Servant Leadership -- How Does It Help Achieve Organizational Excellence?

At the end of May, Robert. B Camp published a book entitled The Servant Leader: How to Create a Productive Organization By Serving Those Being Led -- a compelling exploration of servant leadership in practice. The book delves into how truly effective leaders prioritize humility, foster growth in others, and remove obstacles to enable success. A servant leader, Camp asserts, sets the vision and paves the way for others to follow.

When I spoke with Robert this month, I asked him: "What is 'servant leadership,' and how does it benefit an organization?" Here is his complete response: 

Lean is about leadership.  

When employed effectively, Lean works from the top of the organization down.  While conventional "command and control" leadership can get a Lean transformation off the ground, it can’t sustain one.  Sustainable Lean is achieved when leaders set direction and goals, then use their authority to remove obstacles from the paths of the people they hold accountable for achieving those things.  This demands a mindset shift: leaders must see themselves not above, but in service to, their teams.

In this upside-down way of looking at leadership, one realizes that leadership isn’t about power and control.  It’s about clearing the path for one’s subordinates so that they can do their jobs more effectively and excel.

Early in my book, the reader meets Thomas Harding, a director endeavoring to be a servant leader.  We learn that, as a leader, “Thomas feels his highest calling [is] to grow those below him; to prepare them to be the best they possibly [can be].  As a result, he [is] far more worried about his people’s careers than his own.”  

The reader also learns that Thomas adheres to a strict hierarchy of principles:

• His priorities are: 
• Morality (following a moral code)
• Organization (achieving the best outcome for his company)
• Subordinates (clearing their paths so his people can shine)
• Self (Striving to be his best in service of others)
• He always completes assignments, but often well beyond expectations.
• He seeks to make his people’s lives easier by eliminating bureaucratic obstacles.
• He listens to his people, but also communicates what’s going on.
• He strives to develop subordinate leaders who mirror his own behaviors. 

Robert’s perspective invites reflection -- What do you think of his view of servant leadership? Is servant leadership part of your organization's culture? Is it part of your Lean initiative? 

What is the Key to Lean's Long-Term Success?

I recently had the opportunity to speak with both Bill Baker and Ken Rolfes about their new book, Lean for the Long Term: Sustainment is a Myth, Transformation is Reality. During our conversation, I asked them: "Why did you write this book? What was unique about your experiences?" Here are their complete separate responses:

William (Bill) Baker: When Ken and I began this book, we found we had been in different industries during the past 40 years, but we had witnessed similar transformations that had started strong with management commitment, but when the low-hanging fruit had been harvested and/or a new executive was hired, the transformation was derailed and lost its momentum. It seemed many times lean was viewed as a “project” executed by a manufacturing manager or continuous improvement leader, but it did not have full-time support by upper management. So we researched organizations that have been on the Lean transformation journey for 30 to35 years to discover their approach to share in Lean for the Long Term: Sustainment is a Myth, Transformation is Reality.

Ken Rolfes: Having been an early adopter of the Toyota Production System methodologies we call "Lean," I have had the opportunity to benefit from Lean strategies in multiple industries and companies. I have seen businesses transform with Lean and then lose it. We wanted to understand why so many Lean initiatives start off strong, plateau, and then recede as well as how can that be prevented. What we found is the Lean transformations that fail to last were not transformations after all. They were high-energy attempts to rally the organization to action, and when the energy is spent, so goes the transformation effort. A Lean transformation is, in reality, a different management system. Lean for the Long Term challenges our organization and management system models.

Business transformation is currently on most CEOs' agenda, and General Electric (GE) is only one example. GE’s announcement in April that it plans to sell off most of its big finance unit, GE Capital, represents one of a number of moves in the transformation of the company under the CEO Jeffrey Immelt. Mr. Immelt described it as a lengthy and often humbling corporate journey recognizing that GE’s real strength lies in industrial engineering rather than financial engineering.

A few years ago, when he was speaking at Stanford Business School about following Jack Welsh after his tenure at GE, he stated “The trick, if you follow someone famous, is that you’ve got to drive change every day without ever pretending anything was ever wrong,” This is the premise of the Lean management system described in Lean for the Long Term. Most are familiar that core idea of Lean is to maximize customer value, but many lean practitioners are hung up in their current business model and structured organizations that are compartmentalized, departmentalized and driven by MBO (management by objective) goals.

The structure and isolation from the customer will not work in the unprecedented trends in sheer number, speed, and intensity of today’s business transformation activity. The need for business transformation may be caused by external changes in the market such as an organization’s products or services being out of date, changing income streams, new regulations, and/or competition becoming more intense. Organizations need the flexibly and responsiveness required to drive business model transformation which a Lean management system is designed to deliver.

To accomplish this, management must change the focus from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers. The Lean management system described in Lean for the Long Term describes that system and gives examples how it applies in every business and every process and the line of sight management process required from the front-line operations to the board of directors. The application of the principles described in our book can make any business more effective and profitable. At the end, this can benefit all of us – owners, managers, employees, and communities. 

So many companies have experienced the Lean initiative "plateau" -- the beginning of the initiative is strong but it soon loses direction and energy. In your experience, what is the cause of this situation? Do you agree with Bill and Ken's perspectives?

Sustaining Lean = Long-Term Leadership

Just this month, Robert B. Camp published a new book titled Sustainable Lean: The Story of a Cultural Transformation, and I talked to him about some of the topics addressed in the book. Most Lean initiatives begin with noble intentions but often plateau or fail to maintain the gains. It’s commonly known among consulting circles that 80% to 85% of all first-time attempts at a Lean transformation fail, and I asked Robert: Why does this occur? Here is his complete answer:

Lean comes from a culture, originally developed at Toyota, that understands that plotting a strategy requires taking the “Long View” -- looking for the best long-term solution, irrespective of what might be best in the short-term.

Making a decision to launch a Lean transformation is a strategic decision. It is a life-changing transformation, the equivalent of leaving the doctor’s office with the emphatic “lose weight or die.” You can’t perform a Kaizen event or two, any more than you can lose a pound or two, and declare victory. Making the decision to embark on a Lean transformation is making the decision to change life habits, and not just on the shop floor.

What most leaders don’t understand (and, frankly, most transformation experts are afraid to tell them) is that for Lean to work, leaders have to change. Leading Lean is not achieved by hiring a well-known consultancy or appointing a Continuous Improvement Coach -- It is achieved by effective leadership from the top.

Leading Lean means learning about the philosophies of Lean and the tools that issue from them. It means changing the way in which processes are measured and goals achieved. It means being transparent and living the life before you ask others to. It means holding everyone in the organization accountable for achieving expectations. It means a lot of mentoring and coaching and going to see for yourself.

Mostly, leading Lean is about a personal commitment to change.

What do you think of Robert's ideas? Have any of you been involved in a Lean transformation that has stalled or failed because key champions have left the company or the emphasis was solely on tools?

Quick Wins on the Green Journey

The third and final part of my discussion with Brett Wills (author of Green Intentions: Creating a Green Value Stream to Compete and Win) focused on the areas of any organization where quick improvements could be accomplished. Brett has some important suggestions here:

"When starting out on the green journey, one does not have to dive in head first. There are many initiatives that can be undertaken to realize significant cost savings without tying up large amounts of resources. Not only will these initiatives realize cost savings, they will go a long way in gaining the buy-in needed to develop a greener culture.

Here are a few quick wins to get started with:

1. Air Compressors -- Identifying and repairing leaks in air compressor lines can result in hundreds even thousands of dollars in annual energy savings. In addition, many times the PSI level is far too high for what is actually needed. By simply lowering the PSI level a few notches, one will see immediate savings.

2. Peak Shaving -- A close examination of one’s electric bill will reveal a hidden peak demand charge. This charge is based on the one-time largest draw of energy over a 15-minute window. For example, turning on all the lights, motors, equipment, computers and so on at the same time will draw a large amount of energy for a short period of time. With a peak demand charge anywhere from $5+ per kW, one can save a great deal of money by simply staggering start ups. Often times the electricity provider will help with this project at no cost.

3. Computers -- Although the energy consumption of a single computer is relatively low, adding up the energy consumption from all computers represents a significant cost. Many times computers are left on overnight so that updates and maintenance tasks can be performed. By simply scheduling these activities to occur on a specific night, computers can be shut off at the end of each day to realize cost savings.

4. Water Coolers -- It is cheaper to use water coolers that treat tap water than to use water coolers that are fed from a bottle.

5. Hot-Water Tanks and Pipes -- Uninsulated hot-water pipes and tanks result in large amounts of heat loss requiring greater amounts of energy to keep water at desired temperatures. By insulating these tanks and pipes, heat loss is minimized resulting in lower energy consumption and ultimately, cost savings.

6. Side Skirts -- For transport and logistics companies or those with fleets of trucks, there is a simple way to dramatically increase fuel consumption, with very little investment. Side skirts for tractor trailers greatly reduce drag and can increase fuel savings by as much as 15%.

These are just a few of the many quick wins that can be had by putting on the green lens. Harvesting this low hanging fruit is an effective way to start realizing cost savings and build momentum for a more comprehensive green transformation. The key is to have a process or a 'road map' to follow."

A Lean and Green Benchmark

To continue our discussion of sustainability and green manufacturing, I present part two of my “digital dialogue” with Brett Wills (author of Green Intentions: Creating a Green Value Stream to Compete and Win). In this post, he presents a great case study in “green thinking”:

"In business for more than 30 years, Interface Inc. is a publicly traded company with 2007 annual revenues of $1.08 Billion. They are headquartered in Atlanta, GA and have offices in more than 100 countries.

Interface is arguably best known in the green world for being a leader in industrial ecology by closing the loop on carpeting. Their ability to take back their carpets and make new carpet out of it with relatively minimal environmental impact in the process has shown that green thinking is not only possible it is practical and just plain good business.

Under the leadership of founder and chairman Ray Anderson along with the support of key change agents such as senior engineer Dave Gustashaw, Interface has a vision of being the world’s first environmentally restorative company by 2020. That’s right, environmentally restorative, not environmentally friendlier or even neutral but to actually have a positive impact on the environment.

Interface looks at waste not only form the customer’s perception of value but also extend that thinking to include the environments perception of value. Although they admit they still have a long way to go, their results serve as inspiration for what can be achieved with a commitment to banish all forms of waste. Have a look at the remarkable stats of their 15-year 'lean and green' journey, you will be amazed.

Cumulative avoided costs from waste elimination – $372,000,000
Total waste sent to landfills from manufacturing – down 66%
Total energy use – down 45%
Total renewable energy use – 27%
Percent renewable or bio-based materials in products – 25%
Net absolute greenhouse gas emissions – down 82%
Water – down 75% modular, 45% broadloom
Post consumer/industrial diversion from landfill – 133,000,000 lbs.
Safety – 60% reduction in recordable accidents.

Still think that going green is a financial drag and a “nice to do” in good times?

The trick to achieving results with green is to have a process and road map to follow. The lean and green process provides this map.

* Information extracted from the an article appearing in the Association for Manufacturing Excellence’s Target Magazine (Volume 24, Issue Number 5). The article was written by Dave Gustashaw and Dr. Robert Hall.

Green… Just Plain Smart Business

My recent posts on "lean and green" and sustainability have generated some emails from practitioners working in this area. Brett Wills, author of Green Intentions: Creating a Green Value Stream to Compete and Win, sent me some fairly detailed insights that I'd like to share here in three successive blog posts. Here is part one:

"Attitudes of customers, employees, and stakeholders are changing. Indicators are constantly showing they are increasingly attracted to those companies who respect the environment and people and are committed to improving sustainable processes. For some, however, there is an illusion that going green is a financial drag. This thinking inhibits the change that is necessary to compete and win in today’s economy. Fortunately, this thinking is rapidly changing as more and more companies continually post results to the bottom line.

Companies like Coca Cola, Kraft, Heinz, Toyota, Interface and HP are showing how going green cuts costs, grows market share, strengthens brands, and increases competitiveness. These companies are clearly illustrating that going green is no longer a 'nice to do' program in good times but a key ingredient to succeeding in the new, reset economy.

The rub is that going green can be difficult if one does not have the tools, techniques, and thinking required for a successful green transformation. The good news is that all the ingredients needed for a successful and profitable green transformation are readily available. In addition, one can quickly learn to apply these tools to immediately realize cost savings and other business benefits with little to no investment and quick implementation.

One such tool is the lean and green process that allows one to quickly uncover the often hidden and costly green wastes laying in an organization. Committing a relatively small amount of time to learning and applying this process will allow one to immediately begin harvesting the low-hanging fruit. These quick wins enable one to get the buy-in and support needed for continuous green improvement.

Whichever way one looks at it, competing and winning in today’s new economy requires a strategy that includes green."

What is Tecumseh Thinking?

About three years ago, the Tecumseh Products Company (best known for producing refrigeration compressors) closed a manufacturing plant in Wisconsin, and I read interesting commentary about it on Mark Graban’s blog at that time. It appeared to be yet another case of a U.S. manufacturer outsourcing its production to foreign countries with extremely low labor costs.

This month, however, I was happy to read this press release detailing Tecumseh’s recent hiring of Michael A. Noelke (as executive vice president, sales, marketing, and engineering) and James J. Connor (as vice president, treasurer, and chief financial officer). Both gentlemen have strong backgrounds in lean applications and impressive track records of performance improvement results. Noelke’s tenure at Sporlan reveals many noteworthy accomplishments – Sporlan is a division of Parker Hannifin, which embraced a quite successful lean transformation many years ago. Connor’s implementation of lean thinking at Newcor helped that organization rebound from bankruptcy.

Time will reveal the depth of Tecumseh’s commitment to cultivating a lean culture, but a general question to all U.S. manufacturers remains: Is any lean overhaul powerful enough to challenge the lure of outsourcing production and competing primarily on the basis of low labor costs?

A New Year Brings "Old" News but New Questions

Shortly before the Christmas holiday, Reuters published an article explaining how U.S. manufacturing companies are discovering and adopting lean methods to compete with plants based in China:

http://www.reuters.com/article/idUSN1817274520091218?type=marketsNews

To many of the long-time proponents and advocates of lean initiatives, this article’s headline most likely elicits a sigh and a “So, what else is new? We’ve known that for years!” response. In addition, most would agree that truly incorporating lean methodology transcends a mere “fix” because it should ultimately result in a cultural transformation.

One aspect of outsourced manufacturing that is hardly addressed is the future sustainability and profitably of these specific plants located in China. U.S. manufacturing companies might be outsourcing work and jobs to China, but are any lean principles being outsourced as well? The benefits of outsourcing currently rest solely on very low labor costs – but how long can this situation last? If low labor costs drive the profitably, are these companies not on the road to evolving into the wasteful mass-production facilities like many U.S. plants of the 20th century?

I always enjoy reading about an organization’s adoption of lean principles and the results gained, but, unfortunately, most of these initiatives in the U.S. are reactive responses to a downturn or crisis. Methods and techniques are implemented and initial results can be compelling, but often these initiatives plateau with measurable decreases in waste and never reach the level of a companywide transformation. In China, it appears these plants are perfect greenfields for lean culture, but will the leaders of these companies take heed? Should they? Please share your perspective.

Finally, I would like to thank my colleague Ralph Bernstein for the outstanding work he’s done writing and steering this blog for more than three years. His entries were not only insightful, but quite thought-provoking and entertaining. I wish him the best in his pursuits.

Industry Week Article Overstates Progress at the Big Three

Industry Week’s current issue is featuring a story about the progress GM, Ford and Chrysler are making in becoming lean. The sub-headline on the article is “Continuous improvement has taken hold in Detroit -- and not a moment too soon.”

But has it? I question the article’s conclusion because I believe it misses a major point.

The article, by Josh Cable, notes how quality and productivity have improved at the Big Three, basing that conclusion partly on figures from the most recent Harbour Report, which measures productivity. I’ve quoted the Harbour Report myself.

Additional information in the article notes the increased emphasis the Detroit automakers are putting on having flexible operations that can adapt quickly to changes in the marketplace.

All of this is true, and yes, progress has been made. But there is a word missing from the article that goes to the heart of a lean transformation.

Culture.

Applying lean techniques to make your processes more efficient and flexible is all well and good. It does produce benefits.

But to become a truly lean organization, you need to transform your culture. You need to become an organization where everyone, from the corner office to the shop floor, thinks in lean terms, never viewing the job as done, always striving for perfection, and endlessly pursuing continuous improvement.

Do the Detroit car companies think that way? Perhaps some people in those organizations do. But I am not convinced that any of the Big Three has achieved the kind of enterprise-wide cultural transformation that would put them in the same league as Toyota.

I hope they make progress in that regard. But I’m not holding my breath.