Sorry, But Lean Is About Cost Reduction… | Rob van Stekelenborg | LinkedIn

“It seems to be popular these last years and more recently to explicitly state that Lean is not (only) about cost reduction or cost cutting. See the recent posts by Mark Graban or Matt Hrivnak. So let me be somewhat controversial in this post (which I think is allowed to spark the discussion) and drop a bombshell: I think Lean is about cost reduction.”

Sourced through from:

Michel Baudin‘s comments:

I know that much of the TPS literature is about “reducing costs,” but it never includes any discussion of money! Ohno is even quoted as saying “Costs are not there to be measured, but to be reduced.” On the face of it, it makes no sense, because cost is an accounting term intended to represent the monetary value of all the resources spent to achieve a result.

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This “respect for people stuff”

The following two-minute dialogue between Jeffrey Liker and British consultant John Seddon has caused a stir in the US, primarily for Seddon’s saying “…all this respect for people stuff  is horseshit…”

Note: For a video of the full 45-minute session from which it is excerpted, see Panel discussion – Lean Ísland 2012 (08). The third participant in the conversation, the woman sitting between Jeffrey Liker and John Seddon is Yr Gunnarsdottir.

While dramatically stated, Seddon’s point is actually not that controversial. If you listen closely, he says that respect for people is not a “point of intervention,” meaning not a subject for which you bring in consultants or start projects. Mark Graban pointed out that he had never seen a company have a respect-for-people project, and I never have either. In his comments on Graban’s post, Rob van Stekelenborg writes “Still, more and more often I notice, Lean is attempted primarily as a leadership and a formalized (thru methods), bottom-up continual improvement effort without much attention for the strong industrial engineering roots it also has.” While I agree with Rob, I am not sure this is what Seddon meant.

Digging deeper, the following paragraphs quote some of my preferred authors/bloggers on the subject, with my own comments added:

1. Jeffrey Liker on Taiichi Ohno’s people skills

The video starts with Seddon asking Liker to rate Taiichi Ohno’s people skills  in a short answer, and Liker answers “terrible.” I would not have answered that. By whatever means he accomplished it, Ohno got thousands of people to work with him to develop and deploy the Toyota Production System, and it makes him only one in a long line of effective business leaders, sports coaches, and military commanders who don’t ooze charm from every pore.

My understanding of people skills is as the art of working with, through, and for other people and that the degree to which a person possesses these skills is measured not by their manners but by their achievements. Some of Ohno’s statements on people issues are surprising. Ohno’s open bursts of anger were not due to lack of self-control but were on purpose, as he explains on p. 93 of Workplace Management:

“I never get angry at the workers. However, with supervisors and above I will get very angry. The gemba is a convenient place to get angry at people. There is a lot of noise so they can’t really hear what l am saying. When I scold the supervisors on the gemba, the workers see that their boss is being yelled at and they sympathize with their boss.

Then it becomes easier for that supervisor to correct the workers. lf you call the supervisor away to a dark corner somewhere to scold him, the message does not get through. The gemba is a noisy place anyway, so if l am yelling at them and the person being scolded doesn’t really know why they are being scolded, this is okay. However, when the workers see their boss being scolded and they think it is because they are not doing something right, then the next time the supervisor corrects them, they will listen.”

For a higher-level manager never to scold workers is consistent with standard management practice going back to Sun-Tsu. On the other hand, that you should publicly scold supervisors for no particular reason in front of their subordinates to generate sympathy and make it easier for supervisors to do their jobs is a strange idea.  I have never done it, nor have I ever recommended it. In the plants I am familiar with, sympathy for supervisors among operators is in short supply, and a public scolding would do nothing more than undermine their limited authority.

Yet, I don’t think Ohno would write this unless it had worked for him as a manager at Toyota. As he explains, he was trained to praise in public and criticize in private, but he did the opposite on purpose. Had he failed, you could use this practice as evidence of terrible people skills, but he didn’t fail.

2. Art Smalley on the meaning of respect for people

Back in 2010, Art Smalley gave a detailed explanation of what respect for people means in the Toyota context, as he experienced it while working there. In a recent post on the ISPI conference in Reno, I wrote “Lean relies on people to improve operations, provides them with safe and secure jobs, and supports their professional development as a strategy for the company to gain market share, enhance profits, and grow.” While it was not my intention, I think it summarizes Art’s points.

Art also quoted the following excerpt from a TWI Job Relations training manual from World War II as evidence that it is not a new concern:

JR training manual excerpt

But we can dig further. In The Visible Hand, p. 69, Alfred Chandler quotes British textile expert James Montgomery writing in 1832, that “To assure good feeling and understanding, while guarding against too much lenity (modern: leniency) on the one hand, to be careful to avoid too much severity on the other, […] be firm and decisive in all measures, but not overbearing and tyrannical  — not too distant and haughty, but affable and easy of access, yet not too familiar.”

In other words, since the industrial revolution, advisers have been telling manufacturers that it was good business to show respect to their employees, but few have acted on this advice. Taylor’s “scientific management” went in the opposite direction, and so did Ford in its early assembly lines. It could be explained by the prevalence of immigrants from many different countries with limited education in the manufacturing work force of early 20th century America. But  in California 100 years later, Injex was using TPS to make auto parts for Toyota with great success and a workforce with 19 different nationalities and varied levels of education and English proficiency.

3. Mark Graban on Toyota, Respect for People, and Lean

On 2/26, Mark Graban wrote an extensive rebuttal of Seddon, to which I had also added the following:

In concrete terms, I have found disrespect easier to explain than respect. For example, giving a person a job that requires doing nothing 50% of the time is saying “your time is worthless,” and therefore “you are worthless.”  Many managers do not realize how disrespectful this attitude is, particularly where labor is cheap.

Ignoring complaints about minor safety issues, like sharp edges on a cart, is also showing disrespect. There are many such issues that must be addressed before asking people to participate in improvement and contribute ideas. The Frank Woollard quote in Bob Emiliani’s comment explains why you should pay respect to your people. It’s not about being nice. In the long run, you cannot compete unless your organization fires on all intellectual cylinders.

Frank Woollard was a British industrial engineer in the 1920s, and Bob Emiliani’s quoted him saying:

“This principle of ‘benefit for all’ is not based on altruistic ideals – much as these are to be admired – but upon the hard facts of business efficiency.”

In his article, Mark includes a photo of an exhibit at the Toyota museum, that contains the following text:

Toyota museum photo from Mark GrabanIt is in English, Japanese, and Mandarin, but the titles have slightly different meanings. The Japanese title means “Respect for Humanity,” not “Respect for People,” and the Mandarin title means “People-oriented.” To be even more specific, in Japanese, ningensei (人間性) means humanity in the sense of human nature, not humankind, which would be jinrui (人類).

On the other hand, the English paragraph is an accurate translation from the Japanese and clarifies the difference in the titles. Saying “please” and “thank you” is showing respect for people, but it does not imply any consideration for their specifically human sensory, intellectual and cognitive abilities.

I don’t know what the paragraph in Mandarin says, but it is visibly shorter than the other two. Mandarin is concise, but not this concise.

4. Rob van Stekelenborg on teaching respect for people

Rob van Stekelenborg,  blogging as Dumontis, also posted on this subject, introducing the new word “resp-act.” What Rob does here is go beyond general statements and give examples of how to show respect for people in situations involving suppliers, customers, or employees.

After all the theorizing on the true meaning of respect for people, it remains a vague and fuzzy guideline for anyone on a  shop floor today and tomorrow, and what Rob does to bring it into focus reminds me of the Critical Incident Technique I heard about from Steven Villachica at the ISPI conference.

Steven Spear on Problem-Solving with JIT: Not Bad for an Academic Paper

Steven Spear’s The Essence of Just-in-Time:Imbedding diagnostic tests in work-systems to achieve operational excellence  is a working paper from Harvard Business School in 2002 focused on the interaction between JIT and problem-solving. It is an important topic, only briefly alluded to in Lean Logistics and covered in more detail in When to Use Statistics, One-Piece Flow, or Mistake-Proofing to Improve Quality, but there are many other improvement opportunities besides product quality, and shining a light on their relationship with JIT is useful.

Spear’s paper is worth reading because he did his homework: it is based on research that involved immersion in a Toyota supplier support team, visits to seven Toyota plants and 12 suppliers in Japan and the US, and working as an assembler in a non-Toyota plant for comparison. I recommend in particular sections 4 to 7. Section 4 is a case study of mattress manufacturing at Aisin Seiki, from which the following sections draw general conclusions.

You have to look past the other sections, which mainly reflect Spear’s membership in the academia tribe. His research is described as an “ethnographic study,” which conjures up the image of an American or European spending 15 years among the Guaranis of Paraguay recording what they are willing to share of their language and culture. That this vocabulary should be used in a study of Lean reflects how alien the world of manufacturing is to academia.

As an academic, Spear is obligated to reference other academics, but not non-members of the tribe, no matter how major their contributions. For example, the only Japanese author in the bibliography is Takahiro Fujimoto, from the  University of Tokyo, but neither  Taiichi Ohno nor Shigeo Shingo appear. Section 3, on Methods, opens with “Many scholars argue…” With all due respect, the arguments of scholars don’t amount to a hill of beans in Manufacturing, because, unlike Computer Science or Biology, it is not a field to which they have contributed much. From Taylor and Gastev to Ohno and Shingo, the key innovators in Manufacturing have almost all been self-taught, Lillian Gilbreth being the exception with a PhD. Why was Spear’s research not done in an Industrial Engineering department, where its content would normally place it? As I found in my own ethnographic studies of academia, the need for grants pushes researchers in other directions, like genetic algorithms.