The LEAN “Catch-22”
It’s said that 95% of all LEAN initiatives fail or fade after few years. One reason for that is the well-known conflict between the need for engaging employees in the daily improvements and the following ”appreciation” of the same employees when headcount reductions hit as a result of the improvements. This ”Catch-22” of LEAN has hit me several times during my many years working with LEAN and for sure is the biggest concern raised when a LEAN program or initiative is presented. LEAN is the western world interpretation of Toyota Production System (TPS) and by understanding the circumstances around the TPS birth back in the 1950th we may be able to apply LEAN more successfully.
What TOYOTA did:
•TOYOTA went for growth. At that time they were a dwarf in the car industry and they needed to be price competitive on the US market to grow – tricky with very low volumes and high cost of capacity.
•TOYOTA made an agreement with the union about job security for the employees – in return the employees committed themselves to contribute to continuous improvement of the company
So, two critical prerequisites for the successful TPS method. Growth and Loyalty.
After a few years TOYOTA outperformed both cost and quality of a US manufactured car.
For me it is quite obvious that LEAN has to be applied as part of a growth strategy. We may not be able to guarantee job safety for our employees, but by aggressively going for growth we can in good faith tell employees that the expectation is that improvements will lead to more sales and more jobs.
“Unfortunately”, the LEAN tools are very effective for cost cutting and optimization. These tools have been known and used long time before TPS was introduced. Henry Ford developed many of these back in 1910th as part of what he called “Scientific Management Principles” and made huge cost cuttings by that. So please feel free to use all the “LEAN tools” for cost cutting and head count reduction – but please don’t call it LEAN. LEAN is much more than just the tools.