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Every leader leading lean transformation starts off as an apprentice, learning along the way through mistakes and experiments

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Management Strategies The CEO needs to be good with lean strategies

Jun 18, 2018

Lean is a whole strategy and not simply a programme to save on cost. The article highlights the importance and benefits of CEOs having a good knowledge of lean implementation so as to help the organisation eliminate waste and bring about maximum quality in its functioning and production.

Give lean implementation the status of your company’s number one strategic intent, lead it from the top and see it succeed! A CEO with deep commitment to lean thinking and lean practice stands the best chance of leading his organisation to becoming ‘truly lean’ and explore even greater possibilities. The CEOs, who have developed traditional management styles and interact with traditional management ideas, will succumb to trying them and struggle with successful lean implementation. Lean is a complete strategy and not merely a cost reduction or quality improvement program. Managements that treat this as a mere shop floor improvement program tend to delegate this work to their next level and kill the intent. If a CEO is not able to lead lean transformation for any reason, then he should delegate it to the next best leader, who should be so empowered that the buck should stop with him in respect of every decision; irrespective of whether it pertains to marketing, purchase, quality, people or production.

Follow the principle of philosophy

Every leader leading lean transformation starts off as an apprentice, learning along the way through mistakes and experiments. He needs to have a strong vision of what the future can be, with successful lean implementation, and that vision will help him stay focused. Most people fail with the first principle itself, which is the principle of philosophy – “Base your management decisions on long-term thinking, even at the expense of short-term gains.” This is where almost everybody trips. Dual focus is not possible, as you have to choose one of the two at the time of decision making, and what you decide will be your ticket to success or otherwise.

For example, imagine you receive a large order and are bound to deliver good quality on time. You have got a set of lean processes going, have seen its benefits, and need to keep implementing further steps in the process to advance on the lean journey. But what you do instead is panic and go back to the old traditional thinking and style of managing the execution. Such actions not only kill the effort but set you a long way back. If you are not attentive, this becomes a precedent for your next and every subsequent order. Lean thinking and lean behaviour is opposite to conventional thinking and behaviour. So, implementing lean with traditional thinking never works. Lean requires engaging people with trust right down to the last workman. Traditional hierarchy of command and control does not work well while implementing lean.

What makes lean different?

Eventually, thinking and behaviour in an organisation is influenced by its leaders, who help build the culture. The leaders and their succession must place great emphasis on productivity, workmanship, quality, value, etc. The leadership concept of the organisation must be to build an organisation that will serve customers for a long time, rather than building a product to make money, merge, sell or liquidate at the whims and fancies or incapability of the management. Toyota’s leaders believe that profits are the result of ‘making people who make good products that satisfy customers’. Traditional corporate executives do not see things in this way. They see profits as coming from selling things, whether made good or not, and it doesn’t matter who, and whether or not they satisfy customer requirements and expectations. While profits can be increased through productivity improvement, when it comes to traditional management, the pursuit of productivity is secondary to the pursuit of profits. Production is incidental to money making, and thus, lean garners little interest among corporate executives.

Also, the traditional understanding that lean is only for shop floor is a wrong understanding. Lean implementation starts with the customer demands and does not end with delivery, which means to start with the marketing function and its backend, then work all the way upstream. In companies, where the marketing function is discrete and disconnected to the value adding chain, it is likely to induce more wastes. It’s like a train whose engine goes jerky in a start stop motion, and then there can be no smooth ride, meaning there will be problems in on-time deliveries, quality, inventory issues, shortages and so on. To enable the value delivering value stream to deliver efficiently, it is necessary to set right the philosophy and practices in the company-customer interface called the marketing department. Traditional marketing uses forecasting as a method for projection, but the advanced operations research techniques still produce errors when compared with the market behaviour. These errors induce demand changes in the product mix and quantities, causing failures and errors in delivery, inventory and quality. Lean companies use the actual market consumption in developing the sales rates for seeing into the future, which is more reliable and accurate. CEOs must know that starting their lean journey with Kaizen, TPM or VSM does not get them the lean results because they happen to miss this vital aspect.

Learning lean

How then should a CEO lead the lean journey if he does not know how to? Today, information is available in books and at seminars. However, the best way is to study from a Sensei (a teacher or lean consultant). Lean is best learnt and understood through practice and not by playing simulated games, as these are template. This means, being more on the Gemba or with customer or supplier than being in the ivory tower. Lean leaders are where work involves, developing ideas, experimenting and solving problems.

Every organisation has enormous amounts of waste and what is even more unwanted is the unregulated information that’s flowing. Developing the ability to see this waste, which was never seen before, is how one begins improvements. We do the craziest things in lean that are conventionally unimaginable – like reducing a ten plus hour tool change to nine minutes, ninety days’ commodity raw material inventory to cyclical four days, bringing forty-five-day throughput time down to less than two days, inventory levels down to single day’s consumption, etc. So, improvements will have to be worked on with vision, faith and persistence. The incremental results will build belief and propel your journey.

Conclusion

The potential and scope after learning lean is so great that the organisations, which never made profits before, can now change from the colour red to black in two-three quarters. Hence, developing knowledge of lean enables the CEO to clearly see the wastes that exist, and organise the organisation structure or its value stream and the problem solving activities, thereby, helping the company to remove waste, become productive and grow. If the CEO does not acquaint with lean knowledge, he will not understand the opportunities that exist and will find it difficult to lead the transformational changes to become lean. That’s when the resistance to change will set in. So, the CEO must learn the knowledge of lean to be able to lead change successfully.

The article is authored by Sanjeev Baitmangalkar, Strategy & Lean Management Consultant, Stratmann Consulting

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