Why do Lean projects fail so often?
Is the Lean leadership philosophy doomed to failure?
Toyota, a company known for its Lean leadership philosophy, faced serious accusations regarding brake problems in 2009. Since then it has been publicly questioned whether Lean really is a functional leadership philosophy. This suspicious view was also supported by two studies conducted by IndustryWeek (IW/MPI Census of Manufacturers), the first of which was published in November 2007. According to the study, nearly 70% of American plants use Lean manufacturing as an improvement method. In 2008 IndustryWeek conducted an extensive survey and found that only 2% of the American companies have fully achieved the results expected from the Lean projects. In other words, Lean is used in many companies, but 98% of projects are more or less unsuccessful. Why? Is it due to the Lean leadership philosophy or perhaps the fact that it is employed incorrectly?
Case Toyota was investigated by thirty NASA scientists in the spring of 2010
In February 2011, United States Secretary of Transportation Ray LaHood summarized the results of the investigation. Unintended acceleration was caused by a rubber floor mat which trapped the accelerator, not by an electronic defect. The floor mats had been installed at the Toyota factory or at an authorized dealership, so in my opinion Toyota cannot fully “wash its hands” of the matter. The constant and extensive recalls did, however, create the impression that Toyota was struggling with a sudden cluster of quality and safety issues. In the autumn of 2010 when the media frenzy had calmed down, Toyota ranked first in 10 of 17 Consumer Reports categories. In addition, Toyota was number one in two J.D. Power categories among all automakers. The categories were three-year durability and vehicles lasting more than 200,000 miles. By halfway through 2010, Toyota had regained its number one position in retail sales in the United States. It could thus be said that Toyota and its Lean leadership philosophy survived the test.
Three most common reasons why Lean projects fail so often
I have read numerous articles on the topic and discussed the issue with university researchers and corporate executives. Here are summaries of the reasons:
1) Lack of real commitment from senior management and even board members
- The senior management does not have a clear understanding of why the Lean leadership philosophy should be used, what Lean means in their company and what its implementation requires from them. Too often the objectives, responsibilities, powers and roles have not been clearly defined and are not concretely used in strategic or operational management. This causes ineffectiveness in the organization’s activities and thus the creation of a Lean culture and concrete development projects do not progress either.
- Main projects are not tied to the company’s strategy. Thus the management does not pay attention to them and they are not carried out.
- Lean is also not only a production improvement method, as stated by American companies in the 2007 IndustryWeek survey, but rather a company-wide and customer-oriented method for managing processes and people.
2) Lean is purely used as a cost cutting program
- There is nothing wrong with cutting costs, but if your company’s development only focuses on cutting costs, you will face two problems:
a) How will you be able to make your organization committed to development in the long run.
b) How can you prevent your customers from reflecting the achieved savings on the sales prices?
For these reasons your Lean project should primarily focus on seeking growth and regeneration. At the same time you can look for ways to achieve cost savings, but it should not be the only goal of your project. In other words, Lean should be connected to your strategy and your strategy should answer the question “What are we going to do?” (which markets, which customers, which competition methods, which products and services etc.). Your strategy should also answer the question “How are we going to do it?” The Lean leadership philosophy is closely linked to the “how” part of a company’s strategy because the things defined in the strategy are put into practice through processes and people. It is therefore important to understand that the strategy is a verb, NOT a noun!
- Wrong people are responsible for Lean
- One of the most important tasks of an executive is to recruit the right people in the right positions. If one fails at this task, the Lean project will most likely be unsuccessful. The fact is that development work is not suitable for everyone. Therefore people should be replaced if it seems that no progress is being made.
- Remember: “Where there is a will, there is a way. Where there is no will, there is an excuse.”
The Lean leadership philosophy will also be discussed extensively at the 2016 Subcontracting Trade Fair with digitalization and leadership being the main themes. Lean Lion Oy will organize a related seminar and information sessions at the trade fair.
Download the 9 ohjetta parempaan Lean-johtamiseen guide here: http://www.leanlion.com/9-ohjetta-parempaan-lean-johtamiseen (in Finnish)
Test how Lean your company is:
http://bit.ly/lean-testi (in Finnish)
Co-founder and Chairman of the Board
Lean Lion Oy
- IndustryWeek / MPI Census of U.S. Manufacturers. Sep 18, 2007
- Everybody’s Jumping on the Lean Bandwagon, But Many Are Being Taken for a Ride. IndustryWeek, May 1, 2008.
- The Toyota Way to Lean Leadership. Jeffrey K. Liker & Gary L. Convis, 2012.
- Practical experiences and empirical observations from Lean Lion, university researchers, corporate executives and other Lean specialists
Columnist: Pasi Vastamäki is a co-founder and chairman of the board at Lean Lion Oy. Lean Lion Oy offers concrete development projects to boost productivity, tailored online training and face-to-face training together with Finland’s leading experts. The company provides comprehensive and functional productivity-enhancing solutions for all industries. Further information: www.leanlion.com