Leadership in Lean Production Systems

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Timothy J. Burke

► Current Managing Director for Spa City Management LLC• Manage family holdings: real estate, investments, private companies• CFO of Precision Valve & Automation, Inc.• Brought the Toyota Production System to PVA

► Executive management, principal investing and investment banking • 10 years with M&T Securities• 2 years with Ernst & Young Corporate Finance LLC (now MacQuarie)• 1 year with PriceWaterhouseCoopers LLP

► Experience with growth strategies, acquisitions and capital markets• More than 40 deals, with aggregate enterprise value over $2 billion• Advanced manufacturing, aerospace, defense, medical, electronics• Worked with many best-in-class “lean” companies and CEOs• Upstate NY (Albany, Rochester, Binghamton, Syracuse, Buffalo)

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Email: tburke@pva.net

Tel: 518-371-2684

Lean leadership is developing others: i.e. asking people to trying something new

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What is lean leadership?

Start by developing yourself (hint: these books aren’t about one-piece flow or 7 wastes)

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How to develop others

If you want to develop others, you must develop yourself and do it visibly – make it a team sport

Step One: Take the word “lean” out of your vocabulary

► “Lean” manufacturing► Just-in-time► Continuous flow► Continuous improvement

. ► Standardized

work . . ► Performance analysis► Shop floor focus

► Cost, wage and employee cuts► More part shortages► Ford style mass assembly line► Someone in the office thinks they can

do my job better than I can► Inflexible way someone tells me to do

my job► Paperwork► People in my business

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What you will say What they will hear

You cannot succeed without shared vision.You cannot have shared vision when people feel threatened.

Built in the 13th century, Charles Bridge has endured centuries as a world landmark

► Charles IV’s noble vision: • Establish Prague as a trading crossroads connecting Eastern and Western Europe• Use best materials, newest building techniques (including new egg-strengthened mortar)

► The failure of shared vision:• All villages ordered to send eggs for the mortar to the royal palace without knowing WHY• Word spread for a solution to the problem of transportation: HARD BOIL THE EGGS• Hardboiled eggs are useless for making mortar

► A GOOD HIGHER LEVEL VISION AND A GOOD TACTICAL SOLUTION, BUT A FAILURE OF SHARED VISION (100 YEARS TO COMPLETE)

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Action without shared vision = wasted time and resources

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Get people to buy into your vision

A lean production system is a bottom-up culture, and can not be

imposed or “pushed down”

Done right, the lean culture will “go viral” and outnumber the

anchor draggers

You won’t find anchor draggers on the production floor, you’ll find them in the corner office.

Understand and Embrace Shuhari

Shuhari is based on mastery of Japanese martial arts

► Shu: “Obey the rule”• Repetitive teaching• Repetition until skill is mastered

► Ha: “Break the rule”• Skills are automatic• Deviations to respond to circumstances

► Ri: “Be the rule”• Student becomes teacher• Circumstantial deviations now part of the rule

Traditional American vs. Lean Strategic Management

Bringing it all together: Where Hoshin meets Gemba

Executive Level

Organizational Financial Goal

Management Financial Goal

Supervisor Financial Goal

Operator InstructionsPUSH PUSH PUSH

Grow EBITDA by 10%

Cut direct costs by 10%

Increase productivity output 10%

Work faster and harder

Hoshin:Direction

Management

Gemba:Workplace

50% market share

“Catchball”

Reduce changeover time by 1.5

minutes

Traditional

Lean

Get those that share your vision to share it with others

Notable Quotes: "The Toyota Way to Lean Leadership"

The function of leadership is to produce more leaders, not more followers.

- Ralph Nader, consumer advocate

No institution can possibly survive if it needs geniuses or supermen to manage it. It must be organized in such a way as to be able to get along under a leadership composed of average human beings.

- Peter Drucker, expert on management

Go to the people. Live with them. Learn from them. Love them. Start with what they know. Build with what they have. But with the best leaders, when the work is done, the task accomplished, the people will say 'We have done this ourselves. '

- Lao-Tsu, founder of Daoism