Lean Management Systems: The New Modern Management

Lean management systems are becoming the twenty-first century standard. Many years ago one of the first books I read on management was Peter Drucker’s The Practice of Management. In it Drucker defined and extolled the virtues of the management profession and gave credit to Alfred Sloan the longtime CEO of General Motors for developing the model of professional management in much the same way we speak of Toyota today. The system that Alfred Sloan created at GM was built on the theory of management as a distinct profession, separate from engineering and other specialties.

Womack’s View of Modern vs. Lean Management

Jim Womack’s (founder of LEI Institute) recent book, Gemba Walks, contains a number of interesting and helpful short essays. These are Womack’s more recent meditations on the implementation of lean management. One of the more interesting, in my view, is his essay on Modern Management vs. Lean Management in which he contrasts the system of management build by Sloan at GM and lean management as it was built at Toyota.

What then is the contrast between the “modern management” of Sloan and the lean management of Toyota/Honda? These are the contrasts that Womack describes:

Lean management systemsThis is a great list and you could literally write a book with a chapter on each of these contrasts. Let me make a few comments on these contrasts by putting them in the context of a matrix I have long used to describe the transformations of organization cultures from the family farm forward.

Modern management at General Motors created a social class system, a disunity or social strata, and that disunity was the ultimate cause of collapse, as it has been in every civilization.

Social Intimacy and Economic Efficiency: The Miracle of Lean

Those of you who have participated in one of my seminars have no doubt heard me discuss the idea of sociobiology, that there are not only physical, but behavioral characteristics that are genetically passed on because of their contribution to our survival. For most of human history, beginning on the Serengeti Plains of Africa where we hunted antelope in small tribal groups, human beings have worked in family units. The family farm and the small craft shop structure are only the more recent examples of work systems where there was high social intimacy, high interdependence, and high trust. Evolution of Work Systems

This so-called modern management that Womack speaks of began at Ford with the specialization and separation of work and management, the separation of doing versus deciding, and the isolation of workers who were instructed to “do your own work.” This instilled fear and created the loss of the social intimacy that had become the “natural” work environment for the human species over the previous millions of years. The work system and organizations of both Ford and Sloan had become contrary to human nature. This led to the natural rebellion, the need for association, the need for “brothers” in the union as inner city youth seek the safety and security of their brothers and sisters in gangs. Seeking security in groups is healthy psychological survival behavior in the presence of isolation and fear.

The industrial revolution and the revolution in management and organization had created great gains in productivity, economic efficiency, but had destroyed the social intimacy necessary to well functioning human beings and well functioning social systems.

Each of Womack’s contrasts between “modern management” and lean can be seen in this light. Decisions being made remotely versus decisions on the spot is another way of describing the class system, the alienation of leader and led, top to bottom, which almost always results in rebellion from below. The same is true for “staffs improving the process versus teams and those close to the work” improving the process. Similarly, standardization by staff groups versus standardization by line managers and those doing the work is another symptom of the this vertically disengaged culture. Experiments by those doing the work, versus imposed plans from above is the same. Each of these contrasts described by Womack illustrate how lean management is solving the social and psychological alienation created by both Ford and Sloan.

Lean Could Follow Modern Management: Pride Precedeth the Fall

While I generally agree with Womack’s analysis he does leave out an important historical context. The system of production created by Henry Ford was a great advance over craft-shop production in economic efficiency. Resources were made more productive – capital, labor and materials. However, as that system conquered the world of manufacturing it led to the excess of specialization or fragmentation of work, the dis-empowerment of workers, inhuman working conditions, bullying supervision and the natural response of unionization as a counter force. Ford’s system, still extolled by Toyota, became barbaric.

Similarly, there was much initial good in the system of management created by Alfred Sloan. Ford’s system did not provide for the management of a large differentiated organization and the integration of diverse and complex functions. The General Motors system added this capability by creating accounting and control systems that enabled the design of a diverse range of cars, sharing many parts, and utilizing shared engineering and production facilities. GM developed a superior system of administration and this is why GM overtook Ford and became the leading manufacturer of automobiles. It wasn’t until Ford hired Robert McNamara and “the Wiz Kids” after World War II that Ford developed its own system of management.

General Motors not only developed a system of integrated organization, but they promoted and developed professional managers. An entire hierarchy and departments of professional managers emerged. Power and decision making shifted from the engineers to the professional managers, accountants and strategic planners. However, just as happened at Ford, excess pride in their system led to the assumption that all things could be solved by professional accounting and strategic planning systems. Unfortunately for GM, none of those systems of modern management as Womack calls them, could engineer a superior car or produce one with few defects. Both GM and Ford grew to place excess faith in their accounting and administrative systems and failed to focus on the core skills of engineering and manufacturing.

This historical context is important because each management theory or system has its day and makes its contribution. And then, their methods tend to become mechanical, bureaucratic, a set of standardized and unthinking procedures that blind their followers to new methods. And are there no signs of the same in lean implementation? Is 5S, standard work, and other methods becoming bureaucratized? Are lean practitioners a little too certain about what they think they know?

Pride and arrogance always precede the fall, whether in civilizations, companies or management methods. Lean practitioners beware!

The Miracle of the Lean Management Systems

The miracle of lean organizations is the achievement of both economic efficiency and social intimacy. This can truly be labeled “the high performing organization” because it not only serves the needs of customers but also the needs of the people within the organization. It achieves not only business performance, but it enables the realization of human potential. It is not only a technical system, but a social system.

The power of well functioning teams, at every level, is that they are the key to creating unity of social intimacy and economic efficiency. Teams are the family unit of modern organization. Having done some work at both Ford and General Motors I can tell you that the psychological isolation was not only symptomatic on the factory floor, but in senior management ranks as well. They were not safe environments. Isolation, whether a worker at one machine in the factory, or within the confining walls of an executive office, leads to fear and distrust. The elimination of walls and silos must be both horizontal, between departments, as well as between levels of management and employees. Disunity must be replaced by social unity.

At this same time I was involved at Honda in Marysville and the social unity between leaders and led was obvious and in stark contrast to the alienation at GM and Ford. The arrogance of “professional management” was gone and replaced by a deep respect for those who did the value adding work on-the-spot.

I am seeing lean implementations that address front line work processes, but fail to recognize the social illnesses that have been created over many years of fragmented organization, the dead carcass of so-called modern management. The principles of lean management that Womack articulates can heal that illness.