Decision Vision Episode 148: Should I Adopt Lean Management? – An Interview with Cedric Brown, CMB Global Partners
Cedric Brown, Founder and CEO of CMB Global Partners, is a leading expert in lean management. Cedric joined host Mike Blake to discuss the origins of lean management, its core principles, signs a company may benefit from lean management, why and how lean management engages every aspect of the organization, and much more. Decision Vision is presented by Brady Ware & Company.
CMB Global Partners
Founded in 2013, CMB Global Partners connects clients to the best Lean and Six Sigma experts in the world.
They offer a blended learning model including boot camps, simulations online roadmaps, and hands-on consulting proven to drive significant sustainable business impact. Whether you are starting the journey or need to accelerate your transformation contact them today to learn about exciting new products and services they are developing with their global partners to accelerate your Lean Journey.
Cedric Brown, Founder and CEO, CMB Global Partners
Cedric Brown is the Founder and CEO of CMB Global Partners. He is an experienced business transformation leader with a track record of transforming value streams, business units and companies utilizing Lean Six Sigma principles and methodologies.
Cedric was trained and mentored by the original team from Japan that worked directly with Taiichi Ohno, the architect of the Toyota Production System. He has proven experience in design and implementation of an enterprise-wide lean program including full employee engagement through lean boot camps and kaizens.
He was trained and mentored by George Eckes, the number one Six Sigma consultant who helped Jack Welch – GE implement six sigma. Cedric was featured best master black belt in his book “Making Six Sigma Last – Bridging the Cultural Gap.
Cedric has also provided consulting for clients in the automotive, health care, electronics, and clothing industries.
He learned the strategy deployment methodology directly from the architect of the Danaher Business System (DBS) and is fluent in the methodology responsible for driving industry-leading shareholder values.
Cedric has a degree from Georgia Tech and lives in Atlanta.
Mike Blake, Brady Ware & Company
Michael Blake is the host of the Decision Vision podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms, and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.
Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.
Brady Ware & Company
Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth-minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.
Decision Vision Podcast Series
Decision Vision is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision-maker for a small business, we’d love to hear from you. Contact us at email@example.com and make sure to listen to every Thursday to the Decision Vision podcast.
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Intro: [00:00:02] Welcome to Decision Vision, a podcast series focusing on critical business decisions. Brought to you by Brady Ware & Company. Brady Ware is a regional full-service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.
Mike Blake: [00:00:22] Welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owners’ or executives’ perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.
Mike Blake: [00:00:44] My name is Mike Blake, and I’m your host for today’s program. I’m a director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia. My practice specializes in providing fact-based strategic and risk management advice to clients that are buying, selling, or growing the value of companies and their intellectual property. Brady Ware is sponsoring this podcast, which is being recorded in Atlanta per social distancing protocols.
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Mike Blake: [00:01:42] So, today’s topic is, Should I adopt lean management? And I find this topic so fascinating, because it’s so far afield from what I normally do. Although, I have a feeling it’s probably close and I think I just don’t know what I’m doing. But lean management is something that’s often associated with manufacturing. And at least as a close relative, if not the exact same thing, as GE’s famous Six Sigma program and so forth. And our guest is going to talk about exactly what it is.
Mike Blake: [00:02:18] But, you know, the concept of lean management, I think, is seductive in many ways. And that it’s a philosophy that suggests that the tools for one’s success as a profitable business and operation lie firmly within the grasp of the business and not necessarily hoping for a market to turn, or for a customer to suddenly like you, or to suddenly be mentioned by a YouTube influencer, or something like that. And, you know, for anybody that is successful and runs their business successfully, there’s something that’s intoxicating about the concept that you have the power to improve things on your own within kind of a closed system.
Mike Blake: [00:03:06] So, here are some statistics from a website called WingMen.com regarding the impact on companies that successfully implement lean management programs. They meet their delivery targets or increase their ability to meet their delivery targets by 26 percent. They improve their inventory turnover by 33 percent. They enjoy improved labor productivity by 25 percent. They reduce scrap by 26 percent. And they improve their space efficiency by 33 percent.
Mike Blake: [00:03:46] Now, those numbers may or may not seem like a lot, but when you think about how manufacturing tolerances are often made or broken by percentage points or fractions of a percent, those kinds of impacts are just out of this world. The lean management, as we’re going to discover, I think, is not easy. It’s much easier to say than do it. And like I said, I am wholly unqualified to talk about it beyond what I’ve just said over the last 90 seconds or so.
Mike Blake: [00:04:19] So, fortunately, we have a guest who is qualified to talk about it. And that guest today is Cedric Brown, who is Founder and CEO of CMB Lean Partners. CMB connects clients to the best Lean and Six Sigma experts in the world. They offer a blended learning model including boot camps, simulations, online roadmaps, and hands on consulting proven to drive significant sustainable business impact. Whether you are starting the journey or need to accelerate your transformation, contact them to learn about exciting new products and services they are developing with their global partners to accelerate your lean journey.
Mike Blake: [00:04:59] Cedric is an experienced business transformation leader with a track record of transforming value streams, business units, and companies utilizing Lean Six Sigma principles and methodologies. Now, here’s some of the cool stuff. Cedric was trained and mentored by the original team from Japan that worked directly with Taiichi Ohno, the architect of the Toyota production system, is proven experience and design and implementation of an enterprise wide lean program, including full employee engagement through lean boot camps and Kaizens.
Mike Blake: [00:05:35] Cedric is also a Six Sigma deployment expert and was trained and mentored by George Eckes, the number one Six Sigma consultant, who helped a guy named Jack Welch of GE implement Six Sigma, featured Best Master Black Belt in his book Making Six Sigma Last: Bridging the Cultural Gap. He also provided consulting for clients in the automotive, healthcare, electronics, and clothing industries. We could go on and on, but I think you get the story. Cedric knows what he’s talking about. Cedric, welcome to the Decision Vision podcast.
Cedric Brown: [00:06:10] Thank you, Mike.
Mike Blake: [00:06:14] So, lean, I think, can mean different things to a lot of people. To me, it means the fact that I’ve lost 45 pounds this year. But I don’t think that’s what we’re talking about from a business standpoint. So, when you’re talking about lean principles in business, how do you define that?
Cedric Brown: [00:06:36] Good question. To talk about that, I have to give you a little backstory about the origins of the word lean in a business context. In 1988, John Krafcik was an engineer who was working on his thesis, and it was a very interesting study that he was conducting. The name of his thesis was Comparative Analysis of Performance Indicators in World Auto Plants. And so, he was studying what was going on in the automotive industry in 1988. This is before the word lean was coined, before books about Toyota and things like that as part of his study.
Cedric Brown: [00:07:29] And he found some interesting things as he went about his study. He had to do something called a regression analysis, and this is where you have to set up different factors in order to test statistically to see what was really driving impact. So, it was of great interest to a lot of people.
Cedric Brown: [00:07:49] In one particular case, he set up a parameter that he recognized when he walked into the different facilities, and he worked with the 37 largest plants around the world, and with all of the suppliers of those plants, and all of the processes inside those plants. And what he noticed was something unique as soon as he walked in. Some of those plants were what he categorized in his study as buffered, which mean they had extra buffers of inventory parts, people, equipment to buffer against virtually anything that could happen. It’s the way plants run.
Cedric Brown: [00:08:33] How do you keep from shutting down? Well, you have buffers there just in case. In case of quality problems, let’s say you may have a production stoppage of some kind, or a supplier that didn’t deliver, or a setup that took too long, or somebody that didn’t show up for work. So, he recognized that they had buffers to cover all of those.
Cedric Brown: [00:08:59] Contrasting that, there were other plants that he would go into, and he didn’t see those buffers. So, he came up with those two categories as possible tests for one of the key factors or key performance indicators of the performance of these major plants. And what had happened recently was everybody was discussing how impactful the Japanese automotive manufacturers were and the progress they had made in competing with Chrysler, Ford, and GM over that past three decades, how they had made a lot of ground.
Cedric Brown: [00:09:44] And they ran a study where Toyota and GM did a joint venture – what they called the NUMMI experiment – where Toyota took one of GM’s plants with the UAW, the same equipment, the same processes, and they put in their system. So, this was a part of the research that John was doing also. Well, fast forward to the end of his study, and what he found was the main predictor of performance was whether it was a process plant that had buffered resources or one that had unbuffered resources.
Cedric Brown: [00:10:25] And so, he found that the plants that were unbuffered were 38.7 percent more productive. And this was in 1988 and this is measuring the hours that it takes to produce an automobile. That they were 38.7 percent more productive than the plants that had the buffer.
Cedric Brown: [00:10:47] Well, of course, unbuffered is not a good term, so he was looking for the right word. Hence, lean was coined at that point. And what it really stood for was describing these operations that could get more results with less resources. That’s the beginning of the term lean. So, when people say lean, when they’re informed, that’s what they’re talking about.
Cedric Brown: [00:11:16] Now, his thesis advisor, James Womack, went on to write two books about John’s paper. One of them was Toyota: The Machine That Changed the World. And the second one was Lean Thinking, where he really described this as a way of thinking as you get into businesses. And it’s evolved since then into being a total business transformation system. So, when you say what is lean, that’s my two minute answer. My 30 second answer is, it’s getting more done with less resources required.
Mike Blake: [00:11:55] And so, let’s kind of dive right into it. Are there a set of core guiding principles of lean management that kind of make up that thought system?
Cedric Brown: [00:12:09] Yes. Yeah. There is a set of principles. You know, John was doing a passage study, he was looking at the data to find what was driving performance. But transforming a company into a lean company requires a whole business system. So, there are some principles that underlie what we call the data lean business system. The first one is that it has to be strategic and led from the top. So, the CEO, the CFO, the executive team has to be involved because the beginning of becoming lean is to decide where do you want to use this new strategic advantage that you’re about to create. It needs to be focused on your strategy.
Cedric Brown: [00:12:56] The second key principle involves people. One of the things that’s been found in more studies of lean companies is really about the people that are doing the work that made the biggest difference, and that showed up in John’s study also. The best ideas come from those that are closest to the process is one of the key principles. And you’re really investing in your people and appreciating asset as opposed to a depreciating asset. And you’re transforming how they think as one of the key principles of lean.
Cedric Brown: [00:13:36] There’s two more principles. The third one involves process focus. Everything that happens in any business, Mike, happens through a process. Now, there are formal processes and there are informal processes, but nothing happens unless there’s a process involved. And what’s happened over time is, processes have evolved and lean starts to get back into what’s really going on inside that process and standardizing them by taking out the waste.
Cedric Brown: [00:14:12] And that brings me to the fourth principle, which is to create a performance culture that’s focused on continuous improvement. Now, the way lean goes about driving continuous improvement is really unique. And that Taiichi Ohno, the father of the Toyota Production System, categorized seven types of waste. One has been added since his death. But he categorized these types of waste, and the way he did that is he visited Ford. And at that time, Ford was nine times more productive than Toyota. But what he recognized is they weren’t working nine times faster. So, he determined that Toyota must be wasting something, and that was the genesis of these waste.
Cedric Brown: [00:15:06] And that principle around continuous improvement focuses on the way you improve is by removing the waste. It’s counterintuitive because, as an engineer early in my career, I focused on improving the value add process, make the machine run faster. But lean focuses on the nine value added activities the waste, the muda, the Japanese word for waste, and removing that. And when you do, everything else speeds up. So, those are the four principles of lean.
Mike Blake: [00:15:44] So, let me ask a question that, I think, to me, it’s a subtle point – it may not be but I think it’s very important. I think if we’re not educated about the lean philosophy, when we think of lean, we think of cost slashing. Slashing and burning, people got to get fired, slashing budgets, and telling people you have less resources to work with, figure out a way to make it happen anyway. And I think that’s actually unfair. And tell me if I’m wrong, my impression of lean to the extent that I’ve studied is more like, if you do things differently, you’re just going to find you’re not going to need those budgets to begin with.
Cedric Brown: [00:16:33] That’s what we find with lean. Lots of people think that’s what’s meant by lean. You know, it’s about being anorexic as opposed to having just what you need, having not enough. And that’s a misnomer. Actually, the benefits of lean comes in kind of many ways other than just the cost. Delighted customers, because lean is so focused on the processes that deliver the value for the customers, the customers end up delighted, whether it’s better quality, shorter lead times, better cost, better service. So, that delights the customers.
Cedric Brown: [00:17:14] Another byproduct is when we talked about those people and investing in the people that generate the ideas in the company, lean creates another benefit as engaged employees. Everybody’s trying to drive up their employee engagement scores, and they usually end up with something where the employees say, “Our department is great. That other departments not so good.” Well, lean cuts through that stuff. And it really breaks the mold when it comes to employee engagement and driving up those numbers.
Cedric Brown: [00:17:47] And then, I think one of the biggest things is rewarded shareholders. Lean generates like a super return on the investment in a way that the shareholders are rewarded and ready to invest in the company again. So, that’s a misnomer that lean is, you know, about cutting, cutting, cutting, getting to the cost. Some do it that way, but it’s not the way that it’s supposed to be done. That doesn’t really follow the lean principles.
Cedric Brown: [00:18:19] When you’re lead times go from weeks to days, when you improve your productivity by 50 percent the first year and then 50 percent the year after that, and then you see even more gains, you’re working capital requirements go down 80, 90 percent. Your scrap is cut 50 percent year one. Defects are cut 50 percent year one. Throughput is cut about 90 percent in year one. That gives you a very powerful competitive edge on your competition and really rewards your three key stakeholders: your employees, your customers, and your shareholders.
Mike Blake: [00:19:04] So, I’m really glad that you mentioned that because I think that this is an important part that’s overlooked by lean. And two philosophies I have in business, which have served me well. Nobody’s invited me to take over their Fortune 100 company, but nevertheless, I think two things that have served me well. One, you know, speed is a sneaky, powerful man. Customers like it if you deliver stuff on time or even faster than they are expecting it. And as long as you’re not sacrificing quality, it’s not shoddy. That really makes a big difference.
Mike Blake: [00:19:51] I can tell you, we win a lot of business just because of the fact that we can deliver faster. It might be the exact same pride. We may even charge more for it. But because we can get that report in their hands two weeks earlier than the other guy, that’s a major competitive driver.
Mike Blake: [00:20:11] And then, the other part you talked about in terms of employee engagement, employees aren’t dumb. They understand when their time and effort is being wasted. And workers generally want to work. They don’t want to sit around watching the paint dry or watching the clock move until lunch, until everything else. They want to be engaged in productive and prove their value. And waste, in many ways in my experience, can be very cancerous, especially if it feels like nobody else kind of who’s directing those employees cares about waste, cares about listening to suggestions on how to reduce it. It creates a toxic culture of its own, even at the micro level, when you send a message, often by accident, that waste is just okay.
Cedric Brown: [00:21:12] We see that a lot. And you’re right, the companies that can really compress that lead time have a competitive edge that they can use in more than one way. They could charge more for that premium service or they could put pressure on their competition and take market share away. And this is what we see over and over, regardless of the industry, regardless of the type of company, that’s what we see companies doing once they understand the competitive edge that they gain from lean deployments.
Mike Blake: [00:21:48] Now, are there other non-financial benefits or non-monetary, if you will, benefits that adopting a lean philosophy or successfully implementing a lean philosophy offers other than employee engagement and speed of delivery to customers?
Cedric Brown: [00:22:06] Well, when you start a lean process, you’re basically going to transform everything about the business. Every process is touched. Every employee is engaged in a lean deployment, in a lean company. For companies that are at the beginning of their journey, that doesn’t happen right away, but it spreads really, really fast. As they start to get involved in the culture, it really starts to shift.
Cedric Brown: [00:22:31] So, that’s the big change, is, once you start to change the culture, then everything else starts to move faster. The company gets in a position where it knows how to satisfy customers better than their competitors can.
Mike Blake: [00:22:54] Now, obviously, we’re still exiting – I’m not sure where we are in this pandemic. We’re in this pandemic thing, in your mind, has that changed company’s relationships with or perceptions of lean? Does lean become more important because of the way that the labor market has obviously changed, I think in a very secular way – in my own opinion. You may disagree and that’s fine. Or does lean take a backseat because there’s just so much disruption you don’t even know what lean looks like? Or maybe both those things are at play? Or maybe something else, right? But how does the pandemic impact our relationship or perception of lean philosophy?
Cedric Brown: [00:23:43] Well, one of the things that happens during the pandemic and things like that is, it creates an economic crisis. And when there’s an economic crisis, whether it’s local or global to the executives of a company, it creates really demand for a lean transformation.
Cedric Brown: [00:24:06] Let’s take the pandemic. What companies found when they weren’t able to come into the office was many companies didn’t have good solid processes. So, they had to start building those and putting those in place. You know, when you could walk over to somebody’s office and ask them something, that was the informal process. What they found was, all of those informal processes really didn’t function well when we were all working remote. So, it created a demand to start to build out some processes and figure out how are we going to flow these things around when we can’t walk around and talk to each other?
Cedric Brown: [00:24:50] It’s interesting, earlier I mentioned the book Lean Thinking, and copies and sales of that book increases any time there’s a big economic crisis. Actually, it was published during a period where the economy was roaring. Nobody was really interested in reading it. And as soon as it came upon a recession, it went on to the New York Times bestseller list. The authors and the publishers have kind of given up on it. They’re like, “Well, we thought people will be interested, but they’re not.” And without any publication, the publisher said it was unprecedented, “It hit the New York Times list because the demand that’s created whenever we have an economic crisis, whether it’s driven by natural sources or pandemics, it creates a heightened demand.”
Cedric Brown: [00:25:43] Specifically for us, what we found is, of course, we couldn’t do our boot camps. But the demand for our master classes peaked as people wanted to learn more and be able to work remote. And we were able to help some companies to keep their deployments going and help others to get started during that period.
Mike Blake: [00:26:05] You know, that’s so interesting about human psychology. And it makes you wonder – and maybe you may have an answer to this or at least some thoughts on this – why do we only care about lean when the outside environment is tough? Wouldn’t it be so much easier to adopt lean in a non-crisis footing when times are good, sales are coming through, are easy? Why do we wait until there’s a bad economy to really focus on lean?
Cedric Brown: [00:26:38] That’s very perplexing to me personally. Now, I have a unique perspective in that I learned lean early in my career. And, you know, I learned it by being the turnaround guy inside the companies I was working on, and I became seen as that, and people thought I had a magic formula. But I was just deploying lean and learning how to do it better and better.
Cedric Brown: [00:27:05] But it perplexes me because all of the studies, the study in 1988 said it was 38.7 percent more productive. And then, in 2018, McKinsey, they have access to new technologies now where they can look at the stock performance, the economic profit, the return, the shareholders of all of the companies in their portfolio and use their artificial intelligence models to determine what systems are winning and what are the companies doing. Similar to what John did in his first study, but on a much grander scale.
Cedric Brown: [00:27:47] And in 2018, this study came back and said the same thing, except the numbers and the gaps between the buffered and unbuffered, if I could use those terms, was even bigger this time around. Because the companies that are deploying lean have learned how to do it. And they’re not out telling their competition, “Hey, you should try this.” They’re actually taking market share.
Cedric Brown: [00:28:09] Now, it’s interesting, we’re seeing the demand for lean grow a lot. So, while a lot of companies don’t get it, more and more companies are starting to get it each year.
Mike Blake: [00:28:25] And as kind of a follow up, we have this environment that I have not seen in my lifetime – I’m 51 – where we have, in many industries, just flat out shortages of labor. For a lot of reasons, not the least of which is that overnight or almost overnight, our society has simply changed its relationship with work. That’s not something you can fix. I’m not even sure it’s a problem to be solved. It’s just an environmental condition. And I’m curious, does lean become more attractive, maybe even more compulsory, because it is just simply no longer realistic to go out and get some more bodies to do stuff? You just got to make do with what you have because it ain’t available. It’s not out there.
Cedric Brown: [00:29:18] Yeah. You know, they say necessity is the mother of invention, right? And I think that’s what we’re seeing. Actually, Taiichi Ohno will tell you that’s how he discovered lean himself. They didn’t use that term. They called it just in time and Toyota Production System, but it was out of need. They had a need and he had to go and search.
Cedric Brown: [00:29:45] So, you know, business leaders are really smart and what we’re finding is, it’s not that they don’t get it. It’s the logic of the systems they’re using. The mass production buffered systems, the logic that applies there is what’s losing, not their competence in how to execute it. So, as soon as they get it, they quickly start to look in a different direction. It’s kind of like cognitive dissonance or something like that where our minds are set up in a way that, especially in corporate America, where bigger batches just sounds like it’s going to be better. And working in departmental silos just sound like it’s going to give me scale.
Cedric Brown: [00:30:40] But what we find is, when we start breaking that down with the tools that we use, things like value stream maps, we start to find where those problems are and it kind of melts away that layer of doubt that people have and they start to buy in.
Cedric Brown: [00:31:00] One of the things we do is, you mentioned our boot camps earlier, and leaders asked me, “Well, what do we learn to change in the boot camps?” “Well, you learn to change your mind because we give you a real world scenario. And you can experiment.” And with me, when I’m leading it as your sensei, you can decide to make the batch bigger or smaller. Either way, you’re going to learn. And the object there is to gain knowledge.
Cedric Brown: [00:31:31] And so, I let them do it either way. I’ve got a baseline that they’re trying to hit and turn the business around. But if they want to experiment with larger batches, we’ll do that and they’ll learn from it. So, they get to do things they can’t do inside their company kind of practicing with live ammo, if you will. This is a way to come in experiment, try some things. And, typically, when they leave, I’ll get notes and, wow, that was mind changing.
Cedric Brown: [00:32:01] And so, we’ve been working on this boot camp for years to get it right where you can learn by doing, but not in your own process. So, we simulate the real world. And then, at the end of that, we assimilate it into your processes. And that’s the best tool I’ve found for leaders to really get it because these leaders are really smart. But somewhere along the way, we all learned that bigger batches and department silos can solve the problems, and they can’t.
Mike Blake: [00:32:38] Yeah. I mean, we can fool ourselves into thinking that economies of scale is always important. But you can create diseconomies of scope when you do that. That offsets it.
Cedric Brown: [00:32:55] Yeah. You know, John, in that first study I was talking about, he was really surprised that the economies of scale, with those buffered systems, that it could not perform the lean system. And I think just intuition tells you it won’t, but it does every time.
Mike Blake: [00:33:17] So, what are some signs that a company that is underperforming is underperforming because they’re not lean enough? What are some signs that a company kind of needs to really consider adopting lean as a way for it to to reach its full potential?
Cedric Brown: [00:33:34] Oh, good question. Usually, what will happen is, these processes we talked about earlier have evolved in companies. And companies are quick to automate. And so, what they end up doing is automating the waste. In lean, we have a simple philosophy, eliminate, then automate. And whether you’re automating the transfer of information or the product moving, it doesn’t matter. We should take out the waste when we first get started on that.
Cedric Brown: [00:34:11] So, one of the things that helps to identify a company that’s really primed and ready for lean is when the processes that they’ve relied on so much that’s got them to the point where they are today just can’t keep up anymore. The customer demands are going up. The shareholder demands are going up. The employee demands are going up. And these same processes, they’re overwhelmed. They can’t scale up to keep up anymore. So, we end up working harder and harder, faster and faster, without the results to show for it. That’s some of the indicators that it’s time for lean.
Cedric Brown: [00:34:55] The other thing is, all the performance numbers, they start to flatline. So, you get an organization that’s burnt out and the performance indicators that are flatlined, and that’s how you know, it’s time to do something different. And that usually creates the need to start looking for a better way.
Mike Blake: [00:35:16] So, I think it’s natural to associate adopting lean philosophy to manufacturing companies. That would be the natural association. Of course, it’s associated with Toyota and GE, really, the big Korean and Japanese manufacturers and so forth. But can it be applied to my industry? Can lean principles be applied to professional services, for example?
Cedric Brown: [00:35:46] Well, yes. Absolutely. Every company runs on processes. If there’s a process, there’s an opportunity to use lean. So, it doesn’t just go into manufacturing companies. And what happened, what drove some of that was, remember, John didn’t call it lean manufacturing. Matter of fact, he went out of his way not to call it that. And his mentor actually called it lean thinking. And Taiichi Ohno called it a lean production system. By the way, Deming also called it a system.
Cedric Brown: [00:36:27] But when it got branded as lean manufacturing, a couple of things happened. One, it broke one of the principles that it should be led from the top. Since it’s a manufacturing thing, the C-level suite started to delegate it, usually to somebody in operations and typically as far down in operations as they possibly could. So, that starts to cause a problem. And then, the other thing that happened there is, when you call it lean manufacturing and you’re not a manufacturer, of course, you’re wondering why somebody talking to me about lean manufacturing when I’m not a manufacturing company, I’m a service company.
Cedric Brown: [00:37:12] So, it would have had a better name if it had been called lean processes or lean thinking. And it’s evolved now into being called in most companies that are really transforming a business system – Danaher comes to mind. They call it the Danaher Business System. As in the Danaher Business Transformation System is kind of what I call it. So, it applies to service industries as much as it applies to manufacturing industries. And part of what drives people to not realize that is the name lean manufacturing. It should be something different.
Mike Blake: [00:37:52] So, what you’re saying is when I read the book, The Goal, about three years ago, even though I’m in professional services, I didn’t waste my time.
Cedric Brown: [00:38:00] No, you did not waste your time. Just substitute service everywhere they put manufacturing and you’ve got it. You know, service processes, what we find, have even greater opportunities than manufacturing processes. In manufacturing, they at least think about it in the context of a process. In services, in many cases, what we find is they’ve been patchworked together, super glued when you do M&A, and that’s what you get. And so, when we go in and we do a value stream on product innovation or order to delivery of a service, we find lots and lots of things that we’re doing that has no value to the customer. And that meets the definition of being waste at that point.
Mike Blake: [00:38:51] So, I’m glad you said that. I speculate that services are slow to adopt this because services don’t have the same constraints as manufacturing. With manufacturing, at some point, you’re constrained by your capital. And you can’t just build a new factory, right? Ask the semiconductor companies how long it takes to build a new factory, right? You can’t even necessarily buy a new machine and install it. At some point, the machines have a rated capacity and have only so many hours a year of operation, it got to be maintained, that sort of thing.
Mike Blake: [00:39:35] Services, I think, can be more forgiving of being un-lean because, one, they’re full of creative types like me that think we’re being really cool rebels by shunning process. And I will admit to having gone through that early in my career, and it was painful to change that. But also, second, that our response – and, I think, now we’re seeing the fruits of this – is, “Well, just work more hours.” We have lousy processes. We’ve still got to get this out to clients. So, just work 90 hours a week and we’ll pay you a big bonus.
Mike Blake: [00:40:13] And I think we’re now reaching a point in our economy where there are just a lot fewer people that are willing to do that. It doesn’t matter how much you pay them. And so, that safety valve that we’ve enjoyed and services where we’ve sold a culture that burnout is king, we’re starting to learn it on the labor side. We’re going to have the same constraints as people that have physical capital constraints.
Cedric Brown: [00:40:39] Yes. You’re spot on with that. A lean system, it really has three components. Mike, three distinct components. The first component is what we call working on the business. It’s where the vision and strategy and culture all kind of intersect to define where are we going, who do we want to be, and how do we win. And we have tools for that, strategy deployment comes to mind, value streams come to mind, QFD comes to mind. Then, there’s the in the business work that we do, and that’s the work that the customers are really showing up to pay for. That’s what they value. That’s what they want from us.
Cedric Brown: [00:41:33] And the transformation work we do there, whether it’s a service or a product is what the customer is willing to pay for, and that’s where the frontline work really happens. And then, there’s a whole set of work that’s all about how we improve. So, we’ve got on the business work, we’ve got in the business work, and we’ve got Kaizen work – Kaizen is a Japanese term that means good change, change for the better. And when you hear about all the tools we use, which are a lot of fun to use, especially in service processes, when creative types find out about these tools, they get really excited about them.
Cedric Brown: [00:42:14] But we have a portfolio, a whole set of tools that are designed for different kinds of challenges that we take on. It’s interesting that the tools we use in manufacturing, for example, we have one for quick changeovers. When we apply that to accounting, where they have to close the books, we use the exact same methodology and processes. We document the current state. We find out everything that needs to be, that could be external that’s currently internal and move them out. We lay out the internal processes in a way. We eliminate the things that the customer doesn’t really care about. So, we follow the exact same steps. And once the office personnel get a hold of that, it’s a catalyst for change at that point.
Cedric Brown: [00:43:09] So, I think we’re going to find that more and more service businesses as they get turned on the lean and start working on the business, in the business, and improve what we call their Kaizen cadence, the pace of good change, everybody gets excited and work is different at that point. The burnout goes away. These problems can be solved. And the tools are there to solve them. We just need to learn the tools.
Mike Blake: [00:43:38] I’m talking with Cedric Brown. And the topic is, Should I adopt lean management? One question I want to make sure that we cover is, I think companies do fail to go lean. Adopting lean is not easy. If it were, they would need people like you as much, right? When companies fail to really adopt lean, they fail to make that part of their company, what are the most typical reasons that a move to adopt lean fails?
Cedric Brown: [00:44:17] What are the typical reasons? Well, I’ll take you back to the principles. The number one reason is one of the first principles, it needs to be tied to the strategy and led from the top. And so, when we don’t do that, it will definitely fail.
Mike Blake: [00:44:34] So, you can’t just say, “You guys all be lean, but I’m going to do it and I’m doing it up here.”
Cedric Brown: [00:44:39] The resources and everything follow the leader. And so, you can say one thing and do another thing, and they’re going to follow what you do. So, it’s important that the leaders engage. And earlier, I was mentioning the three types of work. Well, the executive suite gets a whole new set of tools. The strategy of deployment is really a neat tool to organize all these things they’ve been trying to get done. And it’s like I said, that intersection between the mission, the vision, the strategy, and what we do day in and day out. So, they get a whole new set of tools to work with and they get excited when they get turned on to those.
Mike Blake: [00:45:22] Is there something a company needs to do to prepare itself for going lean? Let me be very granular here, somebody wants to go lean. They’re going to bring you or somebody from your network, your association, to help them do that. Is there a groundwork that a company needs to do, needs to put down, before somebody like you can come in and help them achieve that goal? Or can you just sort of walk in? Maybe it’s a disaster area. Maybe it’s not. And then, over time, you can eventually get where you need to go.
Cedric Brown: [00:46:01] Well, I’m glad you asked that question, because unlike other things where you’ve got to do a lot of groundwork to get started, what you really need to do with lean is you have to have a basic understanding of it. And then, you’ll get excited about what lean can do for you and how to deploy it. And so, that’s why our boot camp, it sells out because when you come in there, now, you can get the basis for what’s possible without practicing right away in your own process.
Cedric Brown: [00:46:39] But we’ve got a process that we walk through once the leaders understand what the big picture looks like. And so, we start with the strategy. We select what we call a strategic value stream. That’s really important that we identify those value streams and select a value stream, or two, or three, or four to transform, depending on the size and scale of the company. And so, the next step there would be to map that current state.
Cedric Brown: [00:47:11] Now, what you learn in the boot camp is what that map would look like in the process that we’re involved in. So, when you go into mapping it and everybody’s been through the boot camp, they’re really anxious to see their own current state map. And then, what we do as your sensei, we design the future state for you. Before we introduced the boot camp, people really couldn’t see what this future state would do or how it would work, so they would resist it.
Cedric Brown: [00:47:42] Now, what we find is, they want to move faster than they really should. So, we put a cadence on it. What kind of pace should we move at in order to move from that current state to the future state? And that’s a series of Kaizen events that are paced where you’re learning the tools, you’re driving the change, and you’re getting the benefit along the way. And so, that’s how we recommend companies that want to become lean. There is no report to prepare or clean it up before somebody comes over to clean it up. We just start right there at the front end. And from there, we follow the process.
Mike Blake: [00:48:27] Cedric, I’m afraid we’re out of time, and it’s really a shame because I’m really enjoying this conversation. I’m learning so much. This is not in my field of expertise. But I’m sure there are questions that our listeners wished that I would have asked or maybe I’d stayed on longer to probe more deeply. If somebody wants to contact you with a question to continue this conversation, get some advice, are they welcome to do so? And if so, what’s the best way for them to contact you?
Cedric Brown: [00:48:58] Absolutely. They’re welcome to contact me. I love talking about this, especially with people who are interested. My email, cedric – C-E-D-R-I-C – .brown – like the color – @leanjourney.com is the easiest way to contact me. I’m also on LinkedIn, and I’ll be glad to connect with anybody who would like to connect with me on LinkedIn. Or you can visit our website and find out about our portfolio of products that help you to learn faster, and engage deeper, and sustain longer.
Mike Blake: [00:49:35] That’s going to wrap it up for today’s program. I’d like to thank Cedric Brown so much for sharing his expertise with us.
Mike Blake: [00:49:42] We’ll be exploring a new topic each week, so please tune in so that when you’re faced with your next business decision, you have clear vision when making it. If you enjoy these podcasts, please consider leaving a review with your favorite podcast aggregator. It helps people find us that we can help them.
Mike Blake: [00:49:59] If you would like to engage with me on social media with my Chart of the Day and other content, I’m on LinkedIn as myself and @unblakeable on Facebook, Twitter, Clubhouse, and Instagram. Also, check out my new LinkedIn group called A Group That Doesn’t Suck. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision podcast.