At its most basic level culture could be about the reasons for business success historically or assumptions around its purpose. Culture also can be described as the ‘way we do things around here’ the routines, systems, structure (formal/informal) and the general artifacts and symbols.
We know culture is extremely important in that it tends to act as an unwritten guide for employees and helps them to make sense of their environment and understand the behaviours required to ‘fit in’ and perform work effectively. When this is challenged with new systems or structures required to deliver a company-wide Lean transformational programme and the realisation hits home that the existing culture is no longer fit for purpose; keeping the ship steady requires a lot more than just a Lean tool kit. It will likely veer off for a variety of reasons commonly-cited as lack of senior management involvement, middle management abilities, employee resistance are to name a few but are these just symptoms of an underlying cultural working environment poles apart from what a Lean system requires?
Culture is more about values and behaviour
The benefits an organisation gets from marketing its products, mission statement, communicating vision and values or an elaborate website espousing the company’s best bits are of course extremely important but an organisation’s culture is not based on finely worded presentations. Culture is more about behaviour and what drives it. It matters as much as hard financial numbers hence the challenge is how culture is crafted to improve competitiveness and business performance.
The renowned Jack Welch former General Electric (GE) CEO, and subsequent prolific writer on leadership introduced the "20/70/10 split" system of performance appraisal to constantly upgrade his team and help change GE’s culture. A strong proponent of the 6-Sigma methodology Welch’s recognised through his ‘GE Way’ that culture change did not happen overnight and during his 20-year tenure he reevaluated GE’s core purpose and values. This in turn defined the behavioural expectations and norms that he wanted from his team and the split system performance reviews were conducted accordingly against these standards. In a nutshell the breakdown of the split meant the under-performing bottom 10% where simply let go. Measurements were based on both soft and hard numbers with an emphasis on behaviour to improve performance. ‘Forced ranking’ as it was called does have its critics for its harsh, autocratic style and absence of a coaching strategy but Welsh actually believed this was the kindest form of management because employees are generally told where they stood during performance reviews, therefore layoffs and dismissals brought few surprises. Low performers were given a chance to improve, and if they didn’t within a year or so, “you moved them out.”
Comparing Welch’s approach with that of the examples in Womack & Jones’ (2003) Lean thinking bible for practitioners, the contrasts could not be starker. Indeed, the need to remove ‘anchor-draggers’ (a term used in the book to describe management more suited for a hierarchical structure) was estimated also at 10% but the similarities end there. After reducing employee numbers and the ones let go were deemed unsuitable for the Lean culture the CEO Art Byrne of the Wiremold organisation (p132 Lean thinking revised edition) set about building a culture of inclusiveness. Following a complete re-structure from a hierarchical organisation to a team-based structure along its value stream; he set about formulating HR policies that included ‘ironclad’ job guarantees to support the continuous improvement process, going as far as introducing more casual dress codes. In Byrne’s view job guarantees were essential to get the best from the employees during Kaizens (Lean term: changes for the better) and with changes to planning, office workers were moved to the production areas along the value stream hence the white collars were no-longer appropriate.
Cultural change - Evolution v Revolution
The successes of these paradigm shifts were quite remarkable. The two examples illustrated sweeping changes driven by two strong leaders who from different viewpoints knew what they were about and had clear visions and distinct values that they fostered and shared. Although the approaches used were quite different, from the outset their key role was to consider the strategic longer-term duty to customers, shareholders and the wider stakeholders they impact. Employees needed to be flexible whilst understanding and relating to the new purpose and values at every level. This in turn was reinforced by how the leaders and the managers consistently behaved on a daily basis. How they are recruited, managed, developed, promoted and rewarded in a way that incentivised the desired behaviour. Corporate values were defined in practical and meaningful ways, so that the organisational cultures are values-driven which are lived, breathed and consistently buttressed through actions and behaviours day-in-day out, from top to bottom. Quite an accomplishment by any standard and with many Irish Companies owned and managed around deeply seated hierarchical structures, is it reasonable to contemplate that a considerable chasm exists with best practice Lean principles and their current state operations. With Lean systems benchmarked against the widely renowned Toyota Production System (TPS), why then do organisations find it so difficult to decode? This question was posed by Steven Spear and H. Kent Bowen (HBR 1999) and they realised after an extensive four-year study of the TPS that to understand Toyota’s success, you had to ‘unravel a paradox.’ They discovered rigid specification on the one hand is the very thing that makes the flexibility and creativity possible on the other. Their findings showed that TPS and the scientific method that underpins it were not imposed on Toyota and the system actually grew organically out of the workings of the company over five decades! That’s not to say that the use of Lean and other improvement tools aren’t effective for in the short term even against the oppositions engrained within their rigid cultures. All the same the critical success factor of a Lean project comes from the management of change not just the Lean tools mainly because the presence of ‘anchor-draggers’ are in every organisation.
Continuous Improvement Programme (CIP) – steps in the right direction
Few Irish business managers are competently equipped as Welsh or Byrne so considerable outside support from seasoned practitioners on business improvement methodologies is essential. Of course, best practice project management alongside the improvement tools will bring deliverables anyway without the necessity of risking the organisation by turning it upside down or inside out. Even still there are some businesses just not ready and can struggle with basic Lean concepts. A suitable programme which is proven culturally adaptable within a range of Irish businesses is the capably structured continuous improvement process (CIP). Its success relies on a specific hard/soft balanced approach and its key aim is to pursue operations excellence with a range of Lean improvement tools & techniques coupled with synchronised staff development programmes and change management methodologies. Internal project teams are coached in people and process best practices and like Toyota’s cultural change it comes from experimental learning combined with the CI programme’s many incremental improvements. Furthermore, the evolutionary process makes it easy to understand, get broad acceptance and alignment with hierarchical management’s aspirations. Delivering a leaner cost competitive organisation this way will add to a sustainable improvement culture and once embedded - system and structural changes through the CIP could even be taken for granted. TPS grew naturally over many decades so perhaps the first lessons on developing a Lean culture starts here.
