ACCELERATEDLEARNING Why Lean Programs Fail By Joe Panebianco, Director, LeanSigma Institute The lure of a continuous improvement Joe Panebianco Director, LeanSigma Institute –––––––––––––––––––––––––––––––––– Unfortunately, very few continuous improvement programs succeed in transforming the company. ACCELERATED LEARNING –––––––––––––––––––––––––––––––––– 20 Managing Times | Q1.11 www.managingtimes.com (CI) program is irresistible… When done right, such programs can deliver revenue growth and income three to five times the competition. Eliminating waste and excess inventory can add millions of dollars in profit to an organization’s bottom line. There is an added benefit of enhancing a company’s public image: “Continuous improvement” and “lean initiatives” have become such buzzwords over the past 15 years, that companies noted for using these techniques are frequently perceived as being cutting edge and resource savvy. And with a weakened economy and uncertain projections for recovery, many manufacturing companies are looking to CI techniques as a way to remain profitable and weather a rough period. As a result, many companies—almost 67% according to an Industry Week survey— operate some type of continuous improvement program. Do continuous improvement programs really play such a critical role in the success of an enterprise? Some companies that implement CI programs fail to gain traction and quickly abandon their improvement efforts. More commonly, a company’s continuous improvement program will deliver some type of benefit—usually short-term— to the organization. Unfortunately, very few CI programs succeed in transforming the company. Keith Yeater, a veteran TBM consultant, explains, “Lean manufacturing and continuous improvement are as much a cultural transformation as an operational adjustment. In order for the transformation to occur, the entire organization must understand the reasoning behind the change… Without this understanding, people struggle to drive, let alone support and sustain, the transformation.” Implementing a truly successful continuous improvement program requires transforming an organization’s mindset to one that embraces a culture of continual selfexamination, review, and modification. This type of change is difficult to implement because it is transformational: it requires eliminating old ways of thinking, developing and reinforcing new behaviors, and, simply put, is scary. It is human nature to fear change because change requires us to move out of our comfort zones, try new things, and enter unknown territories. For senior management teams, this type of transformation can be particularly frightening because they are stewards of the organization, responsible for a company’s future, its reputation in the marketplace, and the welfare of its employees. Embarking on this type of transformation journey without a guarantee of complete success is daunting for most companies. So what is holding back potential CI programs? How can an organization take lean to the next level? What are the hurdles that have to be cleared in order to maximize the impact of a CI program? There are as many different answers to these questions as there are continuous improvement approaches. Like CI programs themselves, the problems that plague these initiatives and the reasons why they are susceptible to failure are many and varied. However, when you talk to experts who have spent their careers advising companies on cultural transformations, several common themes emerge. Though the reasons why a given program fails to yield significant results or gain traction are unique to that program, the primary obstacles to success can be classified under the following problem areas: 1. Lack of Leadership. Assimilating a continuous improvement program into an organization’s culture requires large-scale, transformational change. Many companies think that by rolling out a CI program to its employees and throwing in a few incentives, such programs will automatically take root and employee behaviors will change over night. This is not the case. CI programs require a culture shift, and changes of that magnitude need to be strongly led, with senior management fully committed to the change and modeling the required behaviors. Without executive leadership continually reinforcing the new CI culture, employees will revert to old habits. “Without clear direction and leadership, the change will falter,” explains senior trainer and design specialist Gary Rascoe. 2. Lack of Focus. Another common reason why CI transformations fail to take hold is a lack of focus. Senior management, as well as the entire organization, may think they are committed to making lean work, but if management cannot articulate a clear vision of why CI is important, or the organization has other major initiatives going on at the same time, the undertaking will fail. Likewise, starting a continuous improvement journey, then temporarily putting things on hold until other conditions change, sends the message that management is not clearly focused on the end goal. 3. Insufficient Resources. Allocating the appropriate resources to a project may seem like Management 101, but it is another area where organizations frequently stumble and fall short on their path to continuous improvement. Ken Koenemann, managing director of consumer products at TBM, advises clients, “If you can’t resource an metric is established, companies forget to question whether the metric is necessary or if it ties to the corporate initiatives in any meaningful way. 5. Underestimating the size of the task. activity sufficiently, then change the scope. Take two bites rather than one, or if that’s not possible, fall back and regroup until you have the firepower to succeed. If you don’t do this…the organization concludes that the improvement methodology doesn’t work.” Questioning the effectiveness of lean tools and continuous improvement programs has been a hot topic in the manufacturing world lately. However, any program will be doomed to failure if it is not given the resources to succeed. 4. KPIs don’t link to CI and Corporate Initiatives. Again, you may be wondering how an organization could make this mistake. But in a data-driven world, companies overwhelmingly find themselves tracking a multitude of metrics across multiple product lines and in various stages of the manufacturing process. “Clear measures and clear results, ultimately tied properly to cash flow and profitability, are necessary to sustain lean transformation,” confirms TBM Executive Vice President Bill Schwartz. How to determine the relevant key product indicators, and then connect those indicators in a meaningful way to the organization’s CI initiative, is the challenge. It is not unusual to walk into a client and find the organization tracking irrelevant metrics. However, once a Lastly, continuous improvement initiatives often fail because the size of the task is grossly underestimated when it is first undertaken. This is particularly true if a company has launched its CI program in response to growing market or industry pressures. In such cases, these organizations are implementing CI as a “Hail Mary Pass”—a quick fix to a problem that is plaguing their processes. Such companies will have a tendency to declare victory too soon—celebrating success at the first signs of improvements—and thinking they have mastered the fine points of a CI program, they may cutback on education and advice too soon and fall back into their old ways without even realizing it. -----------------------------------------------------Joe Panebianco is a senior management consultant and director and team leader of the TBM LeanSigma Institute. He is a former operations manager with broad manufacturing and business experience and is sought after for his team-building and leadership skills and his ability to help clients visualize and develop transformational plans. Contact Joe at [email protected] or follow his blog at www.tbmcg.com/blog. Managing Times | Q1.11 www.managingtimes.com 21