Art Byrne is a true believer in the power of lean. The former Wiremold Co. CEO -- who came to prominence in Jim Womack's seminal book "Lean Thinking" -- has leveraged lean strategies at more than 30 companies, and the results have been uniformly dramatic.
"If every company in our country did this, our economy would be booming again," Byrne proclaims. "And we would be pretty difficult to beat."
The reality, though, is that only a "small sliver" of companies are adopting the principles of the Toyota Production System in earnest, Byrne says, "and even within that sliver, not that many are really successful."
Byrne, who continues to champion lean strategies as an operating partner for the Waltham, Mass.-based private-equity firm J.W. Childs Associates, is well-aware of the myriad reasons why lean implementations fail. That, he says, was his impetus for his new book, "Lean Turnaround: How Business Leaders Use Lean Principles to Create Value and Transform their Company."
In a conversation with IndustryWeek, Byrne discusses strategies for sidestepping some of the most common pitfalls.
Based on his experience, Byrne has found that a one-week kaizen event can -- and often does -- produce a 90% reduction in changeover time for many types of equipment. Tell that to a manufacturing manager or engineer, however, "and they'd say, 'There's no way. There's no how. It's not possible.'"
"The paradigms are hard to break," Byrne adds.
Overcoming skepticism -- not just among the rank-and-file but also among managers -- is one of the major challenges for leaders during a lean implementation.
That's why it's critical for lean leaders -- including, and perhaps especially, CEOs -- to roll up their sleeves, get to the gemba and take an active role in kaizen events and other lean activities.
"You can't manage your way through lean," Byrne says. "You really have to lead it. You have to be the lean zealot, if you will, in your company -- the one who keeps pushing it."
To underscore his point, Byrne offers this hypothetical: Two factories use the same injection-molding machines. Through kaizen events, Factory A has reduced its changeover times down to two minutes. Meanwhile, Factory B's changeover times are two and a half hours and have been for years.
The manager of Factory B visits Factory A to learn how Factory A is able to change its injection-molding machines in two minutes. Flush with excitement, the manager of Factory B then returns to his home plant to share the story with his team members, in hopes of achieving similar results.
What typically happens next?
"One, [the workers] don't believe it, and two, they can't possibly see how they could do it, so they're going to ignore you," Byrne explains. "And unless you want to lead them and show them and help them, nothing will occur."
How hands-on should leaders get? In his book, Byrne recalls how he approached lean implementation as the CEO of Wiremold in the 1990s.
"As the only person at Wiremold with experience in the principles of the Toyota Production System, I knew that I would also have to be head salesperson for the new approach. I would have to lead by example, out on the shop floor -- the gemba," Byrne writes.
" ... To help with this, I created a lean-manufacturing methods manual and trained the first 150 people. I picked the first kaizen events, assembled the first teams and led them on the shop floor. I set the targets for each kaizen."
He also emphasized three principles "that would be fundamental to our adoption of lean: productivity equals wealth; focus on process, not results; [and] teamwork across the entire company."
With a focus on productivity, process improvement and teamwork, Wiremold grew its enterprise value by 2,467% over the course of a decade, boosted its sales from $100 million to $400 million and made dramatic gains in metrics ranging from lead time to inventory turns.
"For a serious lean conversion led by dedicated people," Byrne asserts in the book, "these are typical results."
It's critical for lean leaders to set stretch goals for every kaizen, Byrne says.
However, given that stretch goals, are, by definition, goals that might seem unreachable to many people in the organization, leaders can expect their direct reports to "argue passionately for weaker, incremental goals."
"I'd say that someplace north of 85% of almost everybody running a company would be totally opposed to setting stretch goals, because they feel that, 'If I set goals that are stretch goals, then I'll just discourage my people and I won't get anywhere,'" Byrne explains.
It's an excuse that Byrne has heard many times.
"I look at it the other way," Byrne tells IndustryWeek. "The reality is that setting stretch goals for your people says that you really believe in them, that you believe they can do things that they just don't imagine they can do.
"So you're showing a lot of respect for your people when you set stretch goals. And when you don't set stretch goals, you show disrespect for your people, because you don't think they're capable [of achieving them]."
Going All the Way
As many lean practitioners and consultants have said, lean stands little chance of sustained success if it's viewed as "the program of the month." It's a platitude that speaks to the need for consistent and committed top-management support for all lean activities.
Byrne takes it a step further in his book, emphasizing that lean must be "the foundational core of everything you do if you are to be successful."
"Lean is not a 'manufacturing thing,'" he writes. "Lean is a strategic approach that covers everything you do."
Unfortunately, that doesn't sit well with some managers.
"If you tell a CEO that you can get a 2,500% increase in your enterprise value in about 10 years like we did at Wiremold, but everything has to change, as soon as they hear 'everything has to change' they don't want to do it," Byrne tells IndustryWeek.
Most companies view lean as a helpful tool, Byrne adds, but they don't look at it holistically.
"They don't think of it as a strategic thing. They think of it as, 'This'll help me cut my headcount.' That's the most common," he explains. "Or, 'Maybe it'll bring my inventory down.' Or, 'Maybe it'll help me with my lead times or something.'
"But they don't want to change everything else."
The "everything else," Byrne explains, begins with an organization's people ("the only asset you have that appreciates in value"), but also includes sales, accounting, finance, accounting and other non-manufacturing functions.
That's why when Byrne was at Wiremold, he asked CFO Orry Fiume to participate in one of the company's first kaizen projects -- much to Fiume's chagrin.
"In the course of one week, Orry's team cut the punch-press machine setup from 90 minutes to five," Byrne writes. "Orry kept track of how much we spent doing this. It was about $100. This was his 'aha' moment. From then on, he became a true believer and a tremendous help in getting others on board with a lean approach."
Getting Sidetracked by the Terminology
The terms "lean" and "manufacturing" have become synonymous, even conflated, over the years, creating a misperception that lean is strictly for factories.
But Byrne has seen lean produce dramatic results in hospitals, insurance companies and other non-manufacturing organizations, and he emphasizes that lean "works in any kind of business."
"Actually, I think lean has more leverage in non-manufacturing businesses than it has in a manufacturing business," he says. "Because most non-manufacturing businesses haven't really worked on productivity. They don't really understand how the process works and what the flow is. They don't think of one-piece flow.
"Instead, what they think of is, 'We have an issue. Let's computerize it. We'll get a new computer system.' But they don't fix the process."
Even in manufacturing settings, the term "lean manufacturing" can be problematic.
"What happens in a lot of manufacturing companies is you say, 'Oh, lean manufacturing. Great. Get my operations guy in here. He can do that.'
"So you delegate it down to him. You don't change what the sales force does. You don't change the accounting. You don't change the computer systems. You don't change anything. You just tell the manufacturing guy to have at it."