Pie-in-SkyBusiness leaders often criticize academics as being “too theoretical.” I would like to point out a few examples of business leaders being “too theoretical.” Specifically, pie-in-the-sky theories that guide leader’s thinking and decision-making, which no diligent, thoughtful, knowledgeable, and unbiased (fact-based) academic would ever advise leaders to follow.

Here are some leaders’ theories related to business:

  • The information they receive from people below them is accurate and reliable.
  • Corporations exist to maximize shareholder value.
  • People don’t play games with performance metrics.
  • Leaders can blame people for errors with no consequences (free lunch).
  • Employees’ knowledge is a disposable asset.
  • Can’t do anything about organizational politics.
  • Managers’ work creates value.
  • Stakeholders (especially employees and suppliers) will not try to get even if they feel they have been taken advantage of.

Here are some leaders’ theories related to Lean management:

  • Lean is tools for managers’ toolbox.
  • Lean is nothing more than process improvement and cost cutting.
  • It is OK to marginalize the interests of certain stakeholder in favor of others (zero-sum).
  • Metrics in use before Lean can still be used with Lean.
  • Promotion process and reward systems in use before Lean will work fine with Lean.
  • An organization can “become Lean” without leaders having to understand and apply Lean principles and practices every day.

Here is an example: Something strange happens when I inform business leaders of practical things, such as: “Laying people off due to process improvement removes employee’s desire to participate in process improvement and kills Lean.” My advice – the same as that given by Shingijutsu consultants and Art Byrne – is often labeled by top managers as “theory.” What faulty logic is being used here by business leaders?

The logic goes as follows: Bound by 1900s-era accounting way of thinking, leaders must reduce direct labor in order to reduce costs. So, processes are improved and direct labor is involuntarily reduced even though, today, direct labor is a very small part of overall costs. Meanwhile indirect labor costs increase as a result of hiring because the business is growing due to process improvement.

Leaders take credit is taken for direct labor cost reduction, while costs associated with hiring indirect labor are largely ignored. But because the people who create value, direct laborers, are harmed by process improvement, their desire to participate further stalls. The indirect labor, however, continues to create colorful charts to give the appearance of improvement. Yet, costs are not reduced, which results in further reductions in direct labor.

The inability to accept as practical a simple and obvious cause-and-effect relationship such as, “Laying people off due to process improvement removes employee’s desire to participate in process improvement and kills Lean,” assures Lean failure. How many other simple and obvious cause-and-effect relationships are not accepted by leaders?

Boss, it’s time for some new theories. Your theories just aren’t practical.

Sincerely,

Bob Emiliani, Ph.D.
Professor of Lean Management

One Response to Theories Have Consequences

  1. Sid Joynson says:

    Facts do not cease to exist, because you do not believe in them.

    The Roger commission on the shuttle disaster was very specific in this regard; “For a successful technology, reality must take precedence over public relations, for nature/reality cannot be fooled”. The reality was that the fitters had been reporting the ‘fact’ that the ‘O’ rings were nearly burnt through on the boosters each time they replaced them. But no one listened. Facts come before the data; but too often we measure the data rather than monitor the facts. Too often people chose the data (or in VW’s case fabricate it} that supports what they want the facts to be. But as Rogers’ said; “nature/reality cannot be fooled”, but people can be. —

    When people combine a love of data, with strong opinions they can create a lethal toxin. Your opinions are the cataracts of your mind. Sometimes they distort, other times they completely blind. Looking through your opinions is like looking through a stained glass window. You see your own coloured version of what is there. We then argue with people who appear to see things differently to us. To see things clearly you must remove our opinions and look through the ‘glassless window’. We must then help each other to see things clearly.—

    When looking through your glassless window you just need a final piece of advice on collecting and managing facts from Taiichi and Ivan:

    “Understanding is my favourite word. I believe it has a specific meaning – to approach an object/subject positively and comprehend its nature.” Taiichi Ohno. —

    “Don’t just be a collector of facts; try to penetrate to the secrets of their occurrence, persistently search for the laws that govern them.” Ivan Pavlov.

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