The Profits Generator

A while ago I had a spirited e-mail exchange with a well-known and highly accomplished Lean practitioner, someone I have been friends with for more than 15 years. The former executive, now a very successful Lean consultant, was responding to a Lean Leadership News article in which I criticized consultants for not making the “Respect for People” principle prominent in their work. They must teach “The Toyota Way,” not “The Toyota Half-Way,” I said. I would like to recount this exchange for you because there is much to learn from it.

My friend said to me that the C-level executives ignore the “Respect for People” principle because their overriding concern is profits, and so consultants have to focus on Lean tools and cost savings because otherwise they would not have a business. He said that consultants must deal with imperfect clients, and that they must understand the world from their customer’s perspective. Also, he said that the “Respect for People” principle is typically addressed with the client after the contract is secured as they coach the client through their Lean transformation. He finished this portion of his feedback by saying that in the final analysis, the C-level’s livelihood is based on profits, not on “Respect for People.” That is their reality.

I do understand the C-level world-view and appreciate the demand the job places on them. I also understand there is an abundance of Fake Lean (incredible numbers of layoffs and other zero-sum outcomes), remarkably few examples of Real Lean, and that nobody is exempt from improvement no matter who they are or what their reality is. And, I understand it is the “Respect for People” principle that enables continuous improvement, not the other way around. Therefore, the “Respect for People” principle is the profits generator.

My friend, who has long misunderstood my work as being focused on “ideal Lean” or “pure Lean,” suggested a better way for me to add value was by focusing on the transitional issues faced by these leaders. He thought my work would have greater impact if I addressed the issues that brownfield (existing) companies face, and I should understand the voice of the customer and stop demonizing C-level executives. If only I would put myself in into their shoes and understand their world.

My focus has been on “Real Lean” (applying both the “Continuous Improvement” and “Respect for People” principles), not “ideal Lean” or “pure Lean.” Aspirational goals, if I have offered any, are practical devices to help people improve their performance; to guide them towards better outcomes. All 16 of my books speak to transitional issues in a brownfield environment, as do all the papers that I have written – all of which have appeared in practitioner-oriented journals. The brownfield is my background; it is the enduring frame of reference for everything I do. Other people write about greenfield Lean.

Rather than demonize C-level execs, I simply establish reasonable expectations of highly compensated people who choose to be in leadership positions, and who are responsible for the workplace and the livelihoods of other people. Holding a C-level position does not entitle one to deference or to stop learning how to be a better leader,  just as being the best set-up man does not entitle one to continue doing 4-hour set-ups. Nobody is exempt from improvement.

Most people know that my writing is very direct. Some C-level executives may be offended by my writing, perhaps because I am close to the truth or because I challenge deeply held beliefs and assumptions. My friend appreciates that I have the fortitude to “say it as it is,” because not too many people will do that. And, on second thought, he agrees that my writing offers practical transitional coaching to help C-level executives move from the current (brownfield) state to the future state.

I truly understand the importance of profits. So I coach executives to learn that focusing on profits is to focus on results, and instead they need to learn to focus on process and results. And I coach them to learn that the “Respect for People” principle is the profits generator and it must not be ignored. The “Respect for People” principle is what makes processes work, so that material and information flow, which, in turn, is where the money is. It is where the growth is. It is where the enterprise value is. And, it is where the C-level’s livelihood is.

Finally, what about consultants? Historically, those who ignore the “Respect for People” principle have achieved far greater financial success than those consultants who have made it central to their work. That is because for a long time, customer demand for REAL Lean and incentives for changing how consultants go to market have been lacking, which, in turn, helps perpetuate Fake Lean (what I call “The Toyota Half-Way”). REAL Lean is, apparently, an ugly, unsellable product. Consultants, however, are great at finding ways to get customers to buy ugly products. So, go do your job. Sell REAL Lean. The future of Lean likely depends more on you than anyone else.

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