Editor's Page -- Continuous Improvement In The Executive Suite

Jan. 19, 2006
You can no longer plan for change. Change must be part of your plan.

Manufacturing executives and public policy leaders are among the smartest people in the world, but they're not immune to human nature's powerful resistance to change. One could argue that, for many, there's an inverse relationship: the more successful, the more resistant to change. After all, successful leaders have studied the issues, set the course, and watched the accolades and financial rewards continue to flow. Why change?

Consider today's most obvious example, the U.S.' top automobile makers as compared with Toyota, their steadily advancing competitor. SUVs were the cash cows. Why bother with cars and the possibility that someday the popularity of the SUV might plunge? Surely the executive leadership knew the inevitable day of reckoning would arrive sooner rather than later. Yet their actions suggest that they expected the SUV craze to go on forever.

I don't mean to criticize the leaders of GM and Ford, who face a litany of challenges. But I do cite their bleak situations as convenient cautionary examples. Even the best leaders can fail to see the need -- or fail to act on the need -- to change. It's easy for the rest of us watching from the sidelines, and now with a bit of hindsight, to see that over-dependence on the gas-guzzlers contributed to the Big Two's troubles. What's not so easy is to identify in real time the changes you and I should make now but are resisting.

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See The Manufacturer's Agenda: Pat Panchak's new blog about public policy issues.
Too often leaders wait until the stark reality of extinction is at their doorstep before the real work of change begins. The hesitancy is so readily recognized on the plant floor that there's a name for it: The Burning Platform. Plant-floor executives use the term to describe the need to scare intransigent plant-floor workers with pink slips to force them to change. But our little secret is that the plant-floor executives usually received their own burning-platform speech from the executive suite: Fix it, or you're fired. We also must acknowledge the even bigger secret: Most corporate executives wait for their burning-platform alarm from the market before adjusting corporate strategy.

But it doesn't have to be this way.

If there's any lesson to learn from Toyota's success (and there are many as you'll see in Senior Editor John Teresko's "Learning From Toyota -- Again") it's that planning for change as we did in the past (that is, waiting until imminent collapse) is a plan to fail. Instead, change must be inherent to your management and operating philosophy -- baked in, as engineers like to say about a critical attribute designed into a product. The harsh reality of global manufacturing is that companies need to change more quickly and more often than ever before. Integrating the process of change into corporate strategy, as Toyota does, enables continuous evolutionary change that sparks no resistance. Think about it: Has Toyota launched a major change in strategy since it entered the global market?

It may come as a surprise to many readers that we kick off a six-part series called "Rebuilding U.S. Manufacturing" with a feature espousing the virtues of a Japanese company. Some people might even be offended. Enlightened CEOs won't be. We've watched as Toyota's strength and market share steadily grew for two decades. We've adopted the Toyota Production System (TPS), which we correctly determined is the source of Toyota's success. But we missed something that is now becoming ever more clear: Continuous improvement is as integral to corporate strategy as it is to production strategy. Executives looking for a long-term competitive edge should take note.

Patricia Panchak is IW's editor-in-chief. She is based in Cleveland. Also see The Manufacturer's Agenda: Pat Panchak's new blog about public policy issues.

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