World-Class, Lean Performance in the SMEs - Small and Medium Enterprises - by Carlo Scodanibbio, Industrial & Business Consultant - Lean Management Consultant

Carlo Scodanibbio
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We Are Recovering From A Recession…. Are We? download download free article We Are Recovering From A Recession…. Are We? - format pdf PDF
Stupidity: a major obstacle to Lean Management download download free article STUPIDITY: A MAJOR OBSTACLE TO LEAN MANAGEMENT - format pdf PDF
Companies Changing Hands - The Lean Approach download download free article COMPANIES CHANGING HANDS - THE LEAN APPROACH - format pdf PDF
Economic Crisis, Recession and Lean Thinking download doawnload free article ECONOMIC CRISIS, RECESSION AND LEAN THINKING - format pdf PDF
Lean Thinking: what is it? download doawnload free article LEAN THINKING - format pdf PDF
Total Employee Involvement: is it possible? download download free article TOTAL EMPLOYEE INVOLVEMENT - format pdf PDF
Flow Production: a target for today's Manufacturing Industry download download free article FLOW PRODUCTION - format pdf PDF
Achieving Quick Change-Over: dream or reality? download download free article QUICK CHANGE OVER - format pdf PDF
Kaizen: what does it mean? download download free article KAIZEN - format pdf PDF
Total Productive Maintenance: what is it? download download free article TPM - format pdf PDF
Client/Supplier relationship: evolution or revolution?    
Carlo Scodanibbio's suggested Bibliography    

All my articles are available at no charge for publication in Newsletters, Bulletins, Magazines, etc. on condition that credit is given and a link to this web site is provided.    For further details, please contact Carlo Scodanibbio.

We Are Recovering From A Recession....    Are We?

by Carlo Scodanibbio

"They" say the bad news is now over and we start recovering from a Recession, the worst since 1929.

Firstly, when did this so-called recession begin?
Someone says in 2008, with the explosion of the "financial bubble".....
Someone says it all began after September 11, when oil price started going up.....
And many others give many other explanations.
But, what is the real, bottom-line issue?

Well, consider: our grand fathers generally used to work hard all their life and generally retired at about the age of 65...    Our fathers generally used to work hard all their life and generally retired at about the age of 65....    In our mature generation it is not rare to find many people still working hard even after the age of 65.....
And what happened approximately 10 years ago? Many young people pretended to get rich and retire young, at the age of, say, 35, just by gambling on the financial stock market!

Was this the origin of the financial bubble? Better to leave the answer to illuminate economists and university professors...
Yet, in this simple story, we can try to identify a very basic signal of what truly happened in the past decades and what gave birth to the complex, unstable, unpredictable, troubled world of yesterday and today.
What we are suggesting is that the "recession" issue is not only or primarily of financial, economical or political nature, but rather of a "cultural" nature.

No-one can deny that in the past few decades there has been a tremendous "values decay and loss": it's clear and tangible. Without invading other territories (religious, political, and the like), let's simply focus on industry and the business world in general.
If you ask a simple question to people with a job (any job: high / low skill - managerial / clerical / technical / labour - public or private sector….) such as: "...what do you think while you drive or ride to work in the morning?", you will be amazed by the possible answers: "I listen to the news, listen to some music, watch the traffic, worry for another day at work, worry for the problems I got to tackle today, intrigued by the new secretary, fearing the new boss, etc. etc.".
But if you make your question a bit more specific such as: "...but do you happen, sometimes, to think of what you are going to do today at work to produce value for your clients and for your company and wealth for your family?", you will be horrified by the possible answers: "...clients? which clients? I don't have clients...   I don't work in the commercial or marketing department...   I work in the store, I press machines' buttons, I prepare delivery notes, I do accounts, I design electrical installations, I supervise a group of workers, I drive a truck, I write quality procedures, etc. etc. etc. - and: value? which value? I don't know anything about value....   I manage, I train, I assemble, I paint, I use my computer to enter data, I...   etc. etc. etc. - and: wealth? which wealth? with the salary/wages they pay me I can hardly survive....   etc. etc. etc.".

Amazing? Horrifying?
Surely something is wrong or has gone wrong, because - at the end of the day - what does "work" mean? It seems obvious that working means producing value and wealth. That's why we work. It's only with human work that we can live, progress, civilise, and try to be better and feel better, isn't it?
And where is this simple but core concept gradually gone into in the past 50 years or so? Down the drain. Almost disappeared, and decaying even further by the day.

It has been gradually killed by:

  • Adam Smith's and Frederick Taylor's principles of labour division, speciality division, single-skilling (often become de-skilling), scientific management systems, pyramidal organisational structures, bureaucracy, rules, procedures and top-driven-control.

It has been sustained by:

  • Trade Unions palaeo-practices based on stricter and narrower job descriptions and rigid remuneration/career schemes.
  • Greedy/unscrupulous entrepreneurs delighted to exploit human resources for their benefit.
  • Palaeo-Management practices oriented to strict control of any sort and open only to supply specialised technical training to work forces if necessary...
  • And others....

And it has been destroyed by false schemes of many sorts, according to which working individuals are not really responsible and accountable for their future and their destiny.
Along with such schemes, most working people, during the past 50 years or so, have started believing stronger and stronger that their future and their destiny depends upon:
1) the Organisation for which they work
2) the Unions
3) the Government

If something goes wrong, people believe it's not their fault, but someone else's fault...
With the net conclusion that in most private and public organisations world-wide the industrial culture of Personnel at all levels is rotating around the faulty motto "...I am not responsible for my life, my family's future, and my destiny - someone else is...".

Has all this got anything to do with the famous Recession they say is now over?
Surely it has.
When Organisations, Enterprises, Managers, Personnel at all levels, Unions and Public Institutions are not driven by healthy Value and Wealth generation principles anything can happen.
Many illuminate economists, politicians and university professors have somehow confused everybody by stating that Recessions (and Recoveries) are based on financial mis-management, oil crisis, China indiscriminate growth, etc. etc.   But no-one has been heard - in the past 10 years or so - stating: "...people, it's time to go back to basics… it's time to roll-up again our sleeves and work and think harder… it's time to produce real Value and not fake Wealth...   it's long overdue...".
Yes, it's primarily a Cultural issue. But no-one wants to admit it...

That's where the Lean Philosophy comes onto the scene and, possibly, may greatly contribute to the rescue.
Lean Thinking (or, Lean Management) have a number of main targets:
1) Maximisation of value to the customer
2) Drastic elimination of waste in all processes (core and support) that generate value for customers
3) Elimination or drastic re-dimensioning of all those processes (and functions) that do not contribute to generate value to the customers
4) Minimisation of all times required to provide value to the customers
5) Zero defects, errors and non-conformities
6) and many others

The above is achieved through cultural and organisational re-structuring of any Organisation, public or private:

  • Re-skilling people at all levels
  • Re-discovering processes and inserting multi-skill/multi-function people in value-generating processes
  • Empowering people to improve continuously those processes in order to maximise their output value and minimise the inherent, residual waste
  • Stimulating people to hard work, hard, creative thinking and continual growth
  • Making people fully accountable and responsible for the value they produce - ultimately, for their life and their destiny
  • Gradually changing remuneration systems on a merit/output-based fashion, as well as stimulating entrepreneurship at all level
  • With utmost respect and care for: people, community, environment

The motto becomes: lean, mean, green.

Should these simple, core principles have been instilled and stimulated more intensively in the past 15-20 years both in the private and public sector (instead of suggesting fancy ideas of easy wealth) possibly we wouldn't have seen the Recession from which they say we are now recovering.
Should most entrepreneurs (instead of few) have embraced lean principles over 2 decades ago, we would be much better today.
Should the public sector have embraced lean principles over 2 decades ago, we would need no austerity measures and similar things.
But it did not happen.

So, are we really recovering now?
If we don't get a bit leaner, starting from the private sector (and hopefully with the public sector following a bit faster), NO, we are not recovering.
The negative change and decay will continue, possibly under different, and totally unpredictable camouflages.

To beat recessions and crisis, we'll need to "slaughter", to change skin, like snakes do.
We'll need to transform managers into coaches.
We'll need to "fabricate" a new breed of people, people driven by value principles and not by "job" principles.
People dedicated to re-conceive, improve and perfect the processes they handle, which they can understand, and for which they must become responsible.
People who enjoy working and producing value, proudly, and draw satisfaction from it.
New millennium craftsman in their workshops.
New millennium traders in their shop. In strict contact with their customers.
Empowered People to whom work-pride/passion and professional and work dignity, usurped by over a century of labour division and top-control practices, will finally be given back.
People who can think: lean (that's why the name: Lean Thinking).
It will take time. With everybody's commitment, much less.
And the time to go lean is NOW.

Dr Carlo Scodanibbio and Ing Joseph Micallef are presenting a number of Lean Training workshops in Malta, dedicated to both the private and public sectors, during 2013/2014, with an initial launching conference scheduled for the 11th October 2013. The title of the 2013/2014 Lean Training Programme is: "Recovering from a Recession".
Full details at

download this article download article We Are Recovering From A Recession... Are We? - pdf format



Stupidity: a major obstacle to Lean Management

by Carlo Scodanibbio

So, your company has gone Lean, or is in the process of embarking in lean practices.
Maybe you are a manufacturer and implemented some Lean Manufacturing in your operational areas... Or you are a contractor, and are trying to deploy some solid Lean Project Management and Lean Planning in order to run more efficiently and effectively your contracts... Or, even greater, you have decided to restructure your organisation and embark in a company-wide Lean Management project..... Very positive indeed.

BUT: have you perhaps considered a potentially very serious draw-back capable of jeopardising and threatening your Lean Project in part or in full? Most probably or most definitely NOT.
Your very serious draw-back (and public enemy N. 1) is Stupidity!
Which deserves a comprehensive explanation.

Two things are infinite, the universe and human stupidity, and I'm not sure about the former.
[Albert Einstein]

(Shamelessly copied or adapted from CM Cipolla & GF Livraghi -

A subject not well known, not deeply studied, and possibly rather embarrassing. There are University departments for the mathematical complexities in the movements of Amazonian ants, or the medieval history of Perim island; but we have never heard of any Foundation or Board of Trustees supporting any studies of Stupidology.


We are surrounded by stupid individuals in our daily life: as Carlo M. Cipolla states in his Stupidity First Basic Law

"Always and inevitably everyone underestimates the number of stupid individuals in circulation".

This Law may sound trivial, pessimistic, and even ungenerous.
It is a fact, however, that:

  • many individual whom you had once judged rational and intelligent turn out at times to be horribly stupid
  • and day after day, with unceasing monotony, you are harassed in your activities by stupid individuals who appear suddenly and unexpectedly in the most inconvenient places and at the most improbable moments to cause you aggravations, frustration, stress, hyper-cholesterol and even very serious damages.

Very recently, my wife was taking a brisk evening walk on the Marsascala (Malta) promenade. All of a sudden she finds herself on the pavement, bleeding considerably from her head, with her shoes caught in a tangle of fishing line nylon string lying on the pavement.
Fortunately someone passing by was so kind to help her stopping the bleeding, and rushed her to the nearest Emergency Unit for treatment.
In spite of the shocking night, the next day in the early morning we drove to the accident place. I made my investigations. That's what I discovered:

Marsascala Promenade       Marsascala Promenade

Marsascala Promenade       Marsascala Promenade

Marsascala Promenade       Marsascala Promenade

Marsascala Promenade       Marsascala Promenade

Marsascala Promenade       Marsascala Promenade

Fishing lines solidly tightened to the iron balustrade and bundled within its iron curls. Obviously, with just a little wind (or even breeze) they would fall on the pavement and constitute a rather serious hazard to walkers and joggers.

How do you call that? STUPID!
Is there any good reason for leaving those fishing lines there at night? I cannot think of anyone. Is there any benefit for whoever does that? I cannot think of anyone. And is there any possible loss that could be incurred by other passing-by pedestrians? Yes, plenty and serious.
And it would appear that the local Municipality cares mores for doggie-does than for pedestrians' safety...

This leads to the most important (the Third) Basic Law on Human Stupidity:

"A stupid person is a person who causes losses to another person or to a group of persons while himself deriving no gain and even possibly incurring losses".

From solid researches I have made, this seems the most appropriate (if not the only) definition of stupidity.
As Cipolla says: "Our daily life is mostly, made of cases in which we lose money and/or time and/or energy and/or appetite, cheerfulness and good health because of the improbable action of some preposterous creature who has nothing to gain and indeed gains nothing from causing us embarrassment, difficulties or harm. Nobody knows, understands or can possibly explain why that preposterous creature does what he does. In fact there is no explanation. Or better there is only one explanation: the person in question is stupid."

Cipolla (and very few other authors, like GF Livraghi and J Welles) brought some light into the Stupidity phenomenon: Cipolla also invented the Stupidology Graph.

We all deal with people, we all have human transactions.
Each one of us has a "current" balance with other people.
From action or inaction each one of us derives a GAIN or a LOSS from someone else - likewise, each one of us cause a GAIN or a LOSS to someone else.
GAINS and LOSSES may be accounted for in Dollars or Francs, if one wants. But one has to include also psychological and emotional rewards and satisfactions (GAINS) as well as psychological and emotional stresses (LOSSES) [This last type of GAINS and LOSSES are intangibles and very difficult to measure according to objective standards...].
To clearly determine GAINS and LOSSES, one has to consider the point of view of the recipient of an action or initiative carried out by someone else!

GAINS and LOSSES consequent to Human Transactions (actions, inaction, decisions, initiatives) can be conveniently charted on a graph.
The acting initiative of an individual may cause:

Stupidology Graph

The consequences of an individual's action/s may be plotted on the Stupidity Graph thus classifying the individual's 4 main behaviours:

Stupidology Graph

The 4 main human behaviours are rather self-explanatory.
Some individuals act prominently and regularly in an "intelligent" way, producing gains for themselves and for others.
Some individuals act often or regularly in a "helpless" fashion, causing gains to others and losses to themselves.
Some individuals act occasionally or regularly as "bandits", producing gains for themselves but causing losses to others.
And some individuals act occasional, or regularly or prominently as "stupids".

The key issue is "consistency". Most people do not act "consistently".
Under certain circumstances a certain person acts intelligently and under different circumstances the same person will act helplessly. And so on.
A Helpless Person may occasionally behave intelligently and on occasion he may perform a bandit's action. But since the person in question is fundamentally Helpless most of his action will have the characteristics of helplessness. Thus the overall weighted average position of all the actions of such a person will place him in the Helpless quadrant of the Stupidology graph.
Likewise, an Intelligent Person may well act stupidly at times, though generally and with consistency acting intelligently...

People behaviours, therefore, can be "situational": associated to a "dominant" approach or behaviour, there can be, at times, some overtones of other approaches/behaviours.

However, some special considerations have to be made with regard to the BANDIT and the STUPID.
The PERFECT BANDIT is one who, with his actions, causes to other individuals LOSSES equal to his GAINS (if a thief robs you of 100$, you loose 100$ and he gains 100$).
Unfortunately the "perfect" bandits are relatively few. Some bandits (also very few) somehow fall in the Bandit area close to the Intelligent area: they are Intelligent Bandits (a very rare species). Most bandits, in fact, fall in the Bandit area close to the Stupid area: they are Stupid Bandits (Criminals, cruel Dictators, etc.) who cause to others great losses, far superior to the gains they yield to themselves.

The frequency distribution of the Stupid People is totally different from that of the Bandit.

Stupid People are heavily concentrated along one line, specifically on the Y axis below point O.

Stupidology Graph

The reason for this is that by far the majority of Stupid People are basically and unwaveringly stupid. In other words they perseveringly insist in causing harm and LOSSES to other people without deriving any GAIN (and also any LOSSES).

There are however people who by their improbable actions not only cause damages to other people but in addition hurt themselves.

Stupidology Graph

They are a sort of Super-Stupid who, in the Stupidology Graph, will appear somewhere in the area S to the left of the Y axis.

Stupid People vary enormously in their capacity to affect their fellow men: some Stupid People normally cause only limited LOSSES, while others egregiously succeed in causing ghastly and widespread damages not only to one or two individuals but to entire communities and societies.

Unfortunately, many Stupid People cause enormous damages to humanity because of their Position of Power (among Bureaucrats, Generals, Politicians and Heads of State one has little difficulty in finding clear examples of basically-Stupid Individuals whose damaging capacity was - or is - alarmingly enhanced by the position of power which they occupied/y).

Essentially Stupid People are dangerous and damaging because reasonable people find it difficult to imagine and understand unreasonable behaviour.

When confronted for the first time with the Third Basic Law, rational people instinctively react with feelings of scepticism and incredulity. The fact is that reasonable people have difficulty in conceiving and understanding unreasonable behaviour.

An Intelligent Person may understand the logic of a Bandit.
The Bandit's actions follow a pattern of rationality: nasty rationality, but still rationality. The Bandit wants a plus on his account. Since he is not Intelligent enough to devise ways of obtaining the plus as well as providing you with a plus, he will produce his plus by causing a minus to appear on your account. All this is bad, but it is rational and if you are rational you can predict it and set-up a line of defence.

On the other hand, a Stupid Creature will harass you for no reason, for no advantage, without any plan or scheme and at the most improbable times and places. You have no rational way of telling if and when and how and why the Stupid Creature attacks. When confronted with a Stupid Individual you are completely at his mercy: because the Stupid Person's actions do not conform to the rules of rationality. Hence:
a) one is generally caught by surprise by the attack
b) even when one becomes aware of the attack, one cannot organize a rational defence
because the attack itself lacks any rational structure.

Cipolla's Third Basic Law corollary:

It is absolutely impossible to foresee a Stupid's actions.

Cipolla's Fourth Basic Law:

Non-stupid people always underestimate the damaging power of stupid individuals.

Through centuries and millennia, in public as in private life, countless individuals have failed to take account of the Fourth Basic Law and the failure has caused mankind incalculable losses.

Cipolla's Fifth Basic Law:

A stupid person is the most dangerous type of person.

Cipolla's Fifth Basic Law corollary:

A stupid person is more dangerous than a bandit.

Livraghi's Second Corollary:

Wen the Stupidity of one person combines with the Stupidity of others, the impact grows geometrically - i.e. by multiplication, not addition - of the individual Stupidity factors.

This explains the well-known fact that crowds as a whole are much more stupid than any individual person in the crowd.
Stupid behaviour and thinking tend to reproduce and multiply so dangerously that the contagion can spread to otherwise intelligent people when they don't realize how they are influenced by collective stupidity.
Stupidity, as an aggregate, has more consistency and continuity than other human attitudes.

Livraghi's Third Corollary:

The combination of Intelligence in different people is more difficult than the combination of Stupidity.

Stupidity is brainless - it doesn't need to think, get organized or plan ahead to generate a combined effect.
The transfer and combination of Intelligence is a much more complex and delicate process.
Stupid People can combine instantly into a super-stupid group or mass, while Intelligent People are effective as a group only when they know each other well, are experienced in working together and share common targets/direction and operational methods.

The creation of well-tuned groups of people sharing intelligence can generate fairly powerful anti-stupidity forces, but (unlike stupidity bundling) they need organized planning and upkeep...
...and can lose a large part of their effectiveness by the infiltration of stupid people or unexpected bursts of stupidity in otherwise intelligent people...

Communities, Organizations and Enterprises with a highly-distributed intelligence factor are likely to have greater opportunities for long-term survival... ...but for this to be effective we must avoid the potentially devastating short term impact of shared stupidity, which (unfortunately) can cause major damage to large numbers of non-stupid people before it self-destructs...

Another dangerous element in the equation is that the Machinery of Power tends to place at the top of the pyramid people who care more about their own advantage (and the interests of restricted groups) than about the well-being of everyone else - and they, in turn, tend to favour and protect Stupidity and keep true Intelligence out of their way as much as they can.

While the power of Stupidity is insidious and dangerous in all its ways, even more harm is caused by the Stupidity of Power.


A list of allies, friends and relatives of Stupidity would be very long.
Obviously these attitudes and behaviours combine with each other (and with Stupidity) in countless ways. The effect tends to multiply rather than just add.

Three very relevant allies of Stupidity are: Ignorance, Fear and Habit.
There seems to be a mutual attraction. Fear can be bred by Ignorance - and vice versa. Habit is often the nourishment (or the excuse) for Ignorance and Stupidity. It isn't unusual for all four to join forces. And it's quite obvious that they all can be (deliberately or not) exploited by whoever has the leverage to do so (Power), but also other people can gain an advantage from someone else's Ignorance, Fear, Habit (and even Haste).

There is no direct and linear connection between Ignorance and Stupidity. But when they combine and interact the result can be awful. Of course not all Ignorant People are Stupid and not all Stupid People are Ignorant.
It's a common mistake to confuse Stupidity with Ignorance - they are very different.
And so are Intelligence and Knowledge.
There can be very stupid people with lots of "notions" as there can be poorly informed, or scarcely educated, people with a high level of effective intelligence.

One of the worst forms of Ignorance is the "assumption of knowledge".

The more I know, the more I know that I don't know.

As in the case of Stupidity, things get worse when these attitudes (Ignorance, Fear, Habit) are shared.
Ignorance spreads faster than Knowledge.
Prejudice and misinformation, as well as ridiculous nonsense, are often taken as "true" just because they are widely repeated.
Fear becomes catastrophic when it's shared by a "mass": large numbers of people in a frenzy of fear (or anger) can be extremely dangerous.
Social or group Habits often become mindless obedience, mental slavery, with results ranging from boring monotony to harmful behaviour or serious crime.

There are many other unpleasant "friends" of Stupidity and Ignorance: Arrogance, Presumption, Egotism, Selfishness, Envy, Carelessness, Servility, Imitation, Gossip, Prejudice, Meanness, Unwillingness to listen and to understand… etcetera… lurking almost everywhere in human behaviour and communication.

When we find ways of being a bit less Ignorant, less Scared, less conditioned by Habit, and more Curious, we have a better chance of being less Stupid - and thus more helpful to other people, as well as more comfortable with ourselves.

I keep six honest serving-men,
they taught me all I knew.
Their names are What and Why and When,
and How and Where and Who.

[Rudyard Kipling]


(Fully developed by Carlo Scodanibbio)

Core Concepts and Targets:

  • Value. Maximise Core and Support Processes' output Value
  • Waste. While simultaneously eliminating or reducing Processing Waste

Human Stupidity does represent a major obstacle in the achievement of the main Lean targets.

Converting the Stupidology Graph (ex Third Basic Law), into a Lean Stupidology Graph:

Lean Stupidology Graph

In this graph, besides an individual's action, we now consider also a "corporate" action (at Organisation's management level).
Instead of a "generic" Loss, we now consider a VALUE-LOSS (which may also be pure WASTE).

The consequences of an individual's or a corporate action/s may be plotted on the Lean Stupidity Graph thus classifying the 4 main behaviours (of an Organisation or of individuals in an Organisation):

Lean Stupidology Graph

Some remarks:
- VALUE and WASTE are as typically defined by Lean principles.

- VALUE-LOSS means either: insufficient or decreased VALUE (to the Customer and/or the Organisation) consequent to any form of non-lean processing.
Typical examples: inadequately engineered product/service - unclear definition of requirements - non-timely responses - and the like.

- In the Intelligent (LEAN) Quadrant fall Lean actions and initiatives (targeting at maximising Value to Customers - and to the Organisation through waste reduction) both at individual and corporate level.
This applies both to "Traditional" and "Lean" Organisations. It includes all typical Lean Management initiatives.
Interesting to note that also "Traditional" Organisations may behave in an Intelligent, Lean fashion, when they are strongly customer-oriented and customer-focused, and simultaneously try to get organised in an efficient-as-possible way.
Although the overall results are far from being "lean" (with regard to reduction of "traditional waste"), still the overall corporate approach falls in the INTELLIGENT quadrant.
- Initiatives targeting at "own" VALUE with simultaneous VALUE-LOSS for the Customer, or the Organisation (or both), fall in the Bandit Quadrant. These actions may be taken at Individual or Corporate level.
Individual initiatives include, for example: employees robbing or pilfering - intentional sabotage for own scope - employees cheating customers for own benefit - etc.
Corporate initiatives' examples: cheating or defrauding customers ("Shark's" behaviour) - malicious gossip about Competitors - etc.

- HELPLESS initiatives are well likely to take place both at Individual or Corporate level (in both "Traditional" and Lean Organisations).
In practice they result in VALUE-LOSS for the Organisation and benefit for other Stakeholders.
Individual initiatives include, for example: misinterpreting terms and conditions of Clients and Suppliers - granting special concessions for no reason - managers unable to get collaborators to be productive - etc.
Corporate initiatives' examples: making excessive concessions, promises, etc. to clients - selecting unintentionally unreliable or cheating suppliers - granting excessive discounts by mistake - etc.
Closer to the Intelligence side, Helpless initiatives may be undertaken for promotional/marketing reasons (such as entering a manufacturing contract with a special discount in order to capture a new client).

- STUPID initiatives happen systematically and regularly both at Individual or Corporate level (in both "Traditional" and Lean Organisations).
Such initiatives may go un-recognised and un-detected (most likely), and only few of them - in hindsight - will surface and reveal their detrimental impact. All features of Stupidity apply.
Stupid initiatives generate WASTE, VALUE-LOSS or both: internally and/or externally - immediately or with a delay - with consequences that are generally overlooked, under-estimated or ignored...

An interesting, shocking, initial observation is that all main items of WASTE - as well Illustrated by Lean Management - are somehow caused, directly or indirectly, by sheer Stupidity and/or by its Allies.

In traditional Organisations, WASTE exists, persists and proliferates because:

  • IGNORANCE: of Lean Methods and their potential
  • Management ARROGANCE: "...we know too well how things must be organised..."
  • HABIT: "...we've been doing so well, so long in this way..."
  • FEAR: of changing, of trying and testing new avenues, of making mistakes...
  • Desperate need to CONTROL (a by-product of POWER...)

In traditional Organisations, VALUE-LOSS materialises as:

  • MISSED PROFITS: consequent to poor overall processing Productivity
  • Missed OPPORTUNITIES: consequent to lack of magnification of VALUE to Customers - and of unexploited internal, Human potential
  • Missed COMPETIVENESS: consequent to inadequate, output VALUE components (Time, Quality, Service...)
  • Excessive COSTS: associated with Bureaucracy - Control - mis-management - paleo-management - elephant-type structure - hastily decisions in boom times - hastily, wrong decisions in recessive times...

What is this, if not pure Stupidity, with all its Allies and Relatives in action?

Unfortunately, Organisations "leaner" than "traditional" ones or gradually moving to leaner status are not exempt from the plague of Stupidity.

To begin with, phenomena of WASTE and VALUE-LOSS are still present, even if some strong actions to reduce / eliminate them are being undertaken.
BUT: this is not stupid at all! A very substantial difference is that, in a Leaner Organisation, Waste and Value-Loss awareness is much greater than in a traditional Organisation. Moreover, Intelligent, Lean initiatives are being taken!

However, while advancing in the Lean road, novel, never-seen-before items of Stupidity may surface!
- RESISTANCE and RELUCTANCE to begin with! The "old" DNA is still alive and kicking, and may show up at the most unlikely and inconvenient time up with a novel, unseen before, disguise (especially with regard to "traditional" managers).

- Even the most convinced and lean-fanatic Top Managers are not exempt from stupid initiatives during a Lean Transition!

- Likewise, key employees will reveal their "never-seen-before" Resistance/Reluctance - in spite of their fully declared love for Lean practices - by coming up with the entire dictionary of excuses ("I forgot" - "I had no time" - "I was too busy" - "I thought it was not up to me" - "I got no instruction in this regard" - etc.).

Therefore, the Leaner Organisation now faces a new challenge. Besides fighting hard to introduce Lean methods, a new, major task is assigned to top Lean drivers: "identify the Stupid Persons in the Organisation and take actions to counterbalance or mitigate their destructive force".

While assuming that in an Organisation going Lean there are remarkable clusters of built-up Intelligence (active and involved Lean Project Teams) it is a fact that a fraction "sigma" of Stupid Persons still exists and acts within the Organisation, ready to strike at the most unpredictable time.


  • Identify STUPID BANDITS, if any, and get rid of them as fast as possible
  • INTELLIGENT BANDITS, with overtones of Intelligence, may instead be very valid Personnel, especially in Sales, Marketing, PR, etc.
  • Identify HELPLESS People and classify them. H1 persons (closer to the Intelligent quadrant) can be made grow through dedicated training. H2 persons (closer to the Stupid quadrant) constitute a big question mark...
  • Identify STUPID Persons (by observing their behaviour with great attention) - classify them. Most probably, in a modern, Leaner Organisation, there will be neither Super-Stupid Persons nor predominant-Stupid Persons. There will rather be some Helpless Persons with overtones of Stupidity, as well as many Intelligent People with "frequent" or "substantial" overflows of Stupidity.
    The issue is how "frequent" (recurring) and how "substantial" (intensity) are these episodes of Stupidity!
  • Pay great attention to any Bureaucrat's approach! Most probably, behind a Bureaucrat, there is an overtone of Stupidity (acting frequently and systematically).
  • Pay great attention to any excessive or intensive CONTROL-driven approach. What sits behind it is probably a Paleo-Manager mentality (maybe associated with some tendency to Bureaucracy and/or - even worse - some inclination to POWER or Autocracy): anyhow, some Stupidity is present.
  • Pay great attention to "failures" of any sort, analysing them systematically with the 5Why tool. High % of similar failures are probably caused by some stupid action hidden behind complex processes.
  • Investigate closely any recurring episodes of "missed deadlines" (the classic excuse being "because too busy"). Here there is a signal of non-intelligence (since skipping deadlines is originated by inadequate planning). So, if it is not "sabotage", it's stupidity in action.
  • A Lean Project Team represents an "INTELLIGENCE-CLUSTER". Build up as many of them as possible (Teams and sub- Teams) and request performance in the form of Lean Improvements. Built-up Intelligence is the best antidote to Stupidity!
  • Likewise, stimulate Creative Thinking company-wide. Stir-up troubles, intentionally if necessary, and provoke thinking. People busy thinking creatively have less time to fall into Stupidity traps!
  • Pay great attention to "non-listeners" or "excessive-talkers": because behind it...
  • Stimulate Curiosity, and create a "Learning" environment. Observe: who falls behind?
  • Cut "Complexity" to its roots and beneath, and request exasperate "Simplicity" at all times. Observe: who falls behind?
  • INTELLIGENT MISTAKES MANAGEMENT!! The Lean road is full of mistakes, of trial-and-error initiatives, and possibly of some failed Pilot Projects. THIS MAY HAPPEN… What is vital, is to learn from Mistakes of any sort and magnitude. Actually, making some deliberate mistake through a "CONTROLLED-RISK" approach (Controlled Risk = the risk associated with the consequences of a failure cannot be greater than...) is a LEAN behaviour!
  • Be extremely careful when entering into agreements or anyhow associating with Stupid Employees of your Clients or your Suppliers.
    Traditional Organisations may have a massive amount of Stupid Employees (according to the STUPIDITY OF POWER Corollaries): dealing with them may prove nefarious!
  • Under this angle of view, it might be wise to conduct a "stupidology analysis" of key representatives of your service providers, clients, suppliers, associates, etc.
  • Last (actually: first), if you are a Manager or a Top Manager, please do some regular "stupidology analysis" of your own actions, decisions and initiatives. Knowing your own stupid behaviours may represent the starting point of fighting more effectively any form of Stupidity within your Organisation…



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Companies Changing Hands - The Lean Approach

by Carlo Scodanibbio for Malta

Private Enterprises do change hands.
While a "traditional" approach by the Organisation taking-over the enterprise considers mainly financial/economical, commercial and operational aspects, the Lean approach takes into great consideration also the impact on Human Resources affairs brought up by the change.

What happens when a New Management inherits employees used, most likely, to a different style and set to a "previous" old way of doing things?
Generally, when an enterprise is sold to new owners or merges with another, controlling Organisation, the crucial factors that come under scrutiny are the financial/economic ones - and possibly some others. The "people" issue is most often neglected, overlooked and underestimated.
The people issue requires a deeper analysis.

In our short industrial history we can identify 4 main models of industrial enterprises in respect of their overall Organisational Strategy and associated Structure. To make a simple scheme let's consider two main parameters:

1 - INTERNAL ORGANISATION: historically, we can identify two main (extreme) approaches:
- product/organisation oriented
[The main attention is to the product (or service) - The Organisation is seen as a tool to produce products or services - The Organisation is well structured (functions, duties, responsibilities, authorities) - Activities are rational, logic, systematic, standardised - Bureaucracy is alive and kicking - People Motivation: medium/low]
- process/people oriented
[The main attention is to the business process and to people (groups) managing/involved in processes - The Organisation is more flexible, with an "entrepreneurial" type of management and activities - This is a Group-oriented, "Learning Organisation" - There is little bureaucracy or none at all - People Motivation: high]

2 - RELATIONSHIP WITH MARKET: historically, we can identify two main (extreme) approaches:
- operations oriented
[The Market is seen in the background, or anyhow "far" - Reactions to Market's changes consist, mainly, of change/improvement of "technology" and/or change/improvement of product/s - The strength is "Know-how" (Product - Technology)]
- market oriented
[The Market is "in" the Enterprise - The Market and Market changes are detected and analysed - The tendency is to define Market's needs and localise opportunities - The strength is in the ability to reap & manage opportunities]

By combining the 4 main "approaches" we find the 4 main industrial models:

Organisational Strategies - the 4 Industrial Models

This is the industrial Model typical of the years 50s - 60s in the West.
It is product/organisation oriented and operations oriented. It's the paleo-enterprise (old-world enterprise). Its doors are closed. They are opened only to deliver product to the market. As demand exceeds supply, the Market is unsaturated, static, well predictable.
The Model is called FUNCTIONAL-TAYLORISTIC because is based on functions and on Taylor's Scientific Organisational System (Planning - Control - Rules).
It's called PRODUCT-OUT because the main concern of this model of enterprise is to produce enough product to satisfy demand.

This is the industrial Model typical of the years 60s - 70s in the West.
It is product/organisation oriented but market oriented. It's the "Marketing" Enterprise, that starts seeing a "saturated" Market and changes in the Market. Consequently it opens its door and goes out for a walk in the Market, to see what is happening, and decide accordingly.
For this very reason this Model is called MARKETING-ORIENTED. It's called also PRODUCT-IN because it's now the feed-back from the Market analysis (Market Surveys - Advertising/Promotion) that contributes to decide about what to offer to the Market.

This is the Industrial Model typical of the late 70s - 80s in the East (Japan).
It is operations oriented and process/people oriented. This is the Improving Enterprise, the enterprise that understands the primary importance of processes and people in processes.
However, its relationship with the market is still old-style. The main attention is to the operations that produce a competitive product, competitive in terms of quality, cost and time-to-market.
The market is there, a bit "blurred" in the background. The market exists, created by the (western) competition. The target is to beat the competition through "superior" operations.
This is the Just-in-Time era, with a strong support by TPM - Total Productive Maintenance, TQM - Total Quality Management, QFD - Quality Function Deployment and TEI - Total Employee Involvement.
The Model is called INVOLVEMENT - PROCESS-IMPROVEMENT because it is through high involvement of people that processes (mainly operational processes) are improved, kaizen style.

This is the world-class, Lean Industrial Model, structured mainly in the West and diffused world-wide, starting from the early 90s.
It is market oriented and process/people oriented. This is the world-class Enterprise, the Lean enterprise that lets "pull" all its processes by the Market, and perfects them to high levels of value generation. Its approach to the Market is "new-world" as it is its approach to process management.
This is the Lean Management and VAM - Value Adding Management era, where VAM is deployed and applied via lean approaches. Lean Manufacturing, Lean Project Management and Process Engineering are typical of this era.
The Model is called VENTURE because of the "entrepreneurial" style of process management. It is called MARKET-IN because the enterprise's doors are fully open and in direct communication with the Market, that literally "invades" the enterprise.

As already said, the above classification is based on "extremes". Thus, the 4 "ideal" models as described would fall on the respective outer corners of the grid.

Organisational Strategies - the 4 Industrial Models

In reality, enterprises are living "organism", in a delicate equilibrium of people, methods, technology, culture, policies...
An enterprise willing to understand to which "Organisational" Model it belongs should consider many functional/operational areas and "scan" and assess all of them. Suitable questionnaires are available for the purpose.
At least the following "areas" should be considered:

Organisational Strategies - real structures By considering, for each area, several "features" typical of the 4 "extreme" Models - and by comparison and simple interpolation - an overall "score" representative of each area is obtained and marked on the grid.

The resulting "shape" is just an indication of where an enterprise is positioned with regard to its Organisational Strategies, in respect of the 4 ideal, "extreme" Industrial Models.
So, it has a limited value. But the thinking process associated with the exercise is extremely valuable.
By carrying out the "scanning" assignment, enterprise's key people start visualising where they are, where they sit, ad what are the implications of the resulting "positioning".

Many output "shapes" are possible. Generally, the resulting shape is a mixture of 2 and even 3 Models, a hybrid Organisational situation.

Organisational Strategies - real structures Only in rare instances one finds in an enterprise very atypical organisational features (like, for instance, features of all 4 extreme Models, scattered over the 4 quadrants of the grid, and close to the outer corners). In such cases, either the scanning exercise has been mis-interpreted, or the enterprise belongs to a very rare species....

In the majority of cases, "traditional" enterprises show features of Model B, with a feature or two of Model C and possibly a feature or two of Model A. But the overall shape is rather "central" in the grid.

Organisational Strategies - real structures        Organisational Strategies - real structures        Organisational Strategies - real structures

Only few "traditional" enterprises show Model-specific features. Their Organisational Strategies "shape" is well positioned within a quadrant:

Organisational Strategies - real structures        Organisational Strategies - real structures

"World-class", Lean enterprises (few, unfortunately) show well "condensed" shapes, positioned in quadrant 4, or 3 and 4:

Organisational Strategies - real structures        Organisational Strategies - real structures

With the proviso that a "scanning" exercise of this nature can only supply an "indication", the tool is still very useful.
Enterprises still "traditional" in their Organisational Structure can have a good "thumb-suck" indication of the "gap" to be filled to jump to quadrant 4 (possibly "via" quadrant 3.....).
Besides, enterprises can understand in a simple/easy way how "hybrid" is their present status. A very hybrid situation is not potentially fit to make a jump to upper levels. A rather hybrid situation can instead be changed into a more homogeneous shape, before making jumping exercises.

Finally, the "scanning" tool can be perfected. By increasing the number of areas under scrutiny and the zoom-in level, this tool can produce very valid and rational results.


Knowing where an enterprise is situated with its Organisational Structure can be extremely helpful in defining/perfecting also the enterprise's Human Resources Management strategy, core point in any Performance Management and Improvement initiative.
We shall see (a bit further down) that knowing the Organisational Strategies and Structure of an existing enterprise is vital when it changes hands.

Having defined the main Industrial Models in respect of their Organisational Strategies, it's easy to allocate to the various quadrants of the grid the "most fit Human Resource Strategy under the circumstances".

For instance, for an enterprise falling in the Model A quadrant (FUNCTIONAL-TAYLORISTIC - PRODUCT-OUT), it's easy to conclude the most fit HR strategy is based on a "Paleo" (old) style of HR Management (autocratic, paternalistic, bureaucratic - based on strictest control......):

Organisational Strategies and HR Management Strategies - Paleo Management

Actually, the area of deployment for this style of HR Management spreads a bit also over quadrant B.

Considering the main HR Management disciplines in industrial history, it's rather easy to identify the areas of suitability of MBO - Management by Objectives:

Organisational Strategies and HR Management Strategies - Management by Objectives

and of the so-called MBOII - Management by Objectives II:

Organisational Strategies and HR Management Strategies - Management by Objectives II

TEI - Total Employee Involvement (the leading HR Management Strategy for high-calibre enterprises moving gradually to Lean status) is well fit and adequate for enterprises of the right zone of the Organisational Strategies grid:

Organisational Strategies and HR Management Strategies - Total Employee Involvement

Having made the above considerations, it's easy to conclude that, for every (theoretical and real) Industrial Model there is a HR Management Strategy optimal and most fit under the circumstances.

To begin with, all "traditional" enterprises should assess the validity of their current HR Management Strategy in relation to their overall Organisational Strategies, and ensure there are no major hybrid situations, or conflicts, or clashes...
This will assure, at least, a better overall functional effectiveness.

And "traditional" enterprises willing to move into the world-class, lean area (right quadrants of the grid), can do so after putting, if necessary, their "house" in order.
Putting things in order means : removing "braking forces" - "re-thinking" the enterprise culture, values, principles, objectives... - means reviewing the enterprise's approach to market and clients - means rationalising the overall product/service development area - and means streamlining the enterprise's processes - and means reviewing people position in those processes - means educating, training, and forming people - means making step-by-step experimental tests and launching pilot, lean projects - means instilling gradually new culture, new spirit and showing to people new horizons...

In this way, the shift to the right zone on the Organisational Strategies grid is gradual, continuous, regular, integrated, painless... but it takes time!
Cultural changes are the main limiting factor. Time is necessary. The shift is a "medium" term project (2 to 5 years, depending on circumstances).
But Total Employee Involvement can, in this way, be introduced and made take-off.

How painless is the process?
It might be rather painful for "strong-Model-A" enterprises. It is somewhat painful for Model-B enterprises. And it is less and less painful for "central-zone" enterprises.

In all cases, the road to world-class, lean status will leave behind a few casualties. Not everybody will be able to adapt to this kind of change...

Having illustrated the importance of understanding own Organisational Strategy/Structure (which is generally very vague in "traditional" enterprises), let's make some considerations.

Every enterprise has a HR strategy, even if not well defined, structured and formalised.      QUESTIONS:
- Is it in-line with the overall Organisational & Operational Strategy (Effectiveness)?
- Or only partially coherent (Partial Effectiveness)?
- Or, is it clashing (Ineffectiveness)?
- Does such strategy show continuity?
- Or, is it irregular - scattered - "jumping to extremes"?
- Is such strategy "global" (company-wide)?
- Or is it fragmented "per department" (hybrid situation)?

"...the worst thing that could possibly happen to an enterprise and its employees is the adoption of an ineffective HR Management strategy......"

Unfortunately, this worst scenario happens most often in many "traditional" enterprises.

Episodes of Paleo-Management may happen in practically all enterprises, especially when things get tough and times are turbulent: that's when Top Management becomes very autocratic (indiscriminate cost-cutting exercises - retrenchments - 4-days week - and the like...)

MBO and MBOII are still alive and kicking also in enterprises that proclaim themselves world-class, lean. They are not!

When an enterprise is structured "per departments", each Head of Department most probably and most often adopts a HR Management Strategy best fit to his/her past experience, style and behaviour. With the net conclusion that people are managed "per department" - with consequences such as: people making comparisons and wishing to be transferred to another department where management is softer, or more democratic, or tolerant, or...

And if we give the title "progressive" to a manager or employee with right-quadrants culture and behaviours, and the title "traditional" to a manager or employee with left-quadrants culture and behaviours, how many small and big "clashes" (mis-understandings - mis-alignment - arguments - and the like) take place every day in any enterprise? Every progressive/traditional or traditional/progressive manager/collaborator relationship may give origin to some form of "clash".

We can illustrate schematically the above.
Example 1.
Relationship between "traditional", old-style Manager and "progressive", new-world employee.

Organisational Strategies and HR Management Strategies - Mismatch

This relationship can only give origin to frictions, mis-understandings, mis-alignment, arguments and even strong clashes.
Why? Because there is a "mis-match" between behaviours, approaches and expectations - as well as perceptions - of Manager and Collaborator.
Can a situation like the one described above actually materialise in reality?
Definitely yes, and more often than one thinks.
Just imagine a rather progressive, high-tech enterprise, where the mottos are: team-work, empowerment, attention to process and process' output (results), self-driven and self-motivated employees, etc.
Let's say that this enterprise, in order to expand in a certain high-tech fields, recruits a new R&D Manager with long, specialised experience as required by the nature of the job. It is well likely that the new R&D Manager will be a "mature" person, with first-class technical qualifications and experience, and with his own managerial "style", built-up over the years.
Once appointed, the new R&D Manager will definitely attempt to enforce his "traditional" management style (bureaucracy - control - job descriptions - reports - procedures - discipline - time sheets - etc.) onto rather "progressive" employees as described above.
And what will the net conclusion be? Clashes.
Most probably, the majority of his employees will start looking around for another job...

And let's see the opposite situation.
Example 2.
Relationship between "progressive", new-world Manager and "traditional", old-style employee.

Organisational Strategies and HR Management Strategies - Mismatch

Also this situation is very likely to generate "clashes" as above, but of different nature.
And also this situation can well materialise in reality.
In an enterprise of very old style - never mind to which industrial sector it belongs - a new "progressive" manager is recruited (according to the principle of bringing new "lymph" into the system). Generally the person is "young", with some experience (of progressive nature), dynamic, etc. His/her duty is to re-organise or re-structure a department or an area of the enterprise previously not well run: in fact, employees are de-motivated, possibly also a bit lazy, and used to produce results only under strict control and "strong" old-management drive (read: yelling, screaming, imposing, controlling, strict supervision, etc.).
If the new manager tries (as it seems logical) to deploy his/her "progressive" style, another type of mis-match will materialise. Just imagine this young manager addressing his/her collaborators with an approach such as "...from now on we shall discuss our department strategies and organisation together, in team..."     and     "...I shall hear everybody's opinion before making any decision..."       and        "...I want you people to grow, to develop yourself, to learn new methodologies and to improve this department's processes and outputs, for which you will accountable because I will empower you to self-drive yourselves, so that you will feel also more job-satisfied...".
Can you visualise what happens? Employees will look at the new manager like if he/she were a big gorilla just landed from Jupiter...   And some ideas will buzz around in many employees' minds "...I always thought managers were a bit useless and a pain in the neck, but could never believe they can also be idiots... will fool around with this guy...".

The 2 examples above are rather extreme - on purpose. But in between extreme situations there are 1000s of hybrid, mis-match situations taking place on a daily basis in enterprises world-wide...


Now and only now we can easily analyse what happens in an enterprise when it changes hands.

This phenomenon, well diffused in industry, can be considered like "an industrial DNA transplant". Yes, a transplant, because the core lymph of an enterprise (people - and management/employees relationship) now gets deeply affected.
What can the transplant's outcome be? Anything: from smooth acceptance to total reject.

Let's analyse a few examples.

Companies changing hands - HR match or mismatch Example 1. Existing Employees (EE): "progressive" (new-world - right quadrants in the grid). New Management (NM): also "progressive". This is a rather rare situation in reality.
This situation gives origin to a smooth (or considerably smooth), generally painless "integration: New Management and Existing Employees are tuned to (almost) the same frequency, talk the same language. They can adjust to each other rather easily. The DNA transplant has high chances of being successful, with fast settlement.

Companies changing hands - HR match or mismatch Example 2. Existing Employees: "very traditional" (old-world - left quadrants in the grid). New Management: also "very traditional". This is also an uncommon situation in reality.
This situation not necessarily gives origin to a smooth integration. There are many "very traditional" behaviours, all falling under the Paleo-Management approach and style: from extremely autocratic (New Management) to strongly-control-oriented (New Management) - from lazy, highly unionised (Existing Employees) to disciplined, but pay-me-for-what-I-do-and don't-bother-me (Existing Employees).
Therefore, integration may be smooth or not, depending upon the degree of "traditionalism" (New Management and Existing Employees).

Companies changing hands - HR match or mismatch Example 3. Existing Employees: "mid-way" (old-world but somehow modernised - mid area in the grid). New Management: also "mid-way". This is a rather common situation in reality.
Many "integration" outcomes are possible, generally with a stabilising effect in time: existing employees will most probably adapt (over time) to new management style, with some or even considerable efforts required from New Management.
The key factor is TIME: in time, settlement is possible, but with efforts, compromising, negotiations, and the like.

Companies changing hands - HR match or mismatch Example 4. Existing Employees: "traditional or mid-way" (old-world or somehow modernised - left or mid area in the grid). New Management: "progressive" (new-world - right quadrants in the grid).
This is becoming a frequently encountered situation in today's world. Progressive Companies willing to expand/diversify acquire control of a "traditional" or "mid-way" "promising" enterprise (with unexploited potential) with the purpose of transforming it into a rather modern, progressive and lucrative entity.

In this situation, outcomes vary considerably. The challenge for New Management is to shift Employees culture and working methods to leaner status which, under the best of circumstances, is a medium-term project (2-5 years).
The possibilities of failures are very high if Employees' industrial DNA is very old and/or in case of heavy unionisation.
Heavy clashes and even conflicts are possible.

Companies changing hands - HR match or mismatch Example 5. Existing Employees (EE): "progressive" (new-world - right quadrants in the grid). New Management: "very traditional" (Paleo), or a bit more modern (MBO-based or MBOII based).
Also this situation is very likely to happen in real world: successful, modern, lean enterprises (with right-quadrants culture and methods) are purchased by a larger, "traditional" corporation. The reasons are of various nature: temporary financial difficulties for a lean but small/medium enterprise (so the controlling shares are sold to a financial corporation) - or, simply, a small/medium size successful enterprise is considered a good investment by a large corporation... Etc.

Outcomes: rather gloomy. New Management simply won't even consider embracing Lean approaches: Paleo Management will result in a disaster - MBO will just not work on Existing Employees - nor will MBOII practices be easily accepted. Most Existing Employees will simply start looking for new job.

Many more examples could be made. However, it should be clear that:
      - What I called a DNA Transplant is actually a reality when companies change hands.
      - Many outcomes are possible depending on match or mis-match between NM operational philosophy and EE culture and customs.
      - Unless NM scrutinise in detail the Organisational Structure of the enterprise under consideration before the actual take-over and study a suitable strategy to make the transplant as smooth as possible, it is very likely that some or total failure will show-up sooner or later.

      - In every mis-match situation (the heavier the mis-match the worse the outcome) Waste in all its forms may materialise and increase to high proportions. The main items of waste being: personnel rotation (employees resigning) with consequential costs to recruit new personnel (more suited to NM style) - industrial relations conflicts (always extremely costly and leaving behind a swarm of other items of waste) - operational processing waste (consequent to reduced or anyhow inadequate productivity, poor output quality, longer lead times to process, plus all classic 7 wastes or Muda well identified by Japanese) - management waste (associated with more complexity, more control, more bureaucracy, more procedures, more paperwork, unproductive meetings, revised job descriptions, extra policies...) - commercial waste (loss of clients consequent to decreased enterprise performance; loss of image; loss of reputation; lost opportunities...) - and last but not least, waste of talents (or using existing employees to the best of their qualifications and skills and not to the best of their abilities and possibly-hidden talents).
      - The only "match" situation likely to produce good, smooth outcomes with least waste is when there is a match between progressive New Management and progressive Existing Employees (Example 1 above).
In all other cases, waste consequential to changing hands can be of considerable, high or catastrophic level.
      - Is it always possible to "bring existing employees on board" ("traditional" way of facing the problems associated to the take over)?
Unfortunately, the answer is NO. Or, at least is NO in the short-medium term, except in the case illustrated in Example 1 above.
In some cases (see Examples 2 and 3 above), it is possible: but only in the medium term, and with considerable efforts, negotiations and compromising - and still with remarkable levels of associated Waste. Definitely, in cases such as those illustrated in Examples 4 & 5 above, it's almost impossible to bring existing employees on board.
      - What suggestions can be given to NM and EE to try to co-operate for a smooth transition? Not many, except in the most favourable case illustrated in Example 1 above. It's not a matter of tips, suggestions, or management theories and disciplines. Here we are talking of cultural issues. EE expectations and NM expectations may be aligned onto different planets! An industrial DNA mis-match or poor-match cannot be tackled with "traditional" management or leadership techniques and the like. They will be practically useless, and likely to introduce further waste!

An Enterprise changing hands is a very delicate issue.
While a "traditional" approach by the Organisation taking-over the enterprise considers mainly financial/economical, commercial and operational aspects, the Lean approach takes into great consideration also the impact on Human Resources affairs brought up by the change.
The target being: smooth, painless integration of Existing Employees and New Management - with continued and enhanced Operational Performance - while generating as minimal as possible Waste during and after the take-over.

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Economic Crisis, Recession and Lean Thinking

by Carlo Scodanibbio for The Times of Malta

Recession. Crisis. Financial turmoil. Doom. Gloom.
Unemployment. Stagnation. Property Market down. Stock Market disaster. Worries. Worries.
The bad news is still occupying newspaper headlines and being the main topic of television commentaries.
Confidence indices are at the lowest levels. Car Industry is in deepest troubles. Politicians are busier than ever at calming down masses.
The list could be endless.

Surprising? Astonishing? Unexpected?
I don't believe that. I am not surprised at all. I am not astonished at all.
Unexpected? Sooner or later the "bubble" had to burst.
Worried? Yes, I am worried. Not by the crisis itself. Not by the bad news.
I am worried by analysis made every second day by financial gurus and finance ministers - and by the reactions of governments, public bodies and semi-public institutions (such as Federations of Industry, Employers Federations, Unions, and the like). Those are really worrying.

Because the real problem is not being addressed. Because I hear no one saying "...we deserve all this rubbish!". Because no one seems to be learning from what happens. Because reactions are always the same, the same mince meat we have been served in our hamburgers for decades: "we need to create employment" - "we must help troubled financial institutions" - "we must save the car industry" - "we must resuscitate economies by lowering interest rates" - and so on, and so on...

BUT: have you heard anyone saying "...maybe it's time we start deploying lean principles at all levels of the economy"?    Have you heard anyone saying "If we just had cut waste in industry and public affairs by only 5% a year for the past 10 years there would be no crisis and no recession now "?    Have you heard anyone saying "...we have forgotten completely what generating real value and creating real wealth means - that's why we are in such deep troubles.... maybe, instead of making things more complex by regulating all that needs to be regulated, it's time to start simplifying complexity and land again on solid earth, remembering that our primary target is to produce value and wealth, real wealth, not fake wealth - so, let's roll up our sleeves, let's start again from scratch, and let's start, finally, to 'work'"???

I have heard no one talking along these lines. Have you?
Let's make a few considerations.
# About work, value and wealth. Do this simple experiment. Ask some of (or all) the persons you know in industry, or commerce, or in the public sector - never mind at what level, higher or lower makes no difference - this simple question: "when you are going to work in the morning, does it happen to you to think about what you are going to do today to produce value and generate wealth?"      99,9% of the interviewed will stare at you as you were a big gorilla just landed from Jupiter... "...value? what value? what wealth? ...I am a machine operator (a welder, a mason, a supervisor, a store employee, a truck driver, a teller, a project manager.....) - all I have to do is to operate the machine by pushing its button..... (I weld, I lay bricks or stone, I supervise my team.....) - my job has got nothing to do with value or wealth - that's the job of the Financial Manager (the MD, the Banks, Government, Politicians, God.....).
Strange, isn't it? Most people around there do not correlate working with creating value and wealth. But that's exactly what work is supposed to produce, isn't it? Something has gone very funny in industry, if this basic concept is not well diffused at all levels, world-wide. Even worse, most people believe that working is equal to doing my job. The confusion between work and job seems astronomical.

# Relationship between waste and wealth. Waste does not contribute to real wealth, does it?
How much waste is there in this entire world? When I talk of waste, I refer to wasted manpower, wasted materials, wasted energy, wasted plant & machinery, wasted and unproductive management, wasted resources, wasted time, wasted talents and wasted opportunities - and bureaucracy (still there!) - and more.
If lean gurus are right (I am sure they are even too optimistic), waste amounts to about 50% of the overall economy worth.   50%!   Fifty percent!   It could be more than that. How many zillions of dollars is that? Many - too many. Surely, infinitely more than all billions of dollars "burnt" in stock markets since the beginning of the "crisis".
How would we be today if, as I was saying earlier, we would have cut that waste on a regular basis - say at a conservative rate of 5% per year for the past 10 years?
We would be infinitely "wealthier".

# And let's consider the tragic way in which the cult of waste has been institutionalised and even brought to idolatry levels: through the VAT (Value Added Tax) "system", so popular in most Countries around the world.
The principle is that all revenues generated in "value-adding" industrial and commercial business activities should somehow be "shared" with the local Revenue Services Authority, so that governments can obtain additional funding for their spending, in a manner proportionate to the value that has been added.
The inadequacy is in the name: Value Added Tax.
Since most industrial/commercial activities are primarily waste, as opposed to value-adding or value-added, the net conclusion is that the consumer (finally it is always the consumer who pays) pays a tax on wasteful activities, which do not add any value to anybody nor generate any wealth.
Isn't this tragic? Or is it comic? Shouldn't this tax be called WRT (Waste Reshuffling Tax) instead of VAT?
Does this VAT concept contribute in any way to the primary target of real wealth generation?
No, it does not. To the contrary, it perpetuates and reinforces a waste-cultivating mentality well spread world-wide.
What kind of money are we talking of, with regard to the entity of collected VAT? Zillions.
50% (at least) of which is fake revenue, fake value, and total deception.....

# And let's consider real wealth and fake wealth.
I am referring not only to the fake financial wealth that has made the bubble explode. That's the top of the tops of trick and forgery.......
I am referring to any human, industrial, commercial, governmental and organisational activity that does not produce real wealth.
How much fake wealth is around there? Zillions - again.
Building and then running a factory that produces (hopefully, in a lean fashion) canned tomatoes or energy-saving bulbs (or pasta, or galvanised iron sheets, or recyclable packaging products.....) should indeed generate real wealth.
Building and then running a factory that produces (in whichever fashion) arms and ammunitions or toxic/polluting detergents or health-hazardous cosmetics or..... : does it produce real wealth?
Building a bridge or a road that contributes to make traffic flow better should contribute to generate wealth (in terms of overall motorists' time saved by the new road works).
But building a bridge and not completing it (for whatever reason - there are many examples around) : does it contribute to produce wealth? And breaking roads and pavements again, and again, and again, year after year, to fix underground problems in buried pipelines or ducts : does it contribute to produce wealth?
And building a dam that most likely will ruin an entire echo-system : will it contribute to produce real wealth?
And enforcing a "toll-gate" road-fee collection system that costs a fortune to build - and disrupts the flow of traffic (as motorist have to queue to pay fees, while burning precious petrol) : does it create real wealth?
And employing personnel for the sake of creating employment : will it contribute to produce real wealth?
Examples: inflating a public structure with redundant or un-necessary ministries, departments, commissions, bodies, institutes, committees, and the like.....    and staffing them with personnel (possibly politically- or electorally-motivated) busy most of their time at reshuffling waste, or making simple things complex, or doing absolutely nothing...    or inserting in industry, commerce, and business practices personnel without any basic business and customer-care education and without training them...     or employing "parking marshals" to collect parking fees - each one to cover 50 m. of street - instead of any other parking-fees collecting method....     or allowing personnel to make mistakes (even silly mistakes) because of a fake empowerment principle not associated with assumption of responsibilities and accountability....     or....     (the list could carry on forever) : will this contribute to produce real wealth?
Or creating a system that not only supports, but even enforces "single-specialised-skill" for any trade (painter, mason, carpenter, clerk, etc) - as it happens nowadays in South Africa and many developing Countries, and not only - as opposed to developing multi-skill/multi-function personnel (preached by Lean Thinking) : does it contribute to generate real wealth?     Or, rather, does it perpetuate the very dated "division of labour" principles, so prone to creation of waste?
And perpetuating, decade after decade, an educational system that does not cater enough (or at all) for making students think as opposed to learn by heart (formulas, dates, concepts....) : does it contribute to produce real wealth?
This list could carry on forever.

In a nutshell: we have 2 major problems in this troubled world of ours:
# The one is neglecting or totally ignoring the impact of waste on any attempt to generate wealth
# The other is camouflaged: believing of creating wealth, whilst only creating fake wealth

These 2 problems are strictly interlinked and present a common denominator: an inadequate type of thinking.

Thinking is the crucial issue. Something has gone wrong - very wrong - during one century (the last century) of industrialisation. We have somehow lost 2 core concepts: the concept of value and the concept of real wealth, with the net conclusion that our very basic existential principles have been "deviated". Into roads that lead nowhere.
So, now we wonder what is causing this recession, this financial crisis, this worrying turmoil.
It's so simple: we have forgotten basic, core values and principles.
The principles practiced by honest mid-20th-century craftsmen in their workshop while 'working', generating wealth, and being happy and satisfied with their hard efforts of the day - replaced by principles of mass production, mass thinking, mass answering (call centres!), mass financing, mass building, mass polluting, mass cheating and mass exploiting.

Are we happy with this? I am not.
I believe that if we practice a bit more intensively "lean", 2nd Industrial Revolution principles on a world-wide basis, we won't have to worry anymore for this kind of "crisis" to happen.
Simply, there won't be any space for them.

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Lean Thinking: what is it?

by Carlo Scodanibbio

There is a problem in industry: we have gone into the 21st century with enterprises, organisations and business structures conceived and designed in the 18th and 19th centuries to perform well in the 20th...
The principles that gave origin to industry were conceived back in 1776, when the British economist Adam Smith published his famous book entitled "An Inquiry into the Nature and Causes of the Wealth of Nations". Considering that in those times there was practically no industry, some very excellent principles, conceived by a real genius, were laid out. Smith visualised that the future wealth of the world would be founded and based on industry. Smith went also a step further, engineering practical principles for the future would-be industry, including his famous principle of "Division of Labour" (the whole job to be sub-divided into a number of elementary tasks, each assigned to a dedicated, single-skill worker).
Those principles, that originated the "first industrial revolution", were actually deployed and applied industrially only more than 100 years later, when the automotive industry was born. Introduced by Henry Ford at the beginning of the last century with the first industrial assembly chain, and then perfected in the 30's by Sloan, general manager of General Motors, Smith's principles proved to be operationally valid and effective: productivity was well acceptable, if not excellent.
Sloan, actually, went one step further: since the principle of labour division was working so well in the shop floor, why not applying the same concept to Management? Functions (administrative, financial, commercial, production, maintenance…..) and Roles were thus invented, resulting in a number of different managers each taking charge of a different functional area of the organisation.

Frederick W. Taylor, one of the first industrial consultant in history, perfected even further Smith's and Sloan's principles, developing his so-called "Scientific System" already in 1911. Like Smith and Sloan, Taylor focused acutely on "efficiency", their common driving force. Taylor's newly introduced principles were:
1) levels of management (so that each manager would take care of a controllable number of subordinates
2) clear definition of roles, responsibilities and authorities (so that everyone would know what to do, what to be accountable for, and what would fall under his area of competence and authority)
3) strong accent on "planning" and "control" (so that subordinates' jobs, at each hierarchical level, would be planned properly - and then monitored by their respective supervisors).
In a nutshell, according to Taylor, for an organisation to function efficiently it should be "structured" hierarchically and "organised" like a Swiss clock: every detail should be taken care of - every little gear should turn properly, accurately and efficiently. Terms such as "Role Description" and "Job Description" were invented at that time.

Taylor took into due consideration also another principle initially introduced by the US Railways already from 1860 (the time of the far West...). Since railways were single-track, accidents (trains collisions) had to be prevented. The solution was simple: rules - there had to be rules. So that engine drivers would know what to do and what-to-do-not, respecting rules (signals, timetables….). Obviously, in a rules-governed environment, there must be someone who thinks of and makes the rules, and someone else to obey and comply with the same. That's actually how "bureaucracy" was initiated.

This "Functional-Tayloristic" industrial model had its glorious times in the 1950's - 1960's. Yesterday's industry was born.

But also today's industry was born.
Yes, because still today most enterprises, business organisations and governmental structures are built according to the first industrial revolution principles. Maybe with some changes here and there - but not many.
The alert reader will now ask: "so, what is wrong with that"? Well, not much, except for the fact that these principles are rather "dated".
Because the world changed. When? No-one knows. Someone says 12 years ago, someone else says 15-18 years ago... But that is not so important (the world, actually, has always been changing). What is important instead is the degree of acceleration of the change: faster, and faster, and faster, What has changed? Everything. From any angle of view: social, political, economical, financial, commercial, technological, informatical…. The main differences between Smith's and Sloan's and Taylor's world and today's world are stability and predictability. Smith and Taylor lived in a rather stable (almost static) and well predictable world. We don't. What was true and certain yesterday is most probably no longer valid today or tomorrow… Moreover, this world of ours becomes more and more complex by the day.
Take clients, for instance. Also clients have changed dramatically and are still changing. They demand more and more. Today's clients are real "monsters", never satisfied, never happy. They want more and more, faster and faster. Today's client want what they want, with the features they want, with the speed, pace and timing they want, at the price they want, and even with a smile on top (the cherry on the cake). They are pretending, they are demanding, they are absurd sometimes in their requests.
This facts alone puts a tremendous pressure on any industrial, commercial, business and governmental system. The impact is enormous.

That's where we start discovering the deficiencies of the Smith/Taylor system, which does not seem to be ready to cope with that pressure and impact. This became evident already in the late 60's - 70's. Pipe-smoking consultants and university professors started squeezing their brains in search of new methodologies, management techniques and sophisticated organisational philosophies, with the aim of helping industry and business organisations to remain competitive, to increase efficiency and productivity, to excel or at least survive in a world becoming more and more turbulent. Hundreds of disciplines have been invented over the last 40-50 years. To mention just a few: Management by Objectives, Effective Leadership, Diversification, Z Theory, Situational Leadership, Effective Communication, Zero-based-Budgeting, Decentralisation, Team Building, Management by Exception, Dale Carnegie techniques, Interpersonal Skills, Quality Circles, Excellence, Restructuring, Portfolio Management, Interactive Management, Matrix Organisational Structure, Kaizen and Continuous Improvement, Total Quality Management, ISO 9000, 6 Sigma, Theory of Constraints..... and One-Minute Managing......
All of them have somehow succeeded in bringing a bit of fresh breeze on slack enterprises' sails. But all of them have also failed because most organisations, still today seem not to be able to find their way to real performance and high, stable competitiveness, in spite of their hard efforts.

The real break-through came only in the 80's. The Manufacturing Industry started feeling the hard pinch of the environmental change almost 30 years ago. The famous TPS - the Toyota Production System - created the revolution in manufacturing. Just-in-Time, Flow Production, and other allied disciplines such as Total Productive Maintenance, Quick Change-Over and Total Employee Involvement were then conceived and systematically deployed at Toyota, in Japan, and gradually all over the world. Their common-base principles? Exactly the opposite of those preached by Smith and Taylor. After all, the Smith/Taylor system was good and right for their times, when people had limited or no education, and industrial culture didn't even exist. The Japanese were the first to realise the draw-backs of the system: based on localised "efficiency" associated with mass production and economies of scale, the system overlooked or ignored completely the "fat" between points of efficiency, around and above them: all the non-value-adding activities (such as handling, moving, transporting, storing, parking, stockpiling, controlling, inspecting…. and searching, idling...) between or around "points of efficiency" - all non-value-adding activities in the very "points of efficiency" (such as making mistakes or producing defects, or machinery breaking down, or idling, or stopping... or lines or machines being set-up for production...) - and the fat associated with the governing structure above (management waste: such as waste in supervision, waste in control, waste in inadequate or un-necessary planning, waste in bureaucracy, waste in paperwork, waste in meetings...).
Two core key-words were identified by the Japanese: value and waste, the one the enemy of the other. By systematically eliminating waste and perfecting/enhancing value-adding activities, the Japanese first and then the Western Manufacturers have reached tremendous goals: productivity improvements above 100% (compared to the mass production/efficiency-based system of before) - zero defects in the quality domain - zero break-downs in the plant/machinery area - almost zero set-up time - tremendous reduction in lead-times and dramatically enhanced responsiveness to clients' needs and expectations - astonishing reductions in product development times - elimination of the division of labour principle, replaced by the multi-skill/multi-function principle - much higher involvement of personnel at all levels and incredibly higher levels of job satisfaction - drastically reduced supervision - and many others.
There is a name for this new, revolutionary approach: Lean Manufacturing, or manufacturing with no waste (where waste is the "fat" in the system). Lean Manufacturing has proved over the years to be working very well: Smith/Taylor era has been shut-down once and forever, at least in the manufacturing operations sector.
But not all manufacturers have embraced the Lean approach: many still ignore it - many of them only partially - many of them have rushed through a TPS course, introduced some form of "pull" or "kanban" production, replaced some pieces of machinery, and proclaimed themselves "lean". Pure deception. Their amount of waste is still enormous. The Lean road requires much more than a course and a few changes or some improvement here and there!

And the other industrial sectors? They have been much, much slower than manufacturers...
Take the project/construction sector, for instance. This industry is in some ways not completely shifted from craft to mass production - much less to lean production. On the other hand, the industry has followed the mass production model in its extensive division of labour and hierarchy-based management, Smith & Taylor style. The consequences? 1) Cost Overruns 2) Delays on Schedules 3) Waste.
9 out of 10 projects show cost overruns (of up to 50%, and even more). Overrun is found in over 30 nations on 5 continents. Overrun is constant for the past 70 years. Delays on completion are typical, constant, chronic features of most project works. Waste is in many cases of astronomical proportions. Wasted labour can amount up to 70% (yes, seventy percent) of the total labour content (just spend 10 minutes observing carefully any construction site at any random time in any random day and watch people "working": you will discover that most people on site are carrying out non-value-adding activities such as handling, moving, transporting, idling, talking, preparing, searching, walking... or making or repairing mistakes... - as opposed to adding value to the object of the project). The 3 consequences above are strictly interlinked and have a common denominator: an inadequate organisational system and an inadequate style of thinking.

And the service industry? And the public sector? Exactly the same. The level of wasted manpower is un-measurable.
The level of dis-service or poor service found in airlines, airports, banks, insurance companies, hospitals, hotels and any other service provider (such as power generating/distributing companies, telephone companies and the like) is often astronomical and, unfortunately, on the increase - world-wide. With few exceptions.
In parallel, the level of value, attention and care given to clients is getting poorer and poorer. Banks still make mistakes and let you cue indefinitely. Insurance claims get settled (when they do get settled) after a long, painful struggle.
Hospitals still feature room shortages and long waiting times for an intervention (not to mention mistakes…). Luggage still gets lost by airlines and delays on scheduled departures are chronic. Instead of a passenger, you become a seat number. You open a bank account and become an account number. In a typical hotel, you become a room number. You report a fault to a telephone company or a power distribution company and you become a reference number. If you have some complaint or want satisfaction, you are referred to a "call centre" (mass production! heritage of the Smith & Taylor mentality) where you are nobody and have no joy. The list could carry on forever.

What is the problem? Organisations (or most of them) seem not to be able to cope with the complexity associated with the changing environment. The more pressure is put on them and the more corrective measures they try to adopt, the worse the failures! It's the final coma of the first industrial revolution system, culture and mentality. The only way out of this vicious circle is a revolution in the opposite direction. That's where Lean Thinking comes to the rescue.

Lean Thinking (LT) - that's the name given to this rather recent industrial philosophy and operational discipline - is the extrapolation of lean principles, implemented from long time in manufacturing operations, for their deployment in all economical sectors (project - construction - services - continuous processing - public sector - etc.) as well as in all enterprises' processes (administrative, product development, accounting, etc.). In a nutshell: LT focuses over the removal of waste from the entire Value Chain.
The main targets? Maximisation of value to the (monster) customer. Drastic elimination of waste in all processes (core and support) that generate value for customers. Elimination or drastic re-dimensioning of all those processes (and functions) that do not contribute to generate value to the customers. Minimisation of all times required to provide value to the customers. Zero defects, errors and non-conformities.
How are these achieved? By scrapping once and forever all the principles of the first industrial revolution.
In practice: flattening of organisational structures - thorough re-engineering of the organisation "per process" and not "per function" - insertion of multi-skill/multi-function workers/operators/employees in value-generating processes, which they self-control and for which they are accountable - continuous, uninterrupted flow (of the necessary value-adding activities) triggered and "pulled" by the customers - continuous aim at lean excellence, by eliminating the residual, inherent or surrounding waste. This is done by deploying operationally a number of "lean" tools: tools for "seeing" the waste - tools for "measuring" the waste - tools for "mapping" the waste - tools for "scrapping" the waste - tools for enhancing value and value added - tools for generating lean opportunities - tools for lean, creative thinking - tools for continuous improvement in the "lean" direction.
LT principles can be applied to any industrial, commercial and human activity. They can be applied to commercial and trade operations, to office work, to health practices. Under the larger LT umbrella now fall disciplines such as Lean Manufacturing (manufacturing industry) - Lean Project & Construction Management (project-driven industry) - Lean Processing (service and public sector) - Lean Kaizen (all sectors) - Lean Accounting (all sectors).

Obviously, disciplines are disciplines, and tools are tools. They can be learnt, they can be obtained, they can be purchased. Culture cannot. Modern, industrial lean culture can only be "fabricated" in-house, within the organisation, by those concerned - starting from top management.
This is the hardest and trickiest part of the transition to "lean": changing culture. Unfortunately, the Smith & Taylor heritage is very heavy. It has taken generations to digest and implement the principles of the first industrial revolution. It will take years or decades to digest those of the second one. Our industrial DNA is heavily polluted by traditional principles. We are still in love with the mass and batch production mentality, with traditional planning, supervision and control. With order and efficiency. With roles, authorities and job descriptions. With rules and procedures. Even hairdressers, retailers, and housewives (yes, housewives!) have fallen in love with batch production principles. The resistance to "lean" is and remains heavy.
We'll need to "slaughter", to change skin, like snakes do. We'll need to transform managers into coaches. We'll need to "fabricate" a new breed of people, people driven by value principles and not by "job" principles. People dedicated to re-conceive, improve and perfect the processes they handle, which they can understand, and for which they are responsible. People who enjoy working and producing value, and draw satisfaction from it. New millennium craftsman in their workshops. New millennium traders in their shop. In strict contact with their customers. People to whom pride and professional and work dignity, usurped by over a century of labour division and top-control practices, will finally be given back. People who can think: lean (that's why the name: Lean Thinking). It will take time.

Yet, lean practices start being deployed in many areas other than manufacturing operations: project works - health industry - retail sector - insurance companies - to mention just a few. And there are examples even in the public sector. The results are astonishing and very, very encouraging.
There is space for lean. There is hope to make this world of ours function in a better, leaner, value-based way.

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Flow Production: a target for today's Manufacturing Industry

by Carlo Scodanibbio for "The Malta Independent"

Imagine going to a restaurant for dinner, not knowing that this particular restaurant is geared for "batch production", in other words that the kitchen is organised to prepare food "by the lot".
What would happen is something as follows:
Waiter (after you have been snooping through the Menu for 5 minutes): ".....Well, have you decided, Sir?"
Customer: "Yes, I fancy your Tortellini Alfredo as a starter, and then...."
Waiter (interrupting): "I am sorry, Sir, but tonight we do not have Tortellini, we only have Spaghetti ready - however, if you are prepared to wait for a while, until some other customers pop in and order Tortellini, than may be our Chef will cook them as well..."
Customer (rather surprised): "What do you mean? If you have Tortellini in your Menu, I don't quite see why your Chef should wait for other orders to come before he cooks Tortellini...."
Waiter (very professional): "Sir, let me explain to you: our Owner is a very cost conscious person. He likes efficiency throughout, of which we are very proud. Surely, you will realise that approximately the same amount of time, water and gas is needed to cook Tortellini for one or Tortellini for six. Well, we have decided long time ago that we would go for a minimum batch of six in all our Pasta dishes, in order to achieve optimum efficiency. Besides, this way, we can afford to have only one person in the kitchen, so the saving in manpower is tremendous. Should we go for individual orders, we would need at least another cook, and possibly also a junior to help out.... You see, we do not like to pass extra costs onto our Customers, that's our principle, and that's why tonight there are Spaghetti ready in our kitchen store. Can I get you some lovely Spaghetti Bolognese warmed up in our microwave oven?"
Customer (ready to blow up): "But, wait a moment, assuming your cost saving issue is right, why do you have to warm up my Spaghettti in your micro ?
Waiter (a bit annoyed, but still professional): "Sir, more than half an hour ago, a few customers came in, and the three of them agreed to have Spaghetti Bolognese. Our Chef had gone for the usual batch of six, so now there are three portions of Spaghetti in the store, ready 'off the shelf', but obviously you won't like cold spaghetti, will you? - and it only takes one minute and thirty seconds to warm them up, how is that for speedy service?....."
Customer (boiling): NO, thank you, I don't like cold nor warm Spaghetti, in fact I don't like Spaghetti at all, I hate Spaghetti...... in fact I don't even want Tortellini anymore, I'll rather go next door for a Pizza...."
Waiter (paternalistic, but still professional): "As you like, Sir, good evening, Sir, hope to see you some other time...."

Amazing, isn't it? But something very similar has been going on during the past few decades in many sectors of the Manufacturing Industry.
Many Manufacturers have adopted a simple philosophy, in production:

  • Manufacturing is the business of producing goods
  • Products must be good, cheap and delivery must be reasonably fast
  • Efficiency can be achieved through "large lots" production, which brings considerable cost savings
  • Factory Management determines Production capacity and Production Schedules, according to estimates
  • Profit is something that comes "naturally" out of the manufacturing and marketing process

This philosophy has been well rewarded for long time, and well accepted by the market.
In the past 2 decade, and specifically in the past few years, something has been changing in the market, a sort of silent revolution has taken place.
Customers are not the same anymore, they have become "strange". For many reasons, most of which very difficult to understand, they seem to adopt more and more a different approach: they want the goods they need, in the quantity they want, with the quality they want, in the time they want, and at the price they are prepared to pay.
How have many Manufacturers reacted to this revolution? Simply taking the immediate measures they considered adequate:

  • They have increased their efficiency investing in sophisticated technology: huge, expensive machines able to turn out products faster and in larger lots
  • They have coped with the higher demand for quality introducing a squad of Quality Inspectors and sophisticated Quality Control Systems, with the aim of stopping defective goods from being passed to clients
  • They have reacted to faster deliveries demand making their finished products warehouses larger and larger, trying to offer "off the shelf" goods availability and speedy service

But also these measures now seem outdated. What many Manufacturers have not realised is that the overall market cake has not grown much larger, while the variety of product has.
Due to hot competition, due to higher quality awareness, but mainly due to everybody's different and subjective interpretation of the "quality-of-life" concept, the market is now flooded by a tremendous variety of products, with an enormous range of optionals and personalised accessories, and still clients want "what they want and how they want it". In this tricky chicken-and-egg situation, many manufacturers have been caught in badly.
Their technology seems more and more unable to cope with such a diversified demand, and those bulky, expensive machines do not seem to be the best to run fast smaller batches of diversified products.
Besides, overall efficiency has in fact decreased due to more sophisticated waste proliferating in each corner of their factory, often very close to the expensive, sophisticated machines.
Their quality Control system has, in many instances, just managed to reduce the number of defects passed onto clients, but at the expenses of a "black" store in which defective goods, rejects, second class products and degraded components stockpile to the ceiling.
And the large warehouse, designed to despatch products faster to the market, has not only started to grow a new breed of unusable products called "obsoletes", but has also become a thicker wall between the manufacturer and customers' needs.
In conclusion, many Manufacturers that, like our Restaurant's Owner, have become more concerned about their internal efficiency, with the best utilisation of their sophisticated equipment and with their production planning schedules than with real Customers' explicit or implied expectations, are now having rough times.

The answer to the problem exists, and is called Flow Manufacturing.
Flow Manufacturing, as the name suggests, is a way of producing goods in a "stream" fashion, with materials and workpieces "flowing" smoothly, regularly, inside the factory while becoming finished products in the productive process, and flowing again, without interruption, to the natural outlet, the market.
To perfect the similitude, rather than visualising a stream, or a river, in which the flow of water is driven by gravity, one should try to visualise a pipeline with a pump positioned at the pipeline outlet, sucking water out of the pipeline: this meaning that it is the market (our pump) that determines how the flow (the production style and capacity) should be in the pipeline (our Factory).

What does this approach imply? A few revolutionary consequences:

  • Production (with its rhythm, style and capacity) is not anymore "pushed" by Management through the Factory and to the Client, but rather pulled out of the Factory by Clients' needs, like at a (good) Restaurant table
  • Seller's Market time is over - today it is a "Buyer's" Market
  • Profit is no longer a conventional benefit, attached to manufacturing: profit is to be earned through hard, intelligent work
  • Products must be exactly what Customers want, and they must be delivered as they want, with the quality they expect, when and in the quantity they want - Manufacturing is no longer the business of producing goods: Manufacturing is a Client-Oriented, Service Industry
  • Production is to be considered more and more "wide-variety, small-and-frequent-lots" type, as Clients wish
  • Manufacturing Time should become closer and closer to Selling Time
  • Nowadays Customers are prepared to pay only an amount corresponding to the right "value" of the goods supplied, and therefore the Manufacturer's Selling Price must be very close to that "value"
  • This dictates that true efficiency must take place in the Production Process, as Customers are less and less prepared to subsidise Manufacturers' internal waste

The waste issue fits the missing piece in this puzzle.
In any production process there is waste. Any useful component and material add value to a product, as any useful productive operation does.
Unnecessary components, that do not serve any purpose in the finished product, do not add any further value to it. And the same applies to any wasteful operation.
Where does waste hide in a Factory? Waste is found in any operation that disrupts the normal, regular, smooth flow of materials through the Factory, thus causing turbulence, back-flow and stoppages to the flow itself. And those same wasteful operations do not add any real value to the product/s being manufactured. Examples? Storing, piling up, picking up, laying down, counting, checking, moving, handling, positioning, idling, waiting, transporting, conveying, inspecting, degrading, declassing, repairing defects, re-working, changing production, setting up machines for production, plant break-downs, plant working at reduced speed, searching for tools, dealing with accidents, duplicating efforts, passing the buck.............. and dozens more.

Flow Production is the Discipline that deals with waste and fights it to death.
In fact, if production can be transformed into an easy flowing process, without any interruption between value-adding operations, most definitely the bulk of the waste would be eliminated. Quality should be "built-in" the productive process by multi-skilled workers, capable of handling reliably multi-process operations.
And Manufacturing time would be so close to Selling Time that no finished product warehouse would be necessary. Products would be produced so fast that Clients would be really pulling them out of the Factory's final assembly lines. And those lines would pull components and sub-assemblies out of upstream processing lines, and so on.
This is Flow Production, a manufacturing "style" and "mentality" aimed at reducing internal waste to such a bare minimum that the resulting productive process becomes so "slender" (Lean Manufacturing), so "flexible", so receptive to Clients' needs that it really flows like water in a pipe.
The target is both very challenging and very difficult, to say the least. Still, many Manufacturers, and not only in Japan, have succeeded in getting very close to Flow Production.
What does their experience say? Implementing Flow Production requires time, guts, techniques, efforts, and a tremendous amount of creativity.
But the main obstacle to overcome is and always will be "resistance" from people to the change in mentality that such a project dictates.
Because Flow Production is made, like anything else, by men.

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Achieving Quick Change-Over: dream or reality?

by Carlo Scodanibbio for "The Malta Independent"

Just consider this little story. Coming back home from honeymoon, life becomes, after a while, "normal" for husband and wife: it consists more and more of routine activities. And what does husband discover ?
He discovers that wife has a pretty peculiar system of organising her cooking ménage.
When she prepares chicken cordon-bleu, she cooks some 8 chickens in one go, one after the other. When she bakes pizza, she does 12 pizzas one after the other. And when she does lasagne, at least 10 large pans of lasagne are prepared and cooked one after the other in a row. This way, the deep fridge is always well stocked.
The end result is good: food cooked by wife tastes OK, but husband still does not fully understand her peculiar style. When he asks her why she operates that way, invariably she answers that this is the best, most efficient way of cooking: in fact, once she is geared to prepare chicken, the best is to cook whatever quantity the family needs for approximately three months, which is a safe and convenient storage period in the deep fridge. By doing so, she utilises pans and pots and kitchen utensils once, minimising washing and cleaning etc. The same applies to pizza and lasagne: she knows what is going to be required in the next 12 weeks: why going into the trouble of baking a pizza every week every Friday, when that can be done in one go ? Efficiency is tremendous, she says: the same baking pan is used 12 times without washing it, and, most essential, the oven is already warm, and letting it cool down would be a tremendous waste........

Amazing, isn't it? But a similar mentality is still present in many sectors of the manufacturing industry.
If one asks production managers what they consider difficult in production, the answer, 9 out of 10, is: diversified, small-lots production. And if one asks why this is difficult, invariably the answer is: because of the frequent set-up activities required to produce a large variety of goods in small lots. Set-up (or "change-over") activities like die-changing, re-tooling, line setting, etc., are seen like evils by production personnel, exactly like the housewife in the story above considers problematic and inefficient whatever is required to prepare a different meal every day: getting geared and organised, having all necessary utensils and ingredients ready, warming up, cooling down and cleaning the oven, washing and putting everything in order after cooking, etc.
The roots of this mentality are found in three misconceptions:

  1. set-ups are difficult, problematic, and require particular skills (therefore the less set-ups we do, the better it will be)
  2. set-ups are long and time consuming, and therefore producing in large lots somehow compensates the costly effects of set-ups
  3. since producing in large lots will/might generate excess stock (which also costs), there must be a way of optimising the two types of costs, set-up costs and stock costs, by going into "economical lots", similarly to the 3 months' stock of pizza of our housewife

And the root cause of this mentality lies in over a three decades' confusion with regard to the main relation between market (demand) and productive system (supply). The general tendency has been to mix up the features of the demand (high volumes) with the features of the supply (large lots). Only recently we have learnt that the two concepts should be thoroughly separated, as a feature of demand cannot form the basis of the discipline of production. If, in fact, high volumes are demanded by the market, and are also desirable in order to amortise the high costs of capital equipment, the supply side can still respond with a different style, basing production on numerous repetitions of small-lot productions, and consequently being ready for a change in demand. Which is exactly what is happening nowadays, with customers wanting a more and more diversified range of products in smaller and more frequent lots.
Manufacturers that have understood the market change and the basic confusion in the above mentality, have reacted, in the last decade, in a revolutionary mode: they have moved from the style of large-lots production of products that "should" sell, to the style of "confirmed production", performed in small-lots, on the basis of orders actually received. This style of production is called "Flow Production", driven by customers and piloted by their needs and expectations.
Where is the main feature of such a revolution? In its very conception: design a manufacturing system that is integrally responsive to market change, with minimal inherent waste (thus very efficient), flexible, "slender"(Lean Manufacturing), geared for quality, and client-driven.
And what is the main "technical" secret of such a revolution ? It is definitely the set-up issue. For years set-up and change-over operations have been considered a big problem in production, but still a small aspect of the manufacturing process. Only in the last ten years this issue has been focused and brought to its real status of "key to Change Manufacturing". In fact if set-up becomes fast (minutes if not seconds, instead of hours), and easy (accomplishable with limited skill and little or no difficulties), the door to Flow Production opens wide: lead-times are minimised, stocks are decimated, bottlenecks are eliminated, and diversified/small-lot production, as market demands, becomes a reality and a "human" task.

Today achieving Quick Change-Over easily is possible in practically all manufacturing contexts. Tools and techniques are readily available for the purpose, all based on the "why" things (set-up activities) are done (and done a certain way), in order to determine if they should be done at all, or how else and better they could be done. Obviously the ideal set-up is no set-up at all. But if set-up is to be done, this should be designed as a "one-touch" operation, like if our housewife had a "magic wand" to get everything ready for cooking in a twinkling and clean up and put everything in order in a matter of seconds.
Dream or reality? For today's Manufacturing Industry, definitely a reality. And time is also coming for our housewife.......

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Kaizen: what does it mean?

by Carlo Scodanibbio for The Sunday Times of Malta

the home improver

If you consider your house more than just a shelter and a place in which you eat and sleep, in other words if you consider your house a "home", a cosy, warm nest for yourself and your family, probably you will take great care of it, and you will gladly dedicate time, efforts and money to make it even warmer, cosier, more functional and better looking. In fact, you will not just maintain it in its present state, but you will try to render it better and better: you will renew plumbing and electrics in due time; you will paint or polish regularly doors and windows; but you will also add new pieces of furniture or replace some unsuited ones..... and you will shop around with your half to find some nice pieces of soft furnishing, or wall pictures, or antiques... and you will place flowerpots and ornamental plants here and there..... and if you really love your home, this will be an endless process: even when you believe that your house is very nice indeed, still, you will not feel totally satisfied, and you will carry on forever making changes, and adding, and replacing, and moving things around.... and bettering, and refurbishing, and improving.... Your home becomes your pride, represents yourself, is part of you, and you are part of your home. And if you have just a minor tendency to perfectionism, you will never be totally happy with your house, and you will carry on year after year with this never ending improvement process.

kairyo and kaizen

The process you are doing to your house is a Kaizen process. The Japanese word Kaizen means "step-by-step, continuous improvement".
Now, assuming you are not satisfied with the present state of your house, there are several approaches you may adopt: you may, for instance, decide to buy a new, totally different type of house; or you might decide to keep the one you live in, but you will call an architect and have it completely renewed, re-furnished and re-decorated to suit your taste; or else, especially if your budget is limited (but not only in this case), you may decide to improve it step-by-step, month after month, year after year, and do it yourself (or with your half), or, anyhow, with your direct involvement, with your own design, and under your direct supervision and control.
In the first two cases, you do a Kairyo type of improvement, or large-size, technological improvement. In the last case you improve in a Kaizen fashion, or step-by-step.
Which is the best approach ? None is better than the other, they are simply different, and suited to different circumstances. In many instances, the two approaches may even be complementary, first the one, and then the other.
Still, there is a major difference between the two approaches: if you go Kairyo, you mostly use your money to get what you want; whereas, if you go Kaizen, you mainly use your brain (and your hands, and your heart, and your creativity, and......).
This is the real difference between the two approaches: without touching the validity of the Kairyo approach in all those cases in which it is well suited, the Kaizen approach is mostly based on people's best abilities and skills.
Kaizen has been developed in the '70s - '80s by the Japanese Industry, in order to reach high levels of quality in industrial processes and in associated output products. It has been confined to the quality field for several years; and then applied also to the productivity issue, with the aim of achieving high levels of efficiency; and finally it has been applied to the overall organisational structure of an enterprise, the goal being to drive it towards an excellent, or world-class status.

kaizen and people

The true nature of Kaizen is in the human content it carries. Improvement through Kaizen practice means deep, systematic and continuous involvement of people (everybody), that, by using certain techniques, but mainly their brain, cause a process of improvement to start, develop, and never end. The Kaizen motto is " better than yesterday, tomorrow better than today....". The concept of continuous improvement is applied in all directions: industrial processes can be improved - working methods can be improved - quality defects can be eliminated - waste can be reduced - customer service can be bettered - the working environment can be improved - boss/subordinates relationship can be improved..... the sky is the limit.
Now, improvements in industry can be obtained in many ways: new technology can bring improvement to a process or to products' quality - technology can also bring improvements in productivity and in efficiency - it can also bring improvements to customer service - external consultants can bring improvements to working methods, to processes, to interpersonal relations. But these types of improvements do not fall under the Kaizen umbrella. Kaizen is improvement through the poor man approach: the poor man does not spend money on improvements because he has no money to throw at it - he rather uses his wisdom, and his brain, and his creativity, and his talent, and his patience....

kaizen is brain power

This is the real power of Kaizen: by using their brain to obtain improvements, people perfect their skills and increase even more their talent. And there is an extra benefit: they are more satisfied. If you are a wealthy man, and build a sumptuous villa designed by the best architect in town, you may or may not be as satisfied as the average man who, through years of patient, creative work has transformed his house into a cosy, warm nest, filled with handmade decorations, each corner showing his dedication, each ornamental object purchased through intelligent savings but selected with care and rich in taste, and each detail showing and proving his love...... Each step of improvement, once completed, brings satisfaction, but probably the real satisfaction is in the improvement process itself: because improving mainly or primarily through creative efforts is a tough challenge, and challenge is a wonderful source of satisfaction.

tools for kaizen

Surely, brain alone is not sufficient: specific techniques are available for Kaizen oriented people to perform effectively. Like a home improver needs to know sufficiently about interior decorating, and antiques' restoration, and soft furnishing (and landscaping, painting, plumbing, wallpapering......), similarly the industrial Kaizen improver needs to know about problem-solving techniques, and tools for creativity, and Pareto and Ishikawa Diagrams (to mention but a few of the available instruments for systematic improvement). Besides, in industry, valid Kaizen requires an extra skill from people: the ability to work effectively in team. Starting from the assumption that "the Pope and the Peasant together know more than the Pope alone", the Japanese have extensively deployed and mastered the "team" concept for real, methodical improvement. Their Quality Circles, for instance, are known world-wide.
In western industrial environments the concept of "effective team for systematic improvement" has somehow failed to deliver high level results, mainly due to considerable cultural differences. The ability to perform in team effectively, intentionally and regularly, with the objective of improving systematically all weak areas of an enterprise, seems to be, in the western world, not as high as in the far east. And many attempts to transplant Japanese methods and Kaizen approaches into western enterprises have somehow failed. The truth is that the original Kaizen concept must be tailored to suit not only the western industrial environment, but even the specific enterprise, taking into due consideration its culture and values (and objectives, strategies, policies.....).
Like a home improver cannot and will not merely transform his house following recommendations and ideas of an interior decorating magazine (ideas that he will rather vet and adapt to his or her specific needs and taste), similarly an enterprise willing to undergo a process of continuous, systematic improvement will have to identify, define and deploy a specific "style" and specific, personalised methods to pave its "road to excellence".

the home lover

And there is a last and very difficult obstacle to overcome, for a western enterprise, when undergoing a Kaizen program. In the true nature of Kaizen, improvements are made by people, working together in team (to obtain a "resonance" effect), and using effectively and efficiently their abilities, skills and brains. But they must also be intimately convinced of what they do, and they must also share a "vision" of how the future will be, of what they can achieve, and of the common benefits associated. If this deep feeling is missing or considerably lacking, only superficial improvements can be obtained. A genuine home improver is first of all a "home lover", and has a vision of what his or her home will become, and has feelings and sensations in mind, and emotions, and a "creative tension" which drives him or her in the wanted direction..... a genuine home improver has a sense of belonging, of "symbiosis" with his or her home..... and this will eventually make the difference between a warm nest and a sumptuous but artificial house. Similarly, in industry, a positive sense of involvement, of belonging, and a "shared" vision, are strong prerequisites for an effective, Kaizen style, path of improvement.
Individuals should ideally understand and share enterprise's objectives, and feel part of the enterprise, with a bit of love for it, like a genuine home improver.......
This is, most probably, the toughest challenge for western management.

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by Carlo Scodanibbio for The Malta Independent
and Industry Today - Journal of the Malta Federation of Industry

In our rapidly changing industrial environment, also relationships between client and supplier (or vendee and vendor, as they are often called today) are featuring a substantial evolution.
The signals of this evolution are not weak at all. More and more often one hears sentences like:
"....price is only a component of the total purchase cost....."
"....often best prices result in worst overall costs...."
"....the manufacturing process starts at suppliers' premises and ends at client's home...."
Many industries are instituting formal or informal programs of suppliers evaluation, rating, grading and classification. And many others are reducing substantially the number of their suppliers, sometimes with a dramatic "decimation". Something is definitely changing.
A simple interpretation of this phenomenon might conclude that major industrial and manufacturing groups, under increasing pressure from hot competitiveness, are just trying to score bits of cost savings nibbling and gnawing suppliers to the bone, to obtain out of them more quality, more flexibility and better prices.
A more comprehensive and realistic interpretation, however, goes beyond this "reductive" conception, and sees in these signals the features of a cultural revolution: industrial strategies are changing in a very precise direction, modifying radically all traditional factors of competitiveness, under the philosophy of the so called "New Performing Systems". And the Client/Supplier relationship is so deeply involved in this change, to the extent of representing a crucial starting point, rather than just an aspect of the strategy.

To illustrate the phenomenon, let's consider today's main competitive parameters of any industry. They are: Costs - Delivery/Service - Quality - Innovation, all under a basic dimension, which is Time. All of them affect competitiveness, and all of them, in a personalised "mix", constitute basic parameters of any serious industrial strategy.
A simple examination of suppliers' role is sufficient to conclude that suppliers are strategic co-protagonists, with their clients, in the final destiny, success or failure, of any business.

  • In fact, suppliers can play a determinant role in respect of the cost parameter: purchases (materials, products and services) can easily represent 50% or more of the total costs of many enterprises. And suppliers may, under certain circumstances, contribute drastically to keep costs under control thus ensuring the competitiveness of an enterprise in a turbulent economy. This is in line with the simple and "reductive" interpretation above. But suppliers can do much more than this.
  • With regard to the Delivery/Service parameter, today's clients want products (or services) at the rate, in the mix and with the timing they establish themselves and want. This compels any serious "client-driven" enterprise to respond with flexibility to client's expectations: to such an extent, that it may become impossible unless its suppliers respond with as much flexibility. And the time of warehouses full of finished products is rapidly expiring, therefore the overall productive process, which really starts at suppliers' premises, must become more and more flexible and "slender" (Lean Manufacturing). Suppliers' contribution to this target plays again an essential role.
  • The Quality issue is even more critical. Any product or service is made of "components", and unless the quality of such components is adequate, the quality of the finished product might suffer. In this context, suppliers really have the "lever" in their hands: they contribute to negatives (defects and weaknesses of the finished products), but they may contribute even more to positives (those "extras" in the quality field that may represent the difference between an acceptable product - or service - and an excellent one).
  • Same comments can be made for the Innovation parameter. Many enterprises promote innovation as their more competitive feature. But unless their suppliers participate significantly in the innovation process, with a "partnership" spirit oriented to the success of "common" business, the innovation process itself might result poor, incomplete, or even "looser".
  • Finally, putting the Time dimension under scrutiny, even more disturbing conclusions appear. Suppliers play again a very determinant role in respect of all significant times (besides the supply lead-time, which has always been under the careful control of buyers and procurement officers) of modern industry: e.g., the time to market (or development/engineering time for a new product or service); the start-up time, required to launch a new production (or put into operation a new service); the production-time (P-time) necessary to produce a product (or to render a service); the set-up time necessary to switch over from a productive mode into another; and even the information-time, so essential in today's industrial context.

Surely, if suppliers play such an important role, the overall approach to their global management may deserve a different degree of attention and become itself a strategic parameter for the modern enterprise. This is exactly what is taking place within many industrial concerns world-wide, by answering the simple questions: "if suppliers are so determinant in affecting all main competitive parameters, what global strategy can be developed in order to obtain global business competitiveness with their adequate involvement ?"

Several strategies have been developed and are being developed. A new term has been invented: Comakership ("Joint Manufacturing" - with "integrated" suppliers - at its first level; "Manufacturing Partnership" - with "Partner" suppliers - at its more evolved stage), to give disciplinary consistency to the phenomenon.
A new philosophy has been developed, on the so called value-chain (" is made today, by being in the right sub-supplier/supplier/client "chain", with the right partner suppliers, in a common effort of succeeding together......"). Enterprises traditionally reluctant to give information to their suppliers are today adopting "open door" policies, communicating globally and on a two-ways basis with their suppliers in an effort to plan, study, learn, analyse feed-backs, and perform together. Co-engineering and co-design have become common practices. PPD - Process/Product Development "together" is a reality. Relationships Client/Supplier feature full trust, open orders and long-term time horizons. In many instances even the informatic network is common.

Certainly, these are signals of a cultural revolution in the Client/Supplier relationship, if one compares today's futuristic situation with the scenario of only 20 years ago: buyers were then busy obtaining best prices (the 3 offers rule!) on a single-order basis, generating high competitiveness between suppliers, exploiting them to the extent of considering suppliers "disposable" like paper handkerchiefs, searching continuously and systematically alternative sources of supply, in a process that had all but reciprocal trust and confidence.
Well, in only 20 years, features are rather different: the buyer's role is highly de-centralised, the decision-making process is spread among a multi-functional management, and the old paternalistic approach has developed into a strategic process of establishment and dynamic maintenance of long-term relationships with few, reliable, well-known suppliers, integrated or to be thoroughly integrated into a business value-chain, with mutual satisfaction, joint responsibilities and joint rewards.

The basis and starting point of this global approach is represented by a deep knowledge of existing and potential suppliers. Vendor Evaluation and Rating has developed greatly in the course of last 20 years, moving from a simple examination of supplier's output, to a valuation of vendor's process (especially with regard to Quality Assurance matters), and finally to a global understanding and rating of supplier's structure, including his management system, his process capability, his employees professionalism, his strategies and his cultural values.

The interim result is a phenomenon well known as Grading of Suppliers, into convenient classes, each with different features and potential. The modern industry, the one aiming at "world-class" status, has a strong tendency to up-grade suppliers in a constant process of improvement, in order to bring them to iso-status: same level of professionalism, same level of business maturity, same level of technological capacity, and same level of orientation to client, with the aim of communicating on the same frequency and reaping jointly and maturely market's opportunities. This is done by transmitting know-how, competence and culture, in a real educational process that may include furnishing to suppliers consulting and training services.

The final result, at advanced levels of comakership, is astonishing. Many industries (even small in size) in USA, Japan, and Western Europe have created their own very personalised comakership strategy, and developed their own value-chain with incredible results. A discipline like Total Quality Management has now developed into GWQC: Group-Wide-Quality-Control, thus extending not only in supplier's direction but also (when applicable) in client's direction, homogenising the quality issue over several links of the value-chain.
There are numerous operational examples of chain-QFD, or Quality Function Deployment discipline applied to all chain links (from client to 4th or 5th sub-supplier level), in order to transform effectively client's (or end user's) needs and expectations into a finished product/service, taking into considerations all components of process and product up to raw material level. And there are many examples of operational partnership (with cross-shareholding) along the various chain-links.

Can we call this evolution, or should we rather talk of revolution?



Total Productive Maintenance: what is it?

by Carlo Scodanibbio for the Cyprus Chamber of Commerce and Industry Magazine

Just consider this little story. Coming back home from honeymoon, life suddenly lands into reality, for husband and wife. And reality consists of a number of small and big things to do, like connecting and putting into operation the new washing machine and dishwasher, and the stove, and the microwave oven, and the fridge, and the vacuum-cleaner, and the food processor..... and this requires reading the instruction manual, checking water and electricity connections, understanding the operation procedures, and, eventually putting each appliance into operation. And whose task is it? Obviously husband's task, because "he is technically minded", as wife states very clearly. And so husband becomes all of a sudden a technician, an electrician, a plumber, and a domestic appliance technologist: he reads trough 4 pounds of instruction manuals, gets organised with tools, does the job, and finally, once he has become a specialist in the field, he does a simple training course to wife on how to operate each machine and each appliance, on safety and other precautions to be observed, on little tricks and hints she must remember to make things work properly, and on basic maintenance rules. On this very last point he finds a lot of resistance - wife is prepared to adhere to basic operating and safety procedures, but not very keen on carrying out certain maintenance tasks...... Husband, very patient, and still in glorious love with wife, decides to compromise on this specific point, assigning to wife only some basic cleaning tasks, while he will take care of checking and cleaning regularly the washing machine filter, of replacing vacuum cleaner's bag when needed, of regular checking of fridge's evaporator, etc.
But this is not all: there are dozens of wall pictures to be hung - light fittings and bedside lamps to be connected - curtains to be fitted - shower to be adjusted - bathroom mirror to be fitted with bulbs - TV set and Video Recorder to be connected and programmed - honeymoon slides to be projected with the new slides projector (also to be put into operation) - and grandmother "holy" armchair to be moved to its final position in the lounge, just to mention a few other tasks for poor husband, who must literally split himself in two in order to cope with this considerable workload, which adds to his professional work and keeps him busy evening after evening....

You may easily imagine the conclusion: in a matter of weeks, if not days, husband is silently appointed "house engineer and technician" and "house maintenance handyman", while wife has implicitly and explicitly self-appointed herself "chief domestic operator and principal chef-de-cuisine"...........

As years go by, the two roles consolidate and become institutionalised. The approach "....I operate, you repair...." or ".....I use, you maintain...." gets stronger and stronger. Wife is always primarily involved with direct and indirect domestic "operations": cooking, cleaning, ironing, etc., which she does herself, or by co-ordinating and supervising her maid. Husband, who has in the meantime created a little workshop in the garage, equipped with all essential tools and well stocked with necessary spares and consumable materials (bulbs, fuses, tape, nails and screws, paints, etc.), is primarily involved with all basic maintenance activities (replacing bulbs, cleaning and checking, replacing gaskets to leaking water taps, painting, lubricating squeaky hinges..... and fixing, repairing, restoring, modifying, overhauling, tuning-up......).
From time to time (but less and less frequently), however, they still look at their honeymoon slides, and think back to that glorious time.....

Amazing, isn't it? But very common, all over the world. Most definitely, housewives capable of (and willing to) handling screwdriver and hammer, besides cooking spoon and sewing needle, are a minor percentage. Where does this phenomenon originate from? Where are the roots of this very diffused mentality?

When we consider that a similar, but much more serious phenomenon is happening from decades in industry, we can easily trace a common denominator. In industry, the separation of roles between "Operations" and "Engineering/Maintenance" is an institutionalised feature from many decades. With very few exceptions, all over the world industry is normally structured with a well distinct identification of two functions: the productive function (Operations), and the service, back-up technical function (Engineering and Maintenance). The scopes, the roles, the duties, the tasks and the responsibilities of the two functions are normally very well codified: the productive function takes care of producing products or services (manufactured goods, like in the manufacturing industry - objects of a project, like in the Construction or Project Industry - a service, like in Banks, or Insurance Companies, or Hospitals) - the back-up technical function takes care of making available, installing, keeping in good running order, and generally attending to the plant, the machines, the equipment, the installed services, etc. necessary to the productive function to perform its tasks. Plant include productive machines, fixed installations like electrical or air conditioning systems, or computer equipment.
The objectives of personnel belonging to the two functions are complementary but well distinct: productive personnel have the primary objective of producing products and or services - technical and maintenance personnel have the primary objective of assuring the availability of plant and equipment to be utilised by productive personnel.
This separation of roles has also originated and consolidated over many years a negative mentality, which can be summarised with the well diffused approach: "....I operate equipment, you maintain and repair it.....", with consequences often catastrophic in industry: lack or absence of responsibilities, shifting of responsibilities (...passing the buck.....), abuse and misuse of equipment and machinery, and, generally speaking, inefficiencies at various levels and of various entities.
Today we easily identify the roots of this mentality in the so called 1st Industrial Revolution, initiated by Adam Smith over two centuries ago with his principles of fragmentation of work and labour separation.
According to Smith's principles, work is much more efficient when fragmented into simple/elementary tasks to be performed by separate workers, each attending to a "piece" of the overall work, in which he can become "specialised".
Those principles have constructed industry as we know it: with functions, departments, separation of tasks, duties, roles and responsibilities. Those principles have been applied very successfully also to the two industrial functions under consideration, i.e. the productive and maintenance functions, which have been structured accordingly, and perfected over the years as two well distinct entities. Reflections of these principles are at the basis of separation of duties between husband and wife, like in our little story, and can be found in any human, organised activity still today: weather commercial (like in a hair stylist saloon), social (like in a Country Club), or in the public sector (like in a Post Office or Government Department).

These principles, well adequate for long time, and positive catalysts of the industrial revolution which we still see in our world, seem, however, no longer adequate for competing and succeeding in a fast changing world, well more complex than at those times in which industry was being born. While many human activities and many industries will be organised, for years to come, still according to Smith's principles of work fragmentation and specialised tasks, many other are already changing and moving into the so called 2nd Industrial Revolution: several Manufacturing Industries (the so called "World Class Manufacturers"), like many World Class Performers in the Service Sector (Banks, Insurance Companies, Hotels and Restaurants Chains, Software Developers, to mention just a few), are moving away from Smith's principles, and now recompose their previously fragmented productive processes assigning to multi-skilled personnel works featuring multi-tasks and multi-functions. New challenges and new, comprehensive responsibilities are assigned to people, who now perform comprehensive chunks of work in team, having as primary objective not the task to be performed, but the result. World is changing again, so, and in opposite direction to Smith's ideas.

Something of this nature is taking place, within World Class Industries, also in their productive and maintenance functions. The separation between the two functions, so sharp for many decades, now is being re-sewed. The old approach "....I operate, you maintain and repair....." is being shifted into a new, comprehensive approach: "We are all responsible for our equipment and for the value it generates".
This implies, firstly, a very new vision of the two functions production and maintenance. They are now seen as integrated, interconnected, re-united by the common goal. Personnel from the productive department now have much wider, multi-skill tasks: they not only operate machines, but also attend to several basic maintenance duties, like cleaning, lubricating and bolting, previously assigned to maintenance personnel. Properly trained, and by attending to these maintenance tasks, machine operators become more acquainted with their machines. They know more about them, they understand better their principles of operation, and, most of all, they become like "human sensors" capable of detecting even fine signals of abnormalities in their machines, thus contributing to preventing their deterioration by reporting well timely on their status.
Besides, being knowledgeable about their machines, operators may contribute substantially to the solution of many productivity and quality problems originated by machines, and even to simple modifications to machines to upgrade their performance.
On the other hand, maintenance personnel, have now the primary role of making machine operators acquainted with machines by training them, and the essential role of co-operating close-by with the production personnel for enhancing the effectiveness of traditional maintenance activities and new ones as well (like Predictive Maintenance, Maintainability Improvement, and Maintenance Prevention).
The overall result is well described by the name of the discipline which takes care of the 2nd Industrial Revolution applied to Plant Management and Maintenance: the name is Total Productive Maintenance (or TPM, in short) - where the adjective Total signifies the two concepts of Overall Responsibility for Plant and Machines and Overall Effectiveness of Plant and Machines: the first achieved through intensive and new-deal co-operation between the two functions, production and maintenance; and the second achieved through the joint efforts of the two functions.
TPM is concerned with very high levels of performance of Plant, Machines, Equipment and, generally speaking, Technology - TPM is concerned with very high levels of safety related to Plant - TPM is concerned with new levels of performance of "People next to Machine", by assigning them new, wider and challenging tasks, roles and responsibilities, but also granting them higher possibilities of job satisfaction.

Like to say that, according to TPM principles, our housewife should be closer to her machines, more knowledgeable about them, capable not only of operating them, but also of attending to various maintenance tasks, and capable as well of detecting early signals of deterioration and wear, in time, before the matter becomes too serious...... and capable as well (and proud of) lubricating squeaky hinges and fixing leaking taps.

Dream or reality? The Total Productive Maintenance discipline is expanding very rapidly, world-wide. Will also housewives be affected by it?

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Total Employee Involvement: is it possible?

by Carlo Scodanibbio for the Times of Malta

Entrepreneurs, Managers, wouldn't you like your people to be: responsible - accountable - serious - efficient - dedicated to their work - cost-conscious - committed to quality - actively participating in improving your business processes... in a nutshell: wouldn't you like your people to "perform"?

Yes, you surely would. Every manager worth the title, at any level, would very much like to have collaborators acting, thinking and performing well, a sort of "replica" of himself or herself...

However, in spite of such basic aim, very few managers succeed in the purpose. Actually, the majority of managers believes that getting "performing" people is almost impossible. The majority of managers, when something goes wrong, still uses the universally recognised excuse "...with 'these' people, what do you expect?.....". Rather tragic.
And yet, it is possible to have or create fully performing industrial people!

BUT: there are just a few 'conditions' to be respected and something else to be understood.

One of the conditions is that managers must be well aware of the implications of the change, the change that took place in the industrial (and not only) world several years ago, and must manage the change accordingly. If a manager, today, is not a 'change' manager, he or she won't get very far with results.
Normally, when I begin a Total Employee Involvement course, I ask my delegates what they expect from it. Possibly, the best answer I ever received was recently in India, by a top-level manager: "I am here to see if I can learn and improve ways of changing myself - if I can do that, it will be easy to change others, including my people...". Fantastic answer!

Another condition is to be prepared to scrap the 'formula'.
What is the formula? It's the recipe to success, the past success. Every good enterprise was sooner or later successful; like every manager was - at a certain point in his/her career - successful (otherwise he/she would have not become a manager...). The 'formula' is that cocktail of ingredients that made the success: the ways to do things and the ways to do not - the what can be done and what cannot - the 'taboos' and the 'holy cows' - the rules and policies to be respected - the institutionalised values and principles - the procedures to be followed - etc.
Every enterprise has a 'formula' and every manager has one. Some are simple formulas, some are very heavy, sclerotic ones. But every formula is a braking force when it comes to 'change', to the extent that some enterprises prefer to die rather than scrapping the formula, and some managers stick with all their strength to it until it's too late...
According to their formula, managers label their people: it doesn't take long to a manager to appraise a collaborator and assess his/her merit. Once the assessment is made - on the basis of the manager's past experience and of the consolidated 'formula' - a collaborator gets 'labelled' (good - excellent - not-so-good - useless - etc.). That's it. By one of the famous Peter's Principles, every collaborator with a low-score label will remain a low-score collaborators. In extreme circumstances, even for the rest of his life...

And there are a couple more conditions...
But there is also something very important to understand. In industry (never mind what industrial sector) we find a few (4, to be correct) main models of Organisational Structures and an infinite number of hybrid combinations. Well, only 2 out of 4 models allow people (and therefore the enterprise) to perform better and better. The other 2 simply don't. Unfortunately, most industrial, commercial and business organisations in this world 'fall' somehow within the 2 models that just do not allow people growth and better performance! Entrepreneurs and managers simply don't know about it - and even if they do, they don't realise anyhow the entity of the drawback and the impact of belonging to an inadequate 'model' - the strongest 'braking force'!
Yet, they 'push': push for change, push for better results, push for better performance and improvement….. but generally that's like pushing too fast a petrol-engine-driven lawn-mower through thick lawn maybe neglected for too long after heavy rain... the poor lawn-mower engine will just stall. In the past, the strategy was to replace the petrol engine with a more powerful one. Which worked for a while, until the lawn became thicker and ticker, taller and taller (heavy rain…).
Today, we realise that we cannot keep increasing the engine horse-power indefinitely: it will simply not work! Sooner or later the lawn will become a jungle - there is no lawn-mower that can cut through that…..We have to go for a totally different "cutting style"!

The conclusion is that entrepreneurs and managers need to start thinking differently if they want to cope with a rapidly changing environment and succeed in it. When all (or most of) the braking forces will be removed, not only people will begin performing better and better: the entire enterprise will perform better!

"Totally Involved" employees is not at all a myth. There are enterprises (not many, yet - unfortunately) in which: 'change' is managed adequately on a daily basis, so that the motto becomes "it's not so important what you know, is more important what you can learn" - 'formulas' and other braking forces have been minimised - the Organisational Structure has gradually been flattened and modified to be fit for higher level of people and enterprise's performance - managers have become 'coaches' - people have been 'empowered' (integral transmission of responsibilities), not simply 'delegated' ('evaporation' of responsibilities) - improvement actually takes place in a continuous and systematic fashion - people are involved, committed, dedicated, enjoying what they do - and people, at all levels, are not only 'doers', but also and primarily 'thinkers'.

These enterprises are called Lean Enterprises.

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Carlo Scodanibbio recommended Bibliography

I have selected some good books from the library, grouping them under the relevant Industrial Sector.
Please click on the appropriate link below.

carlo scodanibbio recommended bibliography for the manufacturing industry for the manufacturing industry

carlo scodanibbio recommended bibliography for the project industry for the project industry

carlo scodanibbio recommended bibliography for the service industry for the service industry


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