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Lean Times

Mark Crocker - September 3, 2019 - 0 comments

During the past 20 years, Lean has become one of the prominent performance-improvement programs adopted by companies around the world. Recently, organizations as diverse as steelmakers, insurance companies, and public-sector agencies have benefited from “leaning” their operations with Toyota’s now-classic approach: eliminating waste, variability, and inflexibility.

Yet in our experience, organizations overlook substantial potential savings when they implement or expand operational-improvement programs. Some companies set their sights too low; others falter by implementing Lean and other performance-enhancing tools without recognizing how existing performance-management systems or employee mind-sets might undermine them. Still others underestimate the level of senior-management involvement required.

The broader challenge underlying such problems is integrating the better-known operational tools and approaches with the more difficult leadership and cultural skills, including the development of leaders who can help teams to continuously identify and make efficiency improvements, link and align the boardroom with the front line, and build the technical and interpersonal skills that make efficiency benefits real.

Making operational change stick is difficult. Operations typically account for the largest number of a company’s employees and the widest variation in skill levels. Teams are often scattered across dozens or even hundreds of sites throughout the world, function independently, and have distinct corporate cultures—particularly if M&A has fueled a company’s growth. Each facility may specialize in different products or services and face unique pressures from customers, competitors, and regulators.

Many companies emphasize the technical aspects of their programs over the organizational ones. But overlooking the people side drastically lowers any initiative’s odds of success.

Neglecting the organizational components of an operational transformation can delay or even derail it. A better understanding of the cultural starting point enables companies to determine where they should focus at the beginning of a program, when to implement its various elements, and how to achieve their goals.

Companies that misread employee mind-sets and other cultural elements squander time and resources. After accounting for the way culture and other organizational factors will affect the goals of a program, leading companies put what they learn into action. They reap bigger, more sustainable benefits by balancing the program’s hard and soft elements and developing their line managers’ transformation leadership skills.

Large-scale change requires all employees—from the C-suite to the shop floor—to think and work differently. Companies that use only experts to orchestrate change programs may be fairly successful in the short term but once the low-hanging fruit is gone, such efforts often lose steam as employees slip into old habits.

By contrast, when a company shifts the attention of its line managers away from firefighting, develops their leadership capabilities, and expects more from them, the gains are bigger and longer lasting. To get the most from large operational-improvement programs, top companies look beyond the technical aspects of change programs and embrace the organizational dynamics.

Complementing the development of technical skills with a focus on the organizational capabilities that make efficiency benefits real can help companies to achieve more substantial, sustainable, and scalable results.

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