Home > The Lean Post> Ask Art: Why do you say the CEO needs to become a lean expert?

Ask Art: Why do you say the CEO needs to become a lean expert?

by Art Byrne
February 15, 2018

Ask Art: Why do you say the CEO needs to become a lean expert?

by Art Byrne
February 15, 2018 | Comments (26)

I say that because in every truly successful lean conversion I have witnessed over many years the one common trait has been a CEO with a deep commitment to lean thinking and practice. I realize that this is probably a shocking idea to most CEO’s since they are taught to manage in a traditional way—and are generally rewarded to do so. I would guess that more than 90 percent of all CEO’s see lean as some sort of cost reduction program or “manufacturing thing.” They consider it logical to delegate this work down to the VP of operations. After all, the CEO has lots do and not enough time to get closely involved. Perhaps calling 1-800-lean-consultant could bring the lean knowledge that we need. The right consultant could train the VP of operations and keep the CEO informed. “You have my full support.”

So while this makes sense in the traditional way of thinking, leaders (as opposed to traditional managers) really need to think differently. No successful lean CEO started out as a lean expert. What they did do was come to understand the power of lean as an unfair strategic weapon and see that they needed to learn all about it if they were going to maximize the gains for their company. They also understood from their early exposure to lean that it was almost the exact opposite of the traditional management approach and realized, as a result, that to successfully implement it was going to require major change that would be uncomfortable for just about everyone—including themselves. This would require leadership on their part, and not the traditional command and control management they had grown up with.

They understood that they couldn’t delegate this one. They had to lead it but how do you lead something you don’t know that much about? Well, then they needed to learn more but how? There are books and seminars that can give you the right concepts and principles and they all absorbed that as fast as they could. But they soon found out that you couldn’t really learn lean that way. You only can learn it, really learn and understand it, by doing it. This meant being on many kaizen teams and being on the shop floor, working hard to see and understand the waste that exists in their companies that they never could see before.

That’s how I came to understand lean. I was very lucky that when I went to Danaher as one of the first two group executives and engaged the Shingijutsu consultants early on. They were four former Toyota executives who had spent their careers at Toyota, and for the 10 years prior to forming their consulting company, had all worked directly for Taiichi Ohno implementing the Toyota Production System (TPS) in the Toyota Group Companies and at Toyota’s first tier suppliers. They started consulting for us at two of the companies in my group, Jacobs Chuck and Jacobs (Jake) Brake. My office was in the Jake Brake factory so I spent a lot of time on the shop floor with the consultants when they were with us running kaizens as did the presidents of both Chuck and Brake. We were learning at a very rapid pace. We took them to dinner every night and pumped them for even more information. We heard lots of good Ohno stories about how he constantly pushed them to get better. We were their only U.S. client for four years and during that time we all became expert at lean. We decided early on that no matter what they told us to do we would do it even if we thought it was the craziest thing we ever heard. About 50% of the time it was but we did it anyway. We learned a lot from this. The changes didn’t always work the first time but we never let things go back to the way they were. We stayed with it and made it work giving us big gains and a lot of important learning.

I was the group executive, so in truth, I didn’t need to spend a lot of time on the shop floor or at dinner with consultants. I understood early on, however, how strategic the TPS approach was so I wanted to learn and become an expert. This proved invaluable when I left Danaher to become the CEO of The Wiremold Company. I was the only one at Wiremold with knowledge of TPS and as a result, I could clearly see the waste that existed. More importantly, I knew how to organize the structure (value stream) and kaizen activities that would help us remove the waste and grow. I saw that if you don’t have the lean knowledge as the leader it is hard to understand the opportunities and even more difficult to convince your team to make the changes. The resistance to change will be very strong.

As an early example at Wiremold, I was out on the shop floor and stopped at one of our rolling mills. “How long does it take to change over this machine?” I asked. The answer was 14 hours. I said, “Oh no we can’t have that, we need to get it under 10 minutes.” I had never seen a rolling mill before but my lean knowledge made me comfortable that this was possible. At the same time, I knew that everyone there when I said that thought I was nuts. If I had just said get it to 10 minutes and left, then not much change would have happened. Instead, I organized a series of kaizen teams to attack the problem. It took over a year but we got that changeover to 6 minutes. Now that really changes things. Word spreads. People listen. They can accept new challenges when the leader knows what is possible and can show them how to get there. It is multiplied by seeing the leader out on the shop floor working with everyone else to make improvements. By the way, we more than quadrupled in size and increased Wiremold’s enterprise value by just under 2,500% in a little over nine years.

So, this is why it is important for the CEO to become a lean expert. Knowing what is possible, being willing to challenge people to get there and then showing them how to get there are essential ingredients to a successful lean conversion. You don’t have to start out as a lean expert but you have to understand why it is important to become one.

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
Search Posts:
Strategy Deployment and Alignment through Hoshin
Jikku Mohan, Josh Howell, Karen Gaudet & Mark Reich
The Lean Bakery
By Juan Antonio Tena, Emi Castro
The Work of Management
By Jim Lancaster
Was this post... Click all that apply
HELPFUL
16 people say YES
INTERESTING
24 people say YES
INSPIRING
20 people say YES
ACCURATE
21 people say YES
Related Posts
26 Comments | Post a Comment
Edgar Agustin February 15, 2018
2 People AGREE with this comment

Hi Art,

Perhaps no other CEO in history has ever had deeper knowledge and hands-on experience of Lean as you do. You set the standard for CEOs as the Lean Expert.

I bought your book, "The Lean Turnaround two years ago, and I continuously immerse myself in your teachings. Your first-hand experience with the Shingijutsu consultants (notably Chichiro Nakao, Yoshiki Iwata, and Akira Takenaka) are exciting reads. 

I still remeber your interview with Ron Pereira in Gemba Academy about your inspiring quote you've got from Chichiro Nakao, "Byrne-san, if you don't try something, no knowledge will visit you." Yeah, you said it right, the only way to really learn and understand Lean, is to do it. 

Before reading this article, I had wrote a blog about the Chapter 7 of your book, on this link:  https://edgaragustin.wixsite.com/edgaragustin/home/what-lean-leaders-do

Thak you, Art, for guiding th future CEOs who are Lean leaders as well.

Reply »

art byrne February 15, 2018
1 Person AGREES with this reply

Edgar, thanks for your nice comments. Your right, "Byrne-san if you don't try something no knowledge can visit you", is one of my favorite sayings. The reason is it is true. Just getting the report of what happened or sending people off for lean training doesn't help you gain much first hand knowledge. People will follow the leader if they feel he/she knows more than they do about what is possible. You won't hear too much about "follow the manager." Art.

Reply »

Mark Graban February 15, 2018
4 People AGREE with this comment

"I would guess that more than 90 percent of all CEO’s see lean as some sort of cost reduction program or “manufacturing thing.”

This is sadly true in healthcare, as well.

Reply »

Ralf Lippold February 15, 2018
1 Person AGREES with this reply

So true, Mark. Seen similar, even at the best companies. Without a visionary and personally involved leader all lean efforts are “a drop on the hot stone“ (“ein Tropfen auf dem heißen Stein“, German saying) and worth nothing of lasting value.

Reply »

art byrne February 15, 2018
2 People AGREE with this reply

Ralf and Mark, your both right. I don't know much about "a drop on the hot stone", although it is a cool expression, but if the leader sees lean as just a cost reduction program I can pretty much guarantee that their company won't make much progress with lean.

Reply »

samuel selay February 15, 2018

Mark, out of curiosity what percent of CEOs do think are "lean experts?"

Reply »

Bob Emiliani February 15, 2018
2 People AGREE with this comment

The need for CEOs to be expert has been the clear message since the start of modern progressive management over 100 years ago, but that message has been persistently ignored. Now we finally know exactly why and what to do about it: https://goo.gl/2m69AC

Reply »

art byrne February 15, 2018
1 Person AGREES with this reply

Bob, your right I'm sure this has been an issue long before we ever heard of the Toyota Production System and lean. I think a good leader can become an expert in their company without doing lean and still get great advantages. But the leader who understands both his business and how to remove waste and respect his people will multiply the gains. I would, however, caution against the traditional concept that you need to hire a new CEO that comes from the same industry. This tends to just perpetuate a lot of industry "lore" that a leader who was a lean expert would quickly overcome.

Reply »

Bob Emiliani February 21, 2018

Who said anything about "hire a new CEO that comes from the same industry"? Not me.

Reply »

Edgar Agustin February 15, 2018

Art, I believe in the power of Lean to transform an enterprise, it would be great if all CEOs would become Lean experts. But do they have alternatives other than Lean? I am pondering on a question in my mind, is there an alternative management system that is better than Lean in general, in terms of getting improvements across critical metrics (on time delivery, quality, efficiency, cost effectiveness, employee engagement, and bottom line profitability)?

Reply »

samuel selay February 15, 2018

I completely agree. Sadly, I would say that the number of CEOs that get lean are limited. It must start from the top. “Everything rises and everything falls on leadership.” –John Maxwell. I’m making the assumption that Wiremolds rise and fall in lean thinking resulted from leadership engagement or lack thereof.

Reply »

art byrne February 16, 2018
1 Person AGREES with this reply

Edgar, you sound like you are already to move on to "the next best thing" in management before ever doing any lean. I'm sure there are a number of high priced management consulting companies out there that can even tell you what it is, according to them. Most of these are looking for some easy way out or "silver bullet" solution like installing a new MRP sytem or some other computer based tool. Unfortunately, unless you change the fundamentals of what you are currently doing none of the "critical metrics" you mention will change very much. For example you can't have flow and pull if your set up times remain at 2-3 hours instead of 2-3 minutes. You can't get great quality without one piece flow. You can't really respond to your customers needs if you have 6-8 week lead times. So untill you can fix those things you can forget about "silver bullet solutions."

Reply »

Edgar Agustin February 16, 2018

Art, I'm not looking for the next best thing in management. I'm not a CEO and nowhere near that position. I'm just curious what those traditional CEOs are thinking and why they aren't committed or even slightly interested in Lean. Are they looking for the next best thing, or are they just stuck in the old system which worked in their olden days? 

The question arises because of the fact that very few CEOs and top executives aren't very interested in Lean inspite of the overwhelming evidences that Lean transforms entire corporations, not just improve isolated processes. Just a few days ago, I was reading through the comments in John Shook's article about Tatsuro Toyoda"s death, and in those comments some ex-employees from NUMMI lamented how TESLA (and Elon Musk perhaps) completely disregarded NUMMI's gains, like not utilizing the expertise of NUMMI's former executives and leaders and not utilizing lean setup instead using the mass production setup.

In my previous employment, as a Continuous Improvement Manager, in a digital transactional process,  I was responsible for implementing "Lean Six Sigma" in the company. As a six sigma practitioner for a decade in previous electronics manufacturing, I naturally gravitated towards using the tedious DMAIC project. After only three projects, I switched to A3 problem solving method and went on to lead more than a dozen A3 projects, some were in collaboration with the customer. Working on both DMAIC and A3 formats, I can distinctly feel the simplicity and ease of use of A3 to achieve identical or even better results in less time.

Some six sigma purists argue that six sigma gets it's power from the rigorous problem solving process and the use of advanced statistical techniques. But Lean can also use the same statistical techniques, with less rigor (mostly for showmanship which is a waste). In fact Toyota recognizes the western improvement techniques such as statistics (as mentioned by Taiichi Ohno in his book co-authored by Norman Bodek). It turns out that Toyota has put distinction between locally developed concepts (TPS), and adopted concepts such as statistics from Deming and Juran. In fact, when I was working for an IBM Japan transplant in mid 90s (Lean and Six Sigma weren't widely known then), I saw in the bookshelf volumes of JUSE standards and a book by Katsuya Hosotani, 7-Step Problem Solving Method. We used a lot of statistics to monitor and control the production of computer parts, in much the same way as DMAIC's minus the rigorous documentation. And Hosotani's book is basically A3.

So, that's it. I'm just wondering where do those CEO minds are wandering.

 

Reply »

Bob Emiliani February 17, 2018
1 Person AGREES with this reply

Edgar Agustin, my new book, "The Triumph of Conventional Management Over Lean Management" explains, in detail, what traditional CEOs are thinking and why they aren't committed or even slightly interested in Lean, and what to do about it. You can find the book on Amazon.

art byrne February 17, 2018
2 People AGREE with this reply

Edgar, my apologies. The way your first question was worded I thought you were looking for the next best management approach. I think most CEO's arn't interested in lean for several reasons. First of all doing things the traditional way got them to where they are so there is little reason for them to want to change. They may be willing to change a little or try a few new things but lean is so fundamentaly different from what they have done in the past that it is too big a leap for them to take. To be succesful with lean EVERYTHING you currently do has to change. It is not just about tweaking something in operations. So, once this is clear, most CEO's will run the other way. Bob Emiliani tackles this problem as he mentions in a different way that you might find interesting but my shorthand for what he is saying is that CEO's tend to stick with what got them to be CEO's in the first place. 

Edgar Agustin February 16, 2018

I agree with you, unless the fundamentals of the processes and systems are understood and fixed, no "silver bullet solution" will ever be necessary.

Even in Lean and six sigma implementations, practitioners often regard them as "silver bullet solution" by blindly using tools and techniques without regard to understanding the fundamentals. This leads me to believe that Lean is not actually about tools and techniques but rather a way of thinking. Those SMED, 5S, JIT, 5whys, kanban, VSM, etc. were developed just las ocalized application of fundamental concepts to Toyota's unique situation. The challenge is how to use the fundamentals to develop or adopt suitable tools and techniques to a unique situation. Shingo and Ohno told about the crisis, "catch up with America in three years." From that crisis they delved into their own processes to develop tools and techniques, and eventually forming the fundamental concepts we now kmow as Toyota Production System. I think it was Shingo who said something like "do first, then the theory comes."

Reply »

Edgar Agustin February 20, 2018

I purchased The Lean Turnaround Action Guide book today. Can't wait to learn how UGH's lean turnaround to WOW. :-) 

KJ February 15, 2018

I am stuck in a predicament where, as a Lean Leader (also CLSSBB, former adjunct lecturer, etc...) the CEO has insisted we "do lean". From all I read I think the initiative will probably fail. I am discouraged, and feel I am wasting MY time and MY training and MY talent. Any advice or words of wisdom?

Reply »

Claire Everett February 15, 2018

Hi KJ

I can certainly understand why this conversation would make you feel like there's a high probability of failure.  However the outcome is not certain.  You have an opportunity to communicate with your CEO and make sure that they understand what Lean is and isn't and if he still wants to go ahead what is required from him for the transformation to be successful.

There are resources available that you can use, there are many posts on this blog that are relevant and there are books that are written about Lean that are designed to communicate with CEO's and other SLT members such as The Lean Strategy.

Take some time, create a plan, and use this as an opportunity to sell the real Lean to your CEO.

Good luck!

Reply »

art byrne February 16, 2018
1 Person AGREES with this reply

KJ and Claire, KJ I think Claire has given you some very good advice. Don't give up yet. Think of what you can do to help turn your CEO around. My suggestion would be to implement a couple of good "model lines" so to speak, where you can show both the economic gains that your CEO probably has in mind and the people gains that come with it. You can use these to help turn your CEO as it is much harder to deny the benefits of lean when you have a couple of good examples of it in your own company. Good luck.

Reply »

KJ February 16, 2018

Thank you both!

Michael Ballé February 18, 2018
4 People AGREE with this comment

Great point Art, and I have to agree that I haven't seen a successful lean transformation without a CEO/sensei tandem - which is a huge bottleneck to the diffusion of lean thinking when one things about it.

I am always struck in study visits to Japan how 1/ many Japanese companies do flow/standards/kaizen but only Toyota suppliers (or companies run by ex-Toyota guys) do pull (kanban/Jidoka) and flexibility, also 2/ in these companies, the CEO typically takes you through the kanban and leveling board as one of his key tools.

Having a Toyota truck every 20 minutes in the courtyard asking for a small quantity of every reference you produce for them wil probably do that to you.

I am convinced that TPS as we know it was written down largely to help CEOs of suppliers grasp the benefits of joining Toyota's Just-in-time supply chain (what do you mean better delivery with less stocks is going to cost me less?) 

I am also convinced we missed the real advantage Toyota sough in getting supplies to joing, other than control of the supply chain (today). This is how they got suppliers to join VA/VE efforts and pull value through the chain (tomorrow) by capillarity as well (as Wiremold has done if I remember correctly).

Turns out, that as a Toyota supplier, the disicipline of customer pull and the further intent to improve product design by fixing issues in production and then in engineering becomes quite naturally a strategic issue, and no wonder CEOs get interested: their commercial future with Toyota, the dominant player in the auto industry, hinges on their ability to figure these things out.

In Europe, Toyota always had a much lower share of products in supplier plants, and most of the suppliers I know - to this day - chose to suffer under the yoke of Toyota's expectations but not really try to understand the huge potential benefits to themselves: they did it through more control, not more learning.

No wonder it's rare for CEOs to wake up to the strategic potential of lean when they have to do it by themselves, against their own environment where everyone and their dog tells them to forget about all of this and practice business as usual.

I aslo fear that, in the lean community, we have been tempted to water down lean to something traditionally thinking CEOs can use to eek more productivity out of existing operations, completely missing the real promise of lean: a wider range of better products.

Thank you Art for, as always, reminding us of the essentials and brining us back to the elephant in the lean room. If we want more CEOs to join the movement, we, lean guys, simply have to be more convincing about the benefits of doing so (and how to handle the risks as well).

Reply »

art byrne February 19, 2018
2 People AGREE with this reply

Michael, thanks for your comments and support. I think your comment about how hard it is for CEO's to think about lean "when everyone and their dog tells them to forget all about all of this [i.e. lean] and practice business as usual" is right on the money. Add to this the fact that the lean community has made it more about "tools" than strategy and it is no wonder we are where we are. Until more CEO's can see lean as the strategic weapon that it really is and not just look at it as a cost reduction approach I don't think there will be much change. To me the strategic aspect of lean is overwhelming but I guess it won't hit home to most CEO's until one of the competitors in their industry becomes lean and starts taking market share from them and everyone else.

Reply »

Harry Kenworthy February 19, 2018
1 Person AGREES with this comment

Hi Art - although the article is focused on manufacturing, we all know it's universal in nature. The same executive behaviors exist in all sectors, including government (State, City, County and large K-12 schools), which is the area we focus on. "Give me the silver bullet" so I can delegate this thinking prevails. One of the hurdles is the perception that the Lean tools are the main deal and they are simple to understand. We tell clients this is the easy part. The leadership learning, infrastructure/governance, communications, and trust and belief in an outside sensei to provide top management guidance and PRACTICE is what's lacking which leads to the main cause for sustained implementation failures.

When we start with government clients, we have tele-conference calls with the top leader and her/his key team to outline what will be required of them. Then a two day boot camp kick off where the entire top management team brings a project to work on. 30 day follow on items have them doing 5S, an A3, and instituting examples on dynamic data collection. They are now starting to do. Governance structure is set up and all internal directors/managers are told by the top manager that they "own" lean in their areas, not have a green belt swoop in and try and do a project without their support.

Unfortunately, our ability to do this is limited in governmment, since we're usually responding to an RFQ, and they've already "determined" what's the "right way to do lean" based on very limited knowledge. The only way we've found to overcome this is to work with a client early on during a "demonstration phase" boot camp and several high Leverage Kaizen events, which flies under the RFQ cost hurdles and develops a better level of understanding and they then create their RFQ/RFP. There are also times when we win an RFQ that we can influence the forward implementation process, but this is much more difficult.

Humble, effective leaders who will work openly and except gudinance from an outsider are the key people to find and they are rare in government.

Reply »

art byrne February 19, 2018
1 Person AGREES with this reply

Harry, thanks for your comments. Your right of course when you are searching for waste to remove there are few places with more waste than government agencies/offices. Not surprising I suppose given that they are not working with their own money and can't, for the most part, be fired. Where is the incentive to get better? So to be effective you have to, as you point out, find humble effective leaders who are open to new ideas. Once you do the gains will be hugh and hopefully word will spread. Good luck.

Reply »

Harry Kenworthy February 20, 2018

Hi Art - the real incentives to get better in State, City, County, and K-12 schools are driven by severe budget pressures, unlike the federal government. They have to have a balanced budget. Doing more (effectively) with less is the driving mantra and Lean provides the paradigm shift for this to happen. We advocate with all of our clients to get the cost savings via attrition and some clients are facing 50% attrition rates (mainly retirements) over the next five years. There are more and more leaders that are "getting it".

My recent webinar addesses this:

https://www.youtube.com/watch?v=xbK5thKfb9U

Reply »

Search Posts:
Strategy Deployment and Alignment through Hoshin
Jikku Mohan, Josh Howell, Karen Gaudet & Mark Reich
The Lean Bakery
By Juan Antonio Tena, Emi Castro
The Work of Management
By Jim Lancaster
Confessions of an Aspiring Coach
Ask Art: How Should We Staff and Run Kaizen?