In the mid-80s, I learned about the practice of just in time (JIT) from the best practices at Japanese companies. To me, JIT focused on responsiveness to customer needs by reducing waste and streamlining processes. It gave a new name to the Toyota Production System (TPS) and a set of good tools. However, I feel that the word lean undid all of that. Look what our economy has become: We are lean and we are sick.
We credit Toyota for lean principles, but Toyota does not call its system lean. It is called TPS. In fact, TPS is a system to strive for perfection in everything. It means doing the right things in design, production, sales, management and marketing-every facet of the business.
Looking back at the book, “The Machine that Changed the World,” I do not think U.S. manufacturers implemented lean in a way that benefited them long term. As a result, they are closing factory after factory, or asking for bailout money.
I am concerned because I see companies continually focusing on lean and then getting excited to see something moving in operations, almost in a kamikaze way. Lean has become more of displaying numbers, reorganizing the floor and such, but still most businesses shrink as there is little focus on customers and not much impact on growth. As a result, employees deploying lean will no longer be around. We don’t hear such horror stories from the originator of these concepts-Toyota.
How could our consultants, thought leaders and organizations not see it coming? Corporations continually must focus on profitable growth and creating opportunities first and doing everything as close to perfect in operations. We must raise awareness of global competition and ask our people to raise the performance bar without giving it some fancy, misleading or complicated name. Call it what it is, so it does not need additional training. If the concepts are not simple, we must question the intent behind the principles.
I believe that lean has created confusion and, in hindsight, was unnecessary because JIT already existed. I see too many big name schools used for some mediocre methodologies and executives jumping on the bandwagon seeking bliss, eyes closed, looking for the flight, and, of course, the obvious outcome-the fall.
We must question every methodology for its value, return on investment, employee perceptions, customer delights, corporate growth and new opportunities. We must question scorecards, lean, Six Sigma, innovation, business process management, management systems, and compensation methods for meeting their intents and helping companies do better in achieving profitable growth. We must think through any methodology for its short-term and long-term impact before deploying it in corporations.
Corporations cannot survive by managing for cost because no matter what we do, there will always be a lower-cost option. We should be working toward higher wages, not lower wages.
When Bob Galvin started Six Sigma, he started it concurrently across the board-in the CEO’s office, legal, accounting and manufacturing.
Corporations must be re-engineered fast with broad participation, not in boardrooms or in tall towers. Employees can bail out corporations much better than any amount of money. Leadership must concentrate on formulating strategy for profitable growth for all stakeholders, including employees.
I bet not only will the solutions and execution be the best, but if sacrifice is needed, it will be offered willingly rather than demanded. It will be teamwork of all employees, rather than just a responsibility of the leadership team.
We should use various tools for achieving perfection and reducing waste, but avoid big name programs. Running a corporation simply for Wall Street accolades will bring it to the ground. Wall Street frequently publishes the obituary of these corporations.