Q&A About Ten Lessons for World Class
1. What, in your opinion, is the biggest failing in our companies today?
Short term thinking characterized by leaders that are too impatient to tackle the mundane but critical job of identifying and eliminating waste in the organization.
2. "World class" is a term which is often bandied about. What exactly is a "world class" production system and why is it important? Can you provide some context and metrics for that concept?
World Class means you won't settle for any level of defects - it means Zero as a target is achievable and you are going to marshal all of the resources of the enterprise to get there. It is important if you want to stay in business forever. Context and metrics are simply Toyota's passion and relentless pursuit of waste by focusing on how the work gets done - cost reduction by Kaizen everywhere and everyday measured simply by quality, cost, delivery, safety and morale with these metrics visible from the top to the bottom of the organizational pyramid.
3. The ten lessons offer powerful knowledge and insights for companies wishing to move towards world class. How would you advise organizations to go about implementing these lessons into their daily operations?
To get started leaders must make a leap of faith and first believe that the competitive advantage to be gained in the marketplace comes from unleashing the creativity of people and not from promoting technology.
4. The first lesson addresses the soft side of Lean. To what extent is this neglected in Lean conversions and how can companies avoid exclusively concentrating on the tools and techniques to cultivate the necessary cultural change and employee buy-in?
Leaders must believe that TPS is based on a people building philosophy and that cost reduction isn't achieved by laying people off. Leaders who don't believe that will never be able to experience the full impact of Lean Production. Companies must put in place a no lay off policy and this has simply never been the North American way.
5. The Toyota Production System represents a proven model which shows the superiority of the Lean paradigm over mass production. Why do you think our companies to day overlook the demonstrated effectiveness of the TPS and ignore the lessons they can learn from it?
The leaders are too busy firefighting and not thinking. They are too narrowly focused on increasing the value of the company stock, focused on managing functional silos rampant with waste, doing rework and thinking about how to increase their personal net worth rather than losing sleep over the health and welfare of the people doing the work.
6. You have said that understanding and knowledge of the TPS is essential. How would you recommend companies to acquire this?
Form a study group of top leaders and together read Lean Thinking by Womack and Jones, Toyota Production System by Taiichi Ohno and A World Class Production System by John Black. Next step decide if they have the focus, drive, guts and stamina to move forward with a well thought out game plan that turns the entire organization into a horizontally aligned, people powered charged, waste elimination culture that is going to be in business for the next 100 years.
7. You have said that the Lean change must be led from the top down, and failure to do this probably represents the single biggest reason why many change initiatives, including Lean, fail. How can companies reconcile this need for top-down leadership while at the same time unleashing bottom-up improvement realized through employee involvement?
The plan for implementation must start by leading the start up efforts going on at the bottom of the organization and then continue to provide air cover to champions and others as Lean is implemented. Leaders have to stay engaged, not from the board room, but from the factory, office or surgical floor. We say "Wash Your Hands" 5 times a day - which means go where the waste is, get your hands dirty and search out waste like Columbo not like Sherlock Holmes.
8. Today, many Lean practitioners are promoting their own "brand" of Lean. Now we have "fused" approaches where Lean and Six Sigma are combined, ostensibly to offer benefits that each approach alone is perceived to be lacking. Is it possible that in this day and age of branded programs that we are diluting and moving further away from the original and simple notions of Ohno and Shingo - continually identifying and eliminating non-value adding waste?
Absolutely. Too many leaders want a quick fix, the brand of the month, a way to move the organization forward without really getting engaged with the alligators. Six Sigma is a point improvement tool that slowly improves quality while the organization is dying a slow death. Organizations don't have the time to wait - while they wait for the results of Six Sigma they will get their lunch eaten in the marketplace. They first must start with flow which leads them to all the tools including Six Sigma.
9. You have said that metrics must be few, simple, meaningful, and directly linked to visual targets in the workplace. Can you give some examples of metrics that companies can develop and use in the Lean transformation?
The overarching metrics are Inventory Turns (annual cost of goods sold/inventory) - World Class Target 20; Asset Turnover (annual sales/total assets) - World Class Target 3.33; Productivity (annual sales/employee) - World Class Target $200K. Jon Sutter, formerly from Boeing and a student of the Japanese was instrumental in developing these metrics used with Boeing Suppliers. They are applicable to any business. Department level metrics are Quality, Cost, Delivery, Safety, and Morale. At Boeing we adopted these metrics given to us by the Union of Japanese Scientists and Engineers. Metrics at the Gemba (where the work is done level) come from Shingijutsu Japan and are usually space, inventory, lead time, quality defects, productivity, setup, cycle time and others. Top level metrics using a four square Hoshin chart are deployed using Management by Policy (Hoshin Kanri).
This all speaks to a different philosophy about Price, Cost and Profit. The traditional North American view is Price = Cost + Profit. In this equation Price is a dependent variable and Profit is said to be a God given right. In the Lean view Profit = Price - Cost. Price is an independent variable determined by the customer and Profit is a privilege earned by reducing costs through continuous improvement. Leaders of Lean organizations make Kaizen their weapon and use it against competitors and don't whine about a level playing field.
10. You have worked with Shingijutsu at Boeing. Can you give us an outline of their method of introducing Kaikaku (radical change) at Boeing and how should companies wishing to achieve world class balance Kaikaku with Kaizen?
I am a student of Yoshiki Iwata (who has passed away) and Chihiro Nakao who teach that radical change comes with the implementation of Lean which means the synergy of Kaizen ultimately dismantles the old and recreates the new over a long period of time. It is a concept not understood in North America because we are impatient. The process starts with point to point improvements, then connected, then expanded and then cubed in terms of flow and organizational structure. It is "pick and shovel" work, not particularly fashionable or flashy but substantive and not well understood. Organizations "dabble" in the process. The real benefits are known by leaders who understand that the significant, meaningful improvements come from the basic understanding of flow - they don't originate in the board room. Mr. Nakao identifies 7 flows: The flow of people, information, equipment, engineering, raw materials, work in process and finished goods. I've identified what I think are the seven flows of medicine: The flow of patients, providers, medications, supplies, information, equipment, instruments. The Kaikaku part of the Lean process then takes place when you assemble a team of people who do the work to tackle in one week the seven flows as part of a redesign or a radical surgery of a proposed facility layout proposed by catalog engineers or brick and mortar architects. Healthcare architects of my experience design a $40 million dollar hospital with $20 million dollars worth of waiting area in which the product (the patients) will spend the majority of their time not generating value for the hospital but written complaints.
11. How important are the Ten Lesson to North American companies, given their focus on short-term results, the rise of new economies (China), and their diminishing competitiveness?
Unfortunately it probably means that if you are still thinking about implementing Lean today it is too late. A few Healthcare organizations in America are moving forward because they have decisive leadership. The overall list of successful companies in Lean Thinking by Womack and Jones is a short list as is the list in Good to Great by Jim Collins. It is simply the case of who are you betting on, the tortoise or the rabbit - most bets are on the rabbit. Lean is not glamorous. You will not win American Idol implementing it. To paraphrase Dr. Deming: "it is not for the timid or fainthearted" and sadly "management does not really know what to do."