The top 5 reasons why Lean Transformations fail

           

 

When a Lean manufacturing organization wants to have a system like Toyota Production System (TPS), this reminds me of a caterpillar that wants to be a butterfly. Have you experienced cases where you think the transformation of your organization is complete, but part of it still looks like a caterpillar? Having led three Lean Transformations in automotive OEM’s, I did.

 

Above and beyond being a toolset, TPS is an entire management system, the result of a complete transformation. Before making efforts to arrive at this result, better to note some facts: Firstly, transformation is not an improvement but a comprehensive change program. Secondly, 80% of comprehensive change programs fail, and Lean is no exception. Last but not least, we know the reasons for failure from the beginning: Resistance to change! 

We can measure failure by making a comparison to a meaningful reference point. The opinion survey is a method that takes employee opinion as a reference point. Another approach is to learn from companies that failed because of resistance to change. In my line of work, I always advise evaluating change programs by comparison with best practices.

A fundamental difference between TPS and Lean: Human focus. 

                                        

Toyota has developed TPS through decades of extensive improvement activity. When TPS attracted the attention of the western world in the 1980s, it was translated as Lean. Since then, Lean and TPS continued to develop in different directions.

Today, experts define Lean as generating more value for customers using fewer resources. Well-formulated techniques are currently being used worldwide to create a seamless value stream by eliminating waste. These techniques are being marketed as on-the-shelf sets of Lean tools and systems for profit maximization by productivity improvement. 

 

Profit is one of the points that Lean and TPS differ in methodology, although they seem to have similar goals. A definition to express the purpose of using Lean tools like "elimination of waste and improvement of value generated" is ambiguous. This statement does not include a clue for related management behavior, whether employees are also tools to be used for this purpose or not. TPS fills this gap by emphasizing "respect" as a substantial value and "the well being of employees” as a primary goal. It is not difficult to guess what sort of behaviors follow. I am one of those who believe, all behaviors in an organization are predictable by a proper analysis of cultural components at values/principles level.

 

For organizations under change, Toyota’s transformation is full of lessons to learn. However, it's uncopiable taking the time it takes and the culture needed into account. A much more effective approach would be to look at how Toyota manages the transformation in its overseas operations, each having a unique combination of culture and employee profile.  I experienced one of these transformations during 16 years in Toyota and know how it looks from inside:

 

   

                           

 The first time TPS became known in the western world was in 1984 with the establishment of NUMMI, a joint venture with GM. Toyota designated its Takaoka plant as the mother plant for supporting this operation. Takaoka continued mother plant function for Canada plant TMMC which launched in 1988.

 

When I started working at Takaoka in 1992 to launch a new plant, TMMT in Turkey, there was already a remarkable level of know-how accumulated on how to disseminate TPS in different cultures. Takaoka employees had learned a lot from countless interactions with employees in overseas operations. I could feel the strong sense of "how to give the know-how so that people who take it accept easily." 

Once a team leader told me, “If you want to think about money, better focus on cost rather than on profit and cost is only a result, not a definitive target." For the receiver, this message is evident at first glance.  On giver side, however, it has a deeper meaning:  “Thinking over things that you can not control is a waste. Cost is an unlimited area where you can use your potential endlessly.” Toyota way of thinking lies behind the message: "What we want from employees is to bring their potential into life. How should we act to convince them that we will support them as long as they move in this direction?"

 

5 top mistakes drift organizations apart from this way of thinking and damage Lean transformations:

1. Undermining the importance of values

 

A vision statement shows where an organization wants to be, and the mission states what it does to get there. These statements help to align the efforts of employees towards common goals. The information missing there, what the organization believes in, is given in the value statement. It functions as a standard to guide, evaluate, and develop employee behaviors. There are many organizations with a strong vision and mission but weak values statements. Undermining the importance of values is a big mistake.

 

People tend to make their decisions based on their values. When they come together in an organization, they make different judgments simply because they have different values.  Different judgments drive different behavior, resulting in conflicts. Conflicts as behaviors and tendency to avoid conflicts as attitudes together produce the most significant waste in organizations: Waste of potential.

 

Defining this waste as "resistance to change," wrongly directs our attention to mismatch between what employees do and what we ask them to do. As a result, the real problem stays unnoticed: Mismatch between personal values of employees and what we ask them to do. Lean tools can not eliminate this kind of a waste because it is difficult to visualize, and visualization is only possible by measuring the distance to a reference point. Many organizations stay unaware of the size of this waste because there are no clearly defined and shared values that are taken as a reference point to assess behaviors.  

Just like its employees do, an organization makes its decisions based on what it believes (its values). Therefore, seeking consensus on shared values is crucial.

 

Huge training budgets for general personal development do not help unless their contents are deliberately customized to improve understanding of company-specific values. Performance evaluation and promotion schemes create only confusion when not based on company values as guidelines. Chaos thus spreads out up to decision making processes at frontline operations. 

Neglecting this fact not only produces a sense of loss of direction in employees, but it overloads managers with low-level decision making escalated to them. Undermining values creates a culture where employees perceive Lean Principles as rules to obey, rather than values that should be referred to. Rules help in predefined standard conditions. In cases were things happen outside this standard zone; however,  employees need a compass in their own hands to find the right direction. Instant reaction to abnormalities and innovative thinking are good examples of such cases.

 

Agility in information processing and decision making requires such rapid alignment. What is important here is not to classify the information and forward it to the responsible, but to make information accessible to employees who want to take the solution responsibility before a problem grows. Organizations speed up when employees feel accountable to act following shared values. 

 

Values, principles, or guiding principles. Whatever they are named, all are about behavioral codes that you need to create something that you can later call "the right behavior." Are you looking for an excellent point to start? You can start by comparing the Lean principles you are currently trying to promote and your organizational values like openness, integrity, boldness, passion, and fun.

2.  Overconfidence in Lean Thinking

 

Of course, we all can think about every aspect of Lean in the way it is introduced to us. However, the strong assertion that all of us consequently derive the same conclusions is a mistake because we think in different ways. Our thinking mechanism works under the influence of many factors like desires, beliefs, biases, and thinking errors. A comparison of mind with a computer shows that our thinking mechanism itself is not Lean at all:

A better wording for Lean Thinking would, therefore, be Rational Thinking which is an innate capacity of humans and is a skill that we can develop. Toyota way of developing rational thinking follows the path of raising awareness on factors hindering critical and creative thinking and encouraging trials and errors to learn. Mentoring at all levels is voluntarily done to settle rational thinking using purposeful principles. Some of them are; Genchi-Genbutsu, respect for people, trust, decide based on facts, try before implementing, long term thinking, and challenge. Behavior that naturally develops has two commonalities: cooperation and speed.

 

This development process takes excellent support from the culture at Toyota. Developing rational thinking in organizations where this culture is still weak requires a different approach. This fact motivated me to design Problems and Human Workshop where we analyze each factor that affects the way we think. Together with the participants, we seek consensus on what the rational way of thinking can be, based on shared values. Reactions I receive from organizations after this thinking exercise are similar. Participants say that they catch themselves, thanks to their increased awareness, right when such a factor is acting on their brain.

 

People indeed tend to make decisions based on their values rather than rational thinking. Rational thinking, however, is the only way to build consensus on shared values. Unchain your thinking to understand the link, and then you will be able to teach it.

 

3. Subjective evaluation of behaviors

First management theories emerged at times when Behavioral Psychology prevailed. The idea was that people acquire behaviors through conditioning. It was after the 1950s that Cognitive Psychology developed and showed the importance of learning, reasoning, and perception over decision-making.

 

This perspective encourages us to think that beliefs or values are the results of cognitive processes too, even they might have been once pushed to the subconscious level. We have thus the ability to think over them and question why we believe in different values.

Assessing the behavior of an employee based on subjective personal values of a superior is a mistake. Managers play an essential role in diffusing a culture that evaluates behaviors regarding shared values. Such a culture grows two priceless values, respect, and trust, which all employees need to realize their potentials without worrying about if their efforts will be a waste.

 

4. Systems without a soul

 

Data collection and rational thinking is a long way of decision making, especially in standardized situations. Instead, we build systems that show employees what to do in which case. From then on, systems drive behavior.

 

We all talk about realizing employee potential.  Are we all aware of the barriers we have to tackle?

 

Every people wants to make their own decisions on cases concerning them. When employees commit to company goals, their job becomes something that concerns them. If additionally, they have developed rational thinking, they begin to question existing systems. These are precisely the attributes required to transform potential into performance. They are not cost-free, however. To build their integrity, such employees need to believe that the behavior driven by existing systems is right!

 

Existing systems can pass this test if they have been built over common values through rational thinking. The same reasoning is capable of showing the link between the systems and the values, convincingly.

If your systems struggle to respond to “why?” questions in a human-like manner, then you have a problem. Unfortunately, you can not fill your systems with values because there is no bridge between them. The solution is to link your systems to values through the thinking process.

 

Rapid company growth requires rapid system growth at the same time. Taking care of behaviors and values is seen as unnecessary during growth because everybody is so busy. However, the cost of taking care increases in time, as the culture grows in an uncontrolled direction. Perhaps, the situation is similar to what an Aboriginal Chief said after galloping their horses for a long time:

 

“We galloped so fast that our souls were left behind. Now, we have to wait for them.”

 

 

5. Inability to grow leaders.

 

Research on Lean gained momentum after Toyota established its first wholly-owned plant in the US. General lessons-learned indicate one fact: Ownership of leaders is the key to success and development of the Lean Culture falls into decay if the leader leaves the company. I have seen companies, through my consulting experience, that can not sustain the improvements achieved by Lean over a long time. A typical reason is that senior management does not digest Lean Thinking and let the middle management implement Lean by taking external consultancy. These two examples would lead us to the conclusion that Lean should be top-down. Is it correct?

 

Well, in a way, yes and no!

 

Some leaders apply principles as rules, build systems according to the rules, and assess behaviors according to system output. They may be successful, especially if they are good at human relations. On the other hand, these attributes are not standard for all employees; therefore, leave of such a leader creates a big gap. This gap is the absence of "learning to teach" and "willing to teach."

                  

Some leaders indeed emerge by themselves. In operations like Lean Manufacturing, however, the human is a dominant factor and developing leaders at all levels is the key to speed and sustainability. If you want to build your leaders by yourself, make sure that they will be backed up with consistent behaviors:

 

  • Provide them reliable values that will guide them forever

  • Help them to notice the barriers in front of their rational thinking

  • Teach them the right mindset: how to assess behaviors as right and wrong based on values

  • Guide them to build systems in harmony with human nature in a way that will not cause resistance in the future.

 

Levent Turk, August 19, 2019

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