“…keeping you great” Ten Minutes with the Growth Guy

HEADLINES: (what I learned up at MIT this week)

Radical change requires radical stability — Robert “Jake” Jacobs was our first presenter in the Advanced Business Program I chaired up at MIT. He explained “why” the Rockefeller Habits of meeting rhythms and quarterly themes are so important. They provide a kind of stability that most employees need if they are to deal with the change leaders of growth firms are often thrusting onto their organizations. This is why it’s said “if you want to move faster, pulse faster.” The more you change, the more stability you need.

Use paying-labor vs. paid labor — Jim Gilmore, author of “The Experience Economy,” suggested we all think of things in our business where we could get people to actually pay to do some work for us (THINK — working dude ranches and Dennis Tito paying $20 million to fly into space). In fact, there’s a company called Vocation Vacations where you pay to work i.e. as an evening bartender in a British Pub for a week. Gilmore himself uses paying labor to help organize their annual “ThinkAbout” event. Here’s a link to more info on paying-labor including a link to Gilmore’s article on the subject — what about having people pay a contest fee to submit their designs for your new packaging?

99% of processing time is wasted — Guy Parsons, co-founder of the Lean Institute, delivered a fast-paced workshop on applying Lean to all our companies — the Toyota method we must all use so we can double revenue with the same number of people. Two key tools are Value-Maps and a one-page form called A3. Value-Maps let you document that a billing process that takes three days might only have 14 minutes of actually labor being performed — the best Value-Map booklet is “Learning to See” by John Shook — here’s a link to learn more and purchase —

“Rocks” or Priorities need more detail — the biggest criticism I receive about the One-Page Plan is that there needs to be some additional worksheets to help people flush-out the details behind their individual “Rocks” or Priorities. I’ve found the answer!!! Its Toyota’s A3 one-pager (named after the European equivalent of an 11 x 17 sheet of paper — the same as the One-Page Plan). Here’s a link to see a completed A3. In addition, here’s a link to templates and info about A3s — stay tuned for more info

Why Toyota might lose — Jim Womack, co-author of the original book about Toyota “The Machine That Changed the World” which was just re-released, wrote a piece on Toyota and why they might lose — if you read just one article this week, read this one — it’s below under DETAILS (reprinted with permission).

Scarcity focuses the mind — Evan Chrapko co-founded one of the top technology firms in Canada, DocSpace, selling it for almost $600 million. They turned down an offer of $12 million for the company when they barely had enough food to eat. The VCs visited their home furnished with furniture from dump heaps and walked past the garden where they were growing some vegetables. When the VCs asked “but don’t you need the money” his answer was “we can live like this forever.” Side story — one of the MIT participants is funded by one of the top VC firms in the U.S. His BMW had broken down, so he borrowed his mothers old Acura. He still has it years later. When the VCs visited him, he took them around in the Acura and saw him have to open his door to pay tolls since the drivers-side window doesn’t work. The VCs were impressed. All his time and resources are directed at the business.

Alex d’Arbeloff, co-founder of multi-billion dollar Teradyne, concluded our executive program with a very simple piece of advice. In the 37 years he built and operated Teradyne he would pick one specific project each year that he would spearhead — a pet project he thought would help take Teradyne to the next level. Looking back, it was these specific projects that had tremendous impact. What is the one personal initiative you’re going to spearhead in your firm? This is often different from the #1 priority for the company. For me, it’s writing another book in 2007. Last year it was recruiting Patrick Thean to run Gazelles.

DETAILS:

Latest Note from Jim Womack, founder of The Lean Institute:

Simon & Schuster has just re-issued “The Machine That Changed the World,” which Dan Jones, Dan Roos, and I co-authored 17 years ago. Doubtless, our publisher has noticed the current Toyota boom when any book with “Toyota” on the cover sells.

Fortunately, Machine is still the best description of the complete Toyota business system – product development, supplier management, dealing with the customer, fulfilling orders from raw materials through production, and management of the global enterprise. It still has a story to tell. As new CEO Alan Mulally remarked to Ford employees when he arrived in Detroit last fall, it is the best summary of why Toyota is winning.

But in fact Toyota has already won. It’s just a matter of totaling units sold and revenues during 2007 to know exactly when to transfer the industry leader’s jersey from GM to Toyota. Much more important from a business standpoint, Toyota won the profitability race years ago.

The interesting question for the future is not the precise day Toyota wins but how Toyota can lose. The conventional wisdom is that it may fumble on quality (as evidenced by recent recalls) or go soft on costs or stumble in trying to make Lexus a truly elite brand or fail to gain a stable production and sales base in the emerging markets of China and India.

And these could happen. But if they do they will be symptoms, not the root cause. Toyota’s real challenge for the future is to introduce and sustain lean management and lean leadership at every point in a rapidly growing organization.

It’s sobering to realize that many new employees at Toyota read Jeff Liker’s “The Toyota Way” and Jeff and Dave Meier’s “The Toyota Way Field Book” (which every lean thinker should read as well) to try to understand the company they have joined. Toyota’s traditional way of creating managers by hiring them straight from high school or college and carefully coaching them over many years to become seasoned Toyota-style leaders is being severely strained by Toyota’s breakneck growth rate. There are too many new pupils and not enough mature teachers as Toyota opens new plants, engineering centers, and supplier development groups across the world.

Toyota’s great risk, the way it can lose, is that its new managers and the managers in its new suppliers will revert to the old, mass-production mentality of the companies or schools they have come from. If this happens, Toyota’s management performance will regress toward the mean. Instead of moving the whole world to embrace lean management, Toyota will become just another company. And that will be a tragic failure for us all.

What does Toyota need to teach its new lean managers? Obviously, the specific methods (tools) for conducting production, product design, supplier management, and sales are important. But these are the easy part. The heart of the lean manager’s knowledge is strategy deployment originating with senior managers, A3 problem solving for line managers in the middle of the organization, and standardized work for primary supervisors near the bottom.

And at every level Toyota needs to teach its managers to utilize these concepts by going to the gemba. There, they need to lead by asking questions about the true business problem, the current condition causing the problem, a better condition (that is, a better process) that could address the problem, who must do what when to achieve this new condition (the future state), and what evidence will show that the problem has been addressed.

This means managing the organization’s value-creating processes (value streams) by asking highly informed questions rather than managing results at the end of the reporting period. (The latter is simply another form of end-of-the-line quality inspection.) And it means avoiding a resort to orders on what to do next when matters seem to be getting out of hand.

Issuing crisp orders is the natural instinct of any boss. Indeed, most bosses seem to think that by virtue of their experience and authority, they should be able to solve any problem lower in the organization. But orders from the boss rather than informed questions take away the lower-level managers’ responsibility for solving problems. They start a vicious circle in which lower-level managers wait to be told what to do by higher-level managers who are much further from the gemba where value is created and who inherently have less – not more – knowledge of the best thing to do.

Compared with the rest of us, Toyota has one major advantage. It never acquires companies or facilities. It expands by opening “greenfield” operations in new locations. So if it finds that it can’t grow lean managers at the same rate as sales it can simply slow down. And my bet is that Toyota will slow down if it senses that its management values are being diluted.

The rest of us face a harder problem. We already own and operate “brownfields” that urgently need a transformation in their management. Slowing down this transformation simply makes us fail faster!

In summary, Toyota can fail and if it does the root cause will be a failure to propagate its management system. We can also fail. And if we do the root cause will be a failure to transform our outdated mass-production approach to management. Thus it turns out that we all face the same challenge!

It follows that all of us in the Lean Community need to learn from each other about the best way to create lean managers and lean leaders. I’m happy to report that sharing our experience will be a key objective of the Lean Enterprise Institute as we begin our second decade next fall. We don’t want anyone to fail.

Best regards,

Jim

Jim Womack
Chairman and Founder
Lean Enterprise Institute

 

 

P.S. For years — and again in recent weeks as I have been speaking at lean conferences in Australia — readers have come up to me to say that “Machine” was a great book about factories. And I hope this is true. But anyone who says this didn’t understand the book. “Machine” is about factories and it is also about manufacturing more broadly. But it’s much more important contribution is to describe for the first time a complete, lean business system, a new way of managing multi-function organizations that is relevant to any organization creating any type of value.

I’m hopeful that original readers will now give “Machine” a fresh look and that a new generation of readers will discover the book and read it for lessons on lean management going far beyond its lessons for lean production. Dan, Dan and I have written a new Foreword and Afterword for the re-issued book to place it in historical perspective and to describe what we’ve learned in the years since it was published. And I autograph every copy from our web-based bookstore at www.lean.org. Feel free to forward this message to suppliers, customers, or colleagues who are implementing lean – or should be.

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