Leadership and Strategy in a Lean Environment
The Hidden History of Lean
Lean has a longer and more colorful history than most of us think, with many Lean concepts predating Womack and Jones’s books on the subject. In fact, according to my research, many of the Lean concepts have been around for over 2500 years, and date back to ancient China. In the twentieth century, Henry Ford discussed ideas that we’d now describe as Lean, such as waste, teams, developing the people in his plants, and more. In fact, Ford’s work was one of the sources (along with US supermarkets and Japanese samurai) that Toyota looked to when they developed their Toyota Production System.
75% of US companies are engaged in some form of Lean implementation, but according to studies by MIT, Stanford, Booze Allen Hamilton and McKinsey and Co., 70% of them fail to achieve significant results. The timeline of a Lean initiative closely mirrors the S-curve of a product life cycle: development, growth, maturation and decline. In Lean, this cycle takes about five years, and many companies find that after this period they’re right back where they started.
So how are some companies able to continuously improve and gain competitive advantage? Two essential factors are speed and agility, and to illustrate how they function we’ll take a look at some important battles, both military battles and business battles.
Speed and Agility
Speed is essential because when decisions happen quickly, response time goes down and improvements can be continuous. In Lean, Kaizen events are great for focusing on a single area, but Toyota rarely does Kaizen events because their continuous improvement makes long Kaizen events unnecessary.
As an example of how speed and continuous improvement translate into increased market share, let’s take a look at what became known as the H-Y wars in the 1980s. During this particular battle, Honda gained significant market share over Yamaha by releasing 113 new models of motorcycles within a couple of years, compared to Yamaha’s 30. Honda had discovered how to release a new model, gather customer feedback, improve the motorcycle, release another model, etc. much faster than Yamaha did and they gained competitive advantage as a result through speed.
We’ll define agility as the ability to quickly change from one option to another based on current needs. A simple example is putting production equipment on wheels so that if you find a way to improve flow, you can quickly move equipment into a new position.
Interestingly, you can read about both of these concepts in Sun Tsu’s book The Art of War, which was written 2500 years ago. How did the Mongols defeat the Roman army? Speed and agility. Shortly after writing his book In Search of Excellence, Tom Peters wrote Thriving on
Chaos, which was based on the theory that if you want to gain competitive advantage, you create chaos in the minds of your enemy through speed and agility.
Speed and agility altered the course of history during World War II. The Battle of Dunkirk was one of the most significant losses the English army ever experienced. In May of 1940 the Germans launched an attack on the Netherlands and Belgium, and the English and French, who greatly outnumbered the Germans, expected to fight the same kind of war they had fought in World War I. The historical precedent for the kind of trench warfare used in WWI was set during the American civil war, the Napoleonic wars, and others.
Unbeknownst to the English, the Germans had changed strategy and were carrying out a blitzkrieg, or thunder war. In only 10 days the Germans had completely surrounded the English and French, in spite of having old tanks and outdated equipment. They used the concepts of speed and agility to defeat armies that outnumbered them and had much better technology. They had a clear strategy and pushed decision making down to the front line teams of tank commanders.
When you look at your company’s performance, do you see evidence of speed and agility, or have there been missed opportunities because your operations were slow to respond to changing demands? In Part II of this Executive Briefing I’ll share the four characteristics of agile companies as well as the single unifying factor in operations strategy (hint: you won’t find it in the boardroom or on the shop floor).
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