There are big things and there are little things. There are things that make a huge difference and things that make a small difference. There are things we do because they are easy and there are things we avoid because they are hard.

Books and articles on lean manufacturing, lean culture or management, very often devote a good bit of time to the 5S model. These 5S’s (Sort, Set in Order, Shine, Standardize and Sustain) are all important and worthy when you have a micro-focus on the shop floor. Orderliness is important in any manufacturing setting. However, I believe much of the focus on this 5S process is because these are easy things to attack. No executive in the world is going to object to creating orderliness and eliminating wasted motions on the shop floor.

Doing 5S is easy because it requires nothing of executives and very little if any change in the behavior of managers. It does not disrupt their world. And, that is exactly why it does not address the big issues that drive the culture and competitiveness of any organization.

What is Culture and Why Does it Matter?

Let’s step back and examine what determines the culture of your organization and what you can do to influence it.

First, what is organization culture? It is the system of beliefs and habitual patterns of behavior that are the norms in the organization. We all have habitual ways of thinking, feeling and behaving and those define our own culture. And those beliefs and behavior are most significantly expressed and modeled by executives and managers. If their behavior undergoes no change, if their beliefs are not challenged, you haven’t changed the culture no matter how many 5S implementations or kaizen events you have led. It’s easy to do a shop floor kaizen event but it is frightening to challenge the behavior of senior managers and this is exactly why so many lean implementation efforts fail or fail to sustain.

Continuous Improvement (kaizen) is not an “event.” The idea of an “event” is an inherent contradiction to the idea of continuous improvement. Lean or continuous improvement is a culture that permeates every level of the organization every day. It must be understood as internal competitive strategy, the capabilities of the organization. External strategy is a response to external stakeholders – the business marketplace and financial market. Internal strategy creates the capabilities that enable successful external competition. In other words, if you want to compete on the showroom floor (external), you must have great engineers, stylists, manufacturers, and they have to be able to communicate, must be motivated, etc. (internal capabilities). But, this must be framed as a strategy that is owned by the executives, not merely a tactic on the shop floor.

A Framework for Organization Culture:

Every organization’s culture, even the culture of countries, operates in some similar ways. First, there is an external landscape upon which the culture must operate. This is the playing field of competition. Then there is the nature of the organization itself – its flexibility or rigidity, its complexity or simplicity, its ability to facilitate the work or inhibit the work. Then there are the people, the human capital of the organization, with all their competencies, motivation, fears and hopes. And, at the heart of the organization there is a system of beliefs, values and vision that tend to condition behavior and create boundaries for behavior. You can apply this model to a country or to a corporation.

The 7S’s that Determine Culture:

Let’s take a closer look and fill in the details of this framework. There are 7S’s that are the key levers, the things that determine your culture. These are the things that you can change and these are the things for which leaders must take responsibility.

The Landscape:

If you are developing strategy you develop that strategy to adapt to a changing environment… and it is always changing! If you are in the business of retail sales you must be adapting to the external changes in technology and social habits. Are you developing a strong web and social media presence or are you stuck in brick and mortar stores? These are obvious elements of strategy that are driven by the realities of the landscape. Economic and political changes will also affect strategy. If you are in the energy business you know that threats of war in the Middle East, or the politics of hydraulic fracking in Pennsylvania may determine where you invest your capital. And changes in the climate may have something to do with where you build that next plant and what your insurance costs may be in the future. All competitive strategy involves gathering intelligence and developing a response to the challenges of the external environment. The corporate graveyard is littered with the names of companies that failed to recognize and adapt to the changing landscape.

1. Structures:

The builders of the great Cathedrals of Europe understood a lot about the architecture of structure. And what they understood was not just the engineering of space, but they understood the power of structure to influence the mind and spirit. When you walk into a great cathedral your head goes back and you breath in, and you can feel your soul elevating toward heaven. This is the power of structure.

Do the designers of your corporate structure understand architecture, the influence of structure on thoughts, feeling, and behavior? What do people care about and how does the organization structure determine those thoughts, feelings and behavior? What team am I on? With whom do I win, celebrate, or lose? What are the boundaries and how high are the walls between the structure of which I am a part and other structures in the organization? And, does the structure enable or hinder the flow of the important work process in the organization?

All of these questions are important and they are important right up to the most senior management team. Does the structure of that team reflect the reality of both the core and enabling work processes in the organization? And, does the structure follow the flow of the work in a way that reduces barriers, interruptions, rework and other forms of waste? And, what are you doing to analyze and redesign that structure?

2. Social Systems:

Social systems matter a great deal in any organization. These systems include the following:

• The system of hiring (who does it, what are the criteria, etc.)
• The system of promotion (who wins and why.)
• The system of reward and recognition (what makes performance matter? Are both tangible and social reinforcement contingent on important performance?)
• The decision-making system (who decides what and in what style – command, consultative or consensus).
• Communication Systems (who knows about what, when and in what style)
• Score-keeping or Feedback Systems: (nothing drives behavior more certainly than effective score-keeping)

When implementing lean management many lean implementers draw boundaries around their work that exclude all of these social systems and in doing so, they cripple their ability to influence the culture. It is simply impossible to create a culture of teamwork and continuous improvement if every manager is rewarded only for his or her individual performance. It is impossible to create lean culture in an organization in which the important score-keeping is invisible to most of the players on the field. All of these elements must be designed to optimize teamwork and continuous improvement.

3. Technical Systems:

The technical system of the organization is the core work process that includes each task, each piece of equipment, each second of time consumed as the work flows from input to output, and every opportunity to add value or create waste. The redesign of the whole-system of the organization often begins with mapping the technical system and identifying all of the variances, cycle time, and every opportunity to improve how the customers’ needs are met as value is added through the process.

Lean implementers generally do a better job on the technical system and do less on the social system. For some reason, perhaps it is because of their own backgrounds, they feel more empowered to address the work process, the technical system, then they do to address the social systems.

What lean implementers need to realize is that the social system enables the technical system. In other words, when Shigeo Shingo worked with the die change operators to improve the cycle time of die change, he worked with them as a team. He empowered them. He enabled the to make decisions, experiment and to track their own data. He changed the dynamic of the work team. Similarly, if one studies Toyota one learns that the senior management team makes decision in very different ways than in a traditional Western corporation. The social system is different at the top and and the bottom of the organization.

4. Symbols:

It is ridiculous that symbols should influence behavior and be a concern for lean implementers wishing to create lean culture. It is almost childish.

How do you feel about your country’s flag? Or, your religion’s cross or star, or other iconic symbol? Or, how about your school colors? Or, your bulldog, or eagle or raven, or cowboy hats, or those wearing the Redskin’s hog noses to games, or cheese-heads? Its all ridiculous., isn’t it?

Yes! And that is just part of being human. It has been since history was first recorded and it is no less today. Whether it is wearing a good suit and a tie at the corporate office or wearing uniforms on the factory floor, symbols make a difference. They serve the purpose of saying “This is who I am! This is what I care about and who is my team.” Symbols create social bonds that unite people in common effort. What symbols bond people together in common purpose in your organization?

5. Stories:

I am surely not going to say something as silly as “you need to tell stories.” You are a serious manager, an executive, you have serious work to do looking at spreadsheets and graphs. You don’t have time for story telling. Really?

Every culture… I repeat, EVERY culture, is built on stories of heroes and heroins who demonstrated the values that are important in that culture. We learn far more through stories than through theories and mathematical logic. The Bible, front to back, is a series of stories about real people who the reader can relate to – their tests and difficulties, victories and failures – and each story is a lesson. They were remembered and retold, from generation to generation. Why is there no chapter on the theory, the analysis of the data, the facts, and a step-by-step action plan? And the reason is that it would have been forgotten, but we remember Samson and Delilah, David and Goliath, and Cain and Able. The lessons that are remembered are in the stories. It is why the Iliad and the Odyssey, Greek Tragedies and the plays of Shakespeare are important. They all tell the stories of the culture and reinforce the value systems that are important in that culture.

What are your company’s stories? Who are the heroes? And, are there heroes of the present, or are they all of the past? Cultures in decline only have heroes who are dead. Cultures that are growing and conquering have heroes of the present. It is your job to find and make the heroes. Tell their stories!

This is an important job!

6. Skills:

By Skills I include all the things that people are able to do – their knowledge and their competence. Every strong organization culture is one that values and builds the skills that are critical to the core work.

For many years Honda considered their core competence to be engine technology. That did not mean that chassis design, suspension engineering, styling and manufacturing were not important. But, they believed that the core competence was engineering engines. When you arrived at the Marysville, Ohio plant and you walk into the lobby there is artwork on pedestals, like busts of great men of history. But, this artwork is different: The Formula One engine that won the world championship; the 500cc motorcycle engine that won the world championship… this is the artwork on pedestals.

At the time I was involved in Marysville, Iri Irimajiri was the President of Honda America Manufacturing and Mr. Iri had been a Formula One engine designer. He knew engines! The culture promoted those who knew engines. They valued engine design and this is reinforced by the artwork in the lobby of the plant.

Every great company knows what its core competencies are. Marketing and brand management at Coca-Cola; pharmaceutical discovery at Merck and Pfizer; technology innovation and sensual packaging and customer interface at Apple. What are your company’s core competencies that create competitive advantage? How are these promoted and developed in the organization?

7. Style:

Early on we learn that how we shake hands, how we look at people, the tone of voice we use, and how we make decisions are important determinants of our success in life. This is true for the individual and it is true in the collective experience of an organization. One of the things I have learned after thirty-five years of consulting with a hundred different companies is that they do each have a style that reflects their culture.

Many years ago I worked with the Continental Can Company and they would not have disagreed that their culture was adversarial in the extreme. They had a long history of union-management conflict and extreme distrust. The Vice President of Human Resources told me that their managers were “gunslingers.” I wasn’t sure what he meant. Then I went to lunch with five or six of their senior managers. They kept their hands under the table, leered around from person to person, and then suddenly, they would draw! “That’s not right!” as their quickly drawn finger pointed at someone who had just misspoken (according to them). They were gunslingers! It was a style of interaction that they had learned and developed over the years and it spoke volumes about the culture.

I could describe dozens of styles of behavior in different companies, and most reflect a far better history. These styles enable effective decision making or destroy effective decision making. They cause the workplace to create joy in work and teamwork among colleagues, or a place that creates ulcers.

So, these are the 7S’s of organization culture. Now, which do you think will have a greater impact on the long term competitiveness of the company – sorting and shining tools, or creating systems and structure that eliminates walls through the process and creates teamwork? I am not against the 5S process so commonly associated with lean manufacturing. However, they will not determine the competitive success of the organization. That will be determined by the big seven!