Wednesday, November 16, 2005

Dangers in Lean Manufacturing Awards

Our American culture is full of competition, awards, and status in our need to be recognized as the best, second to none. Just look at the number of award shows on TV in the entertainment fields. Another example are the quality product awards like J.D. Powers, well known in the automotive industry. (Trivia quiz: How many different J.D. Powers quality awards are there for the automotive industry?) I wonder if any other cultures have the same obsession for awards as Americans? With our culture, it makes perfect sense that we would have manufacturing awards (ie Shingo Prize, Malcolm Baldridge, IW Best Plants of the year, etc).

As an American, I love competition, the thrill of victory and a shot at glory. When hardware (a trophy) is up for grabs and the title of "Number 1", my heart pounds as the adrenaline races through my body. Ready, set, go!

But is this the right frame of mind for our lean journey? Bill Waddell at Evolving Excellence has several great posts on this subject including Help Me Out, Please that challenge the pursuit of lean manufacturing awards like the Shingo Prize which include past multi-winners like Delphi.

From my lean training and following the Toyota way, the answer is no. My simple understanding of lean principles is to focus on the pursuit of company survival for eternity with the elimination of waste while adding value for customers, enhancing quality of life for employees and contributing to society. The pursuit of lean manufacturing awards is not on the list of objectives.

Even with this clearly stated, doesn't a little competition help push us (Americans) on the lean journey? Maybe it does helps some companies however there is danger in this approach.

One danger is focusing all our energies on winning the award and neglecting other objectives like new product development. Without constant innovation our future product lifeline is threatened. Threats from global competition could easily send any American company into extinction if innovation dies.

Another danger is cutting corners and fudging the numbers to win. Unfortunately, some American companies have the capacity to bend and twist facts to paint an image that is not a true indication of their business performance. Call it positive spin or creative accounting but I call it cheating.

Then there is the danger of actually winning the award. We could easily start believing that our company is lean. Once we buy into that mindset, the lean journey ends because we think we are done. Winning would lull us into a false sense of security. Toyota has been on their lean journey for over 50 years and publicly states that they still need to improve. Remember-continuous improvement is ongoing..Forever!

Any American company that believes that there are benefits in winning this type of award, despite any potential dangers, they should pursue it. I wish each and everyone the best of luck! My recommendation would be to following the Toyota way, pursue the lean journey and not seek prestigious awards. Your award should be returning customers.

(Answer to Trivia question: I counted 90 separate J.D. Powers quality awards in the automotive category, according to their website. There could be more.)

3 comments:

Chet Frame said...

Good thoughts, Mike. I have two points, one on either side:
1) At least two companies that won the Baldridge Award went broke doing it and lost their businesses.
2) I started my career working for a company that has won three Shingo awards in four years. We implemented SPC in 1978 and everyone in the company was educated and trained and the requirement to bring your data was a primary driver for all of us. They have continued their journey and have found hardware along the way.

Anonymous said...

Good review, Mike and Chet, of the up- and down-sides of these awards. I would add that, the 'us vs. them' outlook that competition and awards engender is yet another danger. For most industries, there is work enough to support all suppliers, and where there is more supply than demand, the market will determine who is best, not the names on the trophies, or the number of trophies in the case.

Norman Bodek said...

The Shingo Prize is an excellent process for a company to sue to go after improvements. The Prize is given for your improvement efforts. It doesn't mean you are the best. Dr. Shingo looked at the prize like a beauty contest, you select the best facility that applies.

Hopefully, the Shingo Prize will add an important missing part "Respect for People." Two has two pillars for their success, Lean is only one pillar.