"CEOs are rarely interested in such radical change in the first place (they are busy), but the real challenge comes from their need to shift from managing to leading in order to have any chance of success." – Art Byrne
“What Lean Leaders Do” is the title of the 7th chapter in Art Byrne’s book, The Lean Turnaround which basically spells out some of the characteristics of a CEO in order to lead and sustain the Lean transformation over a long period of time, and hopefully make it permanent even after the CEO leaves the company.
Lean is a journey that never ends, not a pet project that you start and then abandon in a few years or until you stumble on a serious problem. Lean requires serious commitment and hands-on involvement from the leadership. Only 5 to 7 percent of the companies that implemented Lean will be successful. Why is that so? It is because very very few CEOs are interested in Lean transformation, because they are too busy, and perhaps stuck with the mindset of traditional management approaches. Art Byrne told the story of Wiremold which became famous as one of the first companies in the west to adopt Lean through the works of Shingijutsu consultants. Many companies asked for plant tours of the Wiremold facility such that it became overwhelming with too many requests. So Wiremold decided to put a requirement that only companies who will send their CEOs will be allowed to tour the facility. Overnight, the visits stopped. This proved that CEOs aren’t normally interested to put time and effort to learn and lead Lean, which they’d rather delegate to operations executives. For anyone who is leading a Lean program, he has to convince the CEO on three things:
1. Get interested in Lean
2. Understand that Lean is a strategy - an unfair competitive advantage
3. Change own style from manager to leader
CEO as the Lean Leader
In order for a company to successfully implement a Lean turnaround that is sustainable for a long period of time, its CEO must lead. There are three things that the CEO must do:
1. The CEO must transform all the people in the company – executives, managers, staffs, operators, every single employee. Unlike machines and buildings, people are the only ones capable of changing in character and appreciating in value. The problem is people are resistant to change. Middle managers often feel threatened when presented with changes in expectations. Finance people are often defensive of standard cost and absorption accounting systems. So, the CEO is responsible in making Lean work by getting everyone to think and act in a new way. This becomes possible by doing the second action.
2. The CEO must lead by example. He has to demonstrate a strong leadership, by breaking departmental silos and fiefdoms. He has to get everyone rowing in the same direction. He has to be unforgiving to those who are in rebellion and intractably opposed to Lean, to the point of letting them go before they interfere with the planned change and infect other people.
3. The CEO must make the case for Lean, and keep making it. It is easier to get everyone follow the change of course when there is a case for urgency to do so. The CEO has to find a case and create a sense of urgency to implement Lean, a changing of course could be averting bankruptcy or technological obsolescence, a glaring opportunity to improve, or facing a competitive challenge in the market sector.
CEO as the Lean Coach
The CEO must always be at the forefront of the team coaching people, leading by example and creating strategy. He has to focus on where the company is heading and not just reviewing where it had been. He has to stay vigilant in key metrics and focused on improving them - cutting lead time, improving quality, increasing flexibility, lowering cost, and stronger link of the process to the customer.
The CEO has to be the company’s Lean zealot. He has to display complete and unwavering commitment to Lean turnaround, so that the people will respond positively and engaged to improvement efforts. He has to challenge the status quo, the current state, by asking employees leading questions, getting them think out of the box to come up with possible solutions to every problem. While squeezing every ounce of intelligence from the people, the CEO has to also congratulate the people’s achievement and celebrate the new gain, while helping them also to recognize the next challenge.
Value-adding CEO
To be a Lean leader, the CEO must understand the concept of value-added and non-value-added activities in the process, and it has to be done not in his office but in the shop floor. To do that, he has to make it a habit to spend time in the shop floor observing the process, and learn how to identify and separate value-added and non-value-added activities, and how to eliminate waste.
Succession Planning for Lean Leader, the company CEO
The CEO has to plan the succession of Lean leadership and there is no source of leaders as the members of his own senior team. To move up in the Lean organization, the leader has to have hands-on Lean experience, and a Lean zealot.
The candidate to take take the Lean leadership must have the experience of running successful kaizen events himself. He should also understand that Lean as the business strategy, and has demonstrated as a team player respected by everyone in the organization.
Keep in mind that that we're talking about the succession of CEO himself, not just the Lean leadership. The CEO is the Lean leader.
A person who has been working in a real Lean environment for a long period of time, fortunately, will not transition back to traditional type of organization. It doesn't make sense to him to go back to inefficient operation and backward strategy.
So, the future CEO, as a Lean leader, must be someone who can work with teams, capable of making decisions for the company and not just for his department or function.
Selecting the future CEO with Lean leadership is then crucial to making the Lean journey sustainable and successful in the long haul.
About Art Byrne (excerpted from Lean.org)
Art Byrne is an Operating Partner with J.W. Childs Associates, a private equity firm specializing in leveraged buyouts and recapitalizations of middle-market growth companies, where he leads the implementation of lean management at Childs' portfolio companies.
While serving as CEO or an equivalent position, Byrne implemented lean principles in more than 30 companies (including subsidiaries) and 14 countries during the past 30 years, giving him a matchless knowledge of how to turn around companies using a lean strategy. Byrne began his lean journey as general manager at the General Electric Company. Later, as group executive, he helped introduce lean to the Danaher Corporation. As CEO of The Wiremold Company he quadrupled the company size and increased its enterprise value by 2,500% in less than 10 years.
Byrne holds a bachelor's in economics from Boston College and an master's from Babson College. He also serves as a board member of the Shingo Prize.
Byrne is also the author of two critically-acclaimed books in Lean, "The Lean Turnaround," and "The Lean Turnaround Action Guide." Both are available in Amazon.
