The Challenge of Lean Management

10th Lean Manufacturing ConferenceWroclaw, Poland

James P. Womack, Chairman, Lean Enterprise Institute

June 22-23, 2010

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What Does Lean Need Now?

• To think about the type of manage-ment system we need in order to make lean deployment sustainable.

• A good place to start: Comparing modern with lean management.

(As we do this, please ask yourself what type of management system your organization has and what type it needs for a lean transformation.)

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Two Choices for Managers:

• Modern management

(The Alfred Sloan School of Management)

versus

• Lean management

(The Eiji Toyoda Gemba School of Management)

Let’s perform a side-by-side comparison of the principles of these schools.

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Modern vs. Lean Management

• Primary focus on vertical functions and departments, as mechanisms of optimization and control.

• Primary focus on horizontal flow of value across organizational units to the customer.

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Modern vs. Lean Management• Clear grants of managerial authority by

leaders of organizational units (vertical delegation).

• Clear grants of managerial responsibility to solve problems (especially cross-functional, horizontal problems) over which managers have no authority, within vertical organizations (including Toyota.)

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Modern vs. Lean Management

• Line managers judged on end-of-the-period results for their span of control, increasingly financial in recent times.

• Line managers judged on the state of their process, with rapid feedback loops with next-level management.

“If the process is right the results will be right. Manage by process instead of results.”

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Modern vs. Lean Management• Planning & direction from top down, with

bosses giving answers: Leads to compliance focus: “Make your plan or explain the

variances.”

• Planning & direction in circular feed-back loops, with bosses asking questions:

“What do you think the important issue is? Is there a problem?”

“What’s the root cause of the problem?”

“What do you think the potential solutions (countermeasures) are?”

“What countermeasure do you think we should select?”

“Who must do what when where to test this countermeasure?”

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Modern vs. Lean Management

• Conviction from the top that a good plan, once properly implemented, produces the desired results. (Justifying the compliance focus.)

• Conviction that all plans are experiments and can only be evaluated through the scientific method in the form of PDCA, followed by appropriate countermeasures.

“Planning is invaluable; plans rapidly become worthless.”

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Modern vs. Lean Management

• Generalist line mangers, rotated frequently with weak process knowledge, supported by deeply knowledgeable technical staffs (including finance.)

• Line mangers on extended assignments, with deep process knowledge, lacking the need for extensive staff support.

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Modern vs. Lean Management

• Managers developed through formal education, often ex-company (e.g., management schools, consulting firms) or sink-or-swim rotations.

• Managers developed through in-company gemba learning through repetitive A3 analysis embedding PDCA, led by mentors throughout their careers.

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Modern vs. Lean Management

• Decisions made far from the point of value creation, by analyzing data. (“Conference room management.”)

• Decisions made at the point of value creation, by converting data into facts (“Go see, ask why, show respect” gemba management.)

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Modern vs. Lean Management

• Problem solving and improvement conducted by staffs, often through programs.

• Problem solving and improvement conducted by line managers, often responsible for cross-function teams, with staffs reserved for unique technical problems.

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Modern vs. Lean Management

• Standardization (if any) of activities conducted by staffs, often with little gemba interaction and little auditing.

• Standardization of (all) activities conducted by line managers in collaboration with work teams, with frequent auditing by directly observing actual work not just work standards.

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Modern vs. Lean Management• “Go fast” as a general mandate:

“Jump to solutions” (with the consequence of going slow through the complete cycle of product & process development, launch & fulfillment.)

• “Go slow” as a general mandate:

“Start with the problem” and consider many potential counter-measures in parallel (with higher costs & more time at the beginning, followed by lower costs, less time & happier customers at the end.)

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Modern vs. Lean Management

• Strong emphasis on the vertical flow of authority, looking upward toward the CEO.

Performance usually evaluated at single points.

• Strong emphasis on the horizontal flow of value, looking toward customers.

Performance evaluated in terms of optimizing the whole process (all of the points).

Control reconciled with flexibility!

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Conclusion from This Comparison

• Modern management isn’t conducive to creating sustainable lean enterprises.

• We need to transition to lean management (or something better!) through PDCA.

• How can we you do this?

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What Is the Value-CreatingWork of Management?• Gaining agreement across the

organization on what’s important for customers and the enterprise (purpose), through strategy deployment (a process).

• Deploying on important strategy deployment initiatives, solving problems (every day), & evaluating proposals from lower levels, with A3 analysis (a process).

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What Is The Value-Creating Work of Management?• Creating basic stability throughout the

organization, by means of standardized work with standardized management (a process).

• Educating the next generation of managers, by enaging direct reports in endless cycles of strategy deployment, A3 analysis, & standardized management (a process!)

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Methods of Lean Management• To employ at different levels:

Strategy deployment – to align and engage employees on the few critical issues – the value-creating work of top management in particular.

Note: The transition from modern to lean management might be an objective identified by strategy deployment!

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Strategy Deployment X-Matrix

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Methods of Lean ManagementA3 analysis – to deploy top-level mandates,

solve daily problems as they arise, and (very important) evaluate proposals from lower levels of the organization – the value- creating work of mid-level management in particular.

Never a solo assignment; always done in vertical and horizontal dialogue. (“An excuse to have a constructive conversation about where you are and where you need to go.”)

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Methods of Lean Management

Standardized management of standardized work with continuous kaizen – to stabilize the organization and permit steady improvement – the value-creating work of front-line management in particular.

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Methods of Lean Management

• Educating the next level of management to create lean managers through continuing dialogue – the value-creating work of every level of management every day!

• Indeed, the most important value-creating work of managers?

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In the Absence of Lean Methods

• The predominant “work” of management is re-work – work- arounds for things gone wrong.

• In other words, most of the “work” of modern managers is actually waste!

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An A3 Project for Your Management Team • Analyze your organization’s

management system.

• Characterize its current condition.

• Determine the ways it hinders lean deployment. (The Gap.)

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An A3 Project for Your Management Team

• Identify the most promising countermeasures. (The Plan.)

• Test these countermeasures. (The Do.)

• Assess the results. (The Check/Reflect.)

• Make changes as necessary. (The Act/Adjust.)