Rob Austin: how do we assuage fear of cost-cutting in times of crisis? By Robert Austin, co-author of Artful Making – Last updated: Sunday, December 6, 2009 – Save & Share – One comment

As exciting as the lean ideas are, there’s a concern a person might have that starts with the name: Lean.  As in “lean and mean” or as in “cut your staff by half to make your operations leaner.” How do you keep lean initiatives from being bushwhacked by the cost cutting crowd, especially in today’s down economy? This is not an abstract worry. I’ve seen some so-called “lean” initiatives that looked suspiciously like cost cutting to get an organization ready for sale or spin off. How do you keep a program
called “lean” from being (or perhaps becoming, step by step, as managers feel pressure) an apparently principled smoke screen to mask ruthless cost cutting? Partly this seems like an issue of priorities: Which take precedence, lasting improvements, or short term cost cutting? Managers might feel pressure to do both. And even when lean isn’t a smoke screen, people might suspect that it is, which amounts to an implementation problem. How do you get people who you need to cooperate in a lean initiative to put aside their suspicions and fears and embrace the overall philosophy?

Art Smalley

I can empathize with the fears and connotations associated with the term “Lean” in the question posed by Prof. Austin. The term Lean was coined in the United States by a team associated with MIT researching the Toyota Production System. Internally at Toyota we never used the term “Lean” and I have always been somewhat uncomfortable with it for several of the reasons stated above.

In order to address some of the fears and items mentioned by Prof. Austin. I think there are several actions that need to take place when getting started on a change initiative of this sort. First off management needs to be ready to just listen to the concerns of various parties in the company. I have been in this situation several times in the past. Until some of the fears and ghosts of the past are at least listened to it is tough to move forward.

A good friend and successful lean leader once joked that he spent his first year simply getting yelled at by various disgruntled groups in his company. He listened hard though and categorized the reasons why they were so reluctant to cooperate in the beginning. Often there are fundamental reasons why change initiatives failed in the past and unless you get them right in the Lean initiative you are likely to fail once again.

I suspect humans are somewhat hard wired to resist change so don’t be dismayed when resistance and some fear surfaces. Expect it and have a plan for addressing it with the understanding that each company’s case is a little different. By the way Toyota’s employees did not openly embrace all of the Ohno experiments in the late 1940’s and early 1950’s either!

Secondly I think proper communication is vital in terms of explaining Lean or whatever buzzword you stick on the change program. In Toyota’s case there was actually an unfortunate one-time layoff of 2,146 employees in the early 1950’s that did occur in order to keep the company afloat. Since that time however the company has grown from a couple thousand people to over 300,000 employees worldwide! I think that is an impressive growth trajectory that needs to be considered and emphasized. Likewise employee’s salary and company profits have been excellent as well over the past several decades.

Fundamentally Toyota’s system is about growing while making a profit, satisfying the customer, and constantly improving by eliminating waste. It also emphasizes developing employee skill sets and is not about simply cutting the headcount. Improvement in Toyota does involve “reducing cost” by elimination of non-value added activities but it is not just “cutting cost” as is the norm in most company programs. This principle has to be properly grasped, communicated, and executed for the program to have any chance of success.  In general in my experience I find that while people may resist change not too many people are against “improvement” or “problem solving” when the details are openly discussed.

Thirdly there usually needs to be some sort of initial success stories to hold up as examples in the company. Talk is nice but actions speak a thousand times louder than words. Improve process that have downtime, eliminate problems causing expediting or late delivery, reduce scrap and rework, simplify difficult tasks, etc. and reasonable employees start to see the benefits opening the door for other follow up improvement activities. Showing results matters too and not just fancy signs, slogans, or areas showing “improvement tools”. In Toyota’s case in the early 1950’s the so called “Ohno” lines were dramatic examples of how things could work better and be easier for the employee as well. I could go on with a lot more commentary but this is some of the initial type of groundwork that usually needs to be paved.