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Why the Majority of Lean Implementations Fail – Or Do They?

Article by Tim McLean

A favourite pastime of Lean academics, authors and experts globally is to talk up the difficulty of implementing Lean. “Over 70% of Lean implementations fail” says one expert, 80% fail says another, 95% a third. If they are correct, and Lean is a methodology with a failure rate well above 50%, why would any business waste their effort even attempting?

The Toyota Production System is the basis of Lean thinking.

To understand why these prophets of doom are wrong, we need to consider two things:

  • What is Lean?
  • What is Failure (or Success) at Lean?

I could write a 2000-word essay on the first question. In fact, we have and you can read ‘What is lean Manufacturing’ on our blog. However, to save time and avoid repeating myself, the quick version is that Lean is a system of management developed by Toyota and adapted over the last 40 years to almost every industry sector you can think of.

The second question is what is failure and what is success at Lean? If we define Lean as the “Toyota Production System”, then success at Lean would seem to be creating an organisation with processes and a culture that follow the Toyota model. How successful you are is defined as how close your business is to the Toyota ideal. To define what the “Toyota Ideal” is, a number of diagnostic tools have been developed. The most famous of these is the Shingo Prize.

Achieving a Shingo Prize means scoring high on a large number of pre-set criteria that measure your “Lean-ness” (or “Toyota-ness” if you prefer). Even then, in an interview with a Lean podcast (that has unfortunately disappeared from the web), Robert Miller from the Shingo Committee highlighted that a significant number of past Shingo prize winners lost ground and fell behind their competition in the years following the prize. So even if you “succeed” at Lean as defined by a Shingo Prize, it does not prevent you later adding to the impressive Lean “failure” statistics.

 

So, What is Wrong Here?

Several years ago, we assisted the Chinese operations of a leading European pharmaceutical company to implement a Lean production system as part of the start-up of a new facility. Our China Consulting Director, Justin Tao, then arranged for a leading international Lean Thinker to visit the site. He was not impressed. He felt the site was far from the Toyota ideal.

This was despite the site having an excellent culture, with a level of employee engagement rare in China and outstanding systems that were delivering service, quality and efficiency results that were leading in the global group. Most importantly, the new site was overachieving the very challenging goals set when the decision to establish the new site was made. Despite all this, our visiting Lean expert felt the site was not sufficiently “Lean” and presumably in his mind, it was another “failed” Lean deployment.

At TXM we have worked with over 500 companies around the world. We have a number of team members who spent much of their career at Toyota and we are all committed to Lean Thinking. However, if the standard of success is creating companies that emulate Toyota, then we are a complete failure. We have never created a new Toyota or even a Shingo Prize winner. However, why does that matter? None of our customers have been Japanese automotive manufacturers. What is the point of pushing businesses to exactly emulate the processes, systems and culture of a Japanese car maker when those business are neither Japanese or engaged in Automotive manufacturing? Of course, we should learn from the Toyota experience but we should not try to be Toyota.

Does this Mean Lean is Wrong?

No, it means that the standard against which Lean success is often measured is wrong. By setting “Lean-ness” or “Toyota-ness” as a goal, for example, by pursuing a Shingo prize you are almost guaranteeing failure. More importantly, this approach is likely to lead you away from the core strategy and mission of your business as achieving “Lean” becomes a primary operational focus. This explains Robert Millers observation about some Shingo Prize winners seeing a drop in their performance after achieving the prize.

Lean is not a strategic goal, rather Lean is a way for your business to achieve its strategic goals.  The measure of success is not your business’ “Lean-ness”, but rather whether your business achieved its goals. This might mean reducing lead time, improve competitiveness, improving quality, reducing waste, increasing customer value or a combination of these measures.

When we change the criteria of success for Lean implementation to the successful achievement of strategic goals then, in our experience, the likelihood of success is much greater than 50%. If we go further and simply say success is defined as delivering a lasting and measurable improvement in business performance and culture, then I would suggest that the success rate gets close to 100%. In other words, if we defined success as making the business better than it was, almost every Lean program we have been involved in has delivered success.

 

The Importance of “Leadership” to Lean Success?

Getting out into the workplace to give feedback and demonstrate consistent support for Lean is a key role for Senior Leaders.

The “80% failure” brigade have a common mantra for the failure of Lean initiatives. It is always due to the failure of leadership to drive the change. This is true. Without consistent leadership support, any Lean initiative is unlikely to be really successful and sustained. However, this is also true for ANY initiative in business. Whether you are trying to make improvement in safety, governance, marketing, sales or technology, if leadership is not behind it, it’s not happening.

If we define success in Lean as our level of “Lean-ness”, then the standard of leadership engagement needed is exceptionally high. Every level of management from the board of directors down needs to be consistently committed to the Lean ideal for a period of years. I would agree that there are very few examples of this. Just a handful of global companies meet this criterion and very few smaller businesses.

However, if we define success in Lean as “achieving our goals” then we can set goals that we as individual leaders can achieve. For example, in the 1990’s I managed a plastic moulding factory. We set ourselves the goal of improving uptime (overall equipment efficiency) and reducing scrap. This was a goal which I, as the plant manager, could lead. My senior management just wanted cost reduction. They did not care how it was achieved. We chose to use a Lean approach, developing the skills of our front-line leaders and driving 5S, visual management, TPM, SMED and problem solving to achieve a 50% reduction in scrap and a 25% increase in OEE. We had “Lean success”, but I can assure you that this plant was nowhere near a Shingo prize!

When I look at some of the best Lean transformations I have seen, they have often started off with a single leader taking the initiative within a single plant to “make things better” within their scope of control. Rarely was the CEO and board on side from the start (even at Toyota). Instead the top leadership were convinced by middle level leaders who took the initiative to try new things and make improvements. Isn’t this really the essence of Kaizen? Even if you are a front-line employee or team leader, you can start a revolution in your business by applying Lean Thinking to make things better. For inspiration try Paul Akers’ brilliant “Two Second Lean” videos or our “Lean Minute” videos.

So, leadership, is important, but it does not mean every leader at every level aligned to make your company a Shingo winner. It just means one leader showing the confidence, consistency and commitment to make a change and being allowed by their boss to make that change. Despite all this, I personally think Leadership is the second most important determinant of Lean success.

The Most Important Factor Determining Lean Success

2 men standing in front of visual management board
Knowing and setting goals for your Lean Management System is the number one thing to consider when evaluating the effectiveness of the system.

Given all the endless pages written about the importance of leadership, you might be surprised to hear that I think it ranks number two. What could be more important than leadership?

The answer is, the goal. What is the specific objective that you are trying to achieve through the implementation of Lean? Clarity about WHY you are implementing Lean is, in our experience, the number one success factor in your Lean deployment.

Sadly, we frequently come across businesses that are implementing Lean with no specific goal in mind other than to “become Lean”. At best, these businesses acquire the “accoutrements” of Lean such as visual management boards, maybe some gold standard 5S and some localised Kaizen improvement and their Lean diagnostic score might improve. However, these activities will be seen by leaders and front-line staff as something extra they have to do, rather than helping them achieve their goals. These improvements will rarely make a significant contribution to the achievement of the business’ strategic goals. Then, as soon as the focus goes off the “Lean” initiative it will collapse.

On the other hand, if Lean is seen as something the business MUST do to achieve its strategic goals, then leaders and staff at all levels will understand why they are doing it. If it is aligned to their individual and team goals, then they will be motivated to dedicate effort to it. Further, if Lean then enables them to achieve their individual and team goals they will be highly motivated to keep doing it. Then sustaining Lean ceases to be primarily about diagnostics, audits and checklists and instead about people doing the things they need to do every day to get the results they need to get. That’s how we define Lean success.

Importantly if senior leaders see that achieving improved performance through Lean is essential to strategic success then you will have little problem getting their engagement in the process. If senior leaders are NOT engaged and not supportive of Lean in their business, then you can be pretty sure that is because they do not think it is important. They don’t view it as a necessary tool to enable the business to achieve its business goals. When that happens, they are unlikely to dedicate time, focus and resources to its success.

An Optimistic Picture

Some readers at this point will feel that I am “diluting the message” about Lean or “dumbing it down”. By setting the benchmark of success to be “did we achieve our business goals?” and “did it make our work better?”, many of what I call “successful” Lean implementations will still be a very long way from the Lean ideal. However, in my personal experience success breeds success. Once you have applied Lean thinking to achieve your goals, you are more likely to want to learn more, achieve more and do better. At each step we improve the business, and then look to the next improvement. This is the essence of Kaizen.

So, if you are starting out, ignore the doomsayers and their predictions of 90% failure. They are simply wrong. Identify a goal that your business needs to achieve and then apply Lean thinking to achieve that goal. If you achieve it, then you join the 90% of people and businesses that have successfully implemented Lean.