Guitar String Manufacturer Gets Lean

When I think of D'Addario I think of the strings I use to create bludgeoning melodic death metal riffs. I think of face melting solos, headbanging, and on stage theatrics. The last thing I really think about is lean manufacturing. But after watching this video from CNN's small business blog I can tell that CEO Jim D'Addario gets it. Although the video is fairly light on real lean manufacturing content there was a passage that keyed me into the fact that D'Addario is practicing and succeeding using real lean. The part I am speaking of is when he talks about not laying people off. The moment you lay someone off because of the success of lean your lean journey has ended; in fact it has died a horrific death. No one is going to improve a process that works them out of a job. As I have discussed on BadskiBlog before, labor is cheap. It is your materials and inventory that make up the majority of your costs. By reducing inventory and waste while simultaneously increasing throughput and capacity you have effectively paid for all your labor. I think that the fact D'Addario is producing a product that is basically a commodity in one of the highest taxed states in the United States really says something. These strings certainly could be made in China, however D'Addario is using lean which is a growth strategy instead of resorting to a cost cutting outsourcing strategy. Good story that shows that manufacturing in the US is not and does not have to be dead!

The Lean Manager - Developing a Lean Mindset

I subscribe to a Lean Enterprise Institute newsletter and about once a month the man who coined to the term lean, Jim Womack, writes a letter to subscribers. I have included the letter below in full. He shares a valuable but frustrating lesson. One of my mentors in my continuous process improvement journey used to say to me it's about 20% tools and about 80% culture. I think what he meant by that was very much in line with what Womack says here. Anyone can learn lean tools. It has become somewhat of a fad in corporate America and obviously, since I am constantly writing about it, has become instituted in the Department of Defense as well. The tools are the easy part. Maybe it is because they are more tangible, or that they seem more like a step by step guide. However, it is the leadership support and culture change that is truly difficult and will require the most effort. It is never easy to steer the ship when everyone else wants to keep going straight, when everyone else wants to keep things comfortable. Sometimes it just takes showing them that you can go against the status quo and the world is not going to end.

Dear Matt,

Several years ago I started to talk about the need to move beyond lean tools - including the very powerful concept of Value-Stream Mapping - to lean management. At the same time we at LEI began to publish a set of volumes on lean management techniques. These consist of strategy deployment to set priorities from the top of the organization, A3 analysis to deploy new initiatives and solve problems in the middle of the organization, and standardized work with kaizen to create stability and sustainability at the bottom of the organization where value is actually created.

Recently I've been walking through a range of organizations to see how these lean management techniques are being used. Let me cite several illustrative cases:

In one organization I found a remarkably elaborate strategy deployment matrix posted throughout the headquarters and in the plants. It was the familiar x-shaped diagram with important business objectives on the left side, the initiatives needed to achieve the objectives along the top, and the specific results to be achieved in the current year on the right side. In addition there was an array to the right side showing who in which part of the organization was taking responsibility for each initiative and which parts of the organization were affected by each initiative.

And I also found very little success in achieving the goals. Instead, the organizational focus at the end of the budget year was on explaining why progress had not been what had been anticipated. It was a new form of the variance analysis I caricatured in last month's e-letter!

In a second organization I found that the COO had decreed that all problems were henceforth to be tackled using A3 analysis employing a standard eight box format. At the review meeting I attended, every manager showed up with a completely filled out A3 to prove they were on top of their jobs. And, because this organization was transitioning from a decades-long tradition of preparing lengthy reports on every problem (with pages of documentation), the A3s used one point type to crowd in all of the details that would have been included in a traditional report. When these were projected as PowerPoints it turned out that
no one in the room could actually read them. But every manager had done his job.

In a third organization I found all of the elements of standardized work - work standards, work combination tables, kaizen opportunity lists - clearly posted in work areas and ... no standardized work. A few minutes observation showed that the work was not actually being done in the way the work standards required and that kaizen activities were not based on clear problem definition. Yet the management took pains to show me how much progress they had made with this splendid technique as part of their new visual management system.

As I walked through these and other organizations I was sobered to realize that these new lean management techniques had become more tools, in this case lean management tools. They were being followed as corporate ritual without thinking about their actual purpose. As so often happens in organizational life, means had become ends.

I was not surprised. Tools -- for process analysis and for management -- are wonderful things. And they are absolutely necessary. And managers love them because they seem to provide short cuts to doing a better job. But they can't achieve their potential results, and often can't achieve any results, without managers with a lean state of mind to wield them.

What do I mean by a lean state of mind?

First, the lean manager eagerly embraces the role of problem solver. This means going to see the actual situation, asking about the performance issue, seeking the root cause, and showing respect for lower-level managers and for colleagues at the same organizational level by asking hard questions until good answers emerge. It's this critical, probing state of mind that permits lean tools to be put to good use as the lean manager applies the right tool for the specific problem and does this in context on the gemba rather than in the abstract in some conference room. Empty ritual is replaced with a rigorous thought process that engages employees and pulls forward their best abilities.

Second, the lean manager realizes that no manager at a higher level can or should solve a problem at a lower level. (And one of the worst abuses of lean tools lies in trying to do just this.) Instead, the higher-level manager can assign responsibility to a manager at a lower level to tackle the problem through a continuing dialogue, both with the higher-level manager and with
everyone actually touching the process causing the problem. The lean law of organizational life is that problems can only be solved where they live, in conversation with the people whose current actions are contributing to the problem. But this requires support, encouragement, and, yes, relentless pressure, from the higher-level lean manager.

Third, the lean manager believes that all problem solving is about experimentation by means of Plan Do Check Act. No one can know the answer before experiments are conducted and the many experiments that fail will yield valuable learning that can be applied to the next round of experiments.

Finally, the lean manager knows that no problem is ever solved forever. Indeed, the introduction of a promising countermeasure is sure to create new problems at some other point in the organization. This is not bad. It is good, provided the critical, probing mind of the lean manager keeps on the case in pursuit of perfection.

In short the traditional manager is usually passive, going through rituals and applying standard remedies to unique problems. By contrast, inside the mind of the lean manager lies a restless desire to continually rethink the organization's problems, probe their root causes, and lead experiments to find the best currently known countermeasures. When this lean mindset is coupled with the proper lean tools amazing things are continually possible.

Best regards,
Jim

James P. Womack
Founder and Chairman
Lean Enterprise Institute, Inc.

General Motors, Bankruptcy, And Lean

This is a very interesting article at the new challenges at GM. During my two weeks at the University of Tennessee Center For Executive Education we spent a lot of time talking about many of these issues and how continuous process improvement and developing a lean strategy can counteract many of these issues.

The article talks about how there is a culture of fear and bureaucracy. I can relate as I see many of the same issues in the bureaucracy known as the US Air Force. Lean can help to break the culture of fear as it empowers teams to make rapid change and engage in a culture that is focused on creative problem solving instead of the ‘status quo’ approach.

In the meantime, Henderson is tackling GM's glacial decision-making process. A couple of four-hour meetings have been cut in half. Gone are the "premeetings," when the agenda for the real meeting was set. "I don't have time for that," Henderson says. Delegation, never GM's strong suit, is now an imperative. In early April, just after Treasury made him CEO, Henderson and several executives were discussing whether to add some pricey features to a future Buick model. Some wanted to save a few bucks while others figured they needed to step out and show consumers that the brand is truly upscale. After some debate, Henderson turned to Buick-GMC boss Susan Docherty. "You're the vice-president of Buick," Docherty recalls him saying. "Make the call." She opted to spend the money, and that was fine with the CEO. "Fritz is creating a culture where we don't need 17 meetings," Docherty says. "In the old GM, we would have to hear from everybody."

In the AF we have meeting after meeting to prepare for a meeting that is a month away. It gets pretty ridiculous. Part of our class at U of T was centered around applying lean to business and administrative processes. Many companies and organizations disconnect their administrative inefficiencies from their company’s bottom line and in this case manufacturing throughput. They are inextricably linked in all cases. It is easy to point to labor and other cost cutting techniques as a solution to your problems but where does that lead. You can only cut costs a finite amount. Read my lean as a growth strategy rant here for more on cost cutting versus a throughput strategy.

Henderson has been careful not to criticize Wagoner. But he has begun dismantling some of his mentor's initiatives. Wagoner was a data geek who used nearly 10 metrics to measure his executives' performance. Not all were particularly relevant. Henderson says he has boiled those down to the five most vital for each department, with a much bigger emphasis on sales and profits. Under Wagoner, people were focused on minute details that meant more to their own departments than the overall company. "We got a little crazy with metrics," says Chris Oster, GM's organizational czar.

This paragraph is encouraging. So many times we optimize functional silos at the expense of the whole organization. If GM is looking at steering wheel metrics and sees that the steering wheel department is manufacturing wheels at 95% utilization and is pumping out 1000 a day what does that mean? Well I can tell you what it doesn’t mean. It doesn’t mean that the company has the capability to produce any more cars. It is that fractioned way of thinking that leads so many large companies down a path that opens the door for creative destruction. The different departments must be aligned to the company’s strategy.

The feds want Henderson and Whitacre to lure the kind of talent that will help GM reach consumers the way it did when legendary Chairman Alfred P. Sloan Jr. turned the company into one of the best carmakers in the world.

I think this quote illustrates a fundamental flaw in the government way of thinking. They want GM to make cars that people want and to do so profitably. However Sloan was famous for his quote "A car for every purse and purpose". A quote that is less applicable now to GM than it has ever been. Given the problems discussed above and their lack of a problem solving lean culture, trying to be everything to everyone is a strategy that is doomed to fail. I am not trying to infer that there is an easy answer all of GM's problems because there is not, and there will likely be many job casualties along the way regardless of how many people/interest groups try to fight it. I am just saying that there is an obvious culture shift that must take place and thinking that bankruptcy is going to solve all that is crazy. Toyota has been going down a journey of continuous improvement and lean problem solving techniques for half a century or more and they are the best in the world at doing it, and they still struggle with it every day. A bankruptcy, a new CEO, and a few years are not likely to turn GM around very quickly, although they do have one hell of a burning platform.

A Lesson In Change

The last few months have been an interesting time for me. I have been working two jobs. One that seeks to embrace and encourage change through continuous process improvement, and one that knowingly or not stifles change and creativity. As frustrating and unique it has been to work in two completely different environments at times, the experience has been valuable. Earlier this week I was informed that I will be shipping out to a different base (destination unknown) by the end of the summer. It was pretty shocking and it caught my wife and I off guard. These recent experiences all share a common thread and that thread is change.

“The only thing constant in life is change” - François de la Rochefoucauld (French classical author, leading exponent of the Maxime, 1613-1680)

All of the experiences got me thinking about how we as human beings deal with change. When animals don’t change they die, as in they become extinct as a species. Humans aren’t attune to thinking in terms of a species. We think in terms of individuality. We embrace who we are as a person. However I would argue that we too die if we do not change, yet the effects are harder to see as the scope of change is typically only defined as that individual's lifespan.

We all like to latch onto the concept and buzz about embracing change and seeing it as an opportunity. However, in practice this is rarely the case. I would argue that this tendency might be some form of a survival instinct. If we find something that works we continue to do it; it really is quite rational. What we often fail to realize is that the world around us is constantly changing and therefore doing the same thing over time is ignorant and more risky than constantly changing and adapting.

I have found, and verified through my recent string of experiences, that empowerment and choice are key elements in determining how people with deal with change. As a continuous process improvement facilitator for the Air Force, I work in a lot of Rapid Improvement Events (RIE’s). Over time you start to see patterns with regard to human behavior even though the participants change. There are always people who come in pissed off that they have to participate, that they have been voluntold to participate, and they say that the stuff doesn’t work. The RIE’s typically last about 3-5 days and I can comfortably say that the majority of those types of people leave feeling that they have positively affected their process and changed something that they didn’t think they could and/or would want to change. How does this consistently happen? How does one go from Scrooge to DCC in a matter of days? The answer is empowerment.

When people are empowered to make change they embrace change. Not only do they embrace it, they see it as a important force in their personal development and their day to day happiness. RIE’s are a proven way to form a team of key players and to empower them with the ability and resources to make change. Even if they come in as antagonists they are inspired to create something. I really believe that it is an innate human desire to create.

Contrast this example with my recent relocation blindside. When I learned I was moving I was floored. This wasn’t part of my plan. I am not supposed to move yet. This ruins everything. Blah blah blah. I was not empowered to make the change, I was told. I did not go through a buy in process to verify that this change is for the better, therefore I resisted. The fear of the unknown is a powerful thing, and often when you are forced to change you are being forced into the unknown. As you can imagine this doesn’t get too many people excited.

As I work through accepting the fact that I am moving I can begin to rationalize that the change is not automatically the root of all evil. Being an optimist I even tell myself that this is going to work out to be a good thing in the end. However, positive thinking and rationality still do not change how people (or myself for that matter) react to the prospect of change. Becoming empowered to make change is the catalyst that shapes future behaviors regarding change. If you can get used to working through dealing with and creating change you are in essence familiarizing yourself with confronting the unknown. And that confrontation takes courage. Become a courageous change agent, alliteration aside it is a valuable lesson that will better your life.

Article and Blog Addition

I have been giving a new blog a test drive and it has definitely passed my trial run. The blog I am referring to is entitled Get Rich Slowly. Not only is the author from the coolest state ever....Oregon, his posts are extremely well thought out and in line with my financial beliefs.

Check out this post for a sampling of the kind of insight this blog can provide. I know I keep referencing back to my definition of rich in the majority of my posts, but its like that old game slug bug where you punch your buddy in the arm every time you see a VW bug. Now that I have defined my definition I keep coming across pieces of work that reaffirm what I have come to believe. I might have to read the book he is referencing in this post as it probably has some great information to strengthen my beliefs towards wealth.

I like to make concepts into little memorable sayings, almost like a famous quote except I am far from famous. I guess it is my way of replicating that matter of fact truism effect that quotes have. My quote for the concept of living your life and enjoying not only the end state but the journey is, "always content; never satisfied." I try to tell myself to live that way. I try to always be happy but always want more for my life. Kind of new age-y as the Get Rich Slowly post would say but good words to live by. Enjoy the post and the new addition to the blogs that I follow.