Going Lean: How the Best Companies Apply Lean Manufacturing Principles to Shatter Uncertainty, Drive Innovation, and Maximize Profits - Softcover

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Stephen A. Ruffa (Oak Hill, VA) is an engineer who worked for the American Defense Department and researched lean manufacturing across seventeen large aerospace producers. His previous book, Breaking the Cost Barrier: A Proven Approach to Managing and Implementing Lean Manufacturing was awarded the 2001 Shingo Prize for Excellence in Manufacturing Research.

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Introduction: Solving the Mystery of Success

THIS BOOK IS FOUNDED on one simple but enduring truth: Excellence is best seen in a crisis.

In 1973 when oil shortages compromised the profitability and stability of the global automotive industry, the excellence of one corporation stood apart. Its booming operations fueled continued profit and competitive advantage just as others were clinging to survival. Its sustained success ultimately catapulted this firm—the Toyota Motor Company—to market prominence, and has made its unique approach to management the envy of the business world.

This very same phenomenon can be seen again today.

In the wake of disaster—from September 11th and into war, to economic downturn and then hurricane Katrina—American business throughout this decade has been thrust into crisis. Corporations everywhere have been hard hit from lost sales, disrupted by shifting customer demands, sent reeling from new uncertainties rippling from customers to suppliers. Once-unquestioned leaders found themselves in a terrible struggle, one by one driven into financial turmoil or even bankruptcy. But a few firms—Toyota, Wal-Mart, and Southwest Airlines—remained strong, even thriving amid the chaos that crippled their peers.

What makes these corporations different? How do they seemingly defy gravity, extending their edge in a business environment that should have dragged them down?

The answer is simple. While others insist on managing their businesses just as they had done in the past, these companies took a different path. They saw that the world has dramatically changed, that uncertainty and crisis are no longer the exception but are now the rule. And they adopted a set of principles and practices I call lean dynamics—thus preparing themselves long beforehand to meet this head on.

Those who read this book will learn what years of success followed by decades of struggle should have taught managers everywhere: What marks excellent companies is not how efficiently they operate when demand is stable and conditions are optimal. Rather, those who apply lean dynamics continue to thrive—sustaining strong profitability, growth, and innovation—even when unpredictability is constant and change is normal.

Lean dynamics goes beyond tweaking existing operations and organizational structures—quick fixes that offer uncertain benefit to the bottom line. It goes further than simply finding and removing today’s most visible problems—the focus of so many of today’s improvement efforts. Instead, it is transformational—a new way of managing that corporations of all types and sizes can put in place to create the tangible, sustainable, bottom-line results they need to compete.

Throughout the last century, corporations struggled to refine a system of management that was never originally intended to accommodate the business needs of today. Founded by Henry Ford as an answer to the unsolved problem of bringing his new innovation—the Model T—to the mass markets, America’s management system quickly spread to become the gold standard for much of the world. Its basic premise—that tremendous efficiencies can be derived from managing jobs by their most basic steps—permitted managers to drive out hidden variation and waste, streamlining work and making complex products widely affordable. Yet, their system for keeping such a myriad of independent tasks moving together in lock step brought with it a new problem: Its effectiveness demands stability—a condition that has become increasingly hard to find.

For years, new strategies and techniques arose to hold chaos at bay. As expanding mass markets gave way to fragmented, variable customer demand, managers came to rely on buffers and quick fixes to protect their way of doing business. And with bouts of change increasingly driving disruption and crisis, corporations continued to do what worked so well for them in the past: Struggle harder until conditions once again stabilize.

A few have come to understand the losing proposition of demanding stability from a world that over the last several decades has become increasingly driven by disorder. Advanced technology and heroic effort can no longer overcome the shortfalls of a system that has reached its limits. What was once a manageable gap has grown to a chasm, one that can no longer be bridged through the methods of the past.

The solution is clear. Corporations can no longer thrive on a system that is built on the presumption of stability. Instead, they must prepare for change.

Going Lean challenges how companies have learned to think about the way they do business. It sets aside the notion that efficient operations and innovation are only possible when business is steady and demand is growing; that disruption and loss are the price that must be paid each time change is introduced. Instead, it shows how a new breed of companies has demonstrated a powerful yet unexpected weapon in the battle against uncertainty. Their lessons strike to the core of what is perhaps today’s greatest mystery of success: how one firm’s adversity can become another’s competitive advantage.

This discovery did not come as the result of a single project or event. Rather, it grew from the combined experiences of innovators from diverse industries striving to gain the quality, flexibility, and cost structure they needed to compete.

More than a decade ago I first saw the need to pull these lessons together. Immersed in the furious problem solving that marked the development, production, and fielding of military aircraft, I found that this industry—a beacon of American ingenuity and achievement—was not at all as it seemed. Manufacturing inefficiencies were high, flexibility low, and quality came at a tremendous price. Simply stated, the management of its operations stood in stark contrast to the technological prowess that characterized its products.

How could this be?

This is the question I spent much of the next dozen years exploring. Fortunately, as my passion for gaining this understanding grew, so did my ability to study and report on it.

My first opportunity arrived with my study of seventeen aerospace facilities across a dozen major aerospace firms—from GE to Boeing—who granted me and my team of researchers tremendous access to scrutinize their factories.1 We traced their improvement initiatives from beginning to end, looking to see what had worked and what had not, across practices ranging from lean manufacturing to statistical process control and Six Sigma.

I quickly found that things were not as I had imagined. As an engineer I had been trained to use a straightforward, logical approach to problem solving. I came to believe that finding a solution lies in isolating those steps where problems are most evident and then targeting them for action. What I found to be true was quite the contrary. While most struggled, those who managed to make substantial gains did not do so by giving greater attention to the disruption they could readily see or those problems already at hand. Instead, these companies had reached beneath the surface, taking steps that addressed the underlying conditions that had led to their occurrence in the first place. In doing so, many of the problems they once faced simply went away.

By taking a range of internal actions, these firms had made great strides in overcoming the substantial constraints of their external environments. They had been able to mitigate many of the effects of their variability, overcoming huge amounts of waste that had long been seen...