The General Electric company has had a rough year. They were removed from the Dow Jones list after more than 100 years. Their stock price has dropped to half. This week they abruptly fired their CEO. On the bright side, Larry Culp, a GE board members and former CEO of the Danaher Corporation, was named his replacement. Followers of lean news took note.
Danaher is well-known within continuous improvement circles for its success with the Danaher Business System. They were one of the first American companies to recognize the value of kaizen and the Toyota Production System. They quietly built their business model around it. Danaher applies lean thinking to business expansion via acquisition and conversion to lean. They buy businesses that have good products and markets but operate traditionally. While the rest of us debate how to deploy lean, they do it again and again. Their nearly 30-years continual growth and profitability is testament to the effectiveness of DBS.
Almost every week I have a conversation with a customer or just a person on the theme of the “best way” for their organization to start or accelerate continuous improvement. Often someone has been given a mandate to get lean moving. They are looking for a playbook to guide them. Should they follow the Toyota way? The FastCap method? The Danaher model? The Honeywell system? The Virginia Mason experience? The answer is always, “Yes, but it depends.” No successful model deserves to be rejected outright or accepted without question.
Any proven method is a good place to start, IF one is willing to treat it as an experiment, expect failure and plan to learn and adapt. Business owners and Continuous Improvement Managers alike are often on a shorter leash to experiment at length needed for this. Expectations must be met, of their customer and shareholders. There is also the question of perception and credibility with employees, if a lean model is adopted then abandoned or significantly altered. Even with a high degree of communication and change management, rumors spread that “Leadership doesn’t know what it is doing,” or “It’s just another flavor of the month.” There are risk to launching and failing. It is understandable that people want a degree of certainty in which model they should pursue, and which to avoid.
These models and approaches are rooted in common principles and practices. But they differ greatly in their application. The slow-and-steady Toyota approach is based on organic growth and long-term reinvestment in the company, not right for companies needing a quick turnaround. Danaher’s conquer-and-convert approach is contingent on a buy-and-hold model of growth that is both more nimble and ruthless. FastCap’s approach works well in organizations of a certain size, business complexity and energy exchange between CEO and every person in the company. Not to mention that these models grew up in specific historical and economic contexts. The legal, regulatory, market and technological assumptions that shaped their success 20, 30 or 50 years ago may not apply today.
There are three ways to select an approach to deploying lean. The first is to “do it our way”. The positive is that if an organization is great at executing through projects, they will have some success in progressing lean via projects. The negative is that the scope of lean may be wider and deeper a project mentality (or whatever “our way” strength) can effectively manage. The second approach is to pick a model and go with it. The positive is the roadmap, available external benchmarks and external support. The negative is the aforementioned risk associated with poorly managing the fit, experimentation and failure. The third approach is to understand the specific actions, tactics and approaches that make up each of these approaches, to abstract them to general principles and guidelines, and reconstitute them to one’s specific circumstances. This requires work. The negative is that it is slow at first. The positive is that it is unstoppable once it gets going.
Back to Mr. Culp and GE, it will be fascinating to see which way he goes. Will he take what’s working at GE, diagnose what is not, and do the necessary? Will he attempt to bring in DBS to GE? Will he start from basic principles and build an approach that fits GE’s current context and available runway? For GE’s sake hopefully the new CEO is humble and pragmatic enough to begin with the thinking and behaviors, thoroughly grasp the situation, set and align goals and coach and mentor people towards achieving them.