Getting the C-Suite on Board with a Lean Company Transformation

Many of us in the lean community have found opportunities to teach organizations about the value of continuous improvement through demonstration with undeniable local results.  The senior executives have blessed the new “program” and designated some internal managers to lead the charge to “transform the organization and its culture to operational excellence.”  But, as the work to transform the company progresses, they sit in the stands as spectators increasingly losing interest and demanding measurable results.

Why is it that leaders entrusted with the success of the enterprise are willing to verbally endorse a program to transform their company and then sit on the sidelines with only casual interest until it comes to tallying up the results? There are at least three reasons:

1. 1. They are judged on and really care about big changes and big outcomes, not continuous improvement. 

1. 1. They do not deeply understand the philosophy of lean, and do not recognize what they do not know.

1. 1. They live in a transactional world and no longer relate to a world of people and processes.

Priority of Big Transactions

Executives are professional managers who are under constant pressure to get results in two areas: profitability and growth.  Even non-profits are often judged by growing the budget and then sticking to it.  Financial success is necessary for success of the enterprise, but it is the outcome and not the means used to reach it. In the short-term, there are many transactional decisions that can cut costs or increase revenue.  The most obvious cost reduction method is outsourcing or leaning on your suppliers.  Likewise, the most obvious way to grow the business is through mergers and acquisitions, or perhaps being acquired. Both involve shopping around and making discrete decisions that have large stakes, which can lead to large gains in the bottom line.

By contrast, your lean coach is going to talk about long-term thinking, pilot projects, developing people, instilling discipline in the culture, and continuous improvement.  This transformation process is potentially more impactful in the long-term, but in the short-term it is mushy and does not fit the world of rapid decision making about big transactions.

Lack of Understanding of the Philosophy

The philosophy of lean is decidedly long-term, so I showed it as the foundation of my Toyota Way model.  It starts with an unwavering belief that developing exceptional people who develop exceptional processes with their eye firmly on the customer will pay off in the long run with profits and growth.  There is not always a clear and linear cause and effect between the investment in people and processes and business results.  It takes much more than the power of the pen to sign a big contract.  It is a daily investment of time and energy with an optimistic belief that grueling work to bring people along in their ability to solve problems and improve targets will pay off.  It is a philosophy that requires systems thinking, not point solutions.

Living in a Transactional World

We all spend time with close circles of people, and C-suite executives, in particular, tend to spend time with other leaders who are wealthy and influential.  They talk about investments, business decisions, the state of the economy, the schools their children attend and the jobs they get.  In other words, they are talking transactions, not culture change nor people development.  They are talking more about results than processes.  Discussions about a discrete event—the hole in one in golf—are much more intriguing than discussions about complex processes with a lot of uncertainty.  Shifting the conversation from our business results to how we are maturing as a culture is a challenge for every process improvement specialist I know.

On the positive side, when improvement programs deliver results it is possible to get the attention of the top.  There are windows that open.  How to capitalize on those precious windows will be the subject of my next blog.  For the first week of September, I was in Germany with the board of directors (all internal executives) of a large, global parts supplier.  After four years of lean tools application, with measurable results, the vice president of continuous improvement asked for some executive time to explain the benefits of moving from tool-based change to employee engagement and cultural change.  He asked for one day to get the board of directors on board, but the CEO insisted he take a week.  I took part of this carefully crafted event which included a lot of time at the gemba observing.  Stay tuned to Gray’s Blog to find out more about how this worked.

Dr. Jeffrey Liker is professor of industrial and operations engineering at the University of Michigan and author of The Toyota Way.  He leads Liker Lean Advisors, LLC and his latest book (with Gary Convis) is The Toyota Way to Lean Leadership.