Kaizen At All Levels

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One of the common misconceptions about kaizen is that it is limited only to shop floor workers.  When an organization’s leaders hold this belief, it can significantly obstruct the ability to improve and often leads to losing interest in, or abandoning the kaizen process altogether.

Although the scope of kaizen activities changes depending on organizational level, continual improvement is everybody’s job regardless of position.  In fact, the ability of lower levels to succeed with kaizen is highly dependent on how well the higher levels are handling their improvement responsibilities

Success with kaizen requires a systems perspective and an understanding of how the elements work together to support each other and achieve success.  Each level in the organization has specific responsibilities for kaizen.

THE SCOPE OF KAIZEN ACTIVITIES
Team members generally participate in traditional small-scope kaizen activities.  They are the closest to the processes and direct their activities at removing the barriers that interfere with perfect execution of their work.  Although there is interest in making sure changes do not negatively affect other parts of the value stream, the focus is on reducing waste and improving the standardized work within their own process.

Depending on the company’s processes, the cycle time of a typical kaizen can be as short as 1-2 weeks.

Lower and middle managers (including supervisors, managers, and engineering/technical positions) tend to focus their improvement activities on the value stream.  This includes managing WIP and buffer levels, decreasing cycle times, improving handoffs between steps/areas, and reducing variation within processes.  Middle management improvements tend to be mid-scope in nature and can take 3-6 months to fully implement and verify the effectiveness of countermeasures.  Although the improvement activity at this level does not generally occur in a traditional kaizen team setting like team member improvements, it still follows the PDSA process.

It should be noted that supervisors and managers need to participate in and, at times, lead small-scope kaizens to stay sharp and remain connected to the processes for which they are ultimately responsible.

Upper managers and executives apply kaizen through business planning processes.  This includes setting the direction for the organization and assuring priorities are clear.  A difficult part of this responsibility is assuring that 2-3 critical breakthroughs are identified that will stretch the organization without overloading people.  Like all improvement activity, the hoshin process enables learning and improvement to occur by applying the PDSA cycle.  Since the focus is at the organizational level, the timeframe for improvements can be as long as 1-5 years.

Executives should also participate in small-scope kaizens on occasion for the same reasons as those in middle management positions.

ADJUST TO FIT THE ORGANIZATION
As with any other aspect of lean, the specifics of improvement activity at different levels should obviously be tailored to the organization.  The key is for everyone to understand their responsibilities in the improvement process and how they support its continued success.

Culture: The Critical M&A Element

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As we make our way to the other side of the economic downturn and confidence in the future increases, M&A activity will most likely return as a common fixture in the world of business. As this occurs, people involved in the process will make decisions like they always have, by evaluating deals in terms of market capitalization, cash flow, EBITDA, goodwill, etc. Unfortunately, many will ignore a critical element that can ultimately make or break the merger: culture.

Studies continue to show that a vast majority of mergers fail to ever achieve intended results. The intensity associated with the traditional due diligence process pretty well assures that the reason for failure does not lie in the financial analysis. Since culture is considered a subjective element, many people think it can't be effectively assessed. Whether assessed or not, though, cultural issues will appear after the deal is done, often resulting in excessive costs and stress that can greatly lengthen the time it takes for the merger to produce results - if not kill it altogether.

In my experience, I have found the cultural elements that interfere with a successful merger consist of the following:

• Misaligned values between the acquirer and acquiree;
• Misunderstood purpose of the new/larger enterprise;
• Poor communication with team members of the acquired company;
• Fear throughout the organization.
  

As a consultant, I spend a lot of time with companies helping to sort out problems encountered after an acquisition occurs. Too often, investors discover well after the merger takes place that there is ab enormous mismatch in culture between the acquiring company and the acquired company. And the longer these problems are allowed to continue, the more damage that is done to the organization as a whole.

What to Do

An organization, by definition, is a group of people who work together for a shared purpose in a continuing way. Along this line, a due diligence process is not diligent if it does not include a cultural assessment. Although there will never be a perfect match, an upfront cultural assessment will at least provide a picture of the issues to be faced after the merger takes place.

A cultural assessment consists of observation and a series of interviews with people at all levels of the organization to address the following topics:

• Values: Determine the values that exist within the target company (or whether a consistent set of values actually does exist). The objective is to understand how aligned the values are with the acquiring company and where problems may occur;
  
  
• Fear: Assess the level and causes of fear within the company. Fear will obviously exist in any organization that is being acquired, but the key is to discover whether it is a fundamental part of the organization's culture;
  
  
• Leadership Style: Ascertain whether the target company's leaders use a command and control or participative style of management. This will be important after the acquisition to give an idea of how much work will need to be done at the supervisor and management level;
  
  
• Teamwork: Understand the level of teamwork between people, departments, and facilities. If there are problems, it is important to understand what is interfering with people working together. Teamwork needs to be assessed at all levels within the organization;

As part of the cultural assessment process, it is also important to develop a plan to address the issues as quickly as possible after the acquisition. Cultural problems tend to grow exponentially - especially after a merger - and the longer the issues are allowed to continue, the greater the chance they will interfere with the performance of the new organization.

If a cultural assessment had not been performed before the merger, it is important to do one as quickly as possible afterward. Acquisitions generally consume an enormous amount of time and money, and the quicker the new organization begins performing as expected, the better for everyone involved. Unless the cultural issues are understood and corrected, however, the merger has no chance of living up to its potential.