Ask Art: Why Are Leaps of Faith Involved in a Lean Turnaround?

Great question. In my opinion, leaps of faith are required to make a successful lean turnaround. Every time you change something dramatically there is some level of a leap of faith involved, as you can’t be 100% certain of the outcome. For traditionally managed companies making traditional, incremental type changes, the risks involved are relatively low. After all, the organization and structure of the company will stay the same, and small changes in, say Department A, can be reversed easily if they don’t work out as planned. Everyone wants to get better, but in a way that minimizes the risks.

Every time you change something dramatically there is some level of a leap of faith involved.When however you want to go from a traditionally managed batch company to lean, all of this changes. The lean approach to managing a business is the polar opposite of the traditional approach. As a result, when you start down the lean path management must understand that the organization will be entering a whole new world. To become a lean enterprise EVERYTHING must change. You won’t just be making a few changes in Department A, or in operations alone. Every part of the company will have to change and adopt the lean way of thinking. This transformation dramatically increases the risk of every leap of faith, and as a result, tends to scare the heck out of most traditional management teams and all of their associates.

The mere decision to switch to a lean strategy (and its accompanying management approach) requires a certain level of faith: everyone must believe that the dramatic changes that are required will result in equally dramatic results for the company that will be well worth it for the company’s  customers and employees. You must believe this will happen in order to make the leap in the first place.

Moreover, while getting started is one thing, being successful requires a never-ending string of leaps of faith into the unknown. Every time a leap doesn’t work (and this will occur), many people will apply pressure to reverse the lean work and go back to the way things were. “See, I told you that wouldn’t work here!”

Unfortunately, in company after company we see the naysayers winning these arguments, and eventually the forward lean progress is slowed or stopped all together. This is why only about 5-7% of companies that start down the lean path ever become complete lean enterprises. They stall out at the tools stage of lean and back off every time a leap of faith didn’t work out the first time.

When I was one of only two Group Executives in the early days of Danaher Corporation, I saw all of this first hand. George Koenigsaecker (George K.), who reported to me as the head of “Jake Brake,” and I both had some prior just-in-time (the term lean was still 10 years away) experience, and wanted to use that as our approach to turning around Jake Brake and its sister company Jacobs Chuck.

George noticed a seminar on just-in-time down the street from us in Hartford, CT by Masaaki Imai, the author of the book Kaizen. He signed us up and we met the Shingijutsu consultants who were running the seminar. George was relentless in pursuing them and they agreed to help us. The first day of kaizen with them took place at Jacobs Chuck. After a very brief plant tour (we only got a couple of hundred feet into the plant before they stopped us) they came back into the conference room and wrote “NO GOOD” in big letters up on the board. They said, “Look everything here is no good, what do you want to do about it?”

Well, here was our first big “leap of faith.” Most traditionally-run companies would have pushed back on this or just thrown up their hands in frustration. We however took the leap, and moved a bunch of machines that day and created our first cells. This was a leap, and was based on our belief that moving to the Toyota model would help us deliver more value to our customers (not to mention keep us from going bankrupt.)

It was followed immediately by the fact that the new cells didn’t work very well and shut down production. We had all sortsTo become a lean enterprise everything must change. Every part of the company will have to adopt the lean way of thinking.  of internal pressure to just put the machines back the way they were and forget this little experience. But we saw the potential of the new cells and made the call to stay the course, fix the problems and make the cells work. In fact George K. and I had a pact that whatever Shingijutsu told us to do we would do no matter how stupid we thought it was at first. About 50% of the time we thought it was completely stupid. We did it anyway. We learned. We fixed the problems. Most importantly we never let it go back to what it was. Learn by doing.

Just think about how dramatic a change it is to go from functional departments of similar machines to creating one-piece-flow cells. First you have to move maybe 8-10 pieces of equipment from the functional departments which are scattered all over the plant. Next you have to arrange them in a one-piece flow cell. They need to be very close to each other and only leave enough room for the standard work in process, typically one piece per machine. Next you have to determine how many operators you need to run the cell at takt time (a concept you’ve never heard of) and cross-train them to can run multiple machines.

What could go wrong? Oh, yeah, you never really maintained the machines when they were in functional departments. You just fixed them when they broke as you had excess inventory to cover the down time. Now you have almost no inventory and when one machine goes down the other 7-9 machines stop as well. Oops! Oh, and on top of that some of the machines take 2-3 hours to change over and there are multiple products coming through the cell. I think you can start to see where the idea of leap of faith comes in. You can also understand the internal pressure to go back to the way things were.

Setup time is another big leap of faith area for most companies. When machines have been in the plant for 10-15 years and have always taken 2-3 or more hours to change over, this becomes an accepted fact. Nothing can be done about this. The push back against making changes here, or even thinking about it, is very strong. “What if we break something and can’t use the machine?” “Any alterations to the machine might throw it out of tolerance and we won’t be able to make the parts.”

There are many “concrete heads” that have to be changed here. Sometimes you will screw up and cause a problem. Absolutely that will happen. The faith part of the leap comes from knowing the type of results that are possible. For example, at Wiremold we took a rolling mill from 14 hours to change over to 6 minutes; a 150-ton punch press from 3 hours and 10 minutes to one minute; a 150-ton injection molding machine from two and a half hours to 2 minutes; and in one of my portfolio companies in the private equity firm where I was an operating partner, a 750 ton injection molding machine from 5 hours to five minutes.

Were there risks in every case? Of course, but our setup reduction efforts at Wiremold, for example, allowed us to take machines that we used to change only 2-3 times per week and change them 20-30 times per day. This allowed us to take inventory turns from 3x to 18x, freeing up lots of cash and about 50% of our floor space. Pretty nice payback for some inexpensive machine modifications.

The leap of faith barrier strikes at the core of your company’s leadership. When people ask, “why aren’t more companies doing lean?” I think that fear of the risks involved in all the leaps of faith goes a long way to explaining this. It’s not the only thing of course, as most companies can’t see lean as a strategy or strategic way to run their business, and more than  90 percent see lean only as a cost reduction program, which automatically limits any success they may achieve.

But to me the leap of faith barrier goes even deeper. It strikes at the core of what type of leadership your company has. We are all insecure to a certain degree. Many people, however, are very insecure and, a number of them are also very smart and wind up as CEOs. One of the characteristics of the very insecure leader is an aversion to risk of any kind. They can’t even ask a question unless they already know the answer. As a result, they are very uncomfortable taking leaps of faith into the unknown. The same is true for the “command and control” type of manager, of whom there are many. This type of CEO, when something goes wrong, doesn’t ask whatwent wrong but rather whodo I blame? Who screwed up? This creates a culture where almost no one is willing to take the leaps of faith required of lean. They are too afraid of being fired. But if these two types of managers make up 50-60% of all CEOs then it is not difficult to understand why getting more lean penetration is so difficult.

SUMMARY

Leaps of faith are not just involved in a lean turnaround: they are a basic requirement. If you want to be successful take the lean leap. If it doesn’t work the first time, leap again. And keep on leaping forever!