Make Failure Acceptable

I visited a plant recently that was struggling to implement Lean. This plant was having difficulty keeping up with the customer demand. They were operating like a traditional push factory producing large batches utilizing all available resources. What you observed was lots of material and product on the factory floor not moving, poorly utilized process, and general chaos. While talking with the plant management about this obvious deviation from lean thinking to this current thinking a couple insights made it clearer. First, the management has some lean knowledge but really did not understand lean and how to implement it. Second, they were so afraid of doing anything that would affect their output they basically were doing nothing. They were afraid of making a mistake and suffering the ramifications of failure from executive management.

What do you think of failure? How does your organization or manager treat failure? Failure can be good for you.

Fear of failure is the main reason why more than 80% of people in the world are not prepared to change their circumstances. Why do people fear failure so much? The reason for this is because people don't understand the dynamics involved in success and failure.

Everything we do in life has either a right way of doing it and a wrong way of doing it. When we do it the right way we meet with success. Needless to say that when we do it the wrong way we are unsuccessful. Understanding this is important because it puts failure in its proper perspective and removes the fear around it.

Every failure teaches a man something, if he will learn – Charles Dickens

Past failures prepare you for future successes. It’s the old adage, “Learn from your mistakes”. Failures help you realize what didn’t work, so you can find what will work.

Sir James Dyson the inventor of the Dyson vacuum has been famously quoted as saying:

I made 5,127 prototypes of my vacuum before I got it right. There were 5,126 failures. But I learned from each one. That's how I came up with a solution.

Jon Carroll a daily newspaper columnist says failure is a good thing because this is how we learn.

Success is boring. Success is proving that you can do something that you already know you can do, or doing something correctly the first time, which can often be a problematical victory. First-time success is usually a fluke. First-time failure, by contrast, is expected; it is the natural order of things.

Failure is how we learn. I have been told of an African phrase describing a good cook as "she who has broken many pots." If you've spent enough time in the kitchen to have broken a lot of pots, probably you know a fair amount about cooking. I once had a late dinner with a group of chefs, and they spent time comparing knife wounds and burn scars. They knew how much credibility their failures gave them.

The management at this plant needs to understand that failure is part of success. The real failure is trying nothing to improve your situation. Lean is about thinking and making improvements. Some ideas work and some ideas don’t. What management needs to do is create a safe environment where it is OK to fail.

But to have success, you have to create an environment where it is safe to fail. Failure is an expected part of the process of finding solutions. If workers feel that they have to “hit one out of the park” every time they come up with an improvement idea, they will be reluctant to provide their ideas. In a Lean environment, failure and success should be met with the same level of enthusiasm and support.

As a supervisor, you should work to create an environment where improvements are encouraged and failures are embraced. An environment where ideas are continually tested and then those that work are adopted. This cycle of continually learning and improving is at the heart of Toyota’s success.

Failures can either destroy or advance our goals, but it's our response to them that truly determines the outcome. If we are too afraid of failure to try then we will never know if we can improve our situation.

Creative Safety Supply

Along your Lean Journey it is helpful to have resources at your disposal to aid in your transformation. Mike Wilson, a reader of A Lean Journey, wanted to share his company with others in the Lean community as a resource.

Creative Safety Supply specializes in Facility Floor Marking, Aisle Marking, 5S Products, and Ergonomic Solutions. Finding lean and efficient ways of doing business are what drive us every day. We know and understand that quality products and timely delivery are important to our customers. So if you need to implement a 5S system and create a visual “Lean” work place, or stay ahead of OSHA and put aisle marking tape throughout your whole facility we can help. www.CreativeSafetySupply.com 866-777-1360 – Mike Wilson


They offer a wider variety of products to support visual factory and 5S implementation. There are a number of free guides that can be helpful and upon request they will provide samples of many products.

Avery Dennison Shares Thoughts on Lean

Some of you may be familiar with Avery Dennison. I have been fortunate to visit a couple of their facilities looking at their Lean implementation over the years. For those of you who are not familiar with them you can find a brief description below:

Avery Dennison is a global leader in pressure-sensitive technology, retail apparel ticketing and branding systems, consumer and office products and self-adhesive materials. Every day millions of people all over the world see Avery Dennison innovation in thousands of products. From beverage labels and personalized binders to retail tags and vehicle graphics - Avery Dennison products are everywhere you look.

Recently, Dean A. Scarborough, President and CEO, took time to explain Avery Dennison’s view of excellence and service (2 of their 6 values) in a video. This is what they call Enterprise Lean Sigma. It is defined as process and execution excellence, delivering exceptional quality and service that exceeds customer expectations everyday.

They seem to have a strong understanding of Lean and give a wonderful overview. It makes you wonder how your company defines it’s values.

Are We Investing Wisely for Our Economic Future?

Some recent data suggests that the U.S. lags in the global race to invest in production technology and research. Since this economic downturn has taken profits away it is not surprising that companies are not investing as much. Many companies are focused on reorganizing and rebalancing to a newer lower revenue. With all this excess capacity there is little motivation to invest in production.

In the last two quarters, investment in equipment and software, key factors in our high-technology industrial economy, fell by 28% and 34%, respectively, at annual rates. Production of industrial equipment has fallen by 21% since its high in 2007, the biggest decline since the 1950s. This contrasts sharply with an investment boom in China, where fixed asset investment already averages more than 40% of GDP and grew by 33.6% in the first half of 2009. India, too, invests nearly 50% more than the United States in terms of the proportion of GDP. In the tough year of 2008, even Germany increased investments in machinery and equipment by 6%.

The US government is immersed in massive policy changes that are bound to ultimately affect businesses. This spending in excess will certainly be paid for in part by businesses. It is unfortunate that much of the money they will likely forfeit will not support them.

The massive stimulus bill in the United States was billed as an investment, but the amount going to infrastructure and industrial investment in areas like alternative energy production, amounts to around 0.5% of GDP in 2009 and 2010. Again contrast this with China, where its stimulus package led to increased infrastructure investment of 57% at an annual rate in the first half of 2009, according to economist Ed Yardeni.

If we want to continue to be a global leader in manufacturing we must change this short term aversion to invest in sophisticated capital goods and technology. This investment is what is needed for new products and technologies to be developed which will spur on the next growth cycle in our economy.

If we are to compete with the rising economic powers, and traditional ones like Germany, we must do better in the short and longer run. We need to think more carefully about how we spend "stimulus" dollars and pay attention to the fiscal imbalances that constrain future investments. We must create anew a policy environment that favors investment in technology and productivity-enhancing processes, which are key not only to manufacturing, but also to improving our quality of life.

Lean Accounting at Watlow Electric

Many organizations are having success implementing Lean practices but very few have accepted lean accounting. Orry Fiume, who led The Wiremold Company conversion to lean accounting in the early 1990’s before retiring, now spends time sharing the virtues of lean accounting at the Lean Enterprise Institute.

Fiume shows how a standard cost-based P&L statement penalizes a fictitious manufacturer for reducing inventory, because the labor and overhead costs associated with the production of that inventory have been deferred to the balance sheet until the year the inventory is sold.

"When we reduce our inventory, or improve our inventory turns -- which is a good thing -- we have to take some of that labor and overhead from prior years that was capitalized on the balance sheet and we have to take it off the balance sheet," Fiume explains. "And the only place it can go is through the P&L."

Unfortunately, those deferred labor-and-overhead costs are buried on a standard cost-based P&L (usually showing up as an unfavorable overhead variance) -- which often prompts corporate brass to question the value of lean initiatives taking place in the company.

While lean accounting can provide a clearer picture of a company’s lean improvements it has been slow to adopt for several reasons.

"Traditional accounting systems reward overproduction, and overproduction is a very common way for manufacturers to make their results look better," Hourselt says.

Hourselt points out that public companies have been particularly resistant to adopting lean accounting, in part because "the world of public [companies] thinks quarterly earning first."

"Until the academic world starts telling the accounting profession that lean accounting is a legitimate way of looking at your financial information, people are going to be reluctant to adopt it."-- Orest "Orry" Fiume

Watlow Electric has found that lean accounting or what they call “value stream management” has given them a better understanding of its cost structure. Ed Grinde, business unit controller for Watlow Electric Manufacturing, offers 9 tips and best practices for implementing lean accounting.

1.Upper management support is critical.
2.Everyone must understand that lean is a growth strategy-not a cost-cutting strategy.
3.Properly identify your value streams.
4.Don't try to attain perfection before setting up your value streams.
5.Keep metrics and methods simple and manual in the beginning.
6.Do not set hard goals.
7.Value stream leaders need autonomy to be "little general managers."
8.Put as much of your costs as possible directly into the value streams.
9.Use the five principles of lean as your criteria to make decisions.

Grinde provides some more insight on these tips in the article worth reviewing in your own organization. These are even good strategies for implementing lean thinking in your organization.

I wonder how many organizations are practicing lean accounting. We will do an informal survey of readers. Send a comment if your organization is practicing lean accouting. If you care to share your experience, include that as well.

Modern Machine Shop Online & the Most Valuable Lean Resource for Success

Modern Machine Shop is a metalworking professionals’ publication that aims to improve and expand manufacturing by connecting the buyers and sellers of metalworking technology. They recently launched a Lean Manufacturing Zone.

MMS Online’s newly expanded Lean Manufacturing Zone includes both articles and video profiles about machining facilities that are succeeding at lean.

Other resources in this zone include articles on lean-manufacturing concepts such as 5S, setup reduction, value-stream mapping, cells and chaku-chaku—as well as a variety of articles specifically focused on lean in the job shop.

A recent article of interest highlights the lean journey at KLH Industries. Their journey is one where lean fizzled after some initial success.

Company president Ken Heins knew he needed to find a way to make lean stick. He had studied lean, and understood the potential that a commitment to lean manufacturing would have for improving the focus, responsiveness and efficiency of his machining business. The problem was that he couldn’t do it himself. He couldn’t even do it with a group of lean champions around him. For a culture of lean to take hold at KLH, more of the employees would have to look at the workflow as he had come to see it, and integrate an understanding of lean into the way they go about their work.

However, they found the secret to succeeding in changing a company’s culture which is so necessary to sustain lean transformations.

The solution that KLH found is this: Get everyone involved. Instruct everyone so that every set of eyes is trained to look for waste. The parts do not repeat, but the processes do. And who better to see how to improve these processes than the people who interact with them every single day?

KLH also made a number of other important changes to prevent them from fizzling out in the future:
1) pay attention to the little things to sustain commitment
2) create custom shadow boards for machine tools for consistency
3) implement kanban to prevent running out of materials
4) incentivize improvement suggestion and implementation
5) create an environment where failure is acceptable and valuable

I particularly like this last line in the article about the importance of failure and success as a necessary part of the lean process.

The lean journey progresses this way—through both successes and failures. The point of lean is eliminating waste, and no time is wasted that is spent on trying a promising idea.

Some companies and management miss this key point. Lean is about the journey, not the destination. Results will come if you keep your focus on the process to get to the results and not the results themselves.

Good Urgency vs Bad Urgency

The challenge for many leaders of continuous improvement is two fold. First, you must inspire the desire or enthusiasm necessary to change. Second, you must harness this energy in the right direction. To make this change real and combat complacency, the death of many an organization, leaders seek to create a sense of urgency. John P. Kotter, a Harvard Business School Professor and author of A Sense of Urgency, was recently interviewed by Inc.com about leading during a recession.

Kotter believes there are two kinds of urgency -- and, like cholesterol, one is good and one is bad. The good kind is characterized by constant scrutiny of external promise and peril. It involves relentless focus on doing only those things that move the business forward in the marketplace and on doing them right now, if not sooner. The bad kind -- to which many companies have recently succumbed -- is panic driven and characterized by breathless activity that winds up producing nothing demonstrably new.

Kotter advocates using crises like this economic downturn to your advantage when creating a true urgency. He warns that if you use a crisis for urgency it must be managed with clear plans and actions, significant in size, visible, and unambiguous to real business problems.

If you want to tell whether you have bad urgency, Kotter recommends trying the white space calendar test.

There are lots of signs of false urgency. Frenetic activity. Everyone is exhausted, working 14-hour days. One red flag is how difficult it is to schedule a meeting. With true urgency, people leave lots of white space on their calendars, because they recognize that the important stuff -- the stuff they need to deal with immediately -- is going to happen. If you're overbooked, you can't manage pressing problems or even recognize they're pressing until too late.
People think that in urgent situations, they're expected to take on more and more. They're worried about keeping their jobs, so they try to demonstrate their value by being incredibly busy. But the leader should be telling them to do just the opposite. He should say, "I want everyone to look at your calendars. What's on there that doesn't clearly move us forward? Get rid of it!"

In Lean environments change is expected through a constant Plan-Do-Check-Act process of reflection and problem solving. You can always do better and you must strive for True North. To do this you need everyone to make improvements toward your Ideal State.

True urgency is the most important precursor of real change. Seventy percent of change efforts fail or never launch at all, and one reason is that company leaders don't create a sense of urgency around what they're doing.

Kotter was asked about how much attention you should pay to internal issues versus the outside world. His answer in Lean terms is what we call adding value from the voice of the customer.

There should be no meetings that are only about internal matters, without any connection to the outside world. In some way, the outside world always provides the "why" we are doing something.

Many organizations struggle to create the change necessary and many more of them can not sustain the gains of their change. Furthermore, there are many examples of companies picking the wrong sense of urgency and failing. Do you have a true sense of urgency? Does it come from the customer? What does the calendar at your organization look like?