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The Seven Levels and „Lean‟


Catherine Clothier

During the last 50 years, Toyota has developed from small beginnings into a
company that is able to successfully challenge the top 3 car manufacturers in
the world. They have achieved this not by mergers and acquisitions but by
organic growth through the successful development and application of the
Toyota Production System use of lean tools and techniques. As others have
tried to copy this new way of working, it has in recent years received some
bad press on the back of process re-engineering and down-sizing, where it
has become synonymous with cost cutting. Lean done well, however, “...
involves a far deeper and more pervasive cultural transformation than most
companies can begin to imagine.”¹

What is “Lean”?
Lean thinking drives organisations to focus on adding value for the customer
by the elimination of “waste” and the pursuit of “standard work” (one best
way).

The five core principles of Lean are:

1. Specify “Value” as defined by the customer- What is the customer


prepared to pay for?

2. Understand the end to end process of your product/service- Where


is the value added in the process and where are the costs, hand offs,
duplication, waste?

3. Make the work Flow- make the work flow from one added value
element to another by eliminating waste such as errors & waiting or
downtime hence shortening the time from raw material to finished
product.

4. Drive the operation using “Pull” not “Push”- Process work when
it is required by the customer.

5. Aim for Perfection using continuous improvement

It is not, however, something that can just be used in manufacturing


industries.
The Seven Levels and „Lean‟

Lean thinking has been an enormous influence on my business thinking.


It is not just about improving efficiency, it shows how you can fundamentally
transform your business.
—Sir Terry Leahy Chairman and Chief Exec, Tesco

This paper shows how Lean, when done well, fits the model of the Seven
Levels of Corporate Consciousness, and how it can make a significant
contribution towards an organisation becoming „full spectrum.‟

Level 1- Survival (Pursuit of Profit and Shareholder Value)

Values
Benefits Pitfalls
Exhibited

Cost reduction is often the trigger for many businesses starting on


their lean journey. However, in a true lean operation cost reduction is
Cost reduction Cost reduction can be taken too
a bi-product of what is in fact a focus on „value‟- from a customer
far- cutting jobs/ compromising
rather than a shareholder point of view.
safety. This, not unexpectedly,
has the impact of reducing any
Job security is shown here because as a result of implementing lean
further benef its to be gained
Job security tools and techniques the business should become more competitive
from lean, as the workforce will
and provide greater job stability.
naturally fight against this in
order to protect their jobs.
Standardising processes and implementing regimes such as 5S* will
Safety
improve health & safety for employees.

*5s: a simple and effective process for improving the workplace.


Sort- removing the unnecessary from the necessary
Set in order- a place for everything and everything in its place
Shine- cleaning is also inspecting and therefore preventing
Standardise- creating an “obvious office”
Sustain- maintaining and improving the standards set

TOYOTA

TPS (Toyota Production System), then, is the result of efforts to direct all
activities to support the goal of firm survival … It is this focus that enable
Toyota to behave as a natural organism, enabling it to evolve as a truly
emergent system … This is vastly different from the narrow goal of ‘making
money.’
—John Shook Toyota Manager

The New York Times, July 4, 2006, reports:

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The Seven Levels and „Lean‟

Sales data for June, released Monday, showed that General


Motors and Ford Motor hit new lows for market share in the first
six months of the year, while Toyota and Honda posted record
sales for the period.

G.M.’s sales fell nearly 26 percent from last June when it was
the only automaker offering employee discounts to all customers
and posted a 19-year high. Ford’s sales last month declined 7
percent and DaimlerChrysler’s sales were down more than 15
percent.

At the same time, Toyota’s sales in June rose 14.4 percent from
a year ago, and the company outsold DaimlerChrysler for the
third consecutive month.

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The Seven Levels and „Lean‟

Level 2- Relationships
(Relationships that Support Corporate Needs)

Values
Benefits Pitfalls
Exhibited

When building products/ processes these are designed to add value


from the customer point of view. In this context „value‟ means Failure to understand what the
Customer
something that the customer is willing to pay for. By eliminating steps customer actually wants and is
satisfaction
which don‟t add value for the customer, goods and services should prepared to pay for
become faster, cheaper, better

Respect Everyone in the organisation has a part to play and a voice in Paying lip-service only
continuing to improve the business

TOYOTA

Toyota is aligned around satisfying the customer.


—Jim Press Executive Vice President Toyota Motor Sales North America

Respect for people means respect for the mind and capability.
—Sam Heltman Senior Vice President of Administration
Toyota Motor Manufacturing N. America

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The Seven Levels and „Lean‟

Level 3- Self-Esteem (Being the Best, Best Practice)

Values
Benefits Pitfalls
Exhibited

The business focuses on eliminating wasted time and resources.


Productivity Introducing flow will highlight problems and drive a reduction of Is seen by the people as „working harder‟,
Efficiency inventory/ buffers. It is important to understand the required rather than „working smarter‟
rate of production and monitor ongoing performance.

Automation of a process does not always mean


Quality is built into the processes used which should add value improvement. Automating a poor process will
Quality
for the customer not provide predicted benefits. The process
should be improved first

The lean business uses rules and procedures as enabling tools


Without the „enabling‟ an organisation will be
„Enabling for the workforce to improve- i.e. technical standardisation
left with a bureaucracy which will stifle
bureaucracy‟ coupled with enabling
employee creativity
social structures

TOYOTA: From The Executive Summary of The 14 Toyota Way Principles

Principle 2: Create continuous process flow to bring problems to the surface

Principle 3: Use „pull‟ systems to avoid overproduction

Principle 4: Level out the workload (heijunka)

Principle 5: Build a culture of stopping to fix problems,


to get quality right first time

Principle 6: Standardised tasks are the foundation for


continuous improvement and employee empowerment

Principle 7: Use visual control so no problems are hidden

Principle 8: Uses only reliable, thoroughly tested technology


that serves your people and processes

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The Seven Levels and „Lean‟

Level 4- Transformation (Continuous Renewal)

Values
Benefits Pitfalls
Exhibited

Continuous Continuous improvement is seen as a


Employees are active in making improvement suggestions and
improvement- one off big event rather than becoming
implementing changes to identify and eliminate process problems
(Kaizen) part of the every day job

Managers are expected to go and personally observe to understand


Innovation
problems (genshi genbutsu) and work with those „doing the work‟
Accountability Managers dictate the changes
to improve things
Questioning/ rather than involving the workforce
challenging

Employee Individuals are taught how to work together towards common goals
participation and cross functional teams are used to solve more complex issues
The larger team continues to work in „silos‟
Teamwork
Responsibility

The aim is always to level out the workload of the process As the unit aims to work to meet customer
Balance (heijunka) to eliminate overburden to people and equipment. This demand, peaks and troughs not levelled out
Home/ Work allows a business to match capacity and demand and prevent the can cause high demand on individuals to
need for overtime etc. work additional hours

TOYOTA

Every team member has the responsibility to stop the line every time they
see something is out of standard….They feel the responsibility- they feel the
power. They know they count.
-Alex Warren former Executive Vice President, Toyota, Kentucky

The slower but consistent tortoise causes less waste and is much more
desirable than the speedy hare that races ahead and then stops occasionally
to doze. The Toyota Production System can be realized only when all the
workers become tortoises.
-Taiichi Ohno, 1988

Principle 4: Level out the workload (heijunka)

Principle 10: Develop exceptional people and teams who follow your
company‟s philosophy
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The Seven Levels and „Lean‟

Principle 12: Go and see for yourself to thoroughly understand the situation

Principle 13: Make decisions slowly by consensus, thoroughly considering all


options; implement decisions rapidly.

Principle 14: Become a learning organisation through relentless reflection


and continuous improvement.

Level 5- Internal Cohesion


(Development of Corporate Community)

Values
Benefits Pitfalls
Exhibited

Sense of Leaders are grow n from w ithin the business so they The structure does not support such organic
purpose understand the work, understand the objectives of the development, so leaders are brought in from
Shared vision Company and are able to teach this to others outside to „make their mark‟

When problems occur e.g. sales reduce, people are not laid off A short term focus only in these
Trust but are found other useful tasks such as working on circumstances destroys trust
improvement activities

TOYOTA:

...the Toyota Way provides an alternative model of what happens when you
align almost 250 000 people to a common purpose that is bigger than making
money. Toyota’s starting point in business is to generate value for the
customer, society and the economy.¹

Principle 9: Grow leaders who thoroughly understand the work, live the
philosophy and teach it to others.

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The Seven Levels and „Lean‟

Level 6 Making a Difference


(Collaboration with Customers and the Local Community)

Values
Benefits Pitfalls
Exhibited

Strategic
Beating down the supplier or operating a closed
alliances Companies work closely wit h suppliers and even competitors
shop stifles the sharing of best practice and builds
Supplier to help improve products/ processes for their customers
barriers making competition destructive
collaboration

Customers are consulted to understand their needs and to


Customer Assumptions are made about what
ensure that products/ processes are designed around these-
collaboration the customer wants
building in value for the customer

Employee Developing people to fulfil their potential improves Not developing people to reach their potential is
fulfillment motivation which in turn improves the business a big loss of benefit that is not always recognised

TOYOTA:

… consider the stark contrast between the fortunes of Toyota compared with
those of Ford and GM. Granted these companies differ in many ways, but
most everyone agrees that Toyota has built a sustainable competitive
advantage with its suppliers-as-partners philosophy, while Ford and GM are
suffering as a result of their transaction approach to supplier strategy.
-www.industryweek.com

Principle 10: Develop exceptional people and teams who follow your
company‟s philosophy.

Principle 11: Respect your extended network of partners and suppliers by


challenging them and helping them improve.

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The Seven Levels and „Lean‟

Level 7- Service (Service to Humanity)

Values
Benefits Pitfalls
Exhibited

Long term
Developing products/ services that are of benefit to the whole of society
perspective

Failure to develop a long term strategy


Ethics Giving back to society and local communities
to benefit society can result in a loss of
competitive advantage

By focusing on lean a business is continually driving out waste which


Social
ultimately will benefit the planet
responsibility

TOYOTA GUIDING PRINCIPLES

‘..undertake open and fair corporate activities to be a good corporate citizen


of the world.’

‘Dedicate ourselves to … enhancing the quality of life everywhere through all


our activities.’

‘Pursue growth in harmony with the global community through innovative


management.’

Principle 1: Base your management decisions on a long-term philosophy,


even at the expense of short-term financial goals.

CONCLUSION

Setting off on a lean journey is completely congruent with embarking on a


programme to improve an organisation‟s culture. Both require a long term
commitment on behalf of everyone within the organisation, but especially the
managers, in order to reap the rewards that will inevitably follow. As with any
such programme it is important not to become despondent at the first sign of
a problem but to welcome such problems as an opportunity to improve
further.

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The Seven Levels and „Lean‟

RECOMMENDED READING

The Toyota Way - Jeffrey K. Liker

The Machine that Changed the World - James P. Womack, Daniel T. Jones,
and Daniel Roos

Lean Thinking: Banish Waste and Create Wealth in your Organisation -


James P. Womack & Daniel T. Jones

Catherine Clothier
catherine@valuescentre.com
Tel: +44 (0)1706 824692

¹ The Toyota Way : Jeffrey K. Liker

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