The Lean Connected Company : a conversation with Michael Ballé and Dave Gray (part 2)

July 10, 2013

This is the second part (part 1) of the conversation with Michael Ballé and Dave Gray, respective authors of “Le Lean Management” [FR] and “The Connected Company“. A conversation bridging Lean and Social Business, covering a wide range of organization development topics, brought to you by #hypertextual …

6/ Both books insists that if we want engaged teams we need to have them cross-disciplinary and as autonomous as possible. Yet we still have functions and specializations in the organization : so how do we keep the work consistent inside functions when the members are spread all over the place in different units (or Pod as Dave calls them) ?

Michael : This is the role of the pull system – if we consider the company as a market of different cells (pods?) and not a soviet-style kolkhoz, the pull system is the internal supply chain. It allows both process flow and functional specialization (and knowledge development).

Dave : Well the nature of a podular system is that it allows for continual experimentation. This means it is intentionally inconsistent. But you do want pods to be able to learn from each others’ experiments, which is where social networks come in. It’s much easier than it used to be to share knowledge across the world.

7/ A major difference between your vision is the one of the actual organization : Dave podular organization vision is a fully integrated model where each link is weak and Michael suggests that the main challenge of the Lean organization is to become a less integrated model were each link is strong. Can you please elaborate on your respective visions ?

Michael : Again, we have to bear in mind there are no generic solutions – I’d certainly never claim to have an organizational vision beyond let’s make what we’ve got work and see where we go from there. As far as I understand, Dave talks about the social dimension of the having people work together, which is all down to the original Granovetter and Milgram insights – I’d throw in some Schelling as well. Lean looks at brick and mortar supply chains. Our fight is against the MRP software which is a particularly rigid and silly way of handling social cooperation, kind of soviet era central planning. I don’t believe any one has ever used 2.0 tools to run a Kanban, but why not? What I’m getting at is that solutions only make sense in the light of the problems they address, and I suspect Dave and I are looking at rather different practical problems. The level of generalization at which such comparisons can happen often hides how domain-specific the thinking really is.

Dave : I fully agree that there is no one solution that fits all organizations. Each company is unique and that’s a good thing. Otherwise there would be no winning strategies. People should take care to differentiate front stage activities (which are necessarily complex because customers are directly involved in operations) from back stage activities where the environment can be more easily controlled. Front stage activities often benefit from weaker links, while back stage activities often benefit from stronger links.

“When the environment shifts, it is extremely hard to change practices that were once successful. The most important thing any executive can do in such cases is get out and talk to customers – something that, surprisingly, many executives are reluctant to do” (Dave Gray)

8/ Both books report evidences that empowered teams are far more engaged, productive and deliver much better quality service to the customer. Yet today, very few organizations create the context for empowered teams. Why is that ? What are the main obstacles in setting this empowering environment ?

Michael : I often joke that I have a PhD in theory of knowledge and I challenge CEOs on how they use their people and their equipment, whereas they have a business or technical background and they explain to me how culture works, or learning mechanisms: in essence we’re exchanging areas of incompetency. The literature abounds in what it takes to create a context for an empowered team, but why should any manager come across these books – they’re from a very different field. Secondly, general discussions about context often hide the elephant in the room, which is that people work for their boss, not for the company. The larger part of creating a context for empowerment is the day-to-day behavior of the manager, who’s instinctive posture is to solve all problems and use people as extra-pair of hands to get the job done. Empowering co-workers is an acquired skill, which requires a large amount of both programmed knowledge and insight questioning – from the entire hierarchical line. Not surprisingly, the odds are stacked against it. The path of least resistance is to dream up a fully automated process supported by low qualified, low paid (and low motivation) worker drones. It’s not effective, but it is often efficient enough for many companies – for a while at least.

Dave : Are you asking me why smart people do dumb things? Sometimes it’s habit. Sometimes they don’t know better. Sometimes they don’t want to rock the boat or upset colleagues. Sometimes they lack the information they need to make good decisions. Sometimes they are just focused on the day-to-day to-do list and don’t make time for things that are more strategic. It’s hard to change a system. In most cases the danger feels far enough away that people feel they can make it to retirement, and then it will be the next person’s problem.

9/ Both books state that happy customers are the best Marketing department a company could dream of. Yet, most companies fail in providing a great customer service. Companies doing so are exceptions (Zappos, Amazon, Ritz-Carlton etc …). How would you explain that most companies are still struggling in that domain, baring in mind that there again we have more and more evidence of the relationship between customer satisfaction and company profits ?

Dave : Most executives in global companies inherited a system that worked. Maybe it’s working less well than it used to. Historically these systems were product and production oriented. The product was the profit center and service was a cost. In developing economies this works very well. But in developed economies where profits come increasingly from services, the product is the cost center and service drives profits. This is a major mind-shift and requires the kind of visionary who is rarely promoted into high-stakes positions – until the company is on the brink of disaster, as IBM was when Gerstner came in.

“If you look at the evolutionary path that leads any person to become a CEO, many other skills such as politics, keeping your head down, authority, wheeling-and-dealing are far more effectives than seeking to be excellent at what you do. Most of the excellent leaders we can think of had to walk through years (and I mean years) of violent opposition and resistance” (Michael Ballé)

Michael : Many of your questions hinge on the fact that companies are run by humans, to deliver products for humans to use made by other humans. Frame blindness – the solving of the immediate problem without looking up – and the consequent solving the wrong problem, ignoring promising options or losing track of important objectives is just a normal feature of human beings. We’ve evolved out of roaming the savannahs for millions of years were the entire focus was the immediate group and eat or be eaten. The amazing thing is that we can create such large organizations and populous societies at all. Excellence is always going to be exceptional. Lean was never meant to be a method for everybody. It’s there for the few manages who truly, personally, seek excellence – in my estimate, about one in ten, which is already quite a lot. If you look at the evolutionary path that leads any person to become a CEO, many other skills such as politics, keeping your head down, authority, wheeling-and-dealing are far more effectives than seeking to be excellent at what you do. Most of the excellent leaders we can think of had to walk through years (and I mean years) of violent opposition and resistance. Getting it right means keeping a round ball on top of a round hill. The odds are that reversal to the mean will happen, and that the ball will roll back into the valley. Lean management is about learning to get every one’s help to keep the ball up there, but the context changes, people change, and the ball will roll back. As Camus said, we have to imagine Sisyphus happy. Lean CEO are the same, they have to enjoy gathering people’s enthusiasm to roll the ball back up the hill (and get the results) every time it falters. It takes a certain kind of person to do so.

10/ The first leadership principle Michael talks bout in the book is going to the gemba, when the leader goes to the shop floor, where the job is done and value created. This is one of the core principles of Lean leadership. We now see leaders of big companies such as Vineet Nayar (HCL), Cristobal Conde (Sunguard) or Ben Verwaayen (Alcatel Lucent) using new collaborative platforms to directly engage with employees : could we see this as some new kind of Gemba on the scale of large global companies

Michael Ballé

Michael : I doubt it – gemba, in lean terms is the “real place”: where real people make real products used by real customers. There is little room in this definition to include a “digital rendition of the real place”: get out of the office, look with your feet, think with your hands. Having said that, l’ll return to an earlier point. Lean is not a religion. It’s a learning practice invented to fight big company disease, and keep established operations sharp and flexible. Lean is not a state, it’s a process. Lean should be a verb rather than a noun: no company is ever “lean” – all any one can do is “lean” the current state of operations. The point is that lean is a very specific practice, which originated in a Japanese car company and which we have learned, with much trial-and-error –and many tribulations – to extend to certain other cases outside of car manufacturing (maybe even web-based startups?). In each case, lean has different key entry points and different levers. Lean management was never thought to be the be-all and end-all, and I’m sure many other fascinating ideas and practicing are being born as we speak, and some will pass the bar and make it further than their original setting.

Considering how fast the world is changing right now, this is part of the fun! On the other hand, we should be careful of extending lean concepts too quickly. Lean notions are born of a sixty-or-so years tradition, and tend to have very, very specific meanings. Gemba is gemba. Waste is waste, and so are Muri (overburden) and Mura (created variation) and so on. Or Kaizen (small step improvements towards  solving a greater challenge). Part of what makes lean so powerful is the discipline of learning needed to acquire it. On the other hand, a huge part of what makes lean so frustrating, and so limited, is the discipline need to acquire it – as with tai chi or any competitive sport, you have to struggle for years practicing on the gemba with a master coach until you get the hang of it. And that’s totally cool. The motivation for practice is not being lean, but becoming leaner – whatever your current level of excellence: what is the next challenge, what is the next immediate step to explore this challenge, and who are you going to do this with?

Dave :I think perhaps another way of thinking about this, whether we call it gemba or something else, is that we need to get better at going out where the customers are and interacting directly with them. In this case social media does create a lot of opportunities for executives and employees to engage in conversations with customers that are quite specific. A particular problem, complaint, employee interaction, and so on.

Thank you so much gentlemen !

Dave Gray conference at Lift 2013

Michael Ballé conference at Lean IT Summit

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