The End of the Beginning

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NUMMI closes today. The GM-Toyota joint venture assembling motor vehicles in California lasted 25 years - a very long time for a joint venture - and about 8 million vehicles rolled off the line. For those working at NUMMI this is a truly sad day and I hope our Lean Community will reach out to help the many employees there with advanced lean skills find new jobs utilizing their knowledge. But for the rest of the global Lean Community, this day is not just one of sadness. I think it marks the end of the beginning.

Honda first moved manufacturing abroad from Japan in 1982, with a very similar production system to Toyota's. But NUMMI in 1984 was the first application of the complete lean system in a completely foreign environment using employees and line managers steeped in the tradition of mass production. And the best part was that the system the small band of Toyota managers brought to NUMMI was so systematic, visible, and copyable by the rest of us: The TPS house. The standard terminology. The methodical approach to human relations with a new meaning for teams, team leaders, and front-line management. The focus on problem solving and continuous improvement rather than fault finding and the status quo. And all of the support apparatus to handle information and material in order to create a smooth flow of value from end to end.

NUMMI could have failed to match the productivity and quality achieved in Toyota City (as many at Toyota feared it would.) That would have left us with other things to do and talk about today. But instead it was a remarkable success in terms of quality, productivity, and the new way managers and employees were able to work together. It laid the foundation for all of the success lean thinking has had subsequently. So whatever happens to the NUMMI site in Fremont, CA, it surely should be designated a "national [even a world] economic landmark".

Not only was NUMMI a remarkable success, it was an immediate success. From the start of production in 1984 it was only two years before our research team at MIT, in a remarkable paper by young John Krafcik ("Learning from NUMMI"), was publicly reporting the revolution in product quality and productivity. And NUMMI was also an enduring success over its full 25 years through a number of phases of organizational renewal, proving that with periodic reflection and renewed management attention lean can truly endure for the long term.

Remarkably we were still learning from NUMMI at the end. John Shook in his recent Sloan Management Review article ("How to Change a Culture: Lessons from NUMMI", Winter 2010) explains how NUMMI showed that the best way to change and sustain an organizational culture is by first changing and sustaining management behavior, a lesson many transformation efforts still overlook. And toward the end even GM learned to manage in a different way with dramatic gains in productivity and quality, although too late to save itself. (You can hear the sad story of how NUMMI failed to rapidly transform GM, including interviews with NUMMI workers, union leaders, and GM managers, on the most recent installment of This American Life, downloadable from National Public Radio.

But now the launch party for the lean movement - continuing for all these years at NUMMI -- is over. So where do we go from here?

Perhaps the hardest first step is to adjust to the fact that virtue isn't always rewarded. All of us in the Lean Community want to believe that a superior facility applying the best lean methods should be spared the forces of the global economy. But this isn't likely in a world where economic stability seems to lie always in the future. Sometimes making a product very efficiently with few defects and strong team spirit isn't enough in a world of excess capacity and widely varying labor costs per hour.

And we would all like to think that a company like Toyota that has consistently shown the world a better way to do things would be treated generously when a few things go wrong. But this isn't the norm. Fault finding - the search for the one who - may have been replaced with root cause analysis - asking the five whys - in the Toyota management system but the diffusion of this simple idea to the world at large is sadly lagging.

So we will have to move ahead in imperfect circumstances, doing the best we can on our watch.

In my view, we are making progress and have dramatic opportunities just ahead despite the degree of difficulty:

  • NUMMI proved once and for all that lean methods can be successfully adopted in the most difficult circumstances in tired facilities with aging workforces. (Just listen to the This American Life story and ask yourself if anything about your situation can be worse than the problems confronting a few Toyota managers, including John Shook, when they arrived from across the Pacific to start work 25 years ago.)
  • NUMMI proved once and for all that lean methods can be sustained indefinitely, over decades. (NUMMI didn't come to end because it ceased being lean. It came to an end because the auto industry changed in ways that no amount of leanness in California could counter.)
  • We now have examples of good lean practice in practically every industry, even including government services. No one who has tried to create a complete lean enterprise with the hands-on participation of top management has failed to achieve dramatic results. And that is a very powerful statement.
  • We are always looking for a crisis as our moment of opportunity and the world's healthcare systems are all now heading into deep crises as demographics, new technology, and a history of weak process management produce an unsustainable situation. This may be the single most important contribution of lean thinking to society in this generation and we already have the knowledge to transform healthcare delivery systems. ¬†All we need to do is to act together to rapidly deploy our knowledge.

So let's mourn for a moment the passing of NUMMI and the end of the beginning. Then let's all move ahead together to the next set of challenges and opportunities.

Best regards,

James P. Womack
Founder and Chairman
lean enterprise Institute, Inc.

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