Leadership for Lean Operations

Leadership for Lean Operations On the need for Lean Leadership In the lean literature today, there are numerous single case studies which offer anecdotal evidence of the potential of adopting lean (McQuade, 2008; Swank, 2003) but at the same time, previous studies have shown that many attempts to integrate lean in manufacturing businesses fail (Bodek, 2008; Robinson and Schroeder, 2009). Top management commitment is often mentioned in lean literature as a major reason for why come companies fail in implementing lean, and as a prerequisite for implementation success (Suárez-Barraza and Ramis-Pujol, 2010). Leadership and related issues are mentioned as enablers or inhibitors of lean implementation success in almost every academic (and practitioner) paper published in the field (Radnor, 2010; Suárez-Barraza and Ramis-Pujol, 2010). At the same time, there are indications to suggest that some lean implementation efforts fail even with top management commitment (Sim and Rogers, 2009). This forces the question of whether leadership commitment as such is not enough to ensure success in implementing lean. Could there be one type of leadership which is more suited for lean operations than others? Many have stressed the difference between managers and leaders, claiming that managers control and manipulate resources which creates a focus on the past, whereas leaders focus on the now and the future (Bodek, 2008). Since lean entails constant change through continuous improvement, traditional management techniques will thus be unsuitable for implementation of lean as they focus on past performance through budgets etc. In other words, lean lives and dies by leadership (Elliott, 2008). The second question will then be if converting managers into leaders is the only way to successful lean implementation, or if the leadership role could be, or even should be, shouldered partly by others in the company. The purpose of this paper is thus to examine a) whether there is one type of leadership, traits or behaviors, which seem most suited for lean, and b) which actors need to take this role in a lean organization. I investigate these questions in two steps. First, literature on lean is reviewed to attempt to discern some patterns in 1) what are the lean principles and what prerequisites are there to the implementation of those principles, with focus on leadership issues, and 2) how leadership has been studied in the lean context. Then leadership literature is reviewed to see if previous studies on different leadership types can help us understand the patterns in lean literature on leadership. The Concept of Lean The origins of lean can be found at Toyota where the Toyota Production System (TPS) was developed over time as an alternative to the methods of mass production which could be observed in the Western countries during the 1950ies. At that time, western manufacturers focused on mass production with high volumes due to the demand situation after the war and the rebuilding of the economies. Mass production had a number of advantages such as efficient processes generating low cost products and high volumes, but it also represented a number of disadvantages such as limited consumer choice and limitations in the quality of work life for employees. As the demand situation stabilised, pressure grew to deal with these negative aspects of mass production (Bowen and Youngdahl, 1998). In Japan, Taiichi Ohno of the Toyota Motor Corporation set about implementing the efficient mass production methods he had observed during a visit to the US. Some major obstacles to the endeavor were the low volumes in the Japanese market and scarcity of capital following the Second World

War (Holweg, 2007). In the 1980ies, research conducted by MIT provided data for the world renowned book The Machine That Changed The World (Womack et al., 1990) as well as several papers, such as the one by Krafcik (1988) where the term lean was coined. The current understanding of lean builds to a great extent on the observations and the analysis of that research study. Lean principles There have been numerous attempts over the years to decode the DNA (Spear and Bowen, 1999) of TPS and lean. At first, many confused the tools and practices with the system itself, focusing mainly on the visible aspects of lean such as Single Minute Exchange of Dies (SMED), Kanban, Process Mapping, 5S and Total Productive Maintenance. The extension of the lean concept from manufacturing to other industries such as services, led to difficulties in the direct transfer of tools and practices. As a consequence of this concept stretching, lean started being described as a philosophy rather than a collection of tools, and researchers focused on underlying principles. Womack and Jones (1996) stressed five lean principles which form a sequence of implementation. (1) Specify what does and does not create value from the customer s perspective; (2) identify all the steps necessary to design, order and produce the product across the whole value stream to highlight non-value-adding waste; (3) make those actions that create value flow without interruption, detours, backflows, waiting or scrap; (4) only make what is pulled by the customers just-in-time; (5) strive for perfection by continually removing successive layers of waste as they are uncovered. Spear and Bowen (1999) described the lean system as a set of four rules. (1) All work is highly specified as to content, sequence, timing and output; (2) Every customer-supplier connection is direct, and there is an unambiguous yes-or-no way to send requests and receive responses; (3) The pathway for every product/service is simple and direct; (4) Improvements in accordance with the scientific method, under guidance of a teacher, at the lowest level possible. Sugimori et al. (1977) claimed that TPS had two distinctive features, (1) JIT only the necessary products at the necessary time on necessary quantity are manufactured and stock on hand is kept at a minimum (this feature also includes Jidoka making equipment or operation stop automatically when there is a problem); (2) Respect-for-human system workers are allowed to display their capabilities in full through active participation in running and improving their own workshops. Karlsson and Ahlstrom (1996) identified seven design elements of the lean production system; Elimination of waste, Continuous Improvement, Multifunctional Teams, Zero Defects/JIT, Vertical Information Systems, Decentralized Responsibilities/Integrated Functions and Pull instead of Push. While these are only a small sample of how lean has been described in previous studies, it shows some underlying dimensions which have great implications for leadership, namely a constant change and strive for perfection, the scientific method, teacher guidance for improvements, delegated responsibilities to multifunctional teams and active participation by and the utilization of the capabilities of all employees. Quite a challenge! The next step is to investigate how lean literature has treated the concept of leadership so far.

Leadership in the Lean Literature The question of why it is so difficult to implement total quality and lean programs given that every company needs to improve its processes to remain competitive in the global market, is a central one in contemporary operations management literature. Leadership as an Enabler / Inhibitor of Lean Implementation In previous literature on lean, leadership and in particular active leadership, has been portrayed as an enabler of lean implementation (Radnor, 2010; Suárez-Barraza and Ramis- Pujol, 2010), but no real attempt has been made to specify what active leadership actually is. At the same time, several commonly cited inhibitors of lean implementation, are tightly interlinked with leadership. Suárez-Barraza and Ramis-Pujol (2010) suggest a number of such inhibitors, notably a lack of credibility of middle management, a lack of a strong link between lean and human resource management (HRM) practices and finally excess regulation. This suggests that middle management has a critical role in lean implementation, that there is a need to make sure that HRM practices are in line with the lean philosophy and that excess regulation is not hampering continuous improvements by workers. Radnor (2010) further suggests that one inhibitor of lean implementation is resistance by workers if they have not been sufficiently involved in the process. As we can see, most effort in previous studies has been put into leadership as an inhibitor of lean implementation, and very little into how leadership could act as an enabler of lean implementation. In what way could leadership be a success factor for lean implementation? Achanga et al. (2006) investigate critical success factors for lean implementation in SMEs and find four such factors, one of which they label Leadership and Management. The authors state that in order to succinctly implement the concept of lean manufacturing successfully within SMEs, the recipient companies should harbor strong leadership traits capable of exhibiting excellent project management styles. They further claim that due to a number of factors in SMEs, leadership behavior tends to focus on attending to short-term crises as opposed to long-term strategic goals such as lean implementation. Leadership for successful lean implementation, according to the authors, includes clear vision and strategic initiatives by management, a good level of education and the willingness to support productivity improvement initiatives. This suggests a different way of managing performance than the traditional management by Key Performance Indicators (KPIs). Management by KPIs The traditional way of managing can be called management by KPIs (Schonberger, 2008) where performance is evaluated based on following up budgets and other financial measures. This way of managing performance is now changing as performance measures go beyond financials (Marshall and Heffes, 2004). To implement lean, a company must typically overhaul its way of measuring cost, speed and quality (Swank, 2003). In traditional performance management, measures of value stream performance rarely appear among those considered important, in fact, horizontal process measures rarely exist at all (Mann, 2009). The new mode has been labeled process management and improvement which is realized by new concepts, tools and techniques (Schonberger, 2008). Process management and KPIs are complementary to some extent, but senior lean managers need to establish and maintain new, process-focused measures alongside conventional measures of results (Mann, 2009) in order to support lean implementation. Both KPIs and process management rely on numbers but the difference is that KPIs are twice or more removed from the processes, whereas process management is based on process data

on what goes wrong. This process data is continually collected, analyzed and acted upon (Schonberger, 2008). This poses some interesting challenges for managers of lean operations. How can you continually collect, analyze and immediately act upon all process data? The answer is simple, you can t. That is why lean puts new demands not only on managers, but also on workers. Lean is all about independent thinking. As a manager according to the lean philosophy, you ask workers what to do, you don t tell them. The effects can be seen for example in the amount of suggestions per employee. At one time, the average Toyota worker submitted 70 improvement ideas per year. In America, the average was closer to one idea every seven years (Bodek, 2008). Leading is often connected with influencing in a certain direction. If managers in lean operations should focus on just asking questions, how do you really lead in practice? Some patterns of leading by example and coaching empowered employees can be discerned by taking a closer look at lean literature. Role model/setting the example Radnor (2010) reported that the first principle in the conceptualization of lean service of one of the most successful lean service firms worldwide, Unipart, was We will expect all our leaders to live the Unipart way philosophy and coach our employees in the tools and practices. Living the philosophy implies managers or leaders setting the example. Senior managers often have a key role in acting as role models when implementing lean (Mann, 2009). If they do not live as they learn, the lean principles quickly loose meaning and credibility. Studies also show that lean implementation has a greater chance of success if initiated by top management than for example the accounting or purchasing department (Yasin et al., 2003). To perform as a role model manager in a lean context has been suggested to require the discipline to learn, practice of correct behaviours, understanding the system level implications of actions, and unlearning political behaviours (Emiliani, 1998). However, there is evidence to suggest that senior managers commitment and setting an example is not enough to ensure lean implementation success. Sim and Rogers (2009), report on a case where the CEO was most fully committed and which has still achieved only partial success. The authors found that one reason for this was that despite the enthusiasm and the support of the CEO/ / there is a lack of committed leadership in following through the day-to-day operations. Leadership in day to day operations is something different than senior leaders acting as role models. Lean literature offers some insights in why coaching and employee empowerment is another part of lean leadership. Coaching and Employee Empowerment Going back to the first principle of the Unipart way; We will expect all our leaders to live the Unipart way philosophy and coach our employees in the tools and practices (Radnor, 2010 italics not in original), it is clear that it consists of two separate parts. One is that of setting the example, of living the philosophy, and the other is more hands-on, coaching the employees in tools and practices. Mann (2009) suggested that managers on each hierarchical level of an organisation have separate tasks and contributions which are complementary in a lean system. While senior leaders must practice going to the gemba (the place of work/workshop floor), lower level leaders actively teach and practice root cause problem solving. Going to the gemba is central in lean leadership, but being present in the place of work is not enough, leaders go to the place, observe the process and talk to the people. By observing if defined procedures are being followed using standard checklists and asking questions about problems, root causes and solutions, leaders instil a mindset where problems are valuable pieces of information on the best places to make improvements. This is leaders and managers enacting the scientific method (Mann, 2009).

Spear (2004) emphasises that in a lean system, the leader s role is to help workers understand the responsibility of improving actual operations and enable them to carry it out. The leader assists workers in constructing work as a series of experiments to ensure continuous learning. A lean leader thus coaches employees very actively and hands-on in finding the right solution, but does not fix the problem him or herself. Lean in the context of Leadership Literature Lean leadership can be understood in, and analyzed by using different contexts in the leadership literature. I have chosen to focus on two; authentic leadership which is a development of transformational leadership and shared or team leadership. Shared leadership and Authentic leadership two complementary concepts The most widely cited definition of shared, or team, leadership is that of Pearce and Conger (2003): a dynamic, interactive influence process among individuals in groups for which the objective is to lead one another to the achievement of group or organizational goals or both. This influence process often involves peer, or lateral, and at other times involves upward or downward hierarchical influence. Shared leadership is thus something dynamic, which varies with the inputs, processes and goals of the team. Carson et al. (2007) suggested three organizational climate factors that could potentially support shared leadership in teams; shared purpose, social support, and voice. Shared purpose exists when team members have similar understandings of their team s primary objectives and take steps to ensure a focus on collective goals. Social support is team members efforts to provide emotional and psychological strength to one another. This helps to create an environment where team members feel their input is valued and appreciated. Voice is the degree to which a team s members have input into how the team carries out its purpose (p. 1222). As was suggested in class, teams report to someone, a manager. It would be important then for this manager to practice leadership in a way to promote these organizational climate factors. I argue that authentic leadership is an example of that type of leadership. According to Avolio et al. (2009), there appears to be general agreement in the literature on four factors that cover the components of authentic leadership: balanced processing, internalized moral perspective, relational transparency, and self awareness. Balanced processing has to do with an objective perspective when analyzing relevant data in order to make a decision. Internalized moral perspective infers self-regulating internal moral standards which guide one s behavior. Relational transparency refers to openly sharing information and feelings as appropriate for situations. Self awareness is the leaders demonstrated understanding of his or her strengths, weaknesses and the way one makes sense of the world. Leadership for lean operations Team leadership is central for lean. Multifunctional teams with responsibilities for constantly improving the way they perform tasks require team leadership. Whoever has the experience, capability and/or improvement idea takes the lead. This type of shared leadership for lean is one of the means to realize active participation by and the utilization of the capabilities of all employees. In order to make this type of team leadership work, I argue that teams should report to what is referred to as authentic leaders in the leadership literature. Authentic leaders are well suited for lean operations and will help create the organizational climate factors that could potentially support shared leadership in teams; shared purpose, social support, and voice.

Balanced processing and internalized moral perspective means authentic managers make use of the scientific method and set a good example for employees. By taking in relevant information and making an objective analysis before decisions are made based on the team s suggestions, authentic managers in this way also ensure a transparent shared purpose, social support and voice of teams. I further argue that relational transparency and self awareness are lean behaviors (Emiliani, 1998), and important in order to ensure the utilization of the capabilities of all employees and create social support and voice of teams. Authentic leadership and shared, or team leadership are thus complementary and integral parts of leadership for successful lean operations! References Achanga, P., Shehab, E., Roy, R. & Nelder, G. (2006), "Critical success factors for lean implementation within smes", Journal of Manufacturing Technology Management, Vol. 17, No. 4, pp. 460. Avolio, B. J., Walumbwa, F. O. & Weber, T. J. (2009), "Leadership: Current theories, research, and future directions", Annual Review of Psychology, Vol. 60, No. 1, pp. 421-449. Bodek, N. (2008), "Leadership is critical to lean", Manufacturing Engineering, Vol. 140, No. 3, pp. 145. Bowen, D. E. & Youngdahl, W. E. (1998), ""Lean" Service: In defense of a production-line approach", International Journal of Service Industry Management, Vol. 9, No. 3, pp. 207. Carson, J. B., Tesluk, P. E. & Marrone, J. A. (2007), "Shared leadership in teams: An investigation of antecedent conditions and performance", Academy of Management Journal, Vol. 50, No. 5, pp. 1217-1234. Elliott, B. (2008), "Lean lives and dies by leadership", Industry Week, Vol. 257, No. 5, pp. 58. Emiliani, M. L. (1998), "Lean behaviors", Management Decision, Vol. 36, No. 9, pp. 615. Holweg, M. (2007), "The genealogy of lean production", Journal of Operations Management, Vol. 25, No. 2, pp. 420-437. Karlsson, C. & Ahlstrom, P. (1996), "Assessing changes towards lean production", International Journal of Operations & Production Management, Vol. 16, No. 2, pp. 24. Krafcik, J. F. (1988), "Triumph of the lean production system", Sloan Management Review, Vol. 30, No. 1, pp. 41. Mann, D. (2009), "The missing link: Lean leadership", Frontiers of Health Services Management Vol. 26, No. 1, pp. 15-26. Marshall, J. & Heffes, E. M. (2004), "Performance measures go beyond financials", Financial Executive, Vol. 20, No. 2, pp. 11. Mcquade, D. (2008), "New development: Leading lean action to transform housing services", Public Money & Management, Vol. 28, No. 1, pp. 57-60. Pearce, C. L. & Conger, J. A. (2003), Shared leadership: Reframing the hows and whys of leadership, Sage Publications, Thousand Oaks, CA. Radnor, Z. (2010), "Transferring lean into government", Journal of Manufacturing Technology Management, Vol. 21, No. 3, pp. 411-428. Robinson, A. & Schroeder, D. (2009), "The role of front-line ideas in lean performance improvement", The Quality Management Journal, Vol. 16, No. 4, pp. 27. Schonberger, R. J. (2008), "Lean performance management (metrics don't add up)", Cost Management, Vol. 22, No. 1, pp. 5.

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