The Nine Fingers of Lean Enterprise

As a Fortune 500 company, Lantech has traveled a difficult and bumpy road in growing into a lean, efficient organization.

In the past, before a company shipped products on a ship, they had to put individual products in boxes, then put the small boxes into a large box, and then wrap the large boxes in plastic paper and send them in The heating channel, after treatment, makes it waterproof and shrink-proof, and finally these large boxes are sized, put on the conveyor, and transported by forklift into trucks or train cars.

During the energy crisis in the United States decades ago, Lantech's founder and chairman, Pat Lancaster, came up with a new approach: using a continuous roll of plastic film to close Pack the boxes for the entire conveyor (imagine a scenario where you wrap your fingers with tape several times). This means that shrink wrapping is eliminated, greatly reducing energy consumption. Lantech applied for a patent for this and made a lot of money from it. Today, Lantech is a world leader in stretch packaging materials, pallet stackers and cargo handling systems.

There are two sides to everything, and that's the same for Lantech. Lancaster admits that the company is not doing well in many areas: "Product quality and customer service are very weak, the factory is inefficient, but because demand is still high, we're still stuck with the old ways."

Until one day, "we lost the patent protection and everything changed overnight," he recalls. "We had to admit, we'd just been selling carts and complacent about it. Suddenly we Discovering that what we can do others can do it too. We can no longer boast that we are better than our competitors."

Lancaster realizes that the company's free lunch is over. Unless it can figure out a way to miraculously reduce inventory, improve product quality, provide great customer service, and become efficient, the end of Lantech is near.

In the ensuing ten years, Lantech tripled its turnover without adding staff, and greatly reduced production time from 5 weeks to 11 hours per machine. During this period, monthly productivity increased by 1%—all as the company focused on more economical ways to make output bigger. This is also the unremitting pursuit of a company dedicated to being lean and efficient.

You've probably heard someone say, "We're becoming a lean and efficient business". These words come from some business owner, manager, department head or chief executive who, in fact, are building momentum for a massive layoff or cost-cutting campaign. The word "lean" became synonymous with increased stress, and employees were worried.

In fact, the so-called "lean" enterprise means much more than that. A lean enterprise should contain many admirable characteristics that are not easy to imitate or master. They challenge convention, and any business that takes this approach will find that they are bucking the current. It takes patience and determination from leaders to embed Lean into the company's corporate culture and organizational structure.

To do this, companies must master the following nine stunts.

Attention to detail

Most businesses claim they pay attention to detail, but this is not the case. Many companies feel guilty about rash decisions, uneasy about "putting out fires" everywhere, busy with implementing one new project after another, running around for small fixes that keep popping up, and racking their brains for a quick increase in profits. That's why it's important to pay attention to the details.

Don't confuse attention to detail with a preoccupation with management. Leaders should not dwell on reports and digital analysis, but should systematically explore the important things that can drive the company’s career development, delegate monitoring and operation to trusted subordinates, and pay attention to problems until they are resolved. until.

One of the reasons Swedish furniture retailer IKEA has maintained high productivity is that IKEA follows the motto of founder Ingvar Kamprad: "If a general spreads his troops, he will It will fail. IKEA can only focus on one thing at a time. Focus is power."

Compete bravely

Many companies now respect, recognize, promote and reward those who can quickly enter the state and absorb knowledge generalist. In today's business environment, those who can hand over matters such as production, customers, workers and suppliers to their successors at any time will be respected, whether they find another job or are promoted.

In Jack Stack of SRC Holdings, these qualities are on display, as evidenced by the stories he tells. He was sent to Springfield, Missouri, to work for a factory owned by International Harvester. The company was later bought by Stark and his colleagues.

"As soon as I came to Springfield, I found people here with an entrepreneurial spirit that I had never met. Their attitude was 'get the tools and I can work'. We're going to show the world what we can do What, there is no goal in the world that we can't achieve, and we can also acquire other Harvester factories around the world. Here we are, we are small, but we have the ability to swallow elephants."

In his At the end of the story, Stark said even more excitedly: "What made us happiest was that we upset the president of the company because he had to fly here to give us the 'award'. His angry look was beyond words. We But happy days."

Equally aggressive is World Saving. Herb Sandler portrays him and his wife as results-minded people in everything they do, in business and in life. "We have our systems, but we don't have time to sit people down," he said. "Achieving the desired results is what we care about. We're a competitive company, and we tell people that unless they share the same philosophy as us, , the company has no place for them."

When asked if she still likes the industry after 40 years, Marion Sandler immediately gave her answer: "From a compensation perspective, We're in a pretty great industry. We don't cause pollution, we give people their own homes, and we guarantee their interests. But the thing that makes us most happy is that we're very competitive and we're leading the way. "

Simplicity is beauty

When asked if Marion Sandler has a chauffeur, she nods and admits it's her little extravagance. Her driver is her husband, who is very reliable (he goes above and beyond what is expected of a driver).

Marion Sandler also admits she has a desire to knit a sweater every year as a holiday craft, which is good for the company. At a charity auction last year, a sweater she knitted for $800.

Another parsimonious example is Mr. Comprad from IKEA. He was surprised that many companies held meetings at any time. "Hundreds of people crowded together, the meeting was poorly prepared, and there was a lack of transparency. This is not a cost-saving approach." In his book "Monologue of a Furniture Dealer" Wrote, "If one-on-one research can do the job well, why do you need to work with teachers?"

From their clothes to the decoration of the company, from the cars they drive to the houses they live in, most of them advocate lightness and efficiency. Most of the company leaders have simple virtues, and it is not the life philosophy and lifestyle of these people to make superficial comments.

Think long-term

When you think long-term, almost every business decision is made because your footing is long-term rather than short-term, says Dan DiMicco, CEO of Nucor Steel. and different. "The steel industry is a cyclical industry," he said. "When the timing is wrong or when demand is weak, it can get pretty bad."

In addition to being cyclical, the steel industry is also a high-input, capital-intensive industry. industry. Nucor's goal is to be a low-cost supplier, so the company can sell at low prices when demand is low. "A company cannot prosper without bringing employees, customers and suppliers together," says DiMico.

When market demand falls, Nucor lets employees produce the steel they can sell . At the same time, provide them with training, repair the plant, and prepare for the warmer demand. Although the company's profits in 2001 were only 20% of its best year, the factory's 10,000 employees were not laid off and still received their full wages.

Imagine what a declining urban center would look like if Walmart, Kmart and other discounters located their stores in the city center instead of the suburbs? Stephen Tindall of The Warehouse Group could have easily moved the American model to New Zealand and Australia, building big malls on cheap land in hundreds of towns and cities. But Tyndale's long-term view is that people will eventually hate you for destroying the natural beauty there. Therefore, The Warehouse Group prefers to build stores in urban centers. Continuing social surveys show that 80% of the merchants who follow the Warehouse model have seen a considerable increase in their profits.

Despise waste

Leaders of all lean, high-performing companies share the "despise waste" view, agreeing with Herb Sandler: "Efficient and successful companies don't cost nothing. , but the art of spending money." Let's take a look at Sandler's company. That's right, World Savings has two planes. One of the company's managers did extensive calculations to support the decision to buy the aircraft. He explained that World Savings' cost of owning and maintaining two planes is much cheaper than buying thousands of round-trip tickets each month: from the company's headquarters in Oakland, California, to the company's back-office support center in San Antonio, Texas, each The company's personnel have to go back and forth many times a month. He also has a logic: if you buy a ticket, all you get is a receipt; and after the use value of the plane is used up, you still have its residual value.

IKEA has its own interpretation of waste. The 70,000 people who work for IKEA all hold a "lista", a word often on the lips of IKEA founder Ingvar Comprad, which originates from Smaland in southern Sweden, according to Comprad. In other words, people here have a habit of trying to use existing things as much as possible. IKEA explains that the lista means you can continue to hand-operate pallet trucks on shelves below 18 feet without having to buy a new forklift.

Becoming a mentor

A common characteristic of lean companies is that their CEOs define themselves as mentors. They are eager to share their views and insights with the employees around them, rather than being bossy and arrogant.

Bill Zollars, CEO of Yellow Freight, often likens his job to being a coach. Other prominent leaders use similar language to identify themselves, such as "mentor" and so on. Stark of SRC Holdings places great emphasis on his work as a professor and has institutionalized and implemented this approach across 22 SRC subsidiaries. All SRC managers and senior leaders are responsible for developing three people who can take their place. As for Stark himself, he has developed two so far.

Be careful

You might think that it is difficult to blow a spring breeze into a dead steel enterprise. Ken Iverson, chairman of Nucor, vividly remembers the day he made the decision to have everyone at the company wear a hard hat of the same color. Previously, he had wanted to create a culture of equality at the company. One day, after reading an article about a Canadian company doing this, he was inspired to use it for Nucor.

The company used to have a different hat color for each person depending on their position. The hats of the workers are one color, and the overseers and the foreman are another. When the people from headquarters went to inspect the branch below, Evanson said, "They just wear golden hats. That's a sign of self-aggrandizement."

In his book, "Speak Out," Evanson says Sen wrote that his new policy of making everyone in the company wear white hats (except for those in charge of security) caused an uproar that was louder than any decision he had ever made. "My phone was blown up. They kept saying 'the color of my hat says who I am and what I do,' etc." Evanson was dismayed to find how much people thought about their title and identity. of importance.

Abandon bureaucracy

Bureaucracy means waste of money, contempt for employees, and trampling on the spirit of competition. Leaders of great companies, like Lancaster at Lantech, will tell you that "anything that doesn't add value is waste, and it's the leader's job to get rid of it".

IKEA's approach is to blow away bureaucracy before it's grown and permeated with the company. "Historical baggage, fear and reluctance are all things that breed bureaucracy," says Comprad. "Indecision leads to more statistical calculations, more research, more meetings. , the result is more bureaucracy. Bureaucracy complicates things, and it drives people crazy."

Comprad has worked hard to destroy complex corporate structures and eliminate them institutionally. IKEA has an "anti-bureaucracy week" during which company managers have to leave their warm, cozy offices and go "dirty" in IKEA stores for a week. This event occurs at least once a year, with no exceptions, and their work includes going to the cart or going to the cashier.

A word of caution, though, "All managers have to come on the weekends, when they're the busiest and crowded with customers," says Kent Nordin, IKEA's national manager, "Monday mornings, Thursdays. You can't go in the afternoon, you have to come when you have the most customers." Ikea's founder made this rule, says Nordin: "He was wary of bureaucracy, he was worried about managers making decisions out of touch with reality."

When Zolas arrived as CEO of lumber giant Yellow Freight, he saw a company struggling in tough times, staggered by bureaucracy. In what he called "Smashing," he asked people to change the face of everything as quickly as possible. One of the defining characteristics of efficient companies is that when they decide to do something, they do it quickly and decisively without dragging their feet.

Zolas' other initiatives include making decisions that include "will this help the customer?" and "will we make money by doing this?". "If not, it's bureaucracy that must be eliminated."

Trust Others

When you make employees truly feel their worth, when they understand that their efforts are inseparable from the company's success, they will With a sense of participation, they will be more efficient. Even when layoffs, downsizing, and restructuring occur, they are comfortable with it.

Zolas encourages everyone to make mistakes. IKEA's Comprad handed over the power to open stores with sales of 25 million to his managers as early as the 1920s. Nucor sold equipment worth more than 10 million Let workers debug with the goal of achieving optimal output. These examples all demonstrate the trust leaders have in their employees.

Another example is The Warehouse Group, which has a straightforward "paid sick leave system". If you are sick, stay home and pay as you go. As for the cause, it could be a week off for the flu, a week off for a broken leg, or a months-long battle with cancer. No need for a bunch of codes and no oversight from HR, which has become the norm at this company.

Most employees at companies outside of Lean, High Efficiency don't get what they do at companies like The Warehouse Group: Treat your people well and they'll do the right thing.