Marketplace and Quality Assurance Presentation - Vincent Chirchir
Why Leadership Matters in Lean Transformations
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Dipl. Wirtsch.-Ing. (FH) Metin Begecarslan
Why Leadership Matters
in Lean Transformations
Introduction
Even though Lean Management is considered
to be the leading improvement methodology,
which is getting implemented in all kind of
businesses, different studies show that 65 %-
70 % of the Lean transformations are failing
to get significant or sustainable results. Why
is that happening with having more than
ever people get trained in Lean and other
methodologies? Is there a problem with the
tools? Does Lean only apply to the automotive
industry and every other industry is so special?
We are in the age of Digitalization and Arti
ficial Intelligence and of course this opens
new horizons and possibilities to advance
implementation. But what is the root cause
for such a high percentage of companies not
showing significant or sustainable results when
they are “executing” their “Lean Programs”?
This paper gives a comparison of different
sources of “Why Lean Transformations Fail”
and summarizes the findings to understand
the most critical success factors.
Importance of Lean Management
There are many publications on the effec
tiveness of Lean Management System and
Business Cases, where companies who
have applied Lean in a structured way, have
achieved outstanding results. Western Com
panies have started to analyse and trying to
Why Leadership Matters in Lean Transformations
understand the famous Toyota Production
System (TPS) when Toyota Motor Company
have mastered the first oil crisis in the mid
seventies, with still having increased their
earnings, while the whole world has been
suffering under the oil embargo (Ōno, 1988).
In the same year of the Oil Crisis, in 1973,
Toyota published his first TPS Handbook and
shared with its key suppliers few foundational
lean methods to improve processes. After
it became obvious in the early 1980`s that
Toyota was able to produce its products with
much lower cost and higher Quality, they got
full attention. (Liker, 2004)
In the meantime, Lean Management has be
come a well-known methodology and found
great interest in different industries. According
to a survey from Industry Week and MPI Cen
sus of Manufacturers in 2007, 69,6 % of all
participating plants in North America were
using lean management as their continuous
improvement methodology (MPI Census,
2007).
Having a deeper look at the survey from 2007,
it appears that only 27,5 % of the responding
companies have fully achieved their targets
or achieved significant results, which leaves
72,5 % of the companies with still having gaps
to achieve at least significant results.
If we review the impact of Lean Manufactu
ring as improvement methodology aimed to
Figure 1 – Improvement Methodologies in use in North American plants (MPI Census, 2007)
Figure 2 – Progress made toward achieving world-class
manufacturing status (MPI Census, 2007)
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Why Leadership Matters in Lean Transformations
achieve world-class manufacturing status,
we have a similar picture, as shown in table
1. Only 35,1 % of all companies applying
Lean Manufacturing as their improvement
methodology demonstrated significant pro
gress or have fully achieved their targets
on their journey to become a world-class
manufacturer.
Importance of Lean Leadership
When a company is about to start their Lean
journey, they usually conduct Lean method
trainings like 5S, Value Stream Mapping and
Waste identification and reduction. While
there is nothing wrong with focusing on
eliminating waste, figure 3 shows the TPS
house (Liker, 2004) where waste reduction
is only one of the core elements and it is
obvious that there are more elements to this
successful Production System which need to
come together.
“Many good American companies have res
pect for individuals, and practice kaizen and
other TPS tools. But what is important is
having all the elements together as a system.
It must be practiced every day in a very
consistent manner — not in spurts — in a
concrete way on the shop floor.” Fujio Cho,
Toyota Motor Corporation, President 1999-
2005 (Ledbetter, 2018)
“… those who decide to implement the
Toyota production system must be fully
committed. If you try to adopt only the ‘good
parts’, you’ll fail.” Taiichi Ohno, Architect of
TPS (Shinohara, 1988)
Toyota’s success is based not only on the
excellence of its Lean methods, but mostly
on its ability to develop leaders, teams and
culture, to deploy strategy, to build strong
relationships with suppliers and to create a
learning organization (Liker, 2004). Execution
of all the TPS elements in a consistent manner
– as Fujio Cho and Taiichi Ohno stated above
– needs a change in leadership behaviors.
Daniel T. Jones and James P. Womack have
put Leadership behaviors in the center of
their Lean Transformation Framework from
Figure 3 – The Toyota Production
System House (Liker, 2004)
improvement Methodologies
Lean Manufacturing
Lean and Six Sigma
Total Quality Management
Toyota Production System
Theory of Constraints
Six Sigma
Agile Manufacturing
Other
No Methodologie
18,6 %
5,0 %
7,5 %
1,2 %
1,9 %
3,1 %
5,0 %
5,6 %
52,2 %
no Progress some Progress significant/Full
40,2 %
10,9 %
8,8 %
2,8 %
3,0 %
3,4 %
4,5 %
4,9 %
13,5 %
35,1 %
20,2 %
16,2 %
7,0 %
3,9 %
3,1 %
2,6 %
7,0 %
4,8 %
Table 1 – Impact of different improvement methodologies (MPI Census, 2007)
the Lean Enterprise Institute to underline
the importance of Leadership in the Lean
Transformation Framework (Jones, Womack).
Shigeo Shingo, one of the key Trainer sup
porting Taiichi Ohno in building the Toyota
Production System, said that “Lean is a
way of thinking – not a list of things to do.”
(Timmerman, 2019)
This shows the early emphasis on Lean
Leadership and its importance to drive be
haviors and results, rather than implementing
lean methods alone.
After researching Toyota for 20 years, Jeffrey
Liker has described in his book “The Toyota
Way – 14 Management principles from the
World`s Greatest Manufacturer” 4 principle
categories (4P Model) and 14 different ma
nagement principles and stated that these
14 management principles are building the
foundation of the Toyota Production System
(Liker, 2004).
He clustered all 14 management principles in
4 principle categories, showing that leaders’
attention should focus on more than looking
for eliminating waste only:
Philosophy (Long-Term Thinking)
z Principle #1 – “Base your management
decisions on a long-term philosophy, even at
the expense of short-term financial goals.”
Process (Eliminating Waste)
z Principle #2 – “Create a continuous process
flow to bring problems to the surface.”
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Why Leadership Matters in Lean Transformations
z Principle #3 – “Use ‘pull’ systems to avoid
overproduction.”
z Principle #4 – “Level out the workload
(Heijunka).”
z Principle #5 – “Build a culture of stopping to
fix problems, to get quality right the first time
(Jidoka).”
z Principle #6 – “Standardized tasks and
processes are the foundation for continuous
improvement and employee empower-
ment.”
z Principle #7 – “Use visual controls so no
problems are hidden.”
z Principle #8 – “Use only reliable, thoroughly
tested technology that serves your people
and process.”
People and Partners
(Respect, Challenge and Grow them)
z Principle #9 – “Grow leaders who thoroughly
understand the work, live the philosophy,
and teach it to others.”
z Principle #10 – “Develop exceptional
people and teams who follow your
company’s philosophy.”
z Principle #11 – “Respect your extended
network of partners and suppliers by
challenging them and helping them improve.”
Problem Solving
(Continuous Improvement and Learning)
z Principle #12 – “Go and see for yourself to
thoroughly understand the situation.”
z Principle #13 – “Make decisions slowly by
consensus, thoroughly considering all
options; implement decisions rapidly.”
z Principle #14 – “Become a learning
organization through relentless reflection and
continuous improvement.”
Why (Lean) Transformations fail
Since 72,5 % of Transformations to become
a world-class manufacturer fail to achieve
their targets or at least significant results
according to Industry Week and MPI Census
of Manufacturers (MPI Census, 2007), many
people started to research the reasons –
the WHY behind the “fails”. Is it the Lean
Management System itself that does not
work, or how it has been applied?
Lean Transformations are big changes to
organizations, where Change Management
is essential. John Kotter has described in his
book “Leading Change” an 8-Step Change
Model and explained in a Harvard Business
Review Article from May 1995 the errors which
can be made in a Transformation.
Based on his 8-step Change Model, Kotter
described following errors which are happening
during major transformations (Kotter, 1995):
1. Not Anchoring Changes in the
Corporation’s Culture
2. Declaring Victory Too Soon
3. Not Systematically Planning for and
Creating Short-Term Wins
4. Not Removing Obstacles to the New Vision
5. Under communicating the Vision by a
Factor of Ten
6. Lacking a Vision
7. Not Creating a Powerful Enough Guiding
Coalition
8. Not Establishing a Great Enough Sense of
Urgency
The International Journal of Lean Thinking
published an article “Lean Transformation Gui
dance: Why organizations fail to achieve and
sustain excellence through Lean improve
ment”, where it listed six points, referring to
Jeffrey Liker’s and Gary Convis’ Toyota Way
Leadership (Liker & Convis, 2011), about what
has to be done when companies are starting
their lean journey (Soliman, 2013):
1. Establish a shared vision of true north
that is believable, actionable and reinforced
in concrete terms as the work is done.
2. Develop leaders who are willing to take
challenges with a positive mindset and
self-development and coach them at the
gemba.
3. Change the role of leaders from decision
makers to teachers, enabling them to
develop others to leaders.
4. Develop a continuous improvement
culture through root-cause problem
solving, respecting all the phases from
PDCA, without jumping into conclusions.
5. Create an environment where targets are
aligned with the plans to achieve the
results and problem solving is used to
remove the obstacles.
6. Use crisis and challenges from the
environment to further strengthen the
company and the leaders to work toward
long-term vision.
Timothy McMahon, founder and contributor of
A Lean Journey Blog, shared his experience
on why lean transformations fail and listed 10
reasons (McMahon, 2013):
1. No Strategy
2. No Leadership Involvement
3. Relying on Lean Sensei/Champion
4. Copying others
5. Thinking Lean is a Tool
6. Lack of Customer Focus
7. Not Engaging Employees
8. Not Educating Employees
9. Lack of Understanding
10. Conflicting Metrics
As a lesson learned he suggests that mana
gers have to become Lean students and
have to apply learning-by-doing in order to
understand what Lean is about.
In a published Article “Everybody’s Jumping
on the Lean Bandwagon, But Many Are Being
Taken for a Ride” in Industry Week, Rick Pay
explains four main reasons why companies fail
to achieve benefits when they implement Lean
(Pay, 2008):
1. Senior management is not committed and
not fully understand the various
implementation stages including the real
impact of Lean. This brings the risk to “pull
the plug” before results are achieved.
2. Senior management is unwilling to accept
that cultural change is often required for
Lean to be a success and to be the driver
of this cultural change.
Figure 4 – John P.
Kotter`s 8-Step
Change Model
(Kotter, 2012)
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Why Leadership Matters in Lean Transformations
3. The company does not have the right
players in the right positions, especially at
the line manager level.
4. The company has chosen Lean as
their process improvement methodology
without understanding what they need to
be successful
a. What is the focus of operations strategy?
b. How is quality defined?
c. Are there the right people to lead the
change?
Mike Rother and Jeffrey Liker critically reviewed
why Lean Programs fail and concluded that
there is a fundamental misunderstanding of
Toyota Production System. They have realized
that lean solutions are generally mistaken for the
process that leads to what is visible in Toyota
plants, without deeply looking at the human
thinking and processes that underlie specific
observed practices (Liker, Rother, 2011).
As a management task they see to have the
organization’s members practicing behavior
patterns not only for doing the job, but also
for improving the job – like the Toyota Kata
(Rother, 2009). Toyota Kata gives a routine
which helps to free up people’s capabilities to
achieve target conditions, an invisible mana
gement routine.
John Shook, Toyota’s first American Manager
in Japan, responded to a question from the
audience in Pella Iowa in 2012 about why
lean transformations fail, saying “If your or
ganization has a culture of hiding or ignoring
problems, your lean transformation will not
be successful until you overcome those
habits and create a culture of exposing
problems for all to see and deal with them
openly.” (Shook, 2012). He points out the
importance of having a solid problem-solving
mindset as well as the collaborative Lean
learning. For a successful Lean learning he
has identified following key elements:
1. active participation of all learner partners
2. showing Respect and being open in
sharing knowledge and experience,
challenges and struggles
3. teachers must be equally open to learn
from the students like students from the
teachers
4. working on important and challenging
Problems to all partners
Results and Discussion
If we summarize and cluster accordingly the
responses from different authors on why Lean
transformations fail, we see following picture:
All the responses are important as they all
appeared several times in the different publi
cations and for sure there is a lot more pub
lications which are not included in this paper,
but we clearly see that one response is men
tioned from all authors as a key to sustain lean
transformations:
Behavioral Change
Behavioral change will lead to cultural change
and as cultural change is often misunderstood, I
want to make a clear point by deliberately using
behavioral change instead of cultural change,
so that the Leaders realize that they have to
change their behavior in order to be able to
influence the culture of the organization and to
make the Lean transformation a success.
To understand if the success factors are work
in progress or are at least familiar to the Senior
Leadership of the organizations, we have to
combine different management surveys. In
an Executive Coaching Survey from Stanford
Business (GBS, 2013), Rock Center and The
Miles Group, 203 CEO’s, Senior Executives
and Directors were asked about the skills
they are working on or where they see a de
velopment need for the most important skills.
Second survey was conducted by Harvard
Business Review (Folkman, 2014) between
332.860 managers in all levels to understand
the most important competencies on each
level of an organization.
Even though some of the success factors
are showing huge differences between the 2
layers of an organization, most of the success
factors are known and identified as important.
According to GSB survey, 100 % of the CEO’s
and 91,4 % of the Senior Executives rated
themselves as very receptive or receptive
to make changes to their leadership style.
Given the fact, that this is the most critical
factor for a successful Lean transformation
and that 64,9 % of the companies in North
America using Lean as their improvement
methodology made no or just some progress
towards a world-class manufacturer, we see
a clear gap between responses and results.
The factor “Lean implementation based on
need” is missing in these surveys as this was
not the focus of the two surveys and is too
specific.
Figure 5 – Toyota’s visible practices are built upon invisible management thinking and routines (Rother, 2009)
Table 2 – Lean Transformation success factors
Lean Transformation success factors
behavioral change
capability development
vision and strategy
go and see hands-on mentality to better understand situation
focus on aligned targets and plans
sense of urgency and leadership involvement
lean implementation based on need
leaders as teachers
communication
continuous improvement set-up in organization
respect and collaboration with partners and customers
thoughtful and rapid execution
# of mentions from the
authors in this paper
ALL (7)
6
4
4
3
3
3
2
2
2
2
2
Practices Tools Principles (Visible)
Management thinking and routines (Invsible)
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Why Leadership Matters in Lean Transformations
When it comes to Vision and Strategy, James
W. Smither has researched that 65 % of the
companies have a well-defined Vision and
Strategy, but only 14 % of the employees
are really aware of the Strategy and Direction
(Smither & London, 2009). He identified six
gaps as root-cause, however, this puts also a
strong emphasis on the Lean Transformation
success factor Communication.
Conclusion
Lean management has shown significant re
sults in different industries, not only in automo
tive. Companies like Danaher and Honeywell
has shown great share price developments
with utilizing Lean as a holistic Management
System. The System itself works, but as a
System. Based on the research of why Lean
transformations fail, it become clear that all
12 success factors are related to Leader
ship and that it cannot be enough to dele
gate those tasks to some departments in
the organization. The most critical factor is
to understand that the Lean transformation
is not a project, it is a behavioral and cultural
change of the organization, the new DNA.
For this, starting with the Leaders itself, a
change in the behaviors must take place. Eg
Problem-solving must be seen as an organi
zational development method, rather than a
Quality improvement method. Or, aiming to
constantly learning from the application of
Kanban, rather than having Kanban cards
implemented and looking for the next method
to apply.
The second most mentioned factor is “Capa
bility Development”, but none of the authors
mentioned any specific Lean Certification or
any other Training Belt System. Even though
Table 3 – Focus and importance of success factors (GBS, 2013; Folkman, 2014)
Lean Transformation
Success Factors
Behavioral Change
Capability Development
Vision and Strategy
Go and see Hands-on
Mentality to better
Understand Situation
Focus on Aligned Targets
and Plans
Leaders as Teachers
Communication
Continuous Improvement
Set-up in Organization
Respect and Collaboration
with Partners and
Customers
Thoughtful and rapid
Execution
GSB
GSB
HBR
HBR
GSB
HBR
GSB
GSB
HBR
GSB
Source
GSB - Skills: Working on / or needs
to be Developed
HBR – Importance of Competencies
CEO`s / Top
Management
100,0 %
44,7 %
34,0 %
29,0 %
27,2 %
23,0 %
50,7 %
23,6 %
29,0 %
43,6 %
91,4 %
24,4 %
29,0 %
35,0 %
42,1 %
26,0 %
11,0 %
26,3 %
34,0 %
39,5 %
Senior
Executives /
Manager
receptive to making changes in leadership
style (very receptive + receptive)
Mentoring skills / developing internal talent
Strategic perspective
Problem Solving and analyzing skills
Decision making skills
Technical or Professional Expertise
Communication skills
Persuasion skills
Collaboration and Teamwork
Planning skills
it is important to learn how to apply methods,
this factor is more about learning by prac
ticing, reflection, collaborative learning, coa
ching and self-development. It is about the
responsibility of the leaders to learn through
self-development and to grow better leaders
than they are, to secure the future by driving
sustainable Transformations. n