Lean Connections

“There is a better way for everything. Find it.”

Thomas Alva Edison

Turbulent times provide ample opportunities for success, if we approach things with the right frame of mind.

by Adam Zak 

In my role as an executive recruiter specializing in helping companies with Lean transformation, I’ve been spending a lot of my time lately speaking with people all over the world who are wrestling with complex decisions. I thought I’d share some of my observations with you, and in turn, hope that you will share your thoughts with me. 

Everywhere we turn, there’s advice heralding “How to manage in a crisis,” or “New rules for surviving the crunch.” Just the other day I heard a discussion on PBS involving business writers trying to agree on a title for what the economy is going through. And there was no consensus (imagine that, from business writers). 

Crisis Breeds Opportunity 

Craig Barrett, recently retired CEO of Intel told Newsweek readers, “There is a general rule in business life: market share is won or lost during transitions. You cannot save your way out of a recession, you can only invest your way out.” No one is denying that cutting costs is essential to surviving 2009, but we Lean disciples have always practiced a different philosophical approach. As we look for ways to eliminate waste and improve productivity, we are always focused on getting better. In early February Muhtar Kent, Coca-Cola’s CEO told the Wall Street Journal “I’ve been through this movie in smaller versions a number of times in the past…times like these are not an excuse to sit back and ride out the storm.” And this week, at a global sustainability conference in Chicago, I spoke with Rick Frazier, Coke’s VP Supply Chain, who told me they were leveraging their Lean & Green efforts even more dramatically during this time of uncertainty. 

“A recession creates winners and losers just like a boom,” observed Mauro F. Guillen, a professor of international management at the University of Pennsylvania’s Wharton School in BusinessWeek. Let’s chose to be among the winners.  read more »

As a LeanThinker I am most unabashedly a free market advocate.  Free trade, absolutely. Love those imported fresh Mexican tomatoes in my sandwich on a freezing January day. Open skies, no question. I look forward to when I can fly Singapore Air from Chicago to LAX, experiencing the same outrageously great service they provide on some of my international trips.  And Brazilian ethanol - bring it on over!  Let’s keep Illinois corn right here in the Midwest where it belongs, fattening up that great-tasting Midwestern beef I’ll be having for dinner tonight.

But Lean Leaders cannot allow a purely free market to exist in executive compensation when CEOs of certain American companies are receiving taxpayer (spelled: MY) dollars via U.S. government welfare handouts!

LEAN is about performance.  And rewards, any way you’d like to define them, should go to those who perform well. And those who do not deliver performance should also receive a strong message: NO rewards.  President Barack Obama was quoted earlier this week in the New York Times:

“This is America,” Mr. Obama said on Wednesday. “We don’t disparage wealth. We don’t begrudge anybody for achieving success. And we believe that success should be rewarded. But what gets people upset — and rightfully so — are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers.”

So let’s silently visualize the news headlines of the past few of months.  Are you thinking of a company or two that has failed miserably in the market place?  Even if you can’t remember the CEO’s name?  We all know about at least some of these folks (though we may not yet know ALL of them).

Now, think for a moment about some of the concepts which define LEAN performance-driven companies, and see if  any of these all-star concrete-heads (automotive, financial services, transportation, etc.) looking for a hand-out could ever be connected with ANY one of these principles or practices. 

Leadership? Value-added activity?  Accountability? Employee engagement? Respect for people? High quality, fewer defects? Flow (well, I guess there was some cash out-flow in the form of toxic mortgages, but that doesn’t count)? Customer value? Continuous or constant improvement? Lower cost?  Going to Gemba (as in, knowing what the hell is going on in my business)? Corporate social responsibility? Transparency?  And how about just good old-fashioned plain honesty?

See many (LEAN) connections? Neither did I.  Many of our “modern” executive compensation systems are built around rewards and incentives that simply don’t do what they were supposed to do. That in itself is a performance issue, and a topic for another day.  I’m sure we could apply loads of LEAN improvement strategies and practices in the compensation arena.  But how about doing something right now?

Solutions?  Well, I’m not an economist and I’m not a political activist, but I’ve sure met a lot of top-performing executives who’ve gotten LEAN religion, then transformed their organizations and their corporate cultures. And then delivered performance, and been well-rewarded for it.

So in the spirit of LEAN I offer a simple suggestion which can be implemented right now: Every company receiving assistance in the form of our tax dollars MUST send its Chairman, CEO, CFO and all business unit (division, subsidiary, etc.) leaders to an intensive (say 3-5 days, perhaps 10 for the CFO)  hands-on LEAN EXECUTIVE training. 

I’ve got a short list of appropriate Senseis in case anyone’s interested.