Here is installment #3 in my exclusive Q&A with Jim Womack, co-author of Lean Solutions along with Daniel Jones. Here, Jim discusses more Lean Consumption and Lean Solutions concepts, discussing executive leadership types, the role of process thinkers, Dell Computer, and lean healthcare. Check out the rest of the blog, I hope you enjoy it.
Part 1 Part 2 Part 3 Part 4 Part 5
Q:Through your Lean Solutions concepts, you argue that there are huge business opportunities for existing companies or entrepreneurs in many industries.What about industries that seem to provide uniformly bad service, such as moving companies or cellular phone providers?Are certain industries (and their customers) resigned to the fact that they won't get better service elsewhere, so why bother improving (or switching)?How can we convince “concrete head” industries to change, as lean practitioners or as customers?
Jim Womack:
It would be great to win over everyone in every industry to lean solutions but….all we really need to do is find one company in each industry who breaks ranks and rethinks the consumption and provision processes. Fujitsu Services in help lines, GFS (a Portuguese chain of car retail and service outlets) in automotive retailing and service, Tesco in fast-moving consumers goods (which has already demonstrated the lean consumption alternative to mass-consumption Wal-Mart and routed them in the UK in the process.) That, after all, is what Toyota did in automotive and, to coin a phrase, changed the world. And it wouldn't hurt to find a few entrepreneurs who totally rethink industries. (That's our best hope for the airlines, who seem incapable of internal reform.)
Q:Dell Computer recently introduced a high-end line of desktop and laptop PCs, with part of the appeal being the promise of premium customer service.For example, they promise that you'll be connected within five minutes (“half” of the normal wait time, according to the New York Times, but much much shorter than the average wait I've experienced as a customer).Do you think companies should start differentiating their products and pricing for service level, not just for the product itself?Should Dell aim to improve service and quit wasting the time of all customers or just those willing to pay for it?
Whoa! Why should Dell (and Microsoft and…) just quit wasting the time of their premiums customers? If they could get their brains in gear, they could quit wasting the time of all their customers and save themselves a lot of money in the process. (But they would have to treat each customer problem as a kaizen opportunity, rather than just a nuisance to be disposed off at as low a cost as possible with an out-sourced, off-shored help line.)
Q:Another lean author commented a few years back that, in the auto industry, “50% of companies are talking about lean, but 2% are actually doing it.”Is the “lip service” level going down or do you find a lot of cases where executives talk about lean because it sounds good, without making a real commitment to lean?
Lean thinkers believe in perfecting every process so they ought to be disappointed with how far we have gotten. (And a good part of Toyota's success, by the way, traces to the fact that they worry so much about what they still haven't got right.) But we lean thinkers shouldn't be inappropriately disappointed. The fact is that most manufacturing processes are getting steadily better. They are just not getting better smoothly and there are disheartening setbacks. Indeed, some great companies – and I've written about Delphi in this regard recently – that couldn't make it despite their improving processes because they ran out of time. And there are a lot of other parts makers – yes, even American-owned suppliers like JCI – that are steadily getting better and making money.
What we (Dan and Jim) have is the advantage of doing a tremendous amount of walking around, and not just in the U.S. and the U.K., but all over the world. We continue to see firms joining the lean ranks everywhere we go, including a lot of firms we thought would never do anything.
Here's today's man-bites-dog story on this theme: Through our global network we became aware a couple of years ago of the terrific performance of GM's new assembly plant in Brazil. After twenty years of messing around, GM has finally put a plant in place that is on the level of a Toyota plant in Japan. (Whether they can sustain it over time is and even make it steadily better, of course, another matter.) And they have done some brilliant work of leaning their business processes everywhere they operate. GM knows how to run a lean business. But the consequence of doing this, in a situation of declining sales and market share, is quickly shedding a tremendous amount labor in existing operations while dealing with legacy costs they will never be able to bear. GM may fail in the months or years ahead, but not because they didn't know what to do and not because they didn't do it anywhere. They just couldn't do it in their mature markets before it was too late.
A prediction about GM (and Delphi too): They will go through a very painful crisis but emerge as vastly better companies that will continue to make progress on the path to leanness. (Remember that Toyota went bankrupt in 1950, fired a quarter of its workforce for good, and vowed never to screw up again. Maybe the current mess can be the turning point for GM and Delphi as well.)
Q:I have seen companies where they talk about “extending lean” to areas such as product development, finance, and HR, when their factories are far from any semblance of lean excellence.What are your thoughts on trying to do lean everywhere at the same time versus focusing first on the factory and then building upon that lean excellence?
The best approach is the one that works! However…most folks with experience and who are versed in policy deployment have concluded that its better to really fix a few things than to start to fix a lot of things. And lean is easier in factories because value streams (processes) are easier to see than in the office, in engineering, in sales, etc. So I still tell companies just getting their heads around lean to fix the factory as a first step.
Q: How many of the manufacturing dysfunctions (not being process focused, making “low labor cost” decisions) are caused by having finance or strategy people heading up manufacturing companies? From your contact with executives, are C-level execs generally more operations or supply chain savvy than they were 10 years ago?
We don't have any survey data on what's inside the heads of senior executives and the ones who contact us are the ones who are most likely to be process thinkers. So, all we can say is that we hope that process thinking is growing at the top levels of companies. We are doing everything we can to nurture it!
Q: What are your expectations for the future of “lean healthcare”?
One of us (Dan) just gave a talk arguing that healthcare is in fact the biggest opportunity for lean thinkers in the years ahead. The monsterous mess we've got right now is gobbling up Gross National Product at an extraordinary rate (just extrapolate from recent growth rates to determine the year in which our whole economy is devoted to healthcare!) while providing poor results. (Don Berwick MD, the head of the Boston-based Institute for Healthcare Improvement (www.ihi.org) has calculated that the number of people dying in the American healthcare system each year compared with the number who would die if every patient get the best currently-known care through a provision process with no errors is…100,000. In short we treat car parts better than patients.) So there is an urgent need, for both cost and health reasons, to create a lot of Toyotas in health care and I hope every lean thinker will answer the call if asked.
How far will we get? That's a touch question because of the complexity of the system and the historic lack of cooperation on process thinking between the docs, the nurses, the administrators, the regulators, the insurers, and the asset owners. My answer is that we simply must go a long, long way toward creating brilliant processes in every healthcare value stream.
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