Home > The Lean Post> “People who can’t change their minds can’t change anything else”

“People who can’t change their minds can’t change anything else”

by Orest (Orry) Fiume
March 29, 2018

“People who can’t change their minds can’t change anything else”

by Orest (Orry) Fiume
March 29, 2018 | Comments (8)

There is a serious debate within the lean community as to whether lean is a strategy or an operational tactic.  I believe that the roots of this debate go back to when those of us in the U.S. were first exposed to Toyota and the concepts, principles, and practices that enabled the company to emerge from an almost-bankrupt post World War II company to a serious (and eventually leading) competitor in the automotive industry. 

Some of the early materials that we saw were translations of Japanese books published by Productivity Press.  In addition, there was an NBC “white paper” entitled “If Japan Can Why Can’t We.”  In those early days “lean” had not been coined as an umbrella word to encompass all aspects of those concepts, principles and practices. In addition, the NBC white paper erroneously implied that this way of working was unique to the Japanese culture and was widely practiced there. 

Since these ideas were so very different from the traditional business model that was being taught in our business schools and widely practiced in the western world, we had trouble identifying with them.  So when we heard about “just-in-time” the question was “JIT what?”  Thus, it became Just-In-Time Inventory Management.  Kanban was also categorized as an inventory management system.  And when we eventually tried to talk about the Toyota System, we inserted the word “production”… thus TPS: Toyota Production System.  I believe that because our understanding of Toyota was so superficial at that point, these labels contributed to the widespread belief that what Toyota was doing was different in merely an operational sense, and as a result, it could be easily copied.  And copy we tried.  At least we tried to copy the “tools” because those were easy to observe.  

How wrong we were.  Around the mid-1980’s, a few people began to understand that Toyota was using a different business strategy to succeed in the automotive industry.  These people understood the value of quality as perceived by the customer.  They understood the value of flexibility in dealing with changing customer demand. They understood the value of developing the capabilities of their people in solving problems as they occurred.  This way of thinking was radically different than the other American and European automotive companies that operated under a strategy based on price, batch production, and “expert” problem solvers. 

Changing Our Industry

I observed these different interpretations first-hand through taking part in one of the best-known stories of lean transformation. Although The Wiremold Company story has been told many times, the lessons that we learned more than 25 years ago are still relevant.  In the 1980’s Art Byrne was one of the few business leaders in the U.S. who understood that what Toyota was doing was strategically different.  It was different than what he learned in the process of getting an MBA.  It was different than all of his previous work experience.  Despite no real experience to anchor his mindset, he also saw that it was a better strategy. Exposure to this new way of working changed his mind as to how to run a business.  

When he became Wiremold’s CEO in 1991 he came to a company where all of the executives had traditional business educations and traditional work experience. This included me (I had joined in 1978 as VP of finance, and eventually became CFO. For some inexplicable reason, when Art taught us about the power of Toyota’s strategy (not called “lean” yet) we all “got it.” Some of us easier than others, but in a relatively short time, we all were able to “change our minds” from everything that we had previously been taught and experienced to something that was literally foreign.  And in doing so, we changed the name of the game in our industry.

The electrical equipment industry historically grows at about the same rate as the GDP.  By implementing a lean strategy that included, among other things, focusing on quality, flexibility, and developing our workforce’s problem-solving capabilities, in less than 10 years we were able to:

  • Improve quality exponentially.
  • Reduce lead time from weeks to days.
  • Boost on-time deliveries from less than 50% to 98% while improving inventory turns from 3.4 times to 18.0 times.
  • Increase revenue from $100 million to more than $400 million.
  • Improve gross profit from 38% to 51%.
  • Improve EBITDA from 6.2% to 20.8%.
  • Grow our enterprise value by 2,467%.

In the eyes of our distributor partners, we went from being a pain in their side to a preferred supplier.  They understood that we were employing a radically different strategy, especially when we taught them how to increase sales of our products while reducing the amount of inventory of those products that they needed to carry.  This enabled them to improve the gross margin return on investment (GMROI, a distribution “golden” metric) on our products from less than average to outstanding. 

Leadership Lacking

The argument being made today against lean being a powerful strategy is that if it were one, then many more companies would be doing it.  I see it the other way around.  Many more enterprises are not doing it because their leaders don’t have the desire (ability?) to change their mind.  Are they that risk averse that they prefer to stay within their comfort zone?  Do they still believe that the success stories told in many lean publications are “one-offs”?  Are they so sensitive to today’s politically correct environment that changing one’s mind makes you a “flip-flopper”?

I’ll say it again.  By being able to change our collective minds instead of following the “this is the way we have always done it” path, Wiremold’s people were able to change from a traditional strategy to a lean strategy and achieve spectacular results for our customers, our suppliers, our people, and our shareholders.  Isn’t that what we should be striving for?

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
Search Posts:
Lean Accounting
Orest (Orry) Fiume
Real Numbers
By Jean E. Cunningham and Orest J. Fiume
August 10, 2017 | 73 Comments
May 23, 2017 | 5 Comments
Was this post... Click all that apply
HELPFUL INTERESTING INSPIRING ACCURATE
16 people say YES
17 people say YES
17 people say YES
12 people say YES
Related Posts
8 Comments | Post a Comment
Bob Emiliani March 29, 2018
1 Person AGREES with this comment

Two books by former Toyota employees are particularly informative with respect to understanding Toyota’s business strategy and its evolution over the years, which is far more than just their management (or production) system. The books are: “The Origin of Competitive Strength: Fifty Years of the Auto Industry in Japan and the U.S.” by Akira Kawahara (1998) and “Corporate Purpose: Why it Matters more than Strategy” by Shankar Basu (1999).

Reply »

Tom Ehrenfeld March 29, 2018

Thanks for the recommendations Bob!

Reply »

Orry Fiume March 29, 2018

Thanks Bob, I will try to get these.

Reply »

Nelson O. March 29, 2018

"And when we eventually tried to talk about the Toyota System, we inserted the word “production”… thus TPS: Toyota Production System."

Who is the "we" there?

Taiichi Ohno called it TPS.

Reply »

Mark Graban March 29, 2018

Change is complicated. Telling somebody else they "should" change isn't really an effective strategy. Even when we tell ourselves we should change, or want to change, or plan to change -- that doesn't mean change automatically happens.

You wrote:

"Some of us easier than others, but in a relatively short time, we all were able to “change our minds” from everything that we had previously been taught and experienced to something that was literally foreign."

Why was your Wiremold team able to change your minds? What triggered that? What's the difference from most organizations?

Reply »

Mark Graban March 29, 2018
1 Person AGREES with this reply

"Many more enterprises are not doing it because their leaders don’t have the desire (ability?) to change their mind.  Are they that risk averse that they prefer to stay within their comfort zone?"

Some of these leaders might have zero desire to change.

Some leaders have some desire, but the desire to change doesn't always lead to action. People get stuck in a state of "ambivalence." They are "addicted to the status quo" (see Ron Oslin's LEI webinar about this).  

Addiction means keeping a behavior even though one knows it's bad. Many leaders know, on some level, they should adopt Lean leadership behaviors, but it's easier said than done.

Somebody in a state of ambivalence isn't being "resistant to change." Ambivalence is normal. Resistance is also a normal step in the change process. People need to work through that ambivalence with a coach (or counselor). 

Many leaders want to be coaches and ask questions... but they also rationalize why they need to jump in with answers. They're on "both sides of the fence."

Again, telling somebody they should change doesn't work because it leads to push back.

Telling people they should embrace Lean as a strategy also leads to nature to push back, because telling isn't a very effective change strategy, no matter one correct one might be.

Too much of this "debate" over The Lean Strategy has been focused on telling people that they're wrong. Again, that doesn't seem effective, I'm sorry to say.

 

Reply »

Bob Hawkins March 30, 2018
2 People AGREE with this comment

I hope thousands of people who think they discoverd Lean and go about bragging to the world, read this. When I was in charge of Manufacturing Engilneering for the Shugart division of Xerox in 1978-1980 we were already doing most of the elements of what is now called Lean. Some people came over from Japan to see what we were doing. 

Now, 38 years later people discover the benefits of cultural change, TPS, Lean, whatever you choose to call it, and act as if they are the creators or inventers off Lean.

It is almost embarrising that it took that long for some people to get it. 

Reply »

Harry Kenworthy April 02, 2018

As we do our consulting work in the government sector, the key we are looking for is great leaders who will make the paradigm transition. Thinking differently and accepting that there is a better way is difficult for "leaders" who have gone through their careers being mentored by "smart people" who tell them what to do and they, in turn, believe they have evolved to being the "smartest person in the room". Humility is a huge missing personality trait. The folks that truly "get it" (not many) can really excel and create awesome organizational firepower by developing their employees to identify and remove wastes and to identify and solve problems.

Of course, the other issue in government is the constant election and appointment cycle which doesn't create a "constancy of purpose" (Deming). 

Wiremold had a long history of Lean thnking but as soon as another company bought Wiremold, the paradigms started reversing back to old school, non-lean, thinking. As I have said "never underestimate the ability for management to muck things up".

Reply »

Search Posts:
Lean Accounting
Orest (Orry) Fiume
Real Numbers
By Jean E. Cunningham and Orest J. Fiume
August 10, 2017 | 73 Comments
May 23, 2017 | 5 Comments
Long Live Process Improvement?
"Too Busy to Walk the Gemba"
Do CEOs Matter?