10 Mistakes in Starting Lean Enterprise Transformations

The are plenty of mistakes people can make when starting up a lean enterprise transformation. Interestingly, many of these mistakes are similar if not identical to those entrepreneurs make in starting a business. Perhaps these mistakes are generic enough to be widely applicable, not specific to lean or start ups.

1. Starting without professional help. It’s easier to build a sustainable business transformation on the foundation of knowledge and experience of others. In addition to these general caveats there are plenty of industry and application-specific dos and don’ts at each phase of lean implementation. Ask for help (see button above), visit a local company known for being steps ahead of you or pay for some time with a person who has a head full of tales from the lean journey.

2. Looking in too many places for advice. An easy but damaging habit is to keep reading, searching, attending seminars or asking questions until you finally “get it” or feel fully confident enough to get started. Provided that controlled failure for the purpose of learning is allowed within your organization, try something. The best way to judge the utility of advice is to put it to immediate use, testing it in real life. Most often the people who work in the places where you test these ideas will tell you why it didn’t work and what needs to be done to make it work.

3. Focusing on education or solutions at the expense of communication. The people who lead lean efforts are typically engineers, operations people or human resources by background. Rarely are they marketing, sales or corporate communications people. The former are solution or education-oriented while the latter excel at communication and persuasion. Both are vital throughout the change process. Think of it as the relationship between the product development team and team and the marketing team; the former tests the ideas they believe will work in the market, the latter attempts to build excitement and support for these ideas but also feeds back to the development team the voice of the customer.

4. Not talking to customers. Will the changes you make matter to customers? Are there specific improvements to delivery, quality or pricing that could make a significant difference in how customers value you? Does the customer have any expertise in lean they are willing to give or lend? Is the customer planning any major changes to order volume or mix that should be considered as part of the lean transformation, i.e. new line design or ramp down of certain products? One of the biggest wastes associated with value stream mapping is “mapping what we think the customer values” as opposed to the actual customer-defined value.

5. Having too little money in the budget. Many lean transformations start by taking the kaizen mantra of “no money, no space, no excuses” too seriously. No water can be drawn up a pump that is completely dry. Below a certain budget level, even having the discussion about a lean transformation becomes a waste of time. This is typically a symptom of the instability of the business preventing investment, a misunderstanding of the scope and duration of a lean transformation or a lack of serious commitment on the part of the leadership. In the first case the solution may be to design an intervention that stabilizes and creates capacity, cash or room in the budget for some long-term system redesign work. In the second case I refer you to mistake #1 on this list. In the third case the options are education, waiting 3.5 years for a new CEO, or moving on to a firm with more enlightened leadership.

6. Having too much money in the budget. it may seem like this never happens, but it does. Over-funded lean projects get everything on the wish list, including much poor quality advice that is funded because it can be. This is where there is a misconception that it is less embarrassing to fail spectacularly with other people’s money than to fail with a small budget and much sweat equity. Here the parallels to start up businesses, venture capital and wasteful behavior are very strong. Creativity over capital, always.

7. Targeting a scope that is too small. It may seem like too small is better than too big when it comes to change efforts, and this is true. Sayings like “Don’t bite off more than you can chew” are common and much heeded. There are plenty of voices of reason that keep a scope of a pilot project or demonstration project from getting too big. Lack of funds, people, time or ideas are all limiting factors. When the scope is made too small for the sake of being conservative, the opportunity to learn can be lost. As the saying goes, “No problem is a problem” and a small scale experiment that is very successful may lull the lean leaders into a false of confidence and security soon shattered as the implementation expands in scope. Target a scope big enough to learn what you need to lean, but not much bigger.

8. Not having a plan to realize the savings. Not all kaizens do or should have an airtight business plan to justify the effort. Some small and quick kaizens should be done for no other reasons than to make the work visibly simpler and to keep people’s minds engaged in improving the work. On the other hand, having no plan to realize the savings once gains are apparent is not excusable. This includes recognizing upfront that any resources that are freed as a result of improvement, including labor, must result in direct or indirect cost reduction. This can be a difficult conversation in some situations but is one that is better had early than late.

9. Too much planning, not enough learning. Many times leaders hesitate to invest in education and training, consultancy support, benchmarking visits to other companies, pilot projects or whatever the first steps may be. Whether it be for political reasons (who gets credit if this works, who gets the blame if not?) or budget reasons (which cost centers will pay for this?) or a great many lean enterprise transformations at large companies spend too many months stuck in the “planning” phase rather than trying something, learning from it and adjusting the plan. It’s a bit chicken or egg, this last one. On the one hand lean enterprise transformation is about getting really good at turning the PDCA cycle. On the other hand it takes putting one’s hand on the PDCA wheel and giving it a crank to start up this learning. Courage, trust and continuity of leadership vision are needed to move from planning to learning.

10. Ignoring the informal distribution network. The distribution network of knowledge, ideas and skills is both informal and formal within an organization. Too often the informal network is ignored. Lean champions, kaizen managers, six sigma black belts or other so-called experts are given the responsibility for distributing (teaching) the knowledge and experience gained from successful pilots or starter projects.

As mysterious as dark matter in the universe or the vast amount of genetic code in our DNA which appears to have no function in gene expression but probably does, everyone else in the organization in fact actively or passively teaches everyone else through their words, actions and behaviors. If a team member does not follow standard work, they are teaching us that there are problems with it. If the engineer responds and corrects the process in a timely fashion, this also teaches team norms. The manager who daily checks the visuals on their gemba for abnormalities is leading by example. Activating this informal distribution network of ideas is a key role of anyone in the formal distribution network.

Mistakes should be welcomed if they can a) be afforded, b) learned from and c) are not on the list of common mistakes given to you by the professional help you hired. There’s no sense in paying for advice unless it’s used. This advice isn’t free; I’ve already prepaid for everyone.

---