors comments are accurate adn from my experience reflect a general apathy by leadership to really embrace Lean (or Project Management) as it is often relegated to a collateral duty assigned to another.  Sadly the fruit of Lean is never realized as Leadership and senior management pay it lip service. 

In the end you know that Lean is not embraced when leadership can render this discipline into a 3-4 word summary.  



Reply »

art byrne April 25, 2017

James, thanks for your comments. As you might expect I totally agree with them. Art.



Reply »

Mark Graban April 25, 2017

Focusing only on cost is a problem with Lean in healthcare too, as I wrote here:

Where Do Hospitals Get the Idea that Lean is Only About Cost Reduction?

http://www.leanblog.org/2016/01/where-do-hospitals-get-the-idea-that-lean-is-only-about-cost-reduction/



Reply »

art byrne April 25, 2017

Mark, thanks for sending me your article. It was very well done. Thinking of lean as "some cost reduction" program seems to cross all industries. The fact that cost reduction is a very nice side benifit that you get as a result of your lean efforts and not the goal seems to confuse everyone. If we can start to think of lean as a strategy to deliver more value to your customers then I think we can see some real progress. People will have to just accept the cost reduction that comes with it as a bonus. Art.



Reply »

Jerry M.Wright, PE, MBA April 26, 2017

Wow! Fabulous summary, Art! You hit all of the things I've both experienced and witnessed. Thank you for taking the time to summarize and to share this!



Reply »

Rick Sunamoto April 26, 2017
1 Person AGREES with this reply

Great job, super article.  I echo Jerry's comments above.  Thanks for sharing your thoughts.



Reply »

art byrne April 26, 2017

Rick, thanks for your nice comments. Art.



Reply »

art byrne April 26, 2017

Jerry, thanks for your comments. It is nice to know that others share my observations. Art.



Reply »

Paul Yandell April 29, 2017

Well written article.  Spot on.  Reminds us all that Lean is a Journey - more like sailing the high seas than driving the highway.  They be monsters out there!  Ahrr!



Reply »

art byrne April 29, 2017

Paul, thanks for your nice comments. Yes lean is really a series of leaps into the unknown. So every change you make to get better is a bit scary. You won't always get it right the first time. Keep leaping. Unfortunately most leaders won't do this. They get the "see, I told you it wouldn't work here" feedback from their staff  and quit. Another reason so few companies are successful at lean. Art.



Reply »

Mackenzie Fazekas April 26, 2017

LOVE this.  Just shared with some of the leaders I support-- they know it's a tough road, and I'm optimistic that they're up for the challenge.  Thanks for always cranking out great content!



Reply »

art byrne April 26, 2017

Mackenzie, thanks for your nice comments. I hope it can help the leaders you support. Lean is always a case of three steps forward and two steps back. If they can avoid some of the pitfals I pointed out they can go three steps forward and only one step back and that will make them very successful. Art.



Reply »

karl LEAN NATION RADIO April 26, 2017

Good stuff Art Burning platform the world economy and resources , And people are getting scarce. So leaders need to get ovwer there EGO's and be as passionate about leading and leadership as the golf game the boating sking etc , And puit that same excitement into the LEAN journey , They will not loose there ence of self, In fact it will grow. And people will see that passion and follow.



Reply »

art byrne April 26, 2017

Karl, thanks for your comments. You are correct of course but getting leaders over their egos is not easy. Lean requires a constant "leaps of faith" approach into the unknown and most leaders are unwilling to do this. Maybe we should just rename lean and call it GOLF or SKIING! Art.



Reply »

Jessie Reyes April 27, 2017
2 People AGREE with this comment

I find it interesting that we lean/Six Sigma experts always point the finger for high failure at the company we are applying it to and not at ourselves. 'We' cause the failures not the customer. In my own 80/20 perspective on the subject, most of the failures happen because we offer and apply the Lean and Six Sigma as "packaged solutions" looking for a problem. Far be it for us to change the package from what is stated as the industry standard for these sciences. My most successful launches are usually very much problem sourced and focused, with solutions coming from specific tools and methods needed to fix the problem. We incorporate as much as possible for culture change and for leadership engagement. But at the end of the day, if the working team sees the logic of the changes needed to solve the problem, it will stick no matter who is at the top. 



Reply »

art byrne April 27, 2017
2 People AGREE with this reply

Jessie, I can't really comment on your observation that "We" [the lean consultants] cause a lot of the failures as I don't know how everyone approaches this. My experience has always been about applying lean concepts to known problems so I know this works. As to your thoughts that if the working team sees the logic of the changes needed it will stick no matter who is at the top I can only parltly agree. The changes may stick in selected value added areas but if the management keeps doing everything else in the traditional way, sales, marketing, finance etc. it will still not make the cultural changes needed to become a lean enterprise. Art.



Reply »

Jim Hudson April 27, 2017

Art, on your comment "they fire the consultants on the mistaken idea they will save costs, and before you know it they are right back to where they started," I understand your intent, which is to continue to leverage the resource Lean coaches represent.

 

But the client is not right back to where they started. They are in fact much further away from where they started, as they have now hiked the resistance levels to Lean way beyond what they were before they started. The most difficult transitions for those who become serious about Lean, are those where Lean has failed due to poor implementation.

 

Your point of course is to have a guide throughout the process, and stay the course. Poignant advice, especially considering the risks at stake if the initial implementation is poorly executed.



Reply »

art byrne April 27, 2017
2 People AGREE with this reply

Jim, you are right in your observations that getting lean re-started after an initial failure is much harder. Wiremold had tried lean a couple of years before I got there and it almost bankrupted the company. They switched to a "total quality" approach which they were very commited to but was giving no results. So lean had a bad name but we got it back on track. My internal people did the work but the push [more like a shove as Shingijutsu was pretty aggressive in those days] from the external lean coaches was invaluable. Even after many years and having developed great internal lean talent I never got rid of the external coaches as I always wanted someone to keep pushing us forward. The main push has to come from the CEO of course but the external coaches led to a lot of breakthroughs that we maybe couldn't get on our own.



Reply »

Ed Feeny April 30, 2017

One other think I have encountered in working in implementing Lean, is the idea that Lean is an engineering function rather than a training and development of the workforce function.  This also contributed to failure of implementation in my opinion.



Reply »

art byrne May 01, 2017

Ed, thanks for the input. I agree with you on this one. If you look at lean as an engineering function you won't get too far. But I think this stems from the idea that most companies see lean is a cost reduction program. Who have companies looked to traditionally to cut costs? Engineers. So it is not surprising that they would look to engineers to do projects to reduce costs. This will typically result in a long process that at its core will be capital intensive because that is the way the engineers were trained. [not knocking engineers here, I love engineers and always want more of them.] Take set up reduction as an example. If you go about it in the traditional way trying to get even a 50% reduction in set up time will take months to plan, then 6-8 months to buy and install the automated equipment the engineers recommend. With the kaizen approach using mixed salaried/ hourly teams at Wiremold we were consistently able to get 80-90% reductions in set up time after just a one week kaizen.Which sounds better to you? Art.



Reply »

Norbert Majerus May 01, 2017

Thanks Art for sharing a long experience. I have experienced every point you make! Too bad I did not read this 12 years ago .....



Reply »

art byrne May 01, 2017

Nobert, thanks for your input. Yes, hindsight is usually 20-20. Even so companies continue to make the same misteaks. Maybe you can help some of them avoid these typ of errors in the future. Art.



Reply »

Hal Moran May 01, 2017

All success and failure is laid at the feet of leadership. Implementing lean is no exception.

Things don't happen ex-nihilo (out of nothing comes something).

It begins with someone(s) initiating, taking a lead.

Managers - we have a plenty. It's leadership we are sorely lacking in Western industry!



Reply »

art byrne May 01, 2017

Hal, thanks for your comments. I couldn't agree with you more. Unfortunately most people get trained in the traditional way to be managers not leaders. The focus is on "make the month" not fixing the processes to remove the waste. Art.



Reply »

Claire Everett May 14, 2017

Hi Art

In my experience most leaders decide they want to implement lean based on having heard about the results it can bring, but they decide this without an understanding of the process or effort that is required to get results.

I've been told "we really want to ranp upp the quality program next year, but we're not going ot put it on anyones yearly objectives or have anyone assign dedicated time each week/month to making progress".  The result, zero change.

It's easy to look at this and say that lack of leadership support is the problem becasue on the surface it is.  But if this was a root cause analysis, this would be the equivalent of stopping after one why. 

What I want to know is "why does management think that results can be achieved this way?"  I suspect that there is a lack of understanding of the commitment and effort required to get the culture change that is necessary to achieve the longterm change that is being sought. 

If I'm right then the quality team has to wear part of the 'blame' becasue surely we shuold be part of communicating the process/effort needed to achieve a full Lean transformation.

"The single biggest problem in communication is the illusion that it has taken place." George Bernard Shaw

Telling leadership "it's hard" or "it takes time" etc. is not enough to ensure they understand the commiment required of them or the business.  Without understanding this I don't see how we can expect that they will give adequate support to the implementation.  So for me, I see 'lack of leadership support' as a symptom and not a cause and focusing on fixing a symptom is never effective.

Best Wishes

Claire



Reply »

art byrne May 15, 2017

Claire you are correct that most leaders don't understand what it takes to make the conversion to lean. This shouldn't be surprising after all where would they get the knowledge? Yet they still want the lean results. As a result it is common to see lean dumped on top of an existing batch structure and strategy as just another initiative. Nothing else changes. The company is still structured and run as a traditional batch company and to have any success the lean initiative has to fight against all the exising systems and management mind sets that are covinced they are already doing it the right way. Leadership doesen't recognize this conflict and instead of leading the charge on lean just trys to manage it in the traditional way. Leading from behind if you will. Obviously you won't get too far with this approach. Understanding lean as a strategy and making sure that management is leading the conversion is the only way to get and sustain lean. Art.



Reply »

Leonidas Lainis May 25, 2017

Really nice article. It covers all cases of incompetence in companies.
The LEAN implementation problem resembles when people buy a recipe book; at the end they make their own versions of dishes because it suits them or if they don't succeed on the first try they blame the book.
This goes for everything in life; if one has done it then it is possible. And in the case of LEAN approach more than one companies have successfully implemented it. 

LEAN approach is a mindset. Are you really open-minded or is it just a line in your CV?



Reply »

art byrne May 25, 2017

Leonidas, thanks for your comments. I'm glad you liked the post. I never thought of lean as being like a recipe book but good analogy.Your right tat having the right mindset is a must for lean. Unfortunately there are too many "concrete heads" out there. Art.



Reply »

Ralf Lippold February 15, 2018

Hi Art, Thanks a lot for sharing your personal insights on an issue that seems so complex that not too many have got rid of the underlying root causes (not to say understanding the complexity of the root causes).

When I started at BMW back in 2003 (the dotcom bust was just about recovered, BMW had recently sorted out its Rover deal (from MINi emerged) when its decision to expand production was taking shape with a new plant in Leipzig. The plant leader being a systems thinker put really everything to reality what you might expect from applying lean (though “lean“ was neither mentioned nor seen as good amongst my peers, as it would propose that we would be like Toyota, only building a limited versions of cars, and in large quantities, and even more disturbing for me, it would show that we had minor process quality if we admit to do lean management or a version of TPS).

It took another two years until the “official“ wording was released “einfach einfach machen“ (“just do it easy“). Only experts with certificates and formal roles were accepted by managers, the worker on the line or the office was not valued as a potential “lean thinker“. 

Not sure how it is nowadays. But I suspect that hierarchical systems like big organizations, need a long leed time and CEO as well as plant managers longer in their position and their relational networks as is currently the case where career plans and formal role switching after a few years disrupt the fabric of learning networks.

These are just my 2-cents on a complex story (for the moment).

Regards, Ralf 



Reply »

Search Posts:
Design the Work, Design the Experience
Alice Lee, Hollie Jensen, Josh Howell, Karen Gaudet & Matthew Savas
The Work of Management
By Jim Lancaster
March 22, 2018 | 4 Comments
Standard Work Roundup
Ask Art: Is Lean a Strategy?
"Too Busy to Walk the Gemba"
“Simple Ain’t Easy”