Apr 25 2014

A Company Without Job Titles Will Still Have Hierarchies | Harrison Monarth | HBR Blog

See on Scoop.it – lean manufacturing

“Radically flat. That’s the management goal that Tony Hseih, founder of e-commerce giant Zappos, aims to achieve by the end of 2014. To get there, Hsieh plans to toss out the traditional corporate hierarchy by eliminating titles among his 1,500 employees that can lead to bottlenecks in decision-making. The end result: a holacracy centered around self-organizing teams who actively push the entire business forward.”

Michel Baudin‘s comments:

In this strange article, organization, hierarchy, and status is treated exclusively as a psychological issue. There is not a word about the need to get the organization’s work done, and its implications in terms of responsibility and authority.

For example, you need a process to resolve differences of opinion on what needs to be done. Particularly when the choice is not obvious, you need one person mandated to make a decision and take responsibility for the consequences. It’s called a manager.

As an employee, at any level, you need someone who speaks for the company and can tell you its expectations. It’s called a boss.

It may be psychological uncomfortable to follow procedures and report to another human being, but it is generally recognized as a price you have to pay to get 10 people — or 300,000 — to work effectively towards a common goal.

Remove all these structures and procedures, and what do you get? Self-organized teams doing great work? Or indecision, frustration, bullying, and chaos?

See on blogs.hbr.org

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Apr 24 2014

Learning and Experience Curves in Manufacturing | Quarterman Lee

See on Scoop.it – lean manufacturing
“Learning Curves have traditionally been used for cost estimating and training purposes. However, they have a much wider applications, including Manufacturing and Marketing strategy. They underly the concept of Continuous Improvement. Like compound interest, they generate large benefits from seemingly small, incremental change.

The learning curve came into prominence during World War II when Army Air Force scientists noticed that the cost for a given aircraft model declined with increased production in accordance with a fairly predictable formula. Each time the cumulative production doubled, cost declined by a fixed percentage. In the aircraft industry, at that time, this reduction was about 20%. Learning curves underpin the concept of Continuous Improvement.”

Michel Baudin‘s comments:

It’s good to see a well-documented, informative article by Quarterman Lee on a topic that is often ignored in the Lean literature but that I think if fundamental to the economics of improvement.

The title mentions both Learning and Experience Curves, but the body of the article is only about Learning Curves. The difference between the two is that Learning Curves are only about labor, and were developed first, in World War II, as Quarterman points out. The Experience Curve is a generalization due to Bruce Henderson of the Boston Consulting Group in the 1960s, which applies the logic not just to labor but to all costs.

The Experience Curve theory is predicated on the notion that there is such a thing as a meaningful cost per piece, and asserts that it decreases with cumulative volume along an inverse power curve, the evidence for which is in the evolution of market prices with cumulative volume in a variety of industries.

The effect of this curve on pricing in an industry depends on its clockspeed. In electronics, with product lives of four years, it is dominant. In cars, where the experience accumulated for over a century is still relevant today, we are so far on the curve that it is not a major factor.

The justification for an inverse power law is in fact simple. It stands to reason that, the more you have already made of a product, the easier it is to make the next unit, and therefore that costs should decrease as a function of cumulative volume. Since we are talking about a broad trend, it should also be a smooth decline.

Could it be linear? No. It would mean a straight line in cartesian coordinates.and that would lead to negative costs, which makes no sense. If you toggled the y-axis to “logarithmic,” a straight line would represent an exponential decline. But it would not make sense either, because it would mean that you could produce an infinite volume for a finite cost. If, as in the above picture, you make both axes logarithmic, a straight line means an inverse power law. Costs never go negative, and it still takes an infinite amount of money to produce an infinite quantity. This is why, among the simple possible decline patterns, it is the only one that cannot be excluded based on its logic.

See on www.strategosinc.com

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Apr 22 2014

When “Lean” is Watered Down to “The Customer is King”

See on Scoop.it – lean manufacturing

Making your business lean might be a surefire way to lose customers | Quartz.com |Stephen MacIntyre

“Recently, I lost my wallet and had to replace a couple of bank cards (a situation millions of people face yearly). The first bank I called required me to slowly navigate through an automated system with an endless succession of prompts, while I grew increasingly frustrated and weary. Finally—after almost an hour!—a robotic voice told me that I would receive a new card in about a week.”

http://qz.com/190968/making-your-business-lean-might-be-a-surefire-way-to-lose-customers/

Michel Baudin‘s comments:

The Toyota Production System (TPS) is the best performing way we know to build cars, and it has a rich technical and managerial content. From the 1970s on, Toyota promoted among its suppliers. They were joined in the 1980s by Toyota’s competitors and a few non-automotive pioneers, who didn’t fully understand it.

Rebranded “Lean” in the 1990s, it was sold first in many manufacturing sectors and then outside of manufacturing. As a consequence, however, the “Lean Body of Knowledge” offered by most consultants and training organizations became more and more generic, and gradually drained of substance.

In this article, Lean boils down to “maximizing customer value using fewer resources.” If that is what Lean is,  then I don’t know any businessperson — from my local dry-cleaner to the CEO of a major manufacturing company — who would not claim to doing it. They might express it in simpler words, like “taking care of customers without wasting money,” but the meaning is the same.

“The customer is king” is Business 101, not the defining characteristic of TPS or Lean as I see it, which addresses the needs of all stakeholders, not just customers. A “relentless customer focus” may be what you want to tell customers about, but it is not the basis for providing supplier support or career planning for production operators.

See on qz.com

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Apr 17 2014

Point Kaizen in Offices – A Disaster | Wiegand’s Watch

Bodo WiegandThis is a translation of the bulk of Bodo Wiegand’s latest newsletter, about Lean in Germany, followed by my comments:

“I ‘m really a patient man , but what I experienced this week is…

Simply unbelievable.

As I was told quite proudly by a manager that they had introduced Lean Administration , but stalled, and he asked me, as a specialist in these matters, how to change the mindsets of employees. To my question, “What have you done so far ,” the proud answer came like a pistol shot: “5S in the office – the whole program. Offices and desks cleared and in tidy rows,  refrigerators, coffee makers , printers and flowers removed , clean desk introduced, etc.”

Then I asked him how he would have introduced Lean in production. ” Since we have identified the work areasand then implemented ​​5S.”

“Oh, you have not unlocked the employees’ lockers,  taken away their photos, or instructed the staff instructed on how they should hang their pants and where to store their purses ? ”

“No, of course not ,” was his indignant reply.

” Oh, and why do you do this with the office staff?”

“You mean …”

“Yes , I mean … ” He understood.

Have others out there also understood?

Ask for your money back from any consultant who has pushed you to such actions. These so-called Lean consultants have no idea of Lean but have sure created an image of it : they have durably changed the employees’ mindset , but certainly not in the direction they wanted. Now  they think

Lean is crap. 

and not

Lean helps us – Lean saves my time – Lean is good.

 

With the Managing Director and his colleagues — whom he called then — we have then discussed how to “recover the cow from ice” and generate a positive feeling .

What made sense was to use the successful concept from interactive, multimedia learning:

  • Simultaneous learning
  • Simultaneous action

We begin with the introduction of e -mail etiquette and the meeting culture. In parallel, we analyse the information structure and meeting structure.

At the same time , we improve the social areas, buy large refrigerators with compartments for each employee and install good coffee machine. In addition, we place remote printer  where it makes sense . All this just to improve the mood.

In parallel, 1 employee for every15 was selected for training in a four-week program as a Lean Office Manager. Anyone who wants to can complete the course  for Lean Assistant Administrator.

All this just to improve the mood and get a chance to think again about Lean in the sense of “Lean is indeed quite good , Lean can save me time , Lean relieved me.”

Because Point Kaizen in the office areas consists of the following elements:

  • 5S in the social areas.
  • Introduction of e-mail etiquette.
  • Improvement of the meeting culture.
  • Standardization of the filing system.

These elements , implemented, bring perceptible relief – an average of 1 to 2 hours per day. This makes the employee associate Lean with relief and nurtures a positive attitude towards Lean management and  the important further steps in process optimization.

Introducing Lean in office areas has very little to do with tools and methods, but very much with changing the mindsets of employees. Changes on desks in the employees’ private areas will come as a consequence of the change in mindsets — it can never be forced from the outside.

Maybe we will achieve even this turnaround. What gives me hope is the spirit of the leadership that immediately got down to brass tacks  and has a date for the leadership workshop and agreed on further actions.

We whall see. I will keep you posted.”

Michel Baudin‘s comments:

I would agree with Wiegand on the folly of starting with 5S, whether on the production floor or in the office. In 2014, whether office work is the routine processing of expense reports or aircraft design, it is not primarily done on paper but on screens with software, and the relevance of neat desks is dubious at best.

Tidying up and organizing what Wiegand calls the “social areas” — by which I assume he means the places where employees take breaks — can be good for morale but will not otherwise directly  improve performance.

E-mail etiquette can make a difference, but focusing exclusively on email obscures the need for more sophisticated means of electronic communications, to support, for example, collaborative work in a project team, with revision management on its output.

The part on standardizing filing systems, in a German context, strikes me as scary. From my experience with German offices, standardization for the filing of paper documents is probably what they least lack. With electronic documents, standardization all too often takes the form of carrying over “smart” numbering systems that, while helpful with paper, are cumbersome and counterproductive in databases.

Generally, I think there is too much variety in office work for there to be much value in a generic, one-size-fits-all concept of a “Lean office.”

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Apr 13 2014

‘Gods’ Make Comeback at Toyota as Humans Steal Jobs From Robots | Bloomberg

See on Scoop.it – lean manufacturing
“Inside Toyota Motor Corp.’s oldest plant, there’s a corner where humans have taken over from robots in thwacking glowing lumps of metal into crankshafts. This is Mitsuru Kawai’s vision of the future…”

 

 

Michel Baudin‘s Comments:

According to the article, Toyota’s management feels that maintaining the know-how to make parts manually is essential to be able to improve automated processes.

See on www.bloomberg.com

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Apr 12 2014

More on Toyota’s “Respect for Humanity”

Much has already been said on this topic, including an extensive discussion in this blog. So, when Frederick Stimson Harriman launched one in the TPS Principles and Practice group on LinkedIn, I was wondering whether I would learn anything. 62 comments later, I would say yes.

The contributors include Toyota alumni  Bob Bennett, Dave Condinho, Luis Javier Sosa Gomez, and Christoph Roser, as well as many others who shared their personal experience outside of Toyota, including Jay Bitsack,  John Davis,  Kris Hallan, Rachel Inman, Emmanuel Jallas, Ram Parthasarathy, Paul Quesada, Łukasz Rogatka, Patrick Ross, William Ryan, and Stuart See.

Frederick’s question was:

“How have you experienced the TPS Principle: ‘Respect for the Person?'” in the context of “criticism [of Toyota] in Japan and in other countries, with complaints of unfair treatment of labor, and a domineering stance towards suppliers that limits their growth and attempts to deprive them of their right to negotiate prices.”

In response, there is what has already been said but is worth restating, personal stories from the shop floor, and new perspectives on the topic. Below are  the excerpts from the discussion that I found most enlightening, as well as my own, edited inputs. I still recommend checking out the complete thread on LinkedIn.

Following are a few themes around which I felt this material could be organized:

gavelTestimonials of Toyota Alumni

Christoph Roser

During my five years at Toyota I was never blamed for anything, and rarely was anybody else. When I worked for other companies in Europe, not a week went by without someone trying to blame me (or anybody else but them) for something. But then, I also had a very good boss at Toyota, which probably also makes a big difference.

Two observations:

  1. During my last visit to Toyota (Motomachi Plant) I was told that there are very minor differences in the uniform according to employees position, e.g., a regular operator has a gold rim on his cap, whereas his team leader has not. But I don’t know if this is for all Toyota plants or only Motomachi. In any case, the difference was minor. BTW I found it interesting that the “lower” position got the gold rim. In the Military it is usually the other way round 😉 I guess that already tells something about the value of the shop floor operator at Toyota.
  2. According to literature, at Toyota it is quite possible for employees to convince their managers away from their preferred option A to another option/solution B. However, a contact close to Toyota told me that this is changing. If the manager opposes a project, the project leader now prefers to wait 2 or 3 years until a new boss comes around in order to start the project anyway. This is even worse at other Toyota Group companies. My source said that it seems that Toyota is hiring more “selfish” people. The exception seems to be Denso, which for that reason reduces its exchange of managers with other Toyota groups. But as I said, this is not a personal observation of mine, but of a contact close to Toyota.

Just remembered something else I read about Ohno: In my view Ohno is the main driver behind TPS. Regarding respect for humanity, however, according to Reingold (Toyota – A Corporate History, 1999, pg 41f) Ohno terrified his colleagues, gave impossible tasks, criticized, yelled at them, and kicked them. Many tried to avoid him as much as possible. Initially nobody wanted to cooperate with him, and he got lots of resistance. He caused people so much trouble so they could not sleep at night.

Maybe you could call it tough love.

If Ohno would have been a nice sweet guy, there would not be a TPS as we know it (or maybe not even a Toyota at all). In my view, respect can still be demanding, but this takes skill. Unfortunately, I don’t know enough about Ohno to say if his approach was skilled and respectful or more towards abusive. In any case, he got results.

Bob Bennett

In my 29 year Toyota career we generally used the term “mutual respect.” We respected people by giving them meaningful work that challenged them to work hard, creatively, and with a sincere dedication to the satisfaction of their external and internal customers. We expected them to be engaged in their own capability and career development by identifying and working with colleagues to solve problems that helped us strengthen our competitive advantage. We expected that people work during assigned working hours, adding value in return for the very competitive compensation and benefits we provided.

Mutual respect also requires mutual obligation. As a group vice president and officer, my strongest obligation was to ensure that our company continued to survive and prosper so that every employee had the opportunity to spend their career in Toyota, and their children and grandchildren could have the same opportunity. Therefore I have important leadership responsibilities to chart a clear path to our vision, to facilitate effective cross-organizational collaboration and cooperation to develop the process improvement action plans necessary to deliver superior business results, and to create a safe and nurturing environment that enables every person at every level to participate in effective problem-solving to both improve our business results and develop their full human potential.

If things do not happen as I expected my first responsibility is not to blame, but rather to humbly reflect (hansei) and ask questions such as, “How have I failed to help them understand?” or “What can we as management do to solve problems or make improvements so that it is easier for people to do the work the way that we desire?” or “What can I do better next time?” (This is how people and organizations learn and improve. Pointing a finger of blame provides no learning.)

If my company got into a period of financial difficulty, my compensation should be reduced first before we ask our subordinates to sacrifice, as management has the greatest influence on the performance of the company.

Yes, expectations are very, very high at Toyota. With a kaizen spirit, we often describe a “permanent state of dissatisfaction” always seeking a better way. This is our duty to our society, to our customers, and to our employees. Mutual trust and respect are mutual, with strong obligations on both sides of the relationship. And for me “leadership his heart” and the values and behaviors I describe above must come from the heart as well because the brain. And what a thrill it is for the entire team to build such a great legacy, and to have achieved it with the integrity, and humanness, and value to society that we can be proud of!

Luis Javier Sosa Gomez

I worked for Toyota from 1998 to 2008 , Toyota always manifested a personal interest in people and the protection of the environment and of course, to generate profits for its shareholders

Although times change and now, I’m not working with Toyota, I am working with Nissan – Renault Alliance , Toyota made ​​a legacy very difficult to forget , especially if we talk about human resources.

As for the relationship with suppliers, like any business , always looking to achieve profitability and a least we are talking about business , there will always be some degree of pressure from the bargaining unit , handle low prices, after all is a struggle to be more competitive , to sell a car in good quality, environmentally friendly and reasonably priced compared to those offered in the market.

So is that Toyota , surely ; will maintain its philosophy that has enabled it to position itself in such a high place, everyone wants to imitate , when you see things from the outside , perhaps, even could say something, but when you’re in and work for Toyota, things look different.

“Respect for Humanity” versus “Respect for People”

Aretha Franklin about Respect
Aretha Franklin demanding Respect

My first reaction was that, as explained before, the TPS principle is not “respect for the person” or “respect for people” but “respect for humanity” (人間性尊重, ningenseisoncho). To me, this means paying due consideration to human nature when designing work in order to take full advantage of employees’ brains as well as muscles, while protecting the output from operator fatigue, forgetfulness, or the power of habit. This is very different from being polite.

Frederick pointed out a 2008 article by Jon Miller on the subject, where he essentially makes the same point:

“The phrase 人間尊重 is not rare within the CSR (corporate social responsibility) statements of major Japanese corporations. The word 人間 means ‘human’, ‘humans’ or ‘people’ and 尊重 can be translated as ‘respect.’ But the phrase used at Toyota is a bit different. It is 人間性尊重. The observant reader or student of Asian languages may recognize the extra character making ‘human’ or ‘people’ into ‘humanity’ or ‘humanness.’ […] So our current understanding of “respect for people” must be broader than simply respecting the rights of every person within a free society or to honor and respect our elders or our peers. To be wordy, the literal meaning of Toyota’s phrase 人間性尊重 is ‘holding precious what it is to be human’ and once could say ‘valuing humanity’ or even ‘respect for humanity’ but ‘respect for people’ in my view is pithy but does not convey the full weight of these words in the original language.”

Kris Hallan took a stab at clarifying this distinction as follows:

“The difference between these two definitions/translations might boil down to this: I can be very respectful to an individual person and everyone can agree on the amount of respect I show…while I lay them off for a lack of work. In that situation I can show tremendous respect for the individual by listening, being honest, forthright, and sincere. At the same time I completely disrespect what makes that person human by ignoring all of the diverse capabilities and potential that person inherently possesses. By laying them off, I disregard the potential for that individual to earn their pay, while being oh so respectful about it.”

The following was advice to factory managers: “to assure good feeling and good understanding, while guarding against too much lenity on the one hand, to be careful to avoid too much severity on the other, to be firm and decisive in all his measures, but not overbearing and tyrannical — not too distant and haughty, but affable and easy of access, yet not too familiar.” This exhortation to show respect for people is from James Montgomery’s “The Carding and Spinning Masters” (Glasgow, 1832), quoted by Alfred Chandler in The Visible Hand.

The language is quaint, but the substance is not far from the kind of advice today’s would-be managers receive on working with subordinates. You have to show them respect as people, but that is not what I understand Toyota’s “respect for humanity” to be about.

Being human means being able to learn skills, sense your environment, apply logic to solve problems, and create. Showing respect for humanity means being aware of the unique capabilities of people and putting them to use. Courtesy may be a means to this end, but it is not the end.

Generic corporate philosohyCorporations and Philosophy

Mission statements and other expressions of corporate philosophy need to be taken with a grain of salt. Philosophy is best written by individuals with no commercial stake in the way their ideas are received.

What is really behind the emphasis on “respect for humanity”? Clearly, the practices of US car makers post World War II did not fully leverage the potential of the work force. They have been variously described as “check your brains at the door,” command-and-control, or “management knows best.”

And what resources did tiny Toyota have to compete with these behemoths? The brainpower of its people is high on the list. Finding a way to leverage it was a key to competing with organizations that didn’t value their own.

It’s nothing philosophical; it’s only business.

Respect for Humanity and Management Practices

A management style

As a manager or as a consultant, you don’t implement or recommend policies labeled “respect for people” or “respect for humanity.” Instead, you make changes to the way work is being done and organized that are aligned with these values and needed for your business.

It goes beyond the obvious realization that the effectiveness of the Stalin/Darth Vader model is limited. It also means taking a critical look at current fads, and, in particular, putting a stop to counterproductive, demoralizing practices like 360 evaluations, Rank-and-Yank, or Management-By-Objectives, and replacing them with others that are tailored to the business at hand, including, for example, policies that are part of TPS like career planning for permanent employees, a pay-for-ability component in the wage system, and Hoshin Planning. But the list is not limited to TPS. It can include, for example, the Balanced Scorecard developed in the US.

To be more specific, following are a few differences between management practices that I think are relevant to this topic, as discussion starters:

  • Supervision: I have seen many factories where one first-line manager is in charge to 90 to 100 operators, with 4 or 5 work leaders as intermediaries. In Toyota car plants, you have one first-line manager on the average for about 17 operators. The operators are further organized in teams of 4 to 6, with one member acting as team leader.
  • Career planning for operators: Major American companies used to offer career plans for their professional staff. Today, these plans are mostly gone, and are sometimes replaced by Rank-and-Yank. They never existed for production operators. I know Toyota has them for operators in the past, and I assume they still do.
  • Response to safety concerns: An operator complains about finger cuts caused by sharp edges on a fixture. Does the manager respond immediately, by adding rubber guards while organizing for the tooling department to smooth the edge on the fixture? Or does he ignore the issue?
  • Fashion: At Porsche, you can tell employees’ positions from what they wear. At Toyota, you can’t; when on the floor, the plant manager is dressed much like an operator. At Honda, everybody wears white uniforms. At Boeing, there are no uniforms. A dress code, or the absence of one, is a management statement on the way it views people.

Emmanuel JALLAS

As far as I am concerned, I never met respect for me when I was employed. I was fired 4 times. Not because I wasn’t doing the right things, nor because I and my teams had no results. But because I didn’t behave the way the King and his court wanted me to behave. I also raised some (a lot of?) jealousy. I have also no love for company politics which always end in a human disaster for the team members. Nor did I jostled for my position. So I also left when the job wasn’t fulfilling. Simple respect for me, my values and beliefs.

On the other hand I can remember myself answering to one of my operators, shortly after being hired myself, 20 years ago. This operator, Jean-Pierre was his name, came to me with a dismantled welding mask. “Can we have this mask replaced sometime ?” did he ask. “Here are the keys of company’s car. Go right now to this shop. Ask for Alain (vendor’s name). Ask him to provide you the mask of the latest technology that fits your need, and to send me the bill. By the way, if you need some other tools, please buy them.”
Jean-Pierre remark was “I’ve been here for four years, and never had a tool bought to help me do my job. I can’t believe It.”

My belief is that respect is shown in small details of working life. Your teamates are behaving the way they do, not because they want to annoy you, but because they are who they are. (just try to change yourself or your behaviors !). If you consider them smart enough to do the job, so you shall consider them smart enough to know what they need, to try what they want to try, to say what they think they need to tell you, and to know what’s good for your company from their point of view. After all, aren’t they making your living?

flagsIrrelevance of National Culture

We cannot over-stress the irrelevance of national culture to this issue. Japanese traditions, for example, are short on respect for people in many ways. Young people who married against their parents’ wishes, for example, were not viewed as courageous but selfish, because they were shirking their duties to family. Sons of small business owners were shunned in recruitment by large companies, based on the assumption that they would eventually leave to take over the family business. And women’s talents were simply ignored…

Conversely, the culture in which I have seen the greatest respect paid to people who do menial jobs is the US. I think the reason for it is that doing these jobs is considered a normal part of education. For all you know, your waiter tonight may be the teenage child of a high-level business executive. Later in life, this experience is the basis for claiming to have been “born in a log cabin he built with his own hands.”

Yet the national cultures do not translate into consistent practices on manufacturing shop floors or in offices.

Ram Parthasarathy:

Michel, to take your very valid analysis a step further, the challenge is to turn this “negative” into a positive. These different people from diverse cultures have different strengths and weaknesses. It is important to understand these and leverage these strengths.

In a small town in India, we used girls just out of high school, with minimal English speaking knowledge, to manufacture engine valves which were accepted in Europe by Daimler, Audi, VW, Fiat, etc. These kids were like a blank slate, but the advantage of that was that you could mould them any way you wanted to. Results were simply amazing.

humanismFaith in People

What is necessary for managers to even attempt to put to use their people’s ability to sense, learn, analyze, and create is a belief that these abilities exist. It is an act of faith. It is easy to have faith in people when living a comfortable life with many opportunities; it is much harder when you have been living in misery or subjected to injustice, discrimination, or persecution.

Having faith in the abilities of factory workers was also a challenge in the American Midwest of the early 20th-century, because communications were severely limited. Many were non-English speaking recent immigrants from farming economies and with limited education, like the heroes of Upton Sinclair’s The Jungle.

The management practices that we inherited from that era are based on not taking up this challenge, relying exclusively on managers and engineers to do the thinking, and simplifying jobs. In recent decades, however, the experience of TPS implementation in California has shown that you can compete in manufacturing by leveraging the brain power of a multi-cultural, immigrant work force.

The challenge can be overcome, but it requires faith in people, which I like to call humanism.

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