The LEI senior executive series on …
“At one company, by engaging the heads, hearts, and hands of the associates and leadership team, we were able to support $1.0B of revenue growth with 12% less labor.
Gary Berndt has led lean transformations as a C-level executive in the U.S., overseas, and in a variety of industries, including automotive, food, building products, power generation, and aeronautics. He has achieved results in different corporate cultures and diverse labor forces. Here are his insights into leading change, based on 30 years of experience.
LEI: How do you connect lean efforts to a company’s business strategy and financial objectives?
Berndt: First determine the business conditions. What are the business metrics? Are they being met? You probably will not immediately start implementing lean solutions. At one company, the major issue was 25% overtime, so we needed to get overtime under control before we could even begin to talk about lean. In another company we had to establish “manufacturing 101” ground rules and accountability. Once these items were in place we could begin to evaluate and implement a lean strategy and share the vision of the future state to the organization.
Then, it’s time to start identifying your top issues. I call this focusing on the top five and relentlessly pursuing them using lean tools. Start with quality, then make sure schedule and cost are among your top five. Each company is different so you will need to understand the metrics driving the business to success or failure. Whichever metric is not up to standard, use gap closure to target non-performance so the business problem can be easily identified and resolved. However, you need to realize, every action may not result in immediate bottom line improvements. You must continue to follow the process in order to achieve the results.
LEI: Most managers and executives would back the idea of supporting continuous improvement and creating a problem-solving culture. So why are these ideas so hard to operationalize?
Berndt: Many times people think of continuous improvement as a series of technical tools to apply to a business condition. I believe this is only one of the key components for success. Many of the organizations I have led have had what I would refer to as the “lean knowledge” aspect of continuous improvement. The challenge is to develop leadership traits within management and engage the entire workforce. How you truly operationalize and institutionalize continuous improvement within an organization is really the issue. At one company, by engaging the heads, hearts, and hands of the associates and leadership team, we were able to support $1.0B of revenue growth with 12% less labor.
An inhibitor to continuous improvement is the over emphasis on daily performance. In one company, leadership was so focused on one metric it drove the wrong behaviors.
Some leaders see any change no matter how potentially effective to not be worth the risk of hurting current performance. This is due to a fear of failure, which, in my experience, affects many team members. This is why many people embrace the routine of their current processes. It’s what they know and were taught. Change requires fostering an environment which promotes new ideas and concepts. These ideas often times are foreign to everything they have experienced within their current company environment. Change is sometimes hard to comprehend and even harder to execute; it’s non-standard to what they know.
LEI: Is there a behavior a senior manager should exhibit to facilitate culture change?
Berndt:: I believe the two traits which serve you best as a senior manager are a bias for action and the ability to deal with ambiguity. In one company there had been extensive training for years with minimal focus on implementation. Management’s focus needs to be on a bias for action and the ability to deal with ambiguity. Lean techniques are common but not identical and dealing with ambiguity is essential to the success of any lean implementation.
A lean transformation is a journey, not a destination. Frequently management wants all the data before making a decision. Learn to make decisions with the information available by gathering critical data, make a decision, then act. The difference in the quality of the decision is usually minuscule. In addition, a senior manager should have a positive attitude and be passionate as he or she leads their team on a change journey. They should share a vision with their workforce so the team knows what they are doing now and where they are going.
The senior manager needs to realize failure will occur at some point on the journey. As a result, you need to learn from the mistakes and move forward. There needs to be a culture of accountability without being punitive. Sometimes people confuse the two behaviors, but people are accountable to deliver results. The senior manager should lead by example and consistently inject themselves into the business. It doesn’t matter what type of business or function, whether you are in engineering, manufacturing, or HR. You need to lead from the front rather than managing from the rear if you expect change. Finally, lead by example. There is nothing more deflating for an organization than to hear their leader say one thing and do the complete opposite.
LEI: What do you think is the key to sustaining improvements?
Berndt:I believe the key to sustaining improvements is to implement a management system with standardized work and a standard bill of process for conducting continuous improvement activity within the company. Do not treat continuous improvement as a program or initiative. Incorporate it into the daily business.
A number of companies I have worked with have done an outstanding job of incorporating continuous improvement into the business rhythm and it still lives on today. Others have not because it became leader dependent or continuous improvement became optional not mandatory. Leaders must “inspect” what they “expect” from the organization so there should be multi-layered audits of the system to ensure sustainability. Metrics should be visible. Leaders must be on the floor or office, going to the gemba to see progress and asking how they can help remove obstacles. Employees know if it’s important to their senior leaders, it better be important to them to succeed. When I have entered organizations which have tried to do lean but not succeeded, this is the one constant.
LEI: Can you give readers some practical advice about what they and their teams may have to change about their current roles and behaviors in order to lead a lean transformation?
Berndt: As you lead a lean transformation, you need to clearly understand where the company is today and what the team’s strengths and weaknesses are. As a first step you need to positively identify and recognize the organization’s strengths. If you do not recognize these strengths, it will demoralize the organization and impede your ability to implement change.
Then, as you start to develop solutions to address the weaknesses, remember always go after problems, not people. As a change agent you will need to reward and reinforce positive behavior at every step of the journey. Manage by injecting yourself in the business and engaging employees at all levels. Ask many open-ended questions and lead your employees to the right answer. Remember, you don’t know all the answers and your team can help you solve problems. Something like this needs to be a collective effort; no one does it alone.
As a result, you can engage your team on many different levels in order to drive the organization towards improvement. You will need to provide direction, support, and the tools for your team to make the improvements. Ensure you measure the performance because you get what you measure. If it’s important to you, it will be important to your team. Provide employee feedback, both positive and negative, express confidence and support.
Along the journey, also create an environment where people can effectively communicate both good and bad news. The sooner bad news comes to the surface, the faster issues can be solved. I worked at one company that did not want to hear bad news and performance deteriorated. This only delays the inevitable. Finally, a change agent must remove obstacles for the team. As issues surface, the obstacles must be removed or the team will become deflated.
LEI: What, if anything, can a middle manager do to convince senior managers to pursue a lean transformation?
Berndt: A middle manager can use results from his or her own lean journey to show the senior manager that lean really does work and will work in their site or company. When one area of the plant or company is continually improving, it will be very visible to leadership and hard to ignore. Pretty soon someone will ask how and why is your team continuing to excel? This will be an opportunity to tell your lean story and the steps you have taken.
In my experience, some of the best middle managers have focused on implementing lean processes regardless of the industry and yield outstanding results. One middle manager comes to mind who led his team to double digit production and quality improvements in multiple industries by utilizing lean processes.
LEI: How were you able to apply lean knowledge successfully to so many different industries? What are the keys?
Berndt: First realize each industry is different just as their problems might be common, not identical. The approach needs to be the same but you need to pattern your approach based on the business condition. Too many times I have seen a company try to use a standard template for lean and fail. As I look for my next challenging opportunity, my approach would be the same: look at the business issue, determine the problem we are trying to solve, and implement the appropriate lean strategy.
It’s just like at home when you are working on a project. You don’t always pick up the hammer; sometimes you need a Phillips screwdriver, a crescent wrench, or pliers. Lean techniques are the same way; you implement the right tool for the right situation to solve the business issue.
Always keep it simple and avoid complication. The more everyone understands and can become involved, you have more brainpower to solve the issue and momentum continues to build.
Finally, pick an area for your implementation that will make a difference to your bottom line. There is no use implementing lean tools to make an area a showcase with no bottom line effect. In one company, everyone said if you can do this in location X, you can do it anywhere. Guess where we started? Location X. We implemented lean principles there in the biggest, most difficult location with excellent results and then we brought all the leaders from the company to see for themselves. They could ask the local personnel how it was done. Seeing is believing. Hearing a concept is one thing, seeing the implementation is another, which then leads to people going back to their location and doing.