Posted by: productivityinc | June 18, 2009

What’s the Alternative?

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The following blog post has been submitted by Andrew Dillon, a long-time observer and participant in the lean revolution. Productivity has had the pleasure of working with Mr. Dillon for over 20 years both in the U.S. and abroad. In the 1980’s, Drew served as Shigeo Shingo’s interpreter in the United States and translated numerous seminal works on lean. Today, Drew is an advisor to organizations and their leaders on management improvement. He consults and lectures in English, French, Japanese and Chinese. He can be reached at apdillon@att.net.

When the going gets tough, the Lean build communities… 

Hidden away in an essay I circulated to colleagues a couple of months ago was the suggestion that an organization’s sustained success with Lean depends on its leadership’s commitment to strengthening internal and external communities.

What does this mean?

Lean and Layoffs

Consider where we stand right now. Many of our organizations are caught in crisis. To increase the value we generate, or if only to gain a bit of an edge on the competition, we have every reason to want to mobilize all our members to improve constantly, to invent, and to raise performance. What Lean offers sounds very much like what we need in order to survive.

Yet not all of us accept the offer. When the pressure is on, we revert to old habits. We see people as costs. We cut their hours, slash their compensation and add to their burdens. Often enough we jettison them entirely. We buy them out, shake their hands and are genuinely sorry that it’s come to this. What else can we do?

No one denies that these are trying times. Organizations of every stripe are so straitened that managers may conclude they don’t have the luxury of putting people first. Or else they persuade themselves that they do put people first; it’s just that they have to fire some of them. How many times have we heard the phrase, “We’re confident we will emerge a stronger and more competitive company?”

Not all organizations are going this route, though, at least not yet. If we look carefully, we can glimpse alternatives.

Facing a 2009 budget shortfall of 200 million dollars, for example, Paul Levy, the CEO of Boston-based Beth Israel Deaconess Medical Center, declined to take the immediately obvious approach of eliminating 600 jobs. He instead turned to his employees, explained the problem to them in a series of e-mails and meetings, and solicited their help in finding ways to reduce costs. Their input pushed back the threat of job losses substantially. It also solidified a sense of common purpose. The details of this ongoing story deserve our attention (http://www.hfma.org/pulse/leadership/BIDMC), but in a general sense, Beth Israel’s experience starkly reminds us that short-term responses have a tremendous impact on long-term strength. Although not out of the woods yet (and who is?), Levy now reports that the hospital’s commitment to its employees has become a recruiting tool. “Candidates,” he says, “are telling us that they’re seeking us out, saying that they want to work for an organization that values all of its people.”

The case of Beth Israel is an unusual but not entirely isolated one. Toyota’s resistance to layoffs, for instance, is of long standing and extends even to operations in the eye of the storm (http://www.mlive.com/news/annarbornews/index.ssf?/base/news-32/124375204112250.xml&coll=2). There are other cases one can cite as well. Perhaps your own organization is finding ways to use commitment to its people to consolidate long-term strength.

No two companies are in precisely the same boat, of course, but such examples tell us something in their broad outlines: Yes, it helps to have a war chest. It also helps to be in the habit of long-term thinking. Most of all, it helps to be genuinely committed both to your employees and to people outside the organization: customers, business partners and the community as a whole.

We don’t have the luxury of putting people first? We should think again. Lean is not a luxury vehicle.

Commitment at the Creation

Lean’s sustained success depends on teamwork, cooperation and reliable long-term relationships. The only way to ignore this is to lower our expectations of what Lean can do. If all we want to do is make a killing this year, for example, and then sell out and move on to something else next year, then the attraction of Lean probably won’t extend much beyond its cost-cutting techniques. “Respect for people” will take a back seat to tools and technologies that don’t require us to change our own behavior. An expatriate factory manager, curious about Lean, explained this to me in China last year, “I’m not interested in helping people improve,” he declared.  “I want to get rid of them. They cost too much.”

On the other hand, if we want to make a killing every year, then investments in long-term relationships become indispensable.

In postwar Japan, Lean assumed its most powerful form in an intensely competitive environment in which leaders nonetheless paid specific allegiance—via a tradition of lifetime employment, for example—to employees, partners, consumers and society at large. It was no perfect world. Far from it. Yet the more Lean moves away from such a context of commitment, the more attenuated it threatens to become.

Many of us still find it convenient to imagine that Lean methods can be understood —and even mastered—without disturbing old habits or basic assumptions about work and management. This has been likened to imagining that we can understand parenthood without ever having experienced it. Perhaps, to a limited extent, we can.

But, as every parent knows, we are talking about a very limited extent, indeed. The failure to revolutionize the way we work with employees, like the failure to rethink the speed of our machines, constitutes precisely the kind of complacency that chokes off the true potential of Lean thinking and practice. It takes us beyond irony, in fact, because the sustaining power of Lean is rooted in “total employee involvement” and because Lean’s fundamental logic is a frontal assault on conventional assumptions. The fingerprints of conventional thinking, one may note, are all over the current economic disaster.

Respect and Investment

By exposing new veins of both failure and promise, the current crisis calls on us to look again at the ways in which we either strengthen or undercut people and communities. Recent and devastatingly widespread waves of layoffs, if nothing else, testify to the importance of this aspect of Lean leadership. As the world continues to shift around us, we neglect that aspect at our peril.

Why invest in people? Well, if quick money is what we’re after and we can get it without people, without competition or in the really, really short term, then maybe we don’t have to treat people well. Maybe it’s all right to treat employees as expenses and customers as annoyances. Why should it matter? There are more where they came from.

The men who shaped the Lean revolution didn’t quite see things this way. Thinking for the long run, they concluded that being competitive is not at all antithetical to building communities. In fact, the two reinforce one another.

This element of Lean thinking seems curiously underexploited in practice even as Toyota-watchers are writing with considerable insight about the company’s “respect for people.” Perhaps the problem simply seems too daunting. Certainly, even for the best of Toyota’s leaders, finding ways to meet the challenge and reap the benefits of “respecting people” has been a constant and demanding preoccupation for many decades.

Part of the problem may be, too, that the words are too easy, too comforting. In my own years of work in management improvement, for example, I have never once heard a manager say that he or she is not “committed” to or respectful of people—not even the manager quoted above. We know how to get the words right. It’s the practice that bedevils.

Action

What actions can we take to strengthen community and respect people? What forms does effective commitment take? Or, put another way, how can organizational structures, values and actions embody our commitment in such a way that draws out the best of everyone?

The Lean experience of the past six or seven decades provides extraordinarily valuable guidance on these matters and any organization aspiring to improvement will do well to consult and experiment with that experience in depth and at length. Some things that Lean has to say are familiar. Others may be surprising, for example that a collaborative insistence on high standards can be a much more powerful expression of respect than simple “empowerment” or formal deference.

In a broad sense, Lean experience confirms that the critical tangle of attitudes and influences we call “culture” is shaped and changed by the choices we make as leaders. If employees are dispirited, suppliers weary and customers scorned, it’s not entirely because they started out that way. Even if we allow that certain of their attitudes are formed outside the workplace, the fact is that we create many others by our expectations and by our actions. Every leader creates his or her own culture.

This is an important lesson that Western capitalism keeps learning and keeps forgetting. It has been pointed out, for example, that although everyone reads the first page of the Wealth of Nations where Adam Smith extols the efficiencies of the division of labor, few seem to get to the part, much later, where Smith discusses the brutalizing effect the division of labor can have on people:

“The man whose whole life is spent in performing a few simple operations, of which the effects, too, are perhaps always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention, in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.” (http://www.gutenberg.org/files/3300/3300-h/3300-h.htm)

Nowadays, at two and a third centuries’ remove, we tend to shy away from using words such as “stupid and ignorant.” But we can’t escape the fact that how we structure work exerts a telling effect on the people who perform it. Lean leaders never forget this. Indeed, it is striking to realize that Lean practice strengthens organizations by engaging their members in precisely the activities cited by Smith: the exertion of understanding, the exercise of invention and the finding of expedients for removing difficulties. Somebody read the whole book.

All right, then. Today, right now, how does one move from laying people off to investing in them for sustained success?

To answer this question in useful detail requires consideration of an organization’s particular circumstances, prospects and ambitions. The basic principle is clear, however: Take actions that will strengthen internal and external communities. Avoid actions that destroy relationships, livelihoods, trust or a sense of shared purpose. No one can pretend this is easy—especially in organizations with bitter histories—but successful Lean leaders, again taking the long view, work constantly at getting it right.

The world is awash in Lists of Lean Lessons, and we should hesitate mightily before proposing any more. Still, it is helpful to identify specific actions by which we, as leaders, can promote our values. And it is always appropriate to ask how we can improve:

  1. Be frank. Share with employees and business partners the constraints and potentials that guide strategic decisions. Candor invites trust and trust, cooperation.
  2. Listen. Find ways to increase attentiveness to colleagues and customers. Give employees the guidance and authority they need to take part in decision-making.
  3. Collaborate. Create mechanisms for all to participate in continuous betterment and the constant alignment of actions to common goals. Participate personally and often.
  4. Commit. This means doing, not promising. Commitment to employees in Lean organizations, for example, typically takes various forms, e.g., profit sharing, participation-based suggestion systems, no layoffs due to improved productivity, a place at the table. There are many options and not all of them are expensive. If you want expensive, try demotivation and neglect.
  5. Keep going to the gemba. Understand the world from the perspectives both of employees who add value and customers who define it. The more leaders abstract themselves from the gemba, the workplace, the less likely they are to be in touch with how to make transformative improvements. And the less enthusiastic their employees are likely to be about changing anything.

In the current crisis and beyond, the enthusiasm for Lean ideas and methods now flooding into fields such as health care, education and new technologies provides leaders with substantial opportunities to redefine and revitalize the communities on whose success their organizations depend: customers, partners and employees. These communities are the most consequential of assets for any organization and the foundation of its potential to become great or to wither away.

This article may be circulated with attribution.
I welcome questions, corrections and comments.

Andrew Dillon

apdillon@att.net


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