We are working our way around my mind map (See below.) So far, it’s been a good “compare and contrast” exercise for me. I hope so for you as well.
This time, our topic centers on Lean culture and how Lean Accounting helps to support and sustain Lean manufacturing.
Sometimes we Lean people get so far into the Lean tools we can’t see the forest for the trees. And, when it comes to the subject of Lean Culture the forest is a big one. Much has been written about what supports it and what doesn’t; how it can be encouraged; how it breaks down. Even so, Lean culture often remains elusive.
I’ll begin with basic Lean principles. When I teach Lean Accounting to my customers, I often use the following illustration:
I take the people through the diagram in detail and spend a good amount of time going over the ideas involved: customer value, value streams, flow and pull, pursuit of perfection, and empowered (or respect for) people. We spend a lot of time thinking about how things work in my customer’s operations. All the while I emphasize that Lean is a long-term process overwhelmingly driven by people.
I firmly believe Lean is not about the Lean tools, although it’s always interesting and really fun to see how well they work. But if companies are to avoid the “flavor of the month” pitfall, Lean also has to be fundamentally about the culture that forms its foundation.
But just what is “Lean culture?” and how does it work? Who owns it? How is it sustained? What has this got to do with Lean Accounting?
Toyota’s experience and their way of doing things – known as the “Toyota Way” – are supported by their “Two Pillars.” Namely: continuous improvement and respect for people. What you see at the below is a diagram Toyota has used to express this notion in simple terms.[i]
In one of his gemba walks[ii], Jim Womack explores what is meant by “respect for people.”
He concludes it is not only about listening to people, letting them solve their own problems in their own way, and giving lots of “atta boy” feedback. On the contrary, it involves challenging people to work together in pursuit of customer value, pull and perfection while creating a learning organization where people use PDCA to improve and develop knowledge day in and day out.
Where’s the Problem?
As accountants and financial people in a Lean organization, the bottom line question for us often is: how can we participate in Lean and help sustain it? In my work with BMA customers, I have seen many culture issues that are hard to address and solve, simply because the traditional information available for making decisions, coupled with the ways they manage and measure what people do and how well they perform, are incentivizing non-Lean behaviors.
For example, traditional HR structures predominantly favor individualism and self-interest. Traditional “Management by Objectives” approaches reward making one’s “personal” targets. This discourages teamwork, and often leads to competition rather than cooperation between people and departments. “Job security” in such an environment often means not letting other people in on the “secret” of how your job is done. In a Lean environment, on the other hand, performance is measured by how well the value stream serves the customers’ pull. This is entirely a matter of coordination, cooperation, and waste elimination.
What’s the Role of Lean Accounting?
Traditional systems reward people and departments that “get the work out” without necessary regard for quality or other impacts (such as building inventory.) Worse, traditional methods stimulate self-interest and (often) playing politics; they nurture non-Lean “heroes” and fire-fighters rather than the steady development of skills, standard work, and empowerment that come from coaching others, supporting their efforts, and helping them learn to do better work for the customer.
Doing the best work for the value pulled by the customer requires the best information about how you are doing, but as importantly, where you are falling short. You don’t need this information after month-end; you need it quickly, so you can make changes in real time. You don’t need opaque and confusing reports on variances and overhead absorption; you need a clear understanding of what you are spending and how you are meeting customer demand. You don’t need blame, you need encouragement to change, the tools to do it, and coaching that creates learning. You do not need a short-term, this-month’s or this quarter’s results orientation; you need a long-term focus on customer value.
Bottom line, you need the information that Lean Accounting provides.
What follows is a table that lays this out.
Next time, we’ll delve into the next subject on our tour around the mind map: Process organization.
[i] The Toyota Way came about because Toyota needed a way to preserve and teach its guiding principles as it expanded globally. This elegant diagram is an example; it was used by the company in its Environmental & Social Report 2005. https://www.toyota-global.com/sustainability/report/sr/05/pdf/so_02.pdf accessed January 15, 2012.
[ii] Jim Womack, Gemba Walks, Lean Enterprise Institute, 2011, p. 66
Original posted at http://blog.maskell.com/?p=543