The importance of leadership
I strongly believe, however, that it is unjust to give people the expectation of “empowerment” in a system replete with waste and under the thumb of an autocratic management. Most waste does not result from a lack of ability or commitment on the part of employees or management. Often, these people are simply part of a structure and a way of operating that produces waste. But people striving to build world-class products have a right to demand an environment that allows them to work in a kaizen-based system, one that gives them the authority to identify and eliminate waste and continuously strive for perfection.
Only the leaders of the organization can create such an environment. Henry Ford had a few things to say about leaders, whom he clearly believed ought to be pioneers rather than plodders. He said:
A business ought not to drift. It ought to march ahead under leadership. It seems hard for some minds to grasp this. The easy course is to follow the crowd, to accept conditions as they are, and, if one makes a good haul, to take it and plume oneself on being smart. But that is not the way of service. It is not the way of sound business. It is not even the way to make money. Of course, a man may, following this old line, fall into a bit of luck and make a million or two, just as a gambler sometimes wins heavily. In real business, there is no gambling. Real business creates its own customers.
A business should pay everybody connected with it, and for every element used in it. It should pay for managerial brains, productive ability, [and] contributive labour, but it should also pay the public whose patronage supports it. A business that does not make a profit for the buyer of a commodity, as well as for the seller, is not a good business. If a man is no better off for buying than he would be if he had kept his money in his pocket, there is something wrong. Buyer and seller must both be wealthier in some way, as a result of a transaction, else the balance is broken. Pile up breaks long enough, and you upset the world. We have yet to learn the antisocial nature of every business transaction that is not just and profitable all around.
These words of Ford and others have continued to resonate in my mind as I have worked with many leaders at Boeing and other companies from a variety of industries — including service industries and the public sector, as well as manufacturing — who have come to my consulting firm for help in implementing a lean, world-class production system. Since my retirement from Boeing in 1999, I have worked as a consultant to organizations in the U.S., Belgium, Italy, and Spain. It has become quite clear to me that employee involvement starts at the top, with management. I will discuss this topic more in Chapter 5, but as both my Army and corporate experiences have demonstrated, leadership and management behavior are key. You cannot implement lasting and continuous productivity improvement from the ground up.
To create a lean, world-class production system, whether in a manufacturing company or a service or public-sector organization, managers must learn to embrace a long-term view, with the consciousness that what we do today is part of a continually improving process. In the chapters that follow, I will share some of the lessons I have learned in 30 years on the continuing journey to world-class performance. That journey is never finished, but I hope this book gets readers started in the right direction or helps them take a few more steps along the way.
What Is a Lean, World-Class Production System?
Lesson 1: People, not technologies, are the key to world-class performance.
I sat in the classroom listening to Yoshiki Iwata, then president and later chairman and CEO of the international consulting firm Shingijutsu Ltd., as he addressed another group of business leaders from around the world. This was my fourth in a series of trips to expose managers to the principles of lean, world-class production, and Iwata was teaching us about Just in Time (JIT), the production system his mentor, Taiichi Ohno, had pioneered at Toyota Motors.
My mind drifted back to 1966 and a U.S. Army Civil Affairs Advisory Course in which I had participated prior to becoming an infantry advisor to the South Vietnamese army. Speaking at Fort Gordon, GA, instructor, historian, and Fulbright scholar Dr. Bernard B. Fall had declared, “Technology doesn’t win wars, people do. Soldiers do.” He had both the academic and practical insight to inform this claim; by the time of his death by landmine the following year, he had traveled to Indochina five times and authored seven books on the subject, most notably Street Without Joy. I gained first-hand experience with Dr. Fall’s teachings in my 1967 tour of duty. In the hot Vietnamese sun, and later in Mr. Iwata’s classroom, I realized that a balance of people and technology was the key to both military and production victory.
What a great message, a simple message, that has been taken up and put into practice now at great companies everywhere, including Boeing, where I tested and refined such tenets of lean, world-class production. Technology is indispensable to most industries, but companies all over the world struggle to strike the balance between people and technology. Furthermore, one of the first truths managers face in trying to change their organizational cultures is that, although many companies build great products, so do their competitors. Companies may work hard on research and development or on cutting-edge tools for connecting with customers, but so do their competitors. No one can claim a monopoly or even a significant advantage in technology. Patents expire. Innovations can be reverse-engineered. Particularly when viewed from a long-term perspective, technology is rarely more than a brief edge that quickly dulls.
Where a company can develop a substantial advantage is in its processes, which are created and refined by people. A well-run process can result in the least waste, the highest quality, the lowest price, the shortest cycle time, the most satisfied customers. Processes that achieve these essential elements are more than just efficient; they are the key to competitive advantage. Such processes should be protected as core competencies and examined relentlessly for ways to improve or refine them. And if your processes aren’t anything special, that’s even more reason to get your people focused on improving and revolutionizing them, without further delay.
My definition of a world-class company, which I’ve tried to distill down to its very essence, is this: World-class companies are those that aggressively focus human potential to excel, far beyond all known or imagined standards of business performance. That focus means doubling productivity, increasing quality by factors of 100, cutting costs in half, achieving five or 10 times as many work-in-process inventory turns, reducing lead times by a factor of five or 10, and reaping equivalent gains in cash flow, profitability, and longevity.
World-class competitiveness is an ideal, a philosophy, and a quest. It is both a goal and a way of thinking and behaving to reach that goal. Really harnessing the power of people and putting them to work to create a lean, world-class production system, however, is easy to say but harder to do.
To get started, leaders must make a leap of faith, and they must truly believe that competitive advantage comes from unleashing the creativity of their people. And the best way to foster that belief is for those leaders to go out on the floor and get their hands dirty with the people doing the work.
More than 100 managers from around the world took notes that day in the classroom with me, as Iwata shared lessons from his life-long experience with JIT manufacturing. Those managers would soon practice the techniques he discussed on the shop floor, getting hands-on experience during a two-day kaizen event hosted by Hitachi and led by Shingijutsu consultants who specialize in helping companies to develop JIT systems. The following week, Iwata’s consultants would take these managers on tours of companies that have implemented JIT production. This combined learn/do experience was and continues to be powerful. Through it, managers learn the concept of kaizen, the continuous improvement essential for achieving JIT operations. Many participants are then required to begin implementing kaizen within a few weeks of returning home. The shift from classroom studies to hands-on, action-oriented learning is essential for changing the management culture to emphasize people rather than