Making Lean work

Implementing a Lean strategy is about much more than simply cutting down on waste, Leslie Kossoff explains.

Chances are you either have or have considered implementing a Lean strategy in your organisation. After all, what is the downside? Operational improvement, cost reduction, employee empowerment, collaboration and innovation. How could it go wrong? However, unfortunately, it does - at an estimated rate of 70 per cent of the time.

According to cross-industry research that was completed last year across a range of organisations in both the USA and Europe, executives reported a 70 per cent failure rate of their improvement and change initiatives. Granted, their definitions for what constitutes "failure" are broad - from a lack of sustained effort post-consultants to financial losses to employee demoralisation - but no matter how it is defined, failure is still failure.

When the failure comes from an initiative that is supposed to make everything better, that failure is more painful and longer-lasting than most. That is why, no matter where you are in your Lean initiative - from first considerations to deep implementation - it is important that you step back, take a look at what you are doing and figure out how to make it stick.

Because if you do it right, it is not a programme or an initiative. It is even more than how you do business. It is how you create the organisation you always envisioned - and more.

Toyota, kaizen and being best of breed

If you ever wanted a good reason to implement a Lean strategy, just take a look at Toyota. Because what you are seeing - most particularly now - with all the company's problems, recalls and associated fines is what happened when it took its eye off the ball.

That ball is "kaizen", which is the basis of Lean but far more. While in its simplest form it means "continuous improvement", as a strategic and operational thinking-to-action methodology it is unmatched.

But adopting kaizen as a way of doing business puts the onus on the owners, senior executives and management team - not the employees. The fix does not go in at the bottom. That is, in fact, the last step. Long before your employees get involved, you and your team are responsible for getting everything right. Your employees are the icing on the cake.

The reason why Toyota has become such an excellent example is because it was not that the employees were doing a bad job that led to the problems with the uncontrolled accelerators and more. It was that management stopped focusing on the excellence of the suppliers with which the company worked. It was more concerned about becoming big than it was about remaining best.

The outcome is what we have all seen. The strategy changed because the management changed it. As a result, the measures of success changed, because that was the way that the management was being monitored and rewarded. The outcome was that decisions were made that had never been considered before - and, suddenly (although not really) the company was in the world of unintended consequences. The employees had nothing to do with it. It was the management.

So, before you go any further, it is time to take a look at what your Lean initiative is doing, where the focus is, how your organisation measures itself, how your managers are rewarded and whether there is any integration of any of those with each other - let alone with your strategic plan.

Dobbies and the £1bn plan

Dobbies broke the £100m annual turnover mark and is now shooting for £1bn (, 20 April). That is £1bn per year based on a growth strategy to 100 stores. The company has given itself a ten-year time frame to achieve this. Chances are it will.

No, it is not because Dobbies is some sort of predatory, horrible monster corporation. The company will achieve this because its chief executive, James Barnes, has set its numerical targets - in stores and turnover - and will now both expect and manage to ensure that his stated goals are met.

It is the positive version of the Toyota story - before Toyota ran amok. It is knowing exactly where you want to go and then, having that context, making every decision at every level, every day, in alignment with that goal.

Then it is making sure that everyone in management knows that he or she is being held to those goals - whether on a by-store, by-department or by-area basis. There should be rewards for success and relegation or P45s for failure.

What that achieves, no matter how large or small the enterprise, is a clear, consistent focus on what is clearly defined as important. It is all about context. Then, when you get to the specifics, everything else falls into place - always starting with the management.

Limited Lean

There is a common version of Lean in grower organisations that is presented and goes something like this. Slide one: There is a really messy pathway next to a glasshouse and a lot of tools hanging around with no rhyme or reason. Some of them are left on table tops. Others are in the dirt.

Slide two: The pathway has now been cleared so that its surface is even and easily accessed and accessible. The tools have all now been hung or placed in predefined positions as indicated by either clear labelling or outline drawings to illustrate what should go where.

The talk surrounding the second slide is all about productivity increase and cost reduction. The employees are not looking for missing tools half their working lives and, when they find them, the tools are in good condition - undoubtedly because, as part of the Lean initiative, a preventive maintenance schedule for the tools was created and is now being followed.

This is all good, but this is not Lean. At least, not Lean as you want and need it to be implemented. This is the so-called five Ss and it is baby stuff to clean up your operations. You have better control, a safer environment, improved care of the tools and higher productivity. That is a great outcome, but it did not need a Lean initiative to make it happen. It needed appropriate management attention.

It is good and it is a beginning but it is also, in the vernacular, the "low-hanging fruit". Let's go back to the 70 per cent failure rate cited for improvement initiatives for just a moment, because it is in these sorts of situations that those failures are most likely to occur.

Over time, what happens in reality is that the employees who work in the area are given other priorities on which to focus, they are reassigned elsewhere in the business or they move to a different organisation altogether. The same things apply for the management.

The outcome is that there is a lack of continuity. Eventually, the "improvements" languish and are neither maintained nor replicated. Worse still, they are not built upon to create even greater savings and opportunities. This is Lean out of context. It is a temporary fix that nets you some results but nothing like what Lean is really designed to achieve.

Even the detailed charts and graphs of statistical and non-statistical measures that are taken - real time and historical - to identify and track performance along with opportunities for improvement go by the wayside for the same reasons.

Those reasons are that your Lean initiative is mistaken for an operational improvement programme, which it is not. It may be part of it, but unless you understand and treat it as something more, it is going to end up costing you a lot and not netting you much of anything.

Strategy and Lean

It is when you turn your Lean initiative into a mechanism and driver to achieve your strategic goals that it begins to fulfil its promise. Until then, whether using visual indicators or statistical analyses, it is just another underutilised tool in an underutilised tool box.

When you move it into the strategic realms, it finally becomes a management owned system. That is why what Phillip Evason, the Haskins buying director and HTA retail committee chair, said about promoting Lean as a way to take out administrative and operational waste (Garden Retail, March/April 2010) also makes perfect sense. It is the in-department execution of Lean that augments and supports the overall goals of the organisation.

But let's put that in context - and that context is sales and profitability growth along with higher profit margins and expanded market share. When you look at "taking out administrative and operational waste" in that larger landscape, suddenly you are not just looking at getting new information technology systems or training up your people - you are looking at a different way of doing business.

What is your relationship with your suppliers? How much of your inventory is provided just in time? What types of buying groups do you serve or belong to? Are they operating efficiently and effectively? How do you know? What measures are being used?

And what about the supply chain - both yours within your organisation and those to which you are a feeder? Are they efficient and effective? How are you tracking your sales? Do you have inventory systems that give you real-time data? How are you using those data to predict future needs?

What are your competitors doing? How do they excel beyond you in product or service? Does your service offering exceed theirs and, as a result, justify higher prices than the big box stores on some of the same items? How do you differentiate yourself and how are you using every aspect of everything you do to continue to differentiate yourself so that customers are consistently wowed with what you have to offer?

Just because you are in the public sector, do not think that this does not apply to you. You may not have the profitability goals that a private sector organisation works to but, particularly in this financial environment, you have cost-cutting goals that have to go beyond simply money. They have to improve the value offering of your local government to its citizens at a lower cost and, potentially, with fewer people than ever before - same issues, different measures.

Now that we have got just some of those questions on the table, it is time to talk Lean. Because if you direct your Lean initiative so that it is marching directly in line with your strategy - so that every project at every level in every department is prioritised and executed specifically to support your strategic goals - then you have got the beginning of having it nailed.

That is when you start to see the real benefits of Lean, and they are visible - measurably visible. This is the other thing you need to remember about Lean. At its foundation, it is a statistical model of management, which is why it is measurement based.

What that gives you is the ever-better ability to see exactly how your strategy is progressing every step of the way - in real time - and that gives you the ability to shift, change and adjust whenever you are not hitting your marks or the market starts changing around you.

You are not just reducing waste. You can predict where all forms of waste are coming from before they arrive and act proactively to ensure that it never happens. Then you can do whatever you want and take your organisation wherever you want it to go. You are that nimble.

From strategic, profitable Lean to innovation and expansion

Next, you find yourself and your organisation living in a world of innovation and expansion. As the Lean initiative moves from management guidance and problem solving to employee execution at the team level, what you will also find is that throughout your enterprise there are ideas that have been waiting for their moment to be brought to light.

You have people in your organisation who have been solving problems in their heads and seeing new business opportunities for your organisation every day, for years. Lean gives them the opportunity to bring those ideas to the fore.

Listen and be responsive. Some may work now while others may not. But every one of them represents another opportunity for you to grow your organisation into the entity that you always knew it could be but never quite achieved.

You have got profitability, but that becomes the easy part. More than that, you have got the opportunity and capability to take on more than you have done before. You want to be best of breed? To take your market? This is how.

- Leslie Kossoff's guide to Becoming a Best of Breed Organisation has just been published in association with HW. See

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