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.
Managing Times | Q1.11
(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
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
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.
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
Managing Times | Q1.11