It’s now been about four years since the Dow began its precipitous decline, and about three since the invention of the expression “too big to fail” entered our lexicon. Then, two years ago, the US Treasury became a majority stockholder in another entity deemed too big to fail. Today, the expression seems apropos once more as debate rages over the US debt ceiling. Not being particularly savvy of these financial maneuvers and not wishing to join the politics, I’ll simply note that the tactical solution, although perhaps unavoidable, always seems to involve throwing money at the problem.
Happily, this is not a solution that most small and medium-sized businesses are able to exercise. They are therefore more inclined to look for solutions that don’t involve spending. An owner of a small manufacturer complained to me recently, “We just don’t’ have all the resources that big guys have.” I replied, “You don’t know how lucky you are!” The solutions to what ails most organizations today cannot be bought with cash, but require a personal investment of time to learn and practice. Managers in larger organizations do not operate that way. Saying “time is money”, they choose to spend their time doing what they’ve always done and delegate the learning to often powerless mezzanine staffs. Why spend the time when you can spend money? The answer in the case of Lean transformation is that managers never get to understand what Lean is all about if they only provide cash support. Worse, their unchanged behaviors and practices, ultimately subvert any gains that might be achieved through localized improvement efforts. It seems that the only beneficiaries of this approach are the members of the mezzanine squads, whose resumes are bolstered with Lean accomplishments. These folks eventually move on to other businesses, hoping to find a more committed management.
In 2003, Hajime Ohba, then General Manager of the Toyota Supplier Support Center, was asked why U.S. manufacturers have not had greater success with TPS (Lean). He replied, “First, management does not understand what TPS is and second, the pressure to deliver quarterly earnings prohibits strategic thinking.” Mr. Ohba’s comments, six years before the too-big-to-fail theory give new new meaning to the phrase “the love of money is the root of all evil.” (Timothy, 6:10).
At last year’s Northeast Shingo Conference in Providence, Rhode Island Governor Don Carcieri commented, “The difference between government and private industry is that in private industry the money is real, while in government it’s more like Monopoly money.” I worry that in larger businesses – the ones that are “too big to fail” – it’s Monopoly money also. If this is so they may really be too big to succeed with Lean Transformation.