Daughter is messed up and mother is helpless! This stock-listed company has a wholly owned legal entity in another country. The subsidiary has been artificially kept alive for years by the mother. Huge amounts of cash have been injected into it by the daughter.
The CEO of the group is faced year after year with the dire state of the daughter’s company, and injecting cash hurts the group balance sheet.
Selling is no longer an option, because the daughter owes so much money to her mother.
Despite this continuing state, there is no sign that anything will change soon.
One top manager after another blames the situation on the employees. Several consultants have visited, and numerous plans with clear actions have been created but not followed through on.
The CEO and top management’s constant firefighting has forced this company into a vicious cycle. It cannot get out of it. The cycle just forces them to go in circles faster.
Worse, CEO and top management do not trust middle-level management. Instead they are constantly asking for reports and analysis.
Employees are almost never clearly informed of planning of corrective actions. This undermines trust again.
To make matters worse, upper management, including the CEO, does not stick to its plans. Silently plans and execution fade away. Employees and middle level management wonder what has happened.
This lack of clear communication over current plans that have to be adjusted—or even over completely new plans still in development—is not building trust. People need plausible communication. If they cannot relate to the CEO’s reasoning, the foundation for effective solution-oriented co-operation has crumbled.
To cut the vicious cycle, the CEO must take following actions:
- Define with the team a maximum of two priority actions
- Pull these actions through
- Delegate to middle management
- Give middle management peace to work
- Do not ask for laborious and frequent reports
- Be available any time for the management team and employees
It is the CEO’s priority to keep the direction. It is clear that along the way, some firefighting must be done. However, as soon as the fire is extinguished, the CEO must make sure that the top-priority actions have their full attention again.
The actions point is the most difficult. It requires nerves of steel not be distracted by all the potential and real issues that would also need attention. The chairman of the board of directors is also required to keep steady. The worst thing that happens in these situations is that the CEO and his team decide to focus on something important and then suddenly a disturbance comes from the board.
The most ridiculous thing I have seen is when a chairman tells the CEO to focus on a complaint coming from a company owned by a friend of his. And then all focus is suddenly on this matter and not in systematic improvement projects. Usually, employees have very little respect for these kinds of actions.
Once the two action points are defined and turning into action, and results are slowly coming, the feeling of success in the whole company can become the new momentum for change.
On February 1,1997, a fire destroyed an Aisin factory that made the inconspicuous P-Valve, a brake part required for every Toyota vehicle worldwide. Toyota’s policy is to source any critical part from multiple geographic locations, but in this case, 99% of global production of the part came out of this one plant—at that time, 32,500 units per day. Toyota’s vaunted Just-in-Time system meant only two days of inventory were available in total in the supply chain.
In two days, disaster would strike. What happened next was a premiere of the Toyota Way in action. After the fire, 63 different firms took responsibility for making the parts, piecing together what existed of engineering documentation, using some of their own equipment, rigging together temporary lines to make the parts, and keeping Toyota in business almost seamlessly.
The Toyota Way management principles were formalized in 2001, introducing a new house, at a higher level than the Toyota Production System. Continuous improvement and respect for people are the two pillars of the Toyota Way.
Continuous improvement has three foundational principles—clarify and face the challenge even when it is seemingly impossible, go and see the current reality without preconceptions (genchi genbutsu), and relentless kaizen—which means start experimenting, rapidly and scientifically.
Respect for people has two foundational principles—get your best people with different skills and expertise to work as one team toward the challenge (teamwork) and respect people, from the global community to each individual.
Whether it is called “lean” or not, mostly not, we are seeing these principles play out around the world as we face the common challenge of COVID-19. We are seeing at record speed laboratories develop test kits and possible treatments. We are seeing auto companies partner with medical device companies to ramp up ventilators in unprecedented volumes in record time. We are seeing front-line workers come together to provide food, housing, medical care, and other essential services, risking their lives.
I had the good fortunate to work with Dr. Richard Zarbo, who runs the testing lab for Henry Ford Health System. They have practiced lean thinking for 15 years and were able to leverage their ability to meet a challenge as a team. On April 7 he wrote to me: “We are now performing all COVID-19 molecular testing in-house (for most of Michigan). We have gone from the first test in the state on March 16 to now more than 700 per day with five methods on 10 instrument platforms with 97% results in less than 24 hours. We have been told repeatedly that we are saving lives. Nice to hear.”
While Dr. Zarbo was ramping up testing in a big lab, Abbott, another lean model company, was rapidly developing a 5-minute test kit that would work with its standard ID NOW diagnostic device, one of the most common devices on the market with 17,000 already in the field. The test kit was a cartridge to insert into the device—and within a month, Abbott started producing 50,000 of these cartridges a day, based on lightning-fast FDA approval. While this was going on, other organizations developed antibody tests to see who had developed an immunity.
As it turns out, most organizations on the front lines of the pandemic battle don't have lean experience, yet they are experiencing the Toyota Way without realizing it. The pandemic has forced people to come together with a passion and common focus and new respect for scientific thinking. Suddenly, scientists are teaching us daily about how our bodies work, how viruses work at a cellular level, and what it takes at a molecular level to create a virus. Believe it or not, epidemiologists are cool!
Top lean practitioners have the two fundamental skills of bringing a diverse team of people together to achieve a breakthrough objective and using a systematic, scientific approach to coaching the team to success.
Anyone who has participated in a well-run kaizen event has experienced the power of accomplishing something great as a team in a short period of time. The Toyota Way seeks to take this further into daily operations so this experience becomes part of the culture.
It is my hope that coming out of the crisis, many people throughout the world will have a greater appreciation for the power of scientific thinking, the power of collaboration, and the power of diversity. Maybe we can then focus some of this experience on an existential crisis—saving the planet.
Jeffrey K. Liker is Professor of Industrial and Operations Engineering at the University of Michigan, owner of Liker Lean Advisors, LLC, partner in The Toyota Way Academy, and partner in Lean Leadership Institute. Dr. Liker has authored or co-authored over 75 articles and book chapters and eleven books, including the bestselling The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer.
This article originally appeared in the Lean Post, the blog of the Lean Enterprise Institute. It is used with permission.
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