New machines do not a world-class company make

March 28, 2002
By: Gary Conner

Buying top-shelf equipment doesn't necessrily make you a top-shelf operation. Much more important is the behavior of the people behind the equipment.

President Bush paid Oregon a visit a few weeks ago. He spoke at length about the sagging Oregon economy. In fact, he held Oregon up as a poster child for a state with the slowest economic growth and highest unemployment rate. His solution to these problems? Tax incentives to buy new and more equipment.

Equipment to make what?

Before You Buy

Before you buy equipment, you should have something to make or sell. I believe that the solution is not more equipment or new mechanical technologies; it lies in changed behaviors and new approaches.

The reason customers look elsewhere is that they find alternative suppliers that behave more competitively and offer more value and quicker response times.

This is not a chicken-and-the-egg kind of problem. If we want customers to seek our services and products, we have to satisfy their desire for value, quality, and availability.

Getting all new equipment is very sexy, but it won't get you sustainable business unless your company behaves like a world-class organization, capitalizing on the talent of its people and the capacity and capability of its buildings and machinery. In short, increased sales do not necessarily follow the purchase of more or new equipment.

So what is the answer?

A Light Analogy

We've all heard the old joke, "How many psychologists does it take to change a light bulb?" (Answer: Just one, but the light bulb really has to want to change.)

I'd like to explore a similar question, by turning the puzzle around: How many light bulbs does it take to change a company?

Like many things, we often take light for granted. We may even ignore it; that is, until it is no longer available. If you have ever walked into an unfamiliar room and were unable to find a light switch, you understand how dependent we are on those little photon-generating devices that we call light bulbs.

A burned-out light bulb can be very annoying and, in some cases, create serious situations. So let's talk about the need to change the "old" bulbs-rooting out old ideas and methods in our companies and replacing them with new and modified procedures and polices, known collectively as the world-class manufacturing approach.

The light bulb analogy is also meant to illuminate that moment in a person's life when he or she recognizes a new concept that just moments before lay hidden. The term most often associated with this experience is epiphany, which Webster's dictionary defines as "a sudden, intuitive perception of, or insight into reality, or the essential meaning of something, often initiated by some simple, commonplace occurrence."

What we are describing here, in lean manufacturing terms, is the moment of epiphany in which you recognize all the waste in your process-primarily, wasted time, your most precious resource.

Non-value-added activities cost time and therefore result in higher costs, longer delivery times, larger inventories, lower quality, and, ultimately, fewer customers.

However, there is a compelling need for more than one person in the organization to recognize the company's need to modify its past practices if it is to move forward. So how many epiphanies does it take? How many mental light bulbs have to come on to change a company? We'll come back to that.

The Newest New Economy

Five major economic generations have been born within the past 200 years:

  1. 1. Steam (shipping by steam ship)
  2. 2. Railroad
  3. 3. Electric motor
  4. 4. Automobile
  5. 5. Communication (technology)

Each generation showed significant economic opportunities and growth in the early stages, followed by significant economic downturns and financial losses at its mature (saturated) stage.

So, what's next? A better question might be, "If your company is world-class, why should it matter what's next?"

If your company is viewed as a world-class machine shop or sheet metal shop or any other kind of goods producer, there is a good chance that you could have been a supplier to the customers in any of the previous economic generations, simply because timeless principles of good business don't change much over time. Is it not reasonable then to assume that you would be able to supply anyone in any future economic generation as long as you maintain world-class status?

To be a viable supplier (then, now, or in the future), you have to satisfy three primary customer needs competitively, regardless of your era, geographic region, or economic generation-timely delivery, acceptable quality, and acceptable costs. In a nutshell, potential suppliers have to provide financial incentive for the customer to buy rather than make (or buy from a competitor). Ultimately, you must meet all three of these expectations while maintaining a reasonable profit margin.

How Lean Manufacturing Helps

The many tools of the lean manufacturing approach can help you meet these customer needs while improving your bottom line.

Your challenge is to learn everything you can about how other companies have applied these tools.

You can find hundreds of examples of organizations (even make-to-order shops) that have applied the lean approach. The key to sustainable change is that everyone in the organization must have the epiphany and commit to being what you might call a "light-bearer."

So the answer to the question, "How many light bulbs does it take to change a company?" is easy-all of them.

Gary Conner

Contributing Writer
Lean Enterprise Training
145 Mystic Mountain Drive
Sparks , NV 89441
Phone: 503-580-1156
Award-winning author Gary Conner is president of Lean Enterprise Training.

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