In Built to Last, Jim Collins argues that for companies to be sustainable for the long haul (i.e., the “great” companies of Good to Great), leaders must embrace a seeming paradox. They must both honor and protect their fundamental values and beliefs, while at the same time pushing their organizations forward and embracing change.
He calls it a sort of yin/yang principle: on one side you have preserving the core, or staying true to something, and the other side you have stimulating progress. (See a very short video here.)
The best organizations weave this tension into the fabric of the company by creating mechanisms to ensure progress. Collins describes how 3M, for example, stimulates progress in innovation by giving scientists 15 percent of their time to work on whatever interests them; by requiring divisions to generate 30 percent of their revenues from new products introduced in the past four years; by maintaining an active internal venture capital fund; and by creating a dual career track to allow innovators to remain innovators rather than move into management. Granite Rock Company has a policy called “shortpay” to stimulate excellence in customer service: they tell their customers “If there’s anything about an order you don’t like, simply don’t pay us for it. Deduct that amount from the invoice and send us a check for the balance.”
Jim Lancaster’s presentation at the recent LEI Summit reminded me of this concept. Lancaster explained how the progress the company made in the 1990s—the progress that earned them a chapter in Lean Thinking—proved unsustainable in the 2000s. They found that much of their improvement work was simply redoing improvements they made years earlier. They weren’t holding the gains they made. Instead, they were on a kaizen hamster wheel, because their processes were unstable. As Jim Womack explained, “without getting without getting control of processes first, we end up doing change on unstable muck.”
In other words, Lantech didn’t “preserve the core.” They had the drive to “stimulate progress,” but without the other half of the yin/yang equation to balance their efforts, they kept backsliding. It was only after they instituted a daily management system to prevent deterioration of their processes that business performance leapt forward.
To be sure, this isn’t a perfect analogy: Collins is talking about the core values, philosophies, and ideologies of an organization, while I’m talking about the core improvements realized through kaizen. But based on Lantech’s experience, I think that the analogy is nevertheless useful.
Here’s how to preserve the core in a lean context:
- Institute a daily management system that reveals deterioration immediately and enables it to be fixed at the right level. As Jim Lancaster explains in his book, “solving the problem that presents itself now is more valuable than finding and attacking the most important problem we have.”
- Invest in people’s problem solving skills through formal and informal training and coaching.
- Drive out fear (per Deming)—not just fear of being fired or laid off, but fear of failure, fear of criticism, fear of ridicule—and encourage experimentation in the service of improvement.