A Tale of Two Companies

August 1, 2007
By Darren Dolcemascolo

Why do some organizations seem to find success on their lean journeys more quickly than others? Why does it appear that employees are eager to participate in lean at some organizations and are not so excited about lean at others? Based on my observations, I believe the single biggest factor in lean successes is leadership.

Let's consider two companies, ABC Corporation and it's biggest competitor XYZ, Inc. Both of these organizations began their lean journey about 1 year ago, but one has found much more success than the other.

Both companies put together "lean" core teams that were thoroughly trained in the Toyota Production System methodologies, and both had the same lean (outside) teacher, who performed the training and facilitated the first value stream mapping and kaizen activities at each.

ABC Corporation, within the first few months, made substantial gains in productivity on the factory floor and reduced WIP by more than 80%; within the first six months, they had begun reducing finished goods and have a plan in place to reduce their FGI by 60% before the end of 2007. Employees at all levels were beginning to make suggestions for improvements and were asking when they would be able to participate in a kaizen event. The VP of Operations and factory floor employees are on a first name basis, and the VP of Operations has made a concerted effort to talk to employees about lean, it's importance to the company, and it's value to them as individuals. Not only did he do this in a formal setting, but he does this regularly on the factory floor.

XYZ, on the other hand, has completed some kaizen events that have identified improvements, but the improvements have not "stuck." XYZ's VP of Operations, after 3 months, had considered halting the program because he believed that the employees were not ready for lean. In contrast to his ABC Corporation counterpart, this VP almost never visits the factory floor, and many of the operators are not even sure who he is.

After studying both organizations, I've compiled a list of some examples of actions ABC's management has taken that have contributed to their success in contrast to those things that XYZ has done.

ABC Corporation XYZ Corporation
Had all executives trained in lean; VP persuaded Division President of lean's benefits. Held brief overview of lean for executives. Most were ok with the idea as long as it did not impact their organizations negatively.
Division President and VP of Operations attend kaizen event kickoffs and reports-out. President never interacts with low level employees. VP of Operations occasionally does but never on the shop floor.
Clearly communicated what lean means to all employees not only at formal meetings but on an on-going basis. Communicated lean benefits to the organization at employee quarterly meeting.
Rewards employees for their lean ideas and participation Expects participation from all employees; rarely recognizes an employees' contributions to lean.
Top management backs up their support of lean by stating that participation in lean events supersedes all other meetings/activities. Top management stated that lean was a high priority, but many kaizen events are cancelled or poorly attended due to more pressing issues.
VP of Operations visits the factory floor daily and talks with operators VP of Operations rarely visits the factory floor.
VP of Operations actually participates in events on occasion, and the team members (including operators) are very comfortable with that. If the VP of Operations participated in a kaizen event, it would likely be a one-man show.
Management stated that no layoffs would occur due to a lean improvement, and they have backed up that claim. Management said that lean was necessary to keep the factory in the U.S. but made no promises. Employees are skeptical.

While both organizations had identical training and very similar business models, the results they achieved are markedly different. Leadership style and approach to lean are key to creating a lean culture. Without a lean culture, some success is possible; however, it is impossible to achieve the kind of breakthrough improvements you might read about in case studies.

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