In co-writing the book “Toyota Culture” with Jeff Liker, Michael Hoseus had the opportunity to travel to many parts of the world and come into contact with many organizations working on improving through “Lean Management”. Many problems and misunderstandings exist regarding what it takes to be a Lean organization. This article reviews the most common and how to correct them.
Many organizations view lean as a program to eliminate waste and quickly cut costs expecting the accounting results to appear at the bottom line this month. Operations are “leaned out” and the assumption is that if well-trained experts properly implement the tools, the efficiency gains will be self-sustaining.
These companies are impatient to see the results and too often lay people off as a result of the process improvement. Laying people off is not an objective of the Toyota Production System (TPS) and a key component is patient expectation that the fruits of daily continuous improvement will develop the associates and operation improvements will result over time. While process improvement improves quality, reduces waste and increases productive throughput, the impatient company misses the very essence of the Toyota Way.
The Toyota Production System (TPS) aims to use the management tools to identify and intentionally expose problems in order to engage the associates in solving them. These two points are usually missed in the common “Lean Implementation” where Leadership delegates Lean to a set of champions or “belts” and then asks them to select projects and report cost savings. Leadership goes about business as usual while the champions are out cutting costs. The problem is that many times these tools are used to reduce people which results in losing a valuable resource to those that leave and the trust of those that stay. Leaders asking for the number of people layed off is an old technique of the traditional operation and indicates that company leadership either doesn’t understand or need a lean organization. Meanwhile, the improvements that were made in such an environment do not usually last because they were not systemic and did not include the people doing the work.
The approach that has worked for Toyota is much more broad and holistic. It starts with a philosophy that the strength of the company is based on continuous process improvement and respect for people. Measurement of success is multidimensional across the success of the enterprise and not just at specific projects with problems. Solving a specific problem is expected and if the company leader stops there, they have missed the essence of the TPS. At every level, the results the TPS Leadership looks for includes the answer to the question: what did the team members learn and did they develop their skills by solving this problem? Over time at Toyota this is the way “culture” has developed toward teamwork and process improvement. As a result, permanent sustainment has been achieved.
There are a broad set of methods available for improvement but the unit of improvement is primarily at the level of the work group led by a group leader. That is where the work process takes place. The group leader is supported by hourly-team leaders who facilitate kaizen at the team-member level. Improvement is not focused only on large lean projects, but by many small improvements led by team members so there is strong ownership of the process and the results. Over time, continuous improvement by identifying and solving problems develops the employee and strengthens the company toward sustaining the improvements and becoming a learning organization. Many companies look only for the results of projects as a return of the cost of the project and pay no attention to the development of the associates. Only Leadership who practice both goals will have a successful Lean Transformation.
A vital, yet commonly missed component of a Lean Transformation is a strong Human Resources Department that is given the proper role in a Lean organization and then has the knowledge and experience to perform that role. The Lean Transformation responsibility in many companies is often assigned to a lean champion in operations or engineering to implement the tools of lean six sigma. The lean champion must use people as the team for solving the problems but generally assumes no responsibility nor is aware of the need to develop the skills of the team members. Such skills as teambuilding, conflict management, supervision or project management are just as important to success in the workplace as the analytical and statistical tools of lean and six sigma. Many times HR isn’t even included in the lean implementation model. HR in the traditional company manages training program budgets, maintains personnel records, manages the hiring processes and maintains the company benefits system. In such traditional companies, the work of HR is not designed to develop the link between training associates and raising skill levels by work process improvement. The Leadership of a true Lean organization understands that Lean depends on Leaders who can build purpose, trust and partnership in the organization and who understand the lean processes and will be the coaches of the “army of problem solvers.” This philosophy dramatically changes the role of HR as well as the culture of the company. Why? HR is focused on developing the human resources by raising knowledge and skills to new levels. Engineering, operations and accounting focus on the fixed assets of the company and the return on investment.
Human Resources then become the “keepers of the values” of the organization, owning the processes that will make “continuous improvement and respect for people” a reality. This process starts with hiring (and promoting) the right people who “fit” the lean organization. People who share the same values, can solve problems, work in a team, and in the case of leaders, coach others. After selection, these processes continue with training and development, daily engagement with employees, evaluation, compensation and communication. The essence of the TPS is first developing the skills of the associate for improving the process and second, achieving the actual ROI results of the improvement. This is a difficult and sometimes impossible shift for many companies. It is a complete turnaround in management practice as the traditional experience treats the human participation in the enterprise as a cost and not as a partnership worthy of investment.
Lean Transformation is not an easy thing. But once you get started and can see the power of people at work, it is contagious. People want to be a part of a larger vision and purpose and they want to be involved. Everyone wants to contribute their skills and abilities and to be productive. We just have to lead and structure the organization in such a way that gives them that opportunity.
Michael Hoseus, Center for Quality People and Organizations
Cash Powell, Center for Competitive Change, University of Dayton