Creating Lean Management

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Jim Womack, Founder & Senior Advisor, LEI
 Is Management Work?
• Work = actions in an organization that créate value as
perceived by the customer.
• Incidental work = actions that are not directly valuable to
customers but which are necessary to perform actions
that are valuable.
• Waste = actions that neither créate value nor help front-
line employees créate value.
Management is, at best, incidental work!

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 What Dan Jones and I Thought
When We Wrote Machine (1990)
• Management would embrace the logic of lean thinking
and perform good incidental work and enable good
front-line work.
And
• We would create product-family value streams that
eliminated the need for much of the incidental work of
front-line management.
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 What We Proposed in Lean Thinking (1996)
For a lean transformation:
• Identify product families. (Draw a map!)
• Clearly specify value. (As the customer!)
• Analyze activities by value stream; place work in process
sequence (often with kaikaku); eliminate waste!
• Make products flow rapidly from start to finish.
• Pull value along the stream when flow was not possible.
• Continually seek perfection through endless kaizen.
To achieve high quality, short lead times & low costs.
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 What Happened When Organizations Tried?
Using the common mechanism of the model line:
• Dramatic improvements in performance always possible.
• New level of performance difficult/impossible to sustain.
• Additional kaizen often ineffective.
• Initiatives in organizations to do new things requiring new
processes and new value streams hard to achieve/sustain.
So…we were wrong!
Modern management (and traditional management as well) are
incompatible with lean transformation, and model lines can’t
overcome this problem,
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 Recent Experience with a Model Line
Created to expose the problems in the management system:
• Inability to level the schedule (seasonal peaks with layoffs.)
• Inability to run a balanced line due to lack of good parts.
• Inability to maintain equipment for high OA.
• Inability to work with product engineering to eliminate struggles
with manufacturability.
• Root cause: modern management with unaligned KPIs.
• Production managers with individual KPIs, met with side deals
with upstream and downstream departments.
• Daily management a listing of problems with no resolution.
• No escalation of cross-organization problems.
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 Jim Lancaster at Lantech Also Noticed

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 Evolution of Management at Lantech
Founding generation (1971):
Traditional management:
• Based on personal relationships with founder/boss.
• Authority system: “When in doubt ask Pat.”
• No precise measures of performance.
• Great for kaikaku – rapid reconfiguration of production from
process villages to product-family cells.
• Dramatic performance gains, with lots of consultant help.
• Difficult to sustain performance.
• Hard to succeed with additional kaizen.
• Hard to succeed with hoshin initiatives.
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 Evolution of Management at Lantech
The second generation (Jim, early 2000s):
Modern management:
• Authority and responsibility tightly linked.
• Performance measures (KPIs) for all managers.
• “Make your numbers!” (Management by objectives – MBO.)
• No questions about how numbers were “made”.
• Wide-spread resistance; many managers depart.
• Instability in daily performance with no ability to countermeasure
problems in real time.
• No improvement in performance; big drop in engagement.
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 Evolution of Management at Lantech
Third version (Jim also > 2006):
Lean management:
Daily management to create basic stability –
ü Front-line walk to see red (green needs no attention) and do
real-time problem resolution at every work cell.
ü Second-level walk, after front-line, across areas in each
department to see/countermeasure problems across areas.
ü Third level walk, after second-level walk, to countermeasure
problems running across departments (= entire business.)
ü To make this work, a “run rate” (a standard) is determined for
every process (= actual performance over preceding 60 days);
10 all deviations from run rate are “red”.
 Evolution of Management at Lantech
Lean management:
Kaizen to raise the standard of every process, using A3 analysis,
performed by up-skilled line managers.
• Authority and responsibility disconnected.
ü “How are you going to improve the process to achieve the new
standard?”
ü “What effect will these actions have on other areas and
departments?” (Align KPIs.)
ü “How can management at each level help you succeed?”
(Incremental work of management!)
• Sustainable kaizen; not “kaizen on top of chaos.”
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 Evolution of Management at Lantech
Lean management today:
• Effective strategy deployment/hoshin to resolve big
problems & seize opportunities.
• Performance stable; standards being raised with kaizen.
• Line managers now have time to pursue hoshin &
kaizen.
• Line managers now how skills to pursue hoshin &
kaizen.
• No need for a Kaizen Promotion Office.
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 Additional Benefit of Lean Management
Management development for line managers:

• Lantech’s management development system is endless cycles of

daily management, kaizen, and hoshin deployment.
• As managers rise in the organization, they must demonstrate
ability to countermeasure more complex problems and deploy
new initiatives.

• These managers become progressively more useful to Lantech.

• They make it possible for front-line value creators to create more
value by eliminating waste.
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 Lean Management in Summary
What is the work of management?
It’s the incidental work of:
• Daily management to maintain the standard.
• Kaizen with A3 to raise the standard.
• Hoshin, again with A3, to tackle big problems and seize
big opportunities.
• Development of the next generation of managers
through coaching, by means of cycles of daily
management, kaizen & hoshin.
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 Who Creates Needed Lean Managers?
Can continuous improvement/OpEx teams help?
• Most CI/OpEx “work” today is hands-on problem solving.
• This is how Toyota started in 1960s with the Operations
Management Consulting Division (set up by Ohno.)
• But Toyota years ago switched to the Operations Management
Development Division.
• Objective is to develop (coach) line managers to stabilize
processes, countermeasure problems, raise the standard, and
seize new opportunities, not to directly countermeasure
problems and seize opportunities.

15 What about you? What should your teams do?

 This Path Changes Thinking about Employees
At Lantech:
• In the recession of 1999, Lantech lost half of its sales
and laid off half of its people.
• In the Great Recession of 2009, Lantech lost half of its
sales but protected 90% of its people.
Lean manager Jim Lancaster began to see that employees
doing the same “job” at Lantech as at other companies
were actually much more valuable and were important to
protect for the future of the business.
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 The Work of Management

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 Lean Management Sound Good? What Can You Do?
• Jointly analyze your management system. (Do an A3!)
• Is it traditional, modern, lean or some of both/all?
• Ask how your current system interferes with your efforts to
create stability, raise standards, and deploy on big leaps.
• What experiments do you need to run in your organization to
begin moving toward lean management?
• Who should run them and how will you judge success?
• Can consultants help? Or do you need to do this yourself?
• When are you going to start?
How about Monday? Or even on the way home
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with your team?!