The Necessity of Lean Culture

Some people believe that the American automotive industry has been battered by external forces. Those of us who promote the cause of lean manufacturing tend to think the automakers did it to themselves.

            What I viewed as powerful reinforcement of our position came at a recent event I attended in Dearborn, Michigan, called “Supplier Challenges, Investor Opportunities: A Conference on Restructuring in the Automotive Industry.” Sponsored by the Center for Automotive Research, the event brought together about 200 people, mostly investors, investment advisers and consultants looking for opportunities in the wreckage of the industry.

            I’m going to write several postings about this conference because I believe it brought into sharp focus the necessity for a lean strategy in today’s global economy (and not just in the automotive industry), as well as what can happen when the wrong strategies are pursued.

            In truth, there were few explicit references to lean manufacturing by the speakers. But lean was the 800-pound gorilla in the room, underlying the vast majority of what was said.

            Daniel Howes, business columnist and associate business editor for the The Detroit News, hit the nail squarely on the head when he said, “The biggest enemy of this town is our culture in Detroit.”

            He quoted a study of the Great Lakes region by the Brookings Institution, which described the Midwest culture as “anti-intellectual, nativist and insular.”

            Howes noted that Americans tend to think “we are somehow unique,” and the best in the world. But the world is changing, he said: “American exceptionalism is dying, if not dead, and I’m not sure a lot of people in this town got the memo.”

            He supported Ford’s decision to hire an outsider, Alan Mullaly of Boeing, as CEO and president because “we don’t have anybody who knows how to do this.”

            Related comments on culture came from other speakers. Tom Stallkamp, an industrial partner with private equity firm Ripplewood Holdings, said “the tendency in this town is to shrug it off.”

            Stallkamp noted that he has a vacation home in Florida and said, “If you want to know what’s wrong with Ford today, go to Bonita Bay. There are 600 retired Ford executives. Go to Starbucks and listen to these guys bitch about Ford. The boys in Bonita Bay need to just play more golf and shut up because they don’t have the answer.”

            Stefano Aversa, managing director and COO of consultant AlixPartners, zeroed in on a key difference: “Toyota is never satisfied, and most of the others get complacent,” he said. “Unfortunately, this is not an industry where you can afford that.”

            Along the same lines, John Casesa, managing partner of Casesa Strategic Advisors, commented on the often-overlooked issue of auto dealers. “The silent killer right now is deterioration of the distribution system, which I think Detroit took for granted for many years,” he said. “Toyota did not.”

            For too many years, Detroit has viewed lean production as a good set of tools, and not an enterprise strategy that must become an integral part of your culture for true success. The current situation is a direct result of that blindness.