I think most people have heard the expression WHAT, WHEN, WHY, and HOW when it comes to managing a business. In my experience, most employees are used to being told WHAT needs to be done and by WHEN. They see this as management’s natural right to set the agenda of what the company, and then indirectly, they are trying to accomplish. For most traditionally managed, batch companies, the instructions to the rest of the company kind of end there. This is typical of the top-down, command-and-control approach to management practiced by most traditionally managed companies. It translates into a make-the-month, or make the number focus that often becomes the company culture. “Real men make the numbers.”
I think telling people WHAT you want done and WHEN you want it is not an unreasonable approach—as long as it doesn’t end there. Explaining WHY this is important and then giving every employee some say in the HOW it gets done, however, are the critical ingredients in success even in a traditionally managed company. When making the transition to lean the most important element to focus on is the WHY. Understanding the WHY is what transforms lean into a strategic way to run your business and away from the more common approach of seeing lean as a bunch of tools or simply a cost reduction program.
Unfortunately, most companies start down the lean path to reduce their costs, which they see as mainly coming from a reduction in head count. They focus on the WHAT, which in this case means reducing costs/head count. They see the HOW as all the lean tools. They figure they can pull out these tools, such as SMED, kanban, visual control, etc. when they need a quick fix to solve a problem. They delegate lean to the VP of Operations and continue their traditional management approach in every other part of the business.
If these leaders think of the WHY at all, they frame it as some desired financial result like increasing gross margin by 0.5%, or improving ROI by 5%. These are of course results but say nothing about what you have to do to achieve them. Most management teams drive their business this way. They spend a lot of time analyzing last month’s results (which of course already happened and you can’t do anything about them now) hoping to find the magic bullet that will get them the 5% increase in ROI or any other desired financial result. They in essence are driving the car through the rear-view mirror hoping that continuing to do the same things over and over, only a little bit better, will somehow get them better future results. Unlikely as that is.
The lean company on the other hand starts out with the WHY. The focus of this WHY is always on delivering more value to your customers than your competitors can over long periods of time. Everything the lean company does is aimed at the customer and the never-ending quest to deliver more value to them. The HOW for the lean company is focusing on removing waste from your processes, every one, in every part of the company and not just in manufacturing. The lean company knows that this can only be done by empowering all of its associates, respecting them and teaching them how to see and remove the waste every day.
The WHY is at the basis of everything a lean company does. Let’s take setup reduction as an example.
SET UP REDUCTION
WHY? To reduce the time it takes to change over a machine
WHY? To reduce the need to carry excess inventory
WHY? To lower overall costs
WHY? To shorten lead times
WHY? To deliver more value to the customer by having lower costs and lead times
For the traditional batch manufacturer, the time it takes to change over a machine is pretty much a given. It has always taken this much time. As a result, people accept the fact that they have six week lead times and have to carry four months of inventory. This is a deep-seated belief. Even if they were able to reduce setup time on one particular machine from 2 hours to 1 hour they wouldn’t understand WHY this was important. They might be impressed by this result but would more than likely see it as a one-off fluke and would not gear up to reduce all their setups by 50%. They would miss the strategic implication of this setup reduction and the impact it could have on the customer through shorter lead times and lower costs completely. They would see WHAT result they got but not understand WHY it was important.
Moving to lean is almost the exact opposite of the way traditional managers have been taught to think (shifting from “sell one/make 10,000” to “sell one/make one”). This is why getting traditional managers to see the simple logic in lean is very difficult. Making the change therefore requires the WHY to be front and center in every discussion so that it becomes the reason for everything you do; deliver more value to the customer. When I first started my own lean journey I read the books about the Toyota Production system by Ohno and Shingo. WHAT they were doing and the changes they were making were very interesting but the thing I found fascinating was when they explained the WHY. WHY were they making this change? WHY was it strategically important?
If everyone in the company can understand the WHY, (delivering more value to the customer is the strategy), then it becomes easy for each person to make the right decisions in their everyday jobs—you no longer have to rely on the message from on high to tell everyone what to do. By training them through kaizen teams and everyday improvement activities you are giving them the major role and say in HOW the waste will be removed such that more value can be delivered. You are creating a learning environment where the main thrust is based on “lean by doing” and everyone is participating in making the WHY a reality.
In switching to lean understanding the WHY is the most important thing. It helps people overcome their traditional beliefs about how something can be done. It is in essence the strategy of the business; removing the waste from your operations in order to deliver more value to the customer. Once everyone understands that things as seemingly small as setup reduction, reducing order entry errors, having 5S and visual control everywhere, daily deliveries of raw material vs. carrying four month’s worth of stock all cumulatively add up to big increases in customer service which in turn will drive gains in market share and better long term results. The lean company in essence knows WHY focusing on improving your processes and not on your results is what delivers better results.