Posted by: knightbird | February 28, 2016

The Politics of Lean Change

When implementing Lean, there is a consistent piece of advice that is given: Get the CEO fully on board. When I was new to Lean, my Sensei, Dr. Tom Jackson, spoke to me frequently about the level of my involvement. As a result, I became immersed in Lean. Our results were amazing and I was hooked. I cannot walk into a business without noticing its many deficits. Yet I hear all the time about how well the business is doing. I know otherwise, and have been looking for gentle ways to inform CEO’s about the benefits of adopting Lean. But the resistance remains heavy.

As a Movie buff, I hear dialogue that intrigues me. I google  the quote and read it for helpful content. This phrase was particularly intriguing. The speaker is the owner of the Boston Red Sox and he is talking about the use of Sabermetrics, of the changed use of statistics to focus baseball play in a different direction from pure talent acquisition. In 2002, the Oakland A’s used this new model to take a poorly funded team to the AL West championship. At the end of that season, Mr. Henry invited Billy Beane, the A’s GM, to become their GM for $19.5 million. He turned it down. But Mr. Henry bought into Sabermetrics and 2 years later, won the World Series with the Red Sox after 6 decades of losing. Their major competitor was the New York Yankees, who spent huge sums without necessarily winning.

So we have owners with huge sums of money for reasons they don’t control, like playing in a huge market. And we have owners with lesser amounts because they play in a smaller market. You know, that kind of sounds like Toyota after World War II compare to Ford, GM or Chrysler. In response, Toyota developed the Toyota Production System (TPS). In 1984, TPS was introduced to the U.S. through their NUMMI joint venture with GM.

Here’s what John Henry said about “…the first guy through the wall.”

“For forty-one million, you (Billy Beane) built a playoff team. You lost Damon, Giambi, Isringhausen, Pena and you won more games without them than you did with them. You won the exact same number of games that the Yankees won, but the Yankees spent one point four million per win and you paid two hundred and sixty thousand. I know you’ve taken it in the teeth out there, but the first guy through the wall. It always gets bloody, always. It’s the threat of not just the way of doing business, but in their minds it’s threatening the game. But really what it’s threatening is their livelihoods, it’s threatening their jobs, it’s threatening the way that they do things. And every time that happens, whether it’s the government or a way of doing business or whatever it is, the people are holding the reins, have their hands on the switch. They go bat shit crazy. I mean, anybody who’s not building a team right and rebuilding it using your model, they’re dinosaurs. They’ll be sitting on their ass on the sofa in October, watching the Boston Red Sox win the World Series.”

The politics of change is that you are threatening a way of life, business or income. Because you may have beens successful doing things your way, according to your standards, you are not open to new thinking. The future isn’t important to you. You will probably not be around to accept the consequences of your lack of innovation. But others will.

In 2005, a business I was associated with had a chance to adopt Lean. Resistance was heavy. Nothing worked to turn their CEO around. Despite some good results from a few Kaizen, the CEO was unable to see the huge potential benefit. I have pointed the benefits out in my writings. With Value Capture from existing sales, profits on both existing revenue and new revenue increase. With greater quality, you are able to capture more business from existing customers and give them lower cost. Customer service improves because of your philosophy. And employees become happier and you have fewer problems in the workplace.

Instead, we continue to look for a superstar to bring us out of our issues. As a study done at Coca Cola states, only about 20% of improvements in an organization can be derived from management. And I have yet to find the management that is capable of capturing the full 20%.

Taking a risk (and it’s a very small one if you are truly committed) has huge potential rewards. For Mr. Henry, it was a World Series Championship. Oh, and he proved his commitment by offering his GM position to Mr. Beane and putting the founder of Sabermetrics on contact, Bill James. He wanted to hire people with the new set of knowledge and skills because it didn’t exist anywhere else.

Lean has a unique skill set requirement. It’s a completely different method of working. And the first requirement is a deep buy in by the CEO. Mr. Henry did that, hired the right people and won. That’s a good lesson.

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