This is a very good question and one that every leader thinking about making the lean turnaround should be aware of before starting down the lean path. After all, if you can’t get your senior management team working with you and committed to lean, then converting to lean, which is already hard when everything is aligned, will be almost impossible to do. Lean requires teamwork. You can’t have your senior leadership, and with them their separate organizations, all going in different directions without creating chaos both internally and with your customer base who will wind up totally confused.
But shouldn’t this be easy to do? After all, you’re the boss and should be able to just tell your direct reports about the new lean initiative and they will fall in line. Right? No, wrong. It would be nice if it could happen that way but trust me, it won’t. There are many reasons for this but perhaps the biggest is that lean is almost the exact opposite of everything that you and your senior management team have learned so far in your careers. Here are some of the key ways your thinking will be challenged:
Big batch vs. one-piece-flow
Push scheduling vs. pull system
Excess inventory vs. sell-one-make-one
Complex vs. simple/visual
Functional departments vs. process/value stream teams
Forecast/budget driven vs. demand driven
Quality inspected in vs. quality built in
And so you should expect strong resistance. Folks will argue: “This will never work here.” “We aren’t like those other companies.” “We tried something like this several years ago and it was a disaster.” And these won’t just be casual statements. They will come from your best and most experienced people—smart and talented people who succeeded over the years by applying and believing in all the traditional management approaches that you will need to get rid of to become lean. You can expect a fight.
You can also expect that each member of your senior team will have a different view of what lean is, and therefore whether or not it applies to them and their function. For example, most people see lean as a cost reduction tool that applies primarily to operations. Or, stated another way, “some manufacturing thing.” And so you can expect your VP of Sales, your VP of Finance, VP of Human Resources and probably the VP of IT to figure that lean doesn’t apply to them and that they can just ignore it and keep doing what they have been doing. You of course should anticipate and prevent them from considering lean in such a limited way. Lean in fact is strategic. It is the best way to run any business as its focus on removing waste allows you to deliver more value to your customers than your competitors can. This will allow you to gain market share and grow.
Consider two examples to illustrate the point: the VP of Sales and the VP of Finance. Let’s start with sales. With lean, a key objective is to level load your production by introducing one-piece-flow. But right away you find that 50% of sales, under the current batch system, ship in the last week of the month. This can’t continue going on for very long. When you investigate you find that this is primarily driven by your sales terms. So you will need to change the sales terms in order to level out the demand. You will likely get pushback, not only on the traditional sales terms but also on the traditional sales practice of seeking large orders and providing volume discounts. This not only creates lumpy demand for operations but does so at a discounted price that isn’t necessary.
Lean in fact is strategic. It is the best way to run any business as its focus on removing waste allows you to deliver more value to your customers than your competitors can. This will allow you to gain market share and grow.The same is true in the finance area. You can expect your VP of Finance to defend her standard cost accounting approach with all kinds of excuses as to why this cannot be changed and of the dire consequences that will arise if you get rid of the standard cost approach. This is in spite of the fact that standard cost accounting incentivizes most of the things you are trying to eliminate with lean. Building inventory is a good example here. Inventory under the lean approach is considered the number one waste (the “root of all evil” in my opinion) as it hides and facilitates the waste you are trying to eliminate. With standard cost accounting, however, building inventory in the short term is a good thing as it defers some overhead costs to a later period and makes the P&L statement look good in the current period.
I could cite other examples but the issue here is learning how to overcome this resistance and build a lean management team. I’m not going to pretend this is easy. But there are many things that can help make the conversion. First off you need to persuade your senior team that converting to lean is essential and will lead to dramatic results. I would share specific examples of the types of success that other companies have had as a result of converting to lean. Continue to make clear that lean is strategic and not just a bunch of tools that can be used to cut costs. Make the point that removing waste from your current operations will provide strategic options that you currently don’t have: a two-day lead time vs. your current six-week lead time, for example. Also, be sure to explain that lean requires teamwork to be successful. You can’t have one part of the organization working at cross purposes to another.
Next, take your senior team to visit some companies that are well down the lean path so that your people can see how different a lean operation looks from what you do now. At both Danaher and Wiremold, I found that a week in Japan visiting about eight companies was very eye opening for everyone. During these visits your team will also get a chance to ask questions about how the other companies went about it and what things to avoid. When you get back, get your team together and create a value stream structure that is very different from your current functional approach. To do so, you’ll need to pick value stream leaders, and doing this as a team in an interactive way will be a great team building exercise; and will help create the organizational structure you will need going forward. Don’t worry about what function or background the team leaders come from. Pick from your highest potential employees, ones that you think can rise 2-4 levels and could run a small/medium size business because that’s what you will be asking them to do.
This still won’t get you there. You’ll still have skeptics. One of the best ways to overcome this is to make sure your senior team members are on a lot of kaizens each year. I think that the minimum should be six week-long kaizen teams each year. Don’t make them the team leaders; just members of the teams. They will learn more faster doing this than anything else you can do. Don’t confine them to kaizen teams in their own area but give them a wide view of many functions. Having the sales VP on manufacturing kaizen teams, for example, will give him/her a much better understanding of what has to happen to get the order out.
Lastly, once you have a value stream structure you have to deploy down the company’s operational excellence goals to the value stream leaders. This gets everyone going in the same direction and focusing on removing the waste (as opposed to the traditional approach of make-the-month). It works best if you review their progress on a frequent basis. I like weekly. It is very important that the entire management team participate in these reviews and act like a team. You are there to help the team leaders not beat them up. With all the key decision makers in the room you can act quickly and make rapid progress. At the same time, you will be solidifying your senior management team as a bunch of lean zealots working together to move the company forward. Becoming a lean enterprise requires having a lean management team. Keep at it till you get it right.