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March, 2000
Telephone 503-235-0600 • Fax 503-235-0909 • Copyright © 2000 by Productivity, Inc.

Advice for Managing the in product development, engineering, marketing, mainte-


nance, human resources – in other words, people from
Change Process Successfully, the shop floor to the top floor will work differently and
in departments that are structured differently. The poli-
Year by Year tics of that are terrific. I’ll describe what you can expect
year by year so you’ll be prepared and better able to
In order to help you better manage the change effort to lean manage the change successfully.
and TPM in your facility, we begin a series of articles this First, examine the chart showing the typical gains
month by George Koenigsaecker on the critical but neglect- your organization can expect from your conversion
ed issue of change management. efforts.
Koenigsaecker’s 15 years of leading a variety of compa-
nies to lean production have convinced him that the vast Typical Gains from a Lean Implementation
majority of implementations do not fail because of technical
issues. Rather, they fail because managers do not successful- Starting from Starting from Ford-
ly contend with the dynamics of change, particularly the Batch style System*
people and organizational structural issues generated by the Production
dramatic conversion. Productivity +300% to +100%
Koenigsaecker’s insights are firsthand. As president of Increase +400%
Jacobs Vehicle Systems Company (Jake Brake) he led a lean
conversion in the mid-1980's that was one of the first suc- Inventory +1000% +300%
cessful transformations in North America. As a group vice Turns
president of parent company Danaher Corp., he subsequent-
ly created the Danaher Business System, a corporate lean Defect -95% -80%
management system based on the Toyota Production System Reduction
(TPS), the model for lean and TPM. Koenigsaecker led the
transformation of Danaher’s Tool Group, its largest unit. Lead Time -95% -75%
As president of The HON Company, the largest unit of
HON Industries, Koenigsaecker developed the company's Source: Benchmarking study of over 100 Japanese
successful lean effort, called Rapid Continuous auto suppliers done in the mid-1980s by
Improvement, during the 1990s. George Koenigsaecker for Rockwell International.
In Becoming Lean (1997, Productivity Inc.), he wrote a *Such a system uses flow in final assembly but batch for
chapter on "Multidimensional Change" and he also parts production.
authored the "Action Plan" chapter in Lean Thinking (1996,
Simon & Schuster). As chairman of the Shingo Prize, the The chart shows that if you begin the conversion from
annual award for lean excellence, Koenigsaecker regularly a batch style production system you can expect produc-
visits plants implementing the tools of lean and TPM across tivity increases of 300 to 400 percent. If you already
North America. He now is a principal in Lean Investments, have a Henry Ford-style production system (flow in final
LLC, a new investment company focused on investing in assembly but not in parts or component production) you
companies and then beginning a lean transformation. are ahead of batch, but there is still another doubling of
(Lean Manufacturing Advisor, Feb. 2000) –Ed. productivity and tripling of inventory turns to be gained.
Of the 100 companies my team studied, about one-
By George Koenigsaecker quarter were using the Toyota Production System. The
benchmark numbers on the chart come from this 25 per-
When a plant or company fails to successfully implement cent. Impressive. But what startled us about companies
lean, people assume it was because the organization did not in this group was besides their four-fold increase in
know how to apply the tools. That is almost never the case. shop-floor productivity, they were four times as produc-
Conversions fail because management did not know how to tive in their administrative functions.
handle the dynamics of change. In fact two-thirds of your ultimate gains will come
For instance, look at the chart alongside showing the from extending lean from the shop floor to product
gains you can expect from a conversion. Now think about development, accounting, accounts payable, etc. For
the impact of a 100 percent productivity gain in your example, at Jake Brake we converted product develop-
organization. ment from a batch process to flow with cross-functional
The only way you can get that is to ultimately reengineer teams. We netted over a four-fold increase in productivi-
100 percent of your jobs. The implication is that everybody’s ty, going from a 72-month average development cycle to
job is going to change, not only shop-floor workers’. People a 12-month cycle. ➝
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March, 2000
Telephone 503-235-0600 • Fax 503-235-0909 • Copyright © 2000 by Productivity, Inc.

A substantial lean conversion, one that gets to at least 80 takes so the anti-change folks will have plenty of shells to
percent of the possible gains, is a six- to 10-year journey. hurl. Basically, expect the second year to be pretty messy
Don’t be discouraged by the long time, the longer the better. and confrontational.
Once you get the conversion effort moving, it will grind out If you surveyed employees now, the consensus reply
improvements year after year. You’ll want it to go on forever. would be, The jury is still out. Some people would say the
Typically, the magnitude of the gains you make with lean progress looks pretty good; others would be very negative.
will revolutionize the position of your company in its indus-
try. If you are the first to convert successfully, you will prob- Year Three: The Gains Appreciate
ably take over the leadership position before anyone else The third year is a building year. The people who are doing
realizes what’s happening. If the competition starts imple- the implementation are getting better. More and more their
menting lean, they must play catch up. Whatever lead you efforts advance the organization two steps forward without
open up, you should be able to maintain. taking a step back. They are getting more skilled at applying
the tools and principals of lean and TPM. Now, when they
Year One: Two Steps Forward, One Back go in to convert an area, they get higher quality results right
The conversion process is not an even and smooth ride. from the start. Their follow up is better, too.
Progress the first year is slow. Be prepared to take two steps By the end of this year, you will be 36 months into the
forward, one step back. conversion, so the compounding of accelerated inventory
The reason is simple: the people who are implementing turns, quality improvements, and increased productivity now
have never done it before. They are trying to understand show significant gains. It’s hard for somebody to say this
principles that they are not accustomed to using in their isn’t different than anything the organization has done in the
environments. Being well intentioned won’t help. They will past because the gains are now big enough to show up in the
make mistakes applying the principles and consequently, the financial statements and to customers. If you make it
tools. Only with experience will they be able to go into a through the third year, the anti-change forces won’t have
particular product line with a particular volume, and a par- much of a case.
ticular process and quickly and effectively apply the princi- If you surveyed employees now, the typical comment
ples of lean and TPM. During this stage you should have the would be, We’re making good progress.
help of an outside sensei or expert teacher. It’s the smart
thing to do. Year Four: Headed for Industry Leadership
Typically, you’ll find that some individual kaizen projects Assuming your conversion effort is aggressive and sus-
show great potential or deliver big improvements. But your tained, this is the year that change becomes the norm; the
follow-up won’t be as good as it should yet. The gains will change process starts to become institutionalized. People at
slip as people drift back to bad old habits. all levels will start kidding, We have our machines on cast-
In addition, not enough projects will be linked together in ers because we move them every week. But instead of feel-
a value stream to make an impact at the company level or ing threatened, they take pride in that ability.
even the plant level yet. The gains are emerging, but they are You’ll begin to get tremendous positive momentum in the
not big enough or broad enough in the plant or the company organization. Buy-in is nearly universal. There are still pock-
for people to say without a doubt, This stuff works. ets of opposition, but people, in general, are less afraid of
Naturally, there will be people who resist the the change now. Having been through several rounds of
change. Every time the team takes two steps forward and changes in the past years, they know that things were better
one backwards, they will highlight the step back. So there is after the changes. When new change comes along as the
typically a lot of dissension at this stage. next step, it is less threatening. They are learning how to live
in a world of more rapid change.
Year Two: Appreciating Gen. Custer’s Position From the fourth year on, the organization tends to make
In year two, the effort becomes very interesting, to put it it’s own good luck. It’s on a path to becoming a leader in its
mildly. This is typically when the anti-change forces, the industry. It has demonstrably shorter lead times, better on-
people who do not want to see the status quo altered, really time delivery, higher quality, increased productivity, and
assert themselves. higher profitability. I have found that it’s not uncommon to
The "anti’s" aren’t lying in the weeds any longer. They acquire customers from the positive buzz about you compa-
can’t. Their jobs are changing, and they are more worried. ny that begins to circulate through your markets.
The organization is in the second year of the conversion. Interestingly, this cycle holds true for administrative con-
Programs usually go away after a year. When they realize versions, too. For example, as you convert product develop-
this one isn’t, the anti-change people become more aggres- ment from batch-based departments handling design, draft-
sive about pointing out the shortcomings and mistakes that ing, testing, etc., you turn it into a different organization and
have been made. you’ll go through a similar four-year cycle. ➝
The change agents are still making normal learning mis-
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March, 2000
Telephone 503-235-0600 • Fax 503-235-0909 • Copyright © 2000 by Productivity, Inc.

The State of Lean Implementations after World War II.


Unfortunately, not many companies in North America are The lean movement is following a similar course. With a
four years into a conversion process even though lean was sea change as dramatic as lean, it will take a generation for
introduced here 12 to 15 years ago. I’d estimate that one or it to spread. After all, it is not just a collection of tools and
two percent of North American manufacturers could be techniques, but a radically different business system and
described as 80 percent lean. philosophy.
Another three or four percent have made significant The last time we had anything approaching this level of
results, but have a lot more they can do. An additional 10 to change in business was during World War II when about
20 percent have dabbled in lean. These organizations built three-quarters of the workforce left to fight. There was a
some cells in part of the company or plant, experimented total conversion of both product lines and production
with some tools, but went no further. processes to support the war effort. The change involved
A big reason why companies never reach the 80 percent mostly a new work force, and mostly a new product line,
mark is that they don’t know how far they can go. and mostly new process technology.
Remember the chart at the start of this story? Just think, if The job of change management was made easier then by
you’re a batch manufacturer and you make a 50 percent pro- the country’s unity of purpose. Everybody was willing to do
ductivity gain, it’s logical to think, Hey, we’ve done great. I whatever it took to win. You won’t enjoy such commitment
guess we’re there. at the launch of your conversion effort.
As a result, many organizations start the conversion but Toyota needed 25 years to implement TPS, the model for
stop unaware that they are still at the starting gate. That’s lean. Granted, it was inventing the system as it went along.
why we have a lot of confusion about companies claiming to Toyota began in 1947, but didn’t begin using kanban compa-
be lean. They apply some of the tools for a couple of years, nywide until 1962. And it didn’t use all of the tools with
grab some big gains by traditional norms, but they aren’t vendors until the early 1970s.
lean. They have only scratched the surface of what So if we are about 10 years into the time line, we have 15
is possible. years ahead of us. This is an exciting phase. Whole indus-
But such lean "experiments" by a few companies have tries are just staring on the conversion path. In others, the
achieved enough results to show that lean and TPM are effort to date is spotty. There are lots of opportunities for
different, they work, and are worth pursuing. Yet most early adapters to dominate industries. ■
organizations are only thinking about starting.
That’s not a reason for pessimism. Look at the evolution Do you have examples of change issues and solutions that
of the traditional Ford-style production system. It started you’d like to discuss? George Koenigsaecker would be inter-
about 1911. Fifteen to 20 years passed before it had spread ested in hearing about them at gkaizen@mscanet.com.
to the rest of the U.S. automobile industry. It needed a full
generation -- 30 to 35 years -- to spread through the Next:The psychology of change; people’s reaction to the
European auto industry. It was not common in Europe until change process.

Spring and Fall Conferences This years conference will make the critical lean-TPM con-
nection and spotlight the successful approaches to TPM in a
Offer Help With Lean and TPM variety of process and discrete industries. Different tracks
will offer content to the experiences TPM organization as
Hear advice about overcoming your implementation well as those starting the journey.
obstacles or taking the next step in your improvement effort Like last year, the conference also will feature the popular
at the upcoming crop of conferences. Conferences also pro- Plant Operations and Maintenance Show, highlighting top
vide good opportunities to visit plants in various stages of products that support TPM.
lean implementations and to network with industry profes- More organizations are realizing that they can’t become
sionals involved in the same change process you are engaged lean without successfully implementing a TPM initiative.
in. Here is an overview: Lean aims for the total elimination of waste and TPM gives
them the strategy and tactics to completely eliminate all
What: 11th Annual Total Producti ve Maintenance losses created by equipment. These losses include the waste
Conference and Exposition from failures, adjustments, and defects to name a few.
When: September 19-22 Eliminating these losses will be the subjects of more
Where: Dallas, Texas than 40 concurrent sessions, keynote addresses, leadership
Sponsor: Productivity Inc . forums, pre-conference seminars, workshops, and a plant
Information: 800 394-6868 or www.productivityinc.com tour. The content is being designed based on extensive sur
continued on p.10