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As CEO, how do I get my management team to support the lean effort?

4/23/2018
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Dear Gemba Coach,

As a CEO, lean has enabled me to renew our company’s profitable growth, so I love it. But getting my management team on board is a daily struggle. Thoughts?

Ouch. That’s unfortunately not uncommon, and a rather hairy problem in my experience. The tricky part of this problem is that you may well be, inadvertently, the source of it. Let’s take a step back and wonder: what problem where you trying to solve when you hired or promoted these people in their current roles?

Chances are that the sales VP is there because you needed someone to run sales: manage the sales team, deal with top customers, implement sales control and motivation systems, such as CRM, and so on. The manufacturing VP is probably there because you needed someone to run operations: move products or services, manage labor relations, control costs and investments. As for the purchasing VP, I’m not taking a big risk in thinking you hired him to manage the supplier base and get prices down. Or the finance VP: make sure you get clean year-end accounts and implement the IT reporting systems to do so. As when we get to IT … you get the picture.

As any CEO, I’m willing to bet that you:

  1. Designed functional boxes of what needs to be done to run the company (you broke down your overall vision into functional lumps needed to make it work).
  2. Inherited a bunch of processes on how each of these boxes run.
  3. Staffed each box with a VP, confident of their ability to run their box productively; deliver more with less.
  4. Required them to enforce compliance of your strategy on their function in order to achieve “disciplined execution.”

And … are probably discovering that although this way of going about it enables you to scale-up the company and build a large global organization, it’s also incredibly inefficient, cumbersome, and unable to adapt to local market conditions – and very wasteful.

Lean Management Differs Because …

The upshot is that when the product or service finally comes together through this functional machine, customers had better like it because that’s all they’ll get (because that’s all we know how to give them).

Now, of course, lean thinking starts from a very different premise. The core idea is “one-time customer, lifelong customer” – never lose a customer, as Jeff Bezos’ Amazon has demonstrated with a vengeance. This has three practical implications:

  1. An ever-broader range of products or services because as customers’ tastes evolve, you want them to find what they’re looking for in your company and not start experimenting with either someone else’s product or another way of solving their problem.
  2. Greater robustness of your product and service than competitors so that customers are not tempted to try someone else just out of annoyance or spite with a deal gone wrong.
  3. Reasonable prices so that customers feel they’re getting good value for money and are not (too) tempted to try a discount competitor just to see…

Indeed, most of lean is about this:

  1. Flexibility from just-in-time to be able to assemble different products or services on the same resources and to reduce lead-times by reducing batch sizes until everything runs on one-piece-flow. Last time I visited Toyota in Japan I was amazed by how hard they’re still working on flexible lines, experimenting with innovative techniques such as one-piece bumper molding, laser-screw welding tech, shorter assembly lines that are bolted on the ground rather than sunk into concrete so they can be moved, and so on.
  2. Built-in quality to make every product more robust, and every service more exact, which involves developing jidoka in every part of the delivery process.
  3. Total cost productivity by creating learning curves from customer complaints to value analysis projects (improving value in current production) and then value engineering in new developments (improving value in products being developed right now).

Achieving this, however, requires cooperation at all levels:

Just-in-time requires cooperation across all functions because the only way to control and reduce lead-time is to get all functions working together at takt time. For instance, if sales needs to hit its targets at month end and decides on a sudden discount for customers, this will create an influx of orders production won’t be able to deal with (unless they have massive inventories, and still they might be holding the wrong type of products). Sales must commit to sales at takt time, so that production can delivery at takt time – not an easy thing for any salesperson (sales come as customer choose to buy, salespeople typically keep “sure thing” customers at the back of the pile to be sure to “make their month”)

Which mean just-in-time also requires cooperation between manufacturing and purchasing – for instance, heavy pressure on cost or a discount for volume is going to look good on purchasing’s objectives, but not help production produce seamlessly at takt times. And so on.

Chain of Command Help

Just to think about it, if you really want to copy Toyota and assemble eight different product models on the same line, one by one (no batching), you’re going to have to tell product design that the new product they’re working on must be assembled in exactly the same sequence as other existing products. More cooperation needed.

Similarly, achieving built-in quality requires cooperation to transform the chain-of-command into a chain-of-help. When a team member pulls the andon cord, and the problem can’t be fixed right away by the team leader, but a real problem is spotted, first, management must immediately come on the spot, and then must be able to bring the colleagues from other functions that will understand where the problem comes from and how to fix it.

Last but not least, reaching for a total cost advantage means being able to think new products in the continuity of existing ones in order to involve the entire supply chain in value engineering. A car customer’s request, for a better cup holder, for example, will have to 1/ try to be fixed on current models in production (can engineering even do that?) and then 2/ addressed with engineering and the module supplier. The trick is that all the issues fixed on the current cup holder production and assembly are a wealth of knowledge and ideas to come up with a better, cheaper (full cost, from materials to assembly time) cup holder in future models. More cooperation.

In other words, the lean competitive advantage you seek cannot be achieved by having functional VPs who see their jobs as narrowly specialized bosses tasked to better run their function by implementing better systems and obtaining greater compliance from their people.

In order to achieve the flexibility, quality, and productivity improvements we seek to convince customers to stay with us and bring their friends, we need a completely different breed of senior officers. People who:

  • Are skilled at teamwork, as an individual skill. They can work with others across functional barriers and interests and look for ways to cooperate to support the company’s overall mission beyond narrow functional objectives.
  • Know how to take initiative. They can spot opportunities and run with them, trying stuff to see what flies and what doesn’t and look for advantages in working with others towards a common goal.
  • Continue to learn and stay fresh and open in their own backyard. In particular, they keep looking for talent and passion in the lower ranks and accept to learn from junior employees who might not have the full perspective but will surely have a better grasp of evolving technologies and their possibilities.
  • Are respected by their staff because they are seen as both competent and trustworthy. They know how to pacify or avert conflict, how to support people in trouble or when they show initiative (that don’t always work out as intended), and how to show the clear direction everyone needs to do good work. They recognize effort, and they have a good BS detector.

As you can see, I’m drawing a very different portrait of a department manager or functional VP.

Change Your Expectations of Management

In lean, the problem we’re trying to solve is: how can I surround myself with smart people, with initiative and ingenuity, who know how to work together (beyond the obvious barriers) and who have the knack to bring people along, so that I can listen to their opinion without fear that they’re simply pushing their functional agenda, and I can construct responses to today’s challenge by getting them all to work together?

In that sense, we’re looking at a completely different way of staffing a management team. First, we start from the people: who have we got in the company that shows promise, both in judgment and ability to get things done? Then what can we do to develop them? To give them space to enjoy their strong points, but also challenges to confront and develop their weak ones? And how does that fit with the list of challenges we need to crack?

The obvious conclusion is that the role has to be adapted to the person, not the person hired to fill the position.

I’ve asked Jeff Liker, lean’s leading expert on Toyota, and this is how he sees Toyota’s staffing decisions for senior jobs: “There are no real rules. If they think there is a reason to do something they do it.  One can rise up to VP through a function or there may be some broader rotation if they think it will benefit the person to get a broader experience to become VP.  or they may simply have a need for someone in a general manager role and nobody within the function is qualified. Or, it could be that they wanted to move someone into your general manager position and there is no obvious place for you at that time, so they find someplace else where you can be valuable.” So yes, there are many lean tools to get your management team working better together, such as gemba walks with the management team (to see the reality of operations), obeyas (large rooms to share challenges and discuss how each person solves problems), A3 sharing (sharing one’s functional problems, reasoning, choice of solution and limits of the chosen solution), and of course, constantly clarifying challenges so that people come together on the problems we’re trying to solve, before debating which solution is best adapted to the company, not functional turf. But the deeper change is learning to build a truly people-centric organization where the choice of who you work with determines what the organization will look like, rather than cutting out boxes on paper and staffing them with who is available at the time. To change how your management team works, first you have to change your expectations of it.

12 Comments | Post a Comment
Owen Berkeley-Hill April 24, 2018

I wonder if you have read Bob Emiliani's latest book, The Triumph of Classical Management over Lean Management. In his book he suggests the rejection of Lean by the leadership class (or is it caste?). From his perspective it is not the people of he Gemba or their managers who are the problem but the CEO and his leadership team.

Lean has had a very poor record of being adopted (unless you have better data), so why does Lean.org and the Lean movement in general not change thier approach?

I see that Lean is entering a phase where people are finally seeing it, not as the Toyota toolbox, or an improvement methodology competing with the likes of Six Sigma, but perhaps the most significant advance in our understanding of how a good leader thinks, believes, acts and behaves. So, how do we persuade the vast majority of current leaders to drop their outmoded (Classical) way of thinking and embrace Lean? How do we persuade the vast majority of B-Schools that their MBAs are a but yesterday with out Lean?

 

Michael Ballé April 24, 2018

Hi Owen,

I think these are good questions, but not quite I see from the gemba. Have you read Jeff Bezos' latest investor letter?

1/ there are not many CEOs that adopt lean as a strategy, but more every year, 2/ it always works when the CEo gets into it, 3/ the trick seems to be to adopt TPS/Toyota Way right away, even if it's hard, rather than start with some diluted form (in other words, aiming for the 100 in the darts target and failing is still more effective than first aiming for the 20, then the 50, then the 100)

The bottleneck, to this day, remains our ability to explain lean thinking clearly and practically on the gemba, and most consultants insistence on bringing back lean to operational excellence, which it really is not.

As for getting more people on board - well, every executive has his or her method, lean is a method to find lasting competitive advantage, so if the CEO is not willing to try and if he or she would rather reproduce known failures - which many programs are - then so much the better for those who get it right. 

The only thing I think we can do is get the information out there, clarify the message, prune out silly ideas and let the chips fall where they will :^)

Bob Emiliani April 25, 2018

Michael Ballé - There has been 30 years of credible effort by hundreds of experienced people to "explain Lean thinking clearly and practically on the gemba" to executives. This is not the bottleneck.

If the only thing you can do is "get the information out there, clarify the message, prune out silly ideas and let the chips fall where they will," then it is likewise clear that you're out of ideas.

And, you seemed to have forgotten, "silly ideas" are the wellspring of innovation -- something that Lean desperately needs.

Michael Ballé April 27, 2018

Ah, Bob, good to see you back on top form :^). I really enjoy how succeed at completely ignoring the gist of an argument, pick up a sentence out of context, and find something negative to say about that to distract from the main point and bring it back to one of your books. Thank you for the lesson - I am learning :^)))) :

As we wrote in The Lean Strategy, new ideas come from a completely different way of thinking, 4F rather than 4D.... ;^)

Anna April 27, 2018

I would recommend for aby CEO Art' Byrne book. He explains it all as used to be the one leading the transformation as CEO and made it 

Mark Graban April 27, 2018

Lean issue aside, isn't it concerning that a CEO is asking "how do I lead and influence people?"

Yikes. They've gotten that far in their career without knowing how to engage people that way?

Michael Ballé April 27, 2018

Hi Mark,

I guess we have very different experience with leadership teams. In my experience getting the VPs to look beyond their functional logic and work together on joint activities to move the company forward is one of the thorniest and stickiest problem the CEOs I know face.

Finance knows what’s best for the company from a financial point of view, HR from HR, and so on. They tend to see their jobs as implementing functional systems, upgrading them and fighting the resulting fires.

We don’t help of course inasmuch as we talk about lean manufacturing, lean engineering, lean supply chain as if these were functional systems as well rather than lean systems.

I don’t think this is a silly question or that it denotes incompetence (as a point in case, the person asking grew a 400 million euros business starting from a laptop on a desk). On the contrary, I feel this one of the critical issues any CEO interest in lean will face - but things might be different in the US. 

Mark Graban April 27, 2018

The question suggested a degree of incompetence, if we'd expect that a CEO (one who grew a business or otherwise) should have some ideas for "getting my management team on board."

There's this whole element of psychology and change that matters greatly. People require more than information and knowledge to change. 

Ron Oslin addresses this in an LEI webinar and classes he teaches on how leaders need to do more than explain.

https://www.lean.org/common/display/?o=34564

I would suggest the CEO check out that webinar.

I agree with Bob E. that the bottleneck with Lean adopting isn't learning how to explain things better. Instead of telling, leaders and Lean champions need to be better at meeting people where they are and engaging them... what's their motivation? What's their commitment for change? What problem are they trying to solve?

Talking at people doesn't lead to change.

Bob Emiliani April 29, 2018

Michael Ballé - I imagine you would be much happier if I simply agreed with all that you say. But, my role is to think and be critical where necessary, not to be blindly uncritical.

The gist of the argument, which you did not address, was Owen's question: Given the existence of new information, why does lean.org and the lean movement in general not recognize it and change their approach?

Sergio April 30, 2018

This looks like a battle of the salesmen - who's best in their theory.

Common sense should be the new approach - every company is different and people in it.

Dheerendra Negi May 7, 2018

Informative article.

Tim May 18, 2018

Hi all, 

possibly not relevant but here goes. Reluctant to air views in such esteemed company.( I might not be alone there)

IMHO The VPs will not change behaviour unless the expectations of the customer, or the CEO- who might be both in this case-changes. 

Some old advice is there needs to be a burning platform or a crisis to create the energy to change to lean thinking. If you haven't got a crisis, create one to trigger action (actually you are creating pull in the absence of flow) and coach, coach, coach at the Gemba. A3s and stretch targets, operational, including respect for people, targets. Safety/People, Quality, Delivery/lead measures, Cost/Capacity issues internally. External customer satisfaction issues relevant to industry. Link that to their (the VPs)tenure and ability to buy stuff. Especially the people factor.

I've always found it worthwhile to teach from the ground up. Basics. Customer, value, flow,pull, perfection continue.

Very Simple, very powerful. Very tricky!!!

Like I said. I'm probably way off mark. But the thinking exercise is great fun.

Thanks for the space for my electrons.

 

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