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Why You’re Struggling to Improve Company Culture

If we focus more on leadership mindset and behavior, and less on the mechanical aspects of operational excellence, it should be easier to create the culture we want.

The new Proqis BTOES Insights report on operational excellence is out, and by a landslide margin (55% to 37%), the most critical challenge for respondents is “improving the company culture.”

Anytime I read that culture is a stumbling block for companies pursuing continuous improvement, I go back to John Shook’s reflections on NUMMI (pdf). With the same people as those who worked at the GM Fremont plant, product quality in the NUMMI joint venture with Toyota went from GM’s worst to best in one year. Absenteeism dropped from 20% to 2%. Strikes stopped completely. No one was intentionally sabotaging cars. As Shook points out, the union and workers didn't just accept Toyota's system; they passionately embraced it.

If GM/Toyota could make this kind of tectonic improvement in company culture in one year, why are companies that aren’t starting from such a deep hole struggling so much? Why do 55% of the BTOES respondents say that cultural improvement is such a challenge? I think there are several reasons that companies struggle with cultural change.

1. Leading with artifacts. Organizations may have finally let go their obsession with lean tools, but I’m seeing it replaced by an obsession with artifacts: kaizen submission cards, A3 forms, visual management boards, 5S checklists and the like. Without the appropriate management values and attitudes, these artifacts become just more examples of meaningless corporate flotsam and jetsam landing on the workspaces of hard-working staff. When management doesn’t actually support people in A3 problem solving -- not only by coaching the employees, but by giving them time to work on those problems -- then the A3 is just another template buried on the file server. When leadership doesn’t come to the visual management boards at least a couple of times per week to ask questions, learn what people are working on, and provide the needed help, then the boards quickly become moveable wallpaper. You can’t lead with artifacts. Artifacts are only valuable when they follow a change in leadership behavior.

2. Lack of investment. Shook reports that in the first year of the NUMMI joint venture, 600 NUMMI employees -- anyone who supervised another person -- visited Japan for at least two weeks of intensive training. Additionally, Toyota sent about 400 trainers from Japan to the U.S. to work side-by-side with their NUMMI counterparts for three-month stints. That’s an extraordinary investment of time, money, and people. Now look at the “investment” most companies make: They set up an OpEx office with a few people; they run workshops on tools; and they lead kaizen events. Sometimes they’ll pay tuition for employees to get a yellow or black belt from an external Six Sigma training firm. To be sure, Toyota and GM are huge auto companies -- not too many companies can afford to spend the kind of money needed to send 1000 people around the world. But you seldom even see a commitment to investing time on a daily basis for practicing lean and solving problems. An employee at an HVAC manufacturer recently told me that he thought lean was just another management flavor of the month. But when the president told him that he would happily pay overtime so that he could do his daily 30 minutes of kaizen, he knew that leadership was committed. And he’s now one of the biggest supporters of lean in the company.

3. Poor framing. Many companies promote lean as simply a different way for employees to do their jobs. But it’s more than that: It’s a fundamental shift in the way both workers and leaders must think about their work. The installation of the andon cord at NUMMI is one of the most well known changes that Toyota made when they started the joint venture. Shook says that GM colleagues questioned the wisdom of installing the system at NUMMI:

“You intend to give these workers the right to stop the line?” they asked.

Toyota’s answer: “No, we intend to give them the obligation to stop it whenever they find a problem.”

There are two critical shifts in mindset here. First is the belief that fixing problems is a worker obligation, not just a right. Most companies don’t talk about this obligation. They talk about tools and artifacts, problem solving and respect for people, true north and customer focus. But they don’t emphasize the absolute, non-negotiable responsibility of every worker to stop a process when they see a problem. The second shift is the change in management attitude toward problems. How does leadership respond when employees find them and bring them to leadership attention? It’s a cliché by now, but management’s matching obligation is to cherish problems, to see them as treasures so that employees are willing to accept the burden of stopping the line. This change in thinking on both sides is the linchpin for successfully changing the organizational culture.

Changing an organization’s culture is no small feat. It takes time and persistence. But a lean organization is one that is fundamentally human-centered, one that enables people to thrive and grow. If we focus more on leadership mindset and behavior, and less on the mechanical aspects of operational excellence, it should be easier to create the culture we want.

Dan Markovitz is president of Markovitz Consulting, a firm that helps organizations become faster, stronger and more agile through the application of lean principles to knowledge work. He is a faculty member at the Lean Enterprise Institute and teaches at the Stanford University Continuing Studies Program. His book “Building the Fit Organization,” just received the Shingo Research Award.

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