During both prosperous and difficult times, successful businesses naturally look for new ways to improve performance. However, in recent years, as the world economy suffered through one of the worst recessions in history, many companies turned in droves to Lean and other variations of continuous improvement programs to rescue their sagging businesses. But, did they really learn during this process?
Despite the enormous popularity of Lean, the track record for successful implementation of the methodology is spotty at best. Some recent studies say that failure rates for Lean programs range between 50 percent and 95 percent. To analyze this level of performance from a Lean, problem-solving perspective, continuous improvement experts should be asking: Why do so many companies fail to achieve Lean success?
While the causes are numerous and extensive, I will focus on one of the most significant reasons: failure to understand the theories and concepts of Lean and their relationship to the entire business.
What Is In a Name?
First of all, there is the name itself. The commonly used term Lean manufacturing perhaps could be the worst-coined phrase for this type of continuous improvement methodology. It automatically emphasizes two things that conjure limited expectations of the functionality of this business methodology: Lean and manufacturing.
The dictionary definition of the word lean (lacking in richness, fullness, quantity; poor) brings up unfortunate connotations. When mentioned in business circles, Lean is often associated with trimming down, reducing or (most notably during the Great Recession) lack of sales or work. Thus, when the word Lean is spoken, most people immediately think of doing more work with fewer people. Because no one prefers unemployment to a stable job, figurative walls are automatically erected to defend against the inevitable layoff.
Companies considering Lean also need to understand that manufacturing is a woefully inaccurate term to describe the full uses of Lean concepts. Lean is a business methodology, not simply a manufacturing tool. It requires complete and total commitment from the highest executive levels and must cascade down to all departments and throughout all levels of business.
Lean does involve manufacturing, of course, but it also directly affects sales, customer service, human resources, research and design, finance, administration, purchasing, scheduling and building maintenance. Failure to understand how improvements (or lack thereof) made in one area will affect another can result in transformation failure. If your manufacturing team improves processing time from five days to one day, but your “pre-production” team still requires 25 days to get the order to manufacturing, you haven’t gained much on the competition.
‘Flavor of the Month’ Resistance
Given that so many companies have misused the Lean approach, resistance is to be expected. This push-back also creates barriers to the change that needs to take place for an effective Lean transformation. Meanwhile, the understandably skeptical staff considers the methodology to be just another flavor-of-the- month that will eventually be abandoned.
But how does a Lean transformation become another flavor of the month? Businesses in all sectors are jumping on Lean. Some truly do the research and understand what they are getting into – usually realizing it is far more than they had foreseen. However, far too many believe that simply applying the tools (5S, Kaizen, value stream mapping and so on) will get them on the road to quick success. They do not take the time to learn of the theories and concepts needed to sustain the transformation. They do not review those theories and concepts thoroughly and align the business to the methodology.
Here lies an additional level of cause. As flavor-of-the-month management is so readily displayed in business today, the faith required for a Lean transformation often does not exist. Too many businesses initiate change, only to fall away when they cannot overcome this barrier.
Arguably, there are several solutions to this lack of faith in Lean. For instance, businesses committing to Lean transformation should not use the time benefits gained from Lean as an excuse to pile more work onto their employees. Simply adding more work to the pile only lowers productivity, morale, and both the physical and mental health of the staff. Taking the time to work with the employee, learning to identify necessary tasks, removing unnecessary work and discovering more available time to do more valuable work (without increasing the overall workload) will result in better understanding between employee and manager, more trust, communication, and overall employee performance.
Nor can a business use Lean as a tool for headcount reduction. Certainly, layoffs made headlines across the globe during the Great Recession, including some companies touting Lean. Many companies used the downturn in business as the excuse for layoffs, claiming they were not Lean-related, but that is like claiming it is not your fault the house burned down while holding the empty gas can and the matches.
The single most significant key to a Lean implementation is that all parts of the business must make the transformation through total commitment to Lean theories, concepts and tools. For example, if your finance team is still using standard cost accounting, you will not see the financial gain of implementing Lean. If finance has no desire to change, the executive level must step in and drive change.
When Lean is implemented to reduce staff sizes or add work without eliminating waste, or is focused too heavily on manufacturing, the transformation is bound to fail. Some improvements will be made, but they will be neither sustainable nor, more importantly, continuously improved upon.
Newtonian laws state that every action has an equal and opposite reaction – it is a simple theory. The difficulty lies in understanding the reaction, preparing for the reaction and working with the reaction. Failure to understand the relationship that a Lean transformation has with the entire business will cause an unexpected, and unwanted, result.