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Telephone 503-235-0600 • Fax 503-235-0909 • Copyright © 2000 by Productivity, Inc.
Advice for Managing the
Change Process Successfully,
Year by Year
In order to help you better manage the change effort to lean
and TPM in your facility, we begin a series of articles this
month by George Koenigsaecker on the critical but neglect-
ed issue of change management.
Koenigsaecker’s 15 years of leading a variety of compa-
nies to lean production have convinced him that the vast
majority of implementations do not fail because of technical
issues. Rather, they fail because managers do not successful-
ly contend with the dynamics of change, particularly the
people and organizational structural issues generated by the
dramatic conversion.
Koenigsaecker’s insights are firsthand. As president of
Jacobs Vehicle Systems Company (Jake Brake) he led a lean
conversion in the mid-1980's that was one of the first suc-
cessful transformations in North America. As a group vice
president of parent company Danaher Corp., he subsequent-
ly created the Danaher Business System, a corporate lean
management system based on the Toyota Production System
(TPS), the model for lean and TPM. Koenigsaecker led the
transformation of Danaher’s Tool Group, its largest unit.
As president of The HON Company, the largest unit of
HON Industries, Koenigsaecker developed the company's
successful lean effort, called Rapid Continuous
Improvement, during the 1990s.
In Becoming Lean (1997, Productivity Inc.), he wrote a
chapter on "Multidimensional Change" and he also
authored the "Action Plan" chapter in Lean Thinking (1996,
Simon & Schuster). As chairman of the Shingo Prize, the
annual award for lean excellence, Koenigsaecker regularly
visits plants implementing the tools of lean and TPM across
North America. He now is a principal in Lean Investments,
LLC, a new investment company focused on investing in
companies and then beginning a lean transformation.
(Lean Manufacturing Advisor, Feb. 2000) –Ed.
By George Koenigsaecker
When a plant or company fails to successfully implement
lean, people assume it was because the organization did not
know how to apply the tools. That is almost never the case.
Conversions fail because management did not know how to
handle the dynamics of change.
For instance, look at the chart alongside showing the
gains you can expect from a conversion. Now think about
the impact of a 100 percent productivity gain in your
organization.
The only way you can get that is to ultimately reengineer
100 percent of your jobs. The implication is that everybody’s
job is going to change, not only shop-floor workers’. People
in product development, engineering, marketing, mainte-
nance, human resources – in other words, people from
the shop floor to the top floor will work differently and
in departments that are structured differently. The poli-
tics of that are terrific. I’ll describe what you can expect
year by year so you’ll be prepared and better able to
manage the change successfully.
First, examine the chart showing the typical gains
your organization can expect from your conversion
efforts.
Typical Gains from a Lean Implementation
Starting from Starting from Ford-
Batch style System*
Production
Productivity +300% to +100%
Increase +400%
Inventory +1000% +300%
Turns
Defect -95% -80%
Reduction
Lead Time -95% -75%
Source: Benchmarking study of over 100 Japanese
auto suppliers done in the mid-1980s by
George Koenigsaecker for Rockwell International.
*Such a system uses flow in final assembly but batch for
parts production.
The chart shows that if you begin the conversion from
a batch style production system you can expect produc-
tivity increases of 300 to 400 percent. If you already
have a Henry Ford-style production system (flow in final
assembly but not in parts or component production) you
are ahead of batch, but there is still another doubling of
productivity and tripling of inventory turns to be gained.
Of the 100 companies my team studied, about one-
quarter were using the Toyota Production System. The
benchmark numbers on the chart come from this 25 per-
cent. Impressive. But what startled us about companies
in this group was besides their four-fold increase in
shop-floor productivity, they were four times as produc-
tive in their administrative functions.
In fact two-thirds of your ultimate gains will come
from extending lean from the shop floor to product
development, accounting, accounts payable, etc. For
example, at Jake Brake we converted product develop-
ment from a batch process to flow with cross-functional
teams. We netted over a four-fold increase in productivi-
ty, going from a 72-month average development cycle to
a 12-month cycle. ➝

A substantial lean conversion, one that gets to at least 80
percent of the possible gains, is a six- to 10-year journey.
Don’t be discouraged by the long time, the longer the better.
Once you get the conversion effort moving, it will grind out
improvements year after year. You’ll want it to go on forever.
Typically, the magnitude of the gains you make with lean
will revolutionize the position of your company in its indus-
try. If you are the first to convert successfully, you will prob-
ably take over the leadership position before anyone else
realizes what’s happening. If the competition starts imple-
menting lean, they must play catch up. Whatever lead you
open up, you should be able to maintain.
Year One: Two Steps Forward, One Back
The conversion process is not an even and smooth ride.
Progress the first year is slow. Be prepared to take two steps
forward, one step back.
The reason is simple: the people who are implementing
have never done it before. They are trying to understand
principles that they are not accustomed to using in their
environments. Being well intentioned won’t help. They will
make mistakes applying the principles and consequently, the
tools. Only with experience will they be able to go into a
particular product line with a particular volume, and a par-
ticular process and quickly and effectively apply the princi-
ples of lean and TPM. During this stage you should have the
help of an outside sensei or expert teacher. It’s the smart
thing to do.
Typically, you’ll find that some individual kaizen projects
show great potential or deliver big improvements. But your
follow-up won’t be as good as it should yet. The gains will
slip as people drift back to bad old habits.
In addition, not enough projects will be linked together in
a value stream to make an impact at the company level or
even the plant level yet. The gains are emerging, but they are
not big enough or broad enough in the plant or the company
for people to say without a doubt, This stuff works.
Naturally, there will be people who resist the
change. Every time the team takes two steps forward and
one backwards, they will highlight the step back. So there is
typically a lot of dissension at this stage.
Year Two: Appreciating Gen. Custer’s Position
In year two, the effort becomes very interesting, to put it
mildly. This is typically when the anti-change forces, the
people who do not want to see the status quo altered, really
assert themselves.
The "anti’s" aren’t lying in the weeds any longer. They
can’t. Their jobs are changing, and they are more worried.
The organization is in the second year of the conversion.
Programs usually go away after a year. When they realize
this one isn’t, the anti-change people become more aggres-
sive about pointing out the shortcomings and mistakes that
have been made.
The change agents are still making normal learning mis-
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Telephone 503-235-0600 • Fax 503-235-0909 • Copyright © 2000 by Productivity, Inc.
takes so the anti-change folks will have plenty of shells to
hurl. Basically, expect the second year to be pretty messy
and confrontational.
If you surveyed employees now, the consensus reply
would be, The jury is still out. Some people would say the
progress looks pretty good; others would be very negative.
Year Three: The Gains Appreciate
The third year is a building year. The people who are doing
the implementation are getting better. More and more their
efforts advance the organization two steps forward without
taking a step back. They are getting more skilled at applying
the tools and principals of lean and TPM. Now, when they
go in to convert an area, they get higher quality results right
from the start. Their follow up is better, too.
By the end of this year, you will be 36 months into the
conversion, so the compounding of accelerated inventory
turns, quality improvements, and increased productivity now
show significant gains. It’s hard for somebody to say this
isn’t different than anything the organization has done in the
past because the gains are now big enough to show up in the
financial statements and to customers. If you make it
through the third year, the anti-change forces won’t have
much of a case.
If you surveyed employees now, the typical comment
would be, We’re making good progress.
Year Four: Headed for Industry Leadership
Assuming your conversion effort is aggressive and sus-
tained, this is the year that change becomes the norm; the
change process starts to become institutionalized. People at
all levels will start kidding, We have our machines on cast-
ers because we move them every week. But instead of feel-
ing threatened, they take pride in that ability.
You’ll begin to get tremendous positive momentum in the
organization. Buy-in is nearly universal. There are still pock-
ets of opposition, but people, in general, are less afraid of
the change now. Having been through several rounds of
changes in the past years, they know that things were better
after the changes. When new change comes along as the
next step, it is less threatening. They are learning how to live
in a world of more rapid change.
From the fourth year on, the organization tends to make
it’s own good luck. It’s on a path to becoming a leader in its
industry. It has demonstrably shorter lead times, better on-
time delivery, higher quality, increased productivity, and
higher profitability. I have found that it’s not uncommon to
acquire customers from the positive buzz about you compa-
ny that begins to circulate through your markets.
Interestingly, this cycle holds true for administrative con-
versions, too. For example, as you convert product develop-
ment from batch-based departments handling design, draft-
ing, testing, etc., you turn it into a different organization and
you’ll go through a similar four-year cycle. ➝
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Telephone 503-235-0600 • Fax 503-235-0909 • Copyright © 2000 by Productivity, Inc.
The State of Lean Implementations
Unfortunately, not many companies in North America are
four years into a conversion process even though lean was
introduced here 12 to 15 years ago. I’d estimate that one or
two percent of North American manufacturers could be
described as 80 percent lean.
Another three or four percent have made significant
results, but have a lot more they can do. An additional 10 to
20 percent have dabbled in lean. These organizations built
some cells in part of the company or plant, experimented
with some tools, but went no further.
A big reason why companies never reach the 80 percent
mark is that they don’t know how far they can go.
Remember the chart at the start of this story? Just think, if
you’re a batch manufacturer and you make a 50 percent pro-
ductivity gain, it’s logical to think, Hey, we’ve done great. I
guess we’re there.
As a result, many organizations start the conversion but
stop unaware that they are still at the starting gate. That’s
why we have a lot of confusion about companies claiming to
be lean. They apply some of the tools for a couple of years,
grab some big gains by traditional norms, but they aren’t
lean. They have only scratched the surface of what
is possible.
But such lean "experiments" by a few companies have
achieved enough results to show that lean and TPM are
different, they work, and are worth pursuing. Yet most
organizations are only thinking about starting.
That’s not a reason for pessimism. Look at the evolution
of the traditional Ford-style production system. It started
about 1911. Fifteen to 20 years passed before it had spread
to the rest of the U.S. automobile industry. It needed a full
generation -- 30 to 35 years -- to spread through the
European auto industry. It was not common in Europe until
Spring and Fall Conferences
Offer Help With Lean and TPM
Hear advice about overcoming your implementation
obstacles or taking the next step in your improvement effort
at the upcoming crop of conferences. Conferences also pro-
vide good opportunities to visit plants in various stages of
lean implementations and to network with industry profes-
sionals involved in the same change process you are engaged
in. Here is an overview:
What: 11th Annual Total Producti ve Maintenance
Conference and Exposition
When: September 19-22
Where: Dallas, Texas
Sponsor: Productivity Inc .
Information: 800 394-6868 or www.productivityinc.com
after World War II.
The lean movement is following a similar course. With a
sea change as dramatic as lean, it will take a generation for
it to spread. After all, it is not just a collection of tools and
techniques, but a radically different business system and
philosophy.
The last time we had anything approaching this level of
change in business was during World War II when about
three-quarters of the workforce left to fight. There was a
total conversion of both product lines and production
processes to support the war effort. The change involved
mostly a new work force, and mostly a new product line,
and mostly new process technology.
The job of change management was made easier then by
the country’s unity of purpose. Everybody was willing to do
whatever it took to win. You won’t enjoy such commitment
at the launch of your conversion effort.
Toyota needed 25 years to implement TPS, the model for
lean. Granted, it was inventing the system as it went along.
Toyota began in 1947, but didn’t begin using kanban compa-
nywide until 1962. And it didn’t use all of the tools with
vendors until the early 1970s.
So if we are about 10 years into the time line, we have 15
years ahead of us. This is an exciting phase. Whole indus-
tries are just staring on the conversion path. In others, the
effort to date is spotty. There are lots of opportunities for
early adapters to dominate industries. ■
Do you have examples of change issues and solutions that
you’d like to discuss? George Koenigsaecker would be inter-
ested in hearing about them at gkaizen@mscanet.com.
Next:The psychology of change; people’s reaction to the
change process.
This years conference will make the critical lean-TPM con-
nection and spotlight the successful approaches to TPM in a
variety of process and discrete industries. Different tracks
will offer content to the experiences TPM organization as
well as those starting the journey.
Like last year, the conference also will feature the popular
Plant Operations and Maintenance Show, highlighting top
products that support TPM.
More organizations are realizing that they can’t become
lean without successfully implementing a TPM initiative.
Lean aims for the total elimination of waste and TPM gives
them the strategy and tactics to completely eliminate all
losses created by equipment. These losses include the waste
from failures, adjustments, and defects to name a few.
Eliminating these losses will be the subjects of more
than 40 concurrent sessions, keynote addresses, leadership
forums, pre-conference seminars, workshops, and a plant
tour. The content is being designed based on extensive sur
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