This CEO Asks if Lean is "Just a Freakin’ Hobby" or a Way to Transform Your Business

For episode 283 of the Lean Blog Podcast, I spoke with Lantech CEO Jim Lancaster. Jim is also the author of a new book, The Work of Management: A Daily Path to Real Improvement, which documents his dramatic experience leading a Lean transformation not once but twice at Lantech. 

As Jim explained, he took over Lantech in 1995 at age 28, when his father wanted to move into a product development role. Jim’s father was the inventor of Lantech’s stretch wrap technology, which is the clear film that encases goods on shipping pallets that started the company in the 1970s. Today, in addition to its sales and manufacturing headquarters in Louisville, Lantech has sales and manufacturing facilities in The Netherlands, and sales and service operations in Australia and China. Lantech’s annual gross sales exceed $130 million and it employs approximately 475 people.

A lot of that growth is attributed to Toyota’s Lean management principles first brought in to Lantech in the 1990s, as chronicled in Lean Thinking, the Harvard Business Review, and other publications.

Their First Lean Transformation

“The short story is we were in pretty big trouble in the late 80s early 90s when we at Lantech lost a patent case on a core piece of technology around stretch wrappers,” Jim said.

“We promised to deliver our customers a machine, it’s just that we weren’t real sure which month it would be in that they would get it."

We weren’t all that profitable and had a fairly large debt load that had accumulated in trying to grow the business. And in 1990 or so, right after this happened, my father ended up having to let go our operations director because we just couldn’t get it under control. I would call it luck, he found a gentleman who was working for Danaher who decided to move to Louisville and come help us with our operations. This fellow’s prerequisite for coming here was to put us on a Lean journey and to get involved with a consulting firm called TBM and another one called Shingijitsu. So my dad, in desperation, said, ‘absolutely.’”

Jim explained the transformation from this initial Lean journey was dramatic and happened quickly.

“We started doing Kaizen events, and the impact was just incredible,” Jim said.

“We essentially converted all of our products and production lines in about a year and a half. And then we went to work on the office components because we could build a machine faster than we could enter an order pretty soon after we started the process. And it had just an enormous effect on us, we freed up something like 60 or 70 people and we redeployed them to product development and sales, which is where I was at the time, and we utilized that extra capacity in product development and sales to grow the business, and we doubled the business in the next couple of years. So Lean is what facilitated that process.”

Jim explained that there was a connection between the consultants used during that transformation and James P. Womack, Daniel T. Jones, who came to look at Lantech as one of the early adopters of Lean in the United States.

After "Lean Thinking"

In the years that followed the release of the book, which saw people touring the factory to learn how a company committed to continuous Lean improvements operated, Jim became concerned that Lean activities weren’t having the impact they once did. While the company’s results continued to improve, thanks to the big investments in technology and sales that continued to grow, it was clear to Jim that by the late 90s impact on the business from Lean activities had stalled.

“There’s times where you’re making improvements and they don’t quite hit the bottom line yet, but you just know they’re right and they’re absolutely making an improvement because you can see the waste just come out of a system or a process. And there’s other times when maybe the results are looking better but you look at what you’re doing and know you’re not really making any difference,” he said. 

Through our conversation, Jim came to the point that the type of Lean approach used at Lantech in the 1990’s and the kind they employ now differs. Today, training and teaching is at the core of their improvement efforts as it offers the best gains for their efforts.

“So the difference, in the 90’s was we ran Kaizen events to really convert an area from batch to one piece flow or to take waste out of a business process; today we run workshops on for example standardized work, or on problem solving, or on pull, and the primary purpose of those workshops is for the people in the workshop to learn. The by-product is an improved process in the area. And the results are not overly different in terms of the change in the environment, but the focus of the preparation and how you think about team make-up and how you think about what you do in the report outs, all that changes when your primary focus is development. That’s the only way I get enough improvement. Now we’ve got 500 and some odd people, I can’t have a KPO office [Kaizen Promotion Office] with two or three people and have a meaningful impact on the business, I’ve got to have all our team leaders understanding these principles and able to implement them and train their folks.”

Jim stressed the importance of the development of people and buy-in during our conversation as well as the need to focus on improvements that are fixing pressing needs within the organization.

“If we’re not creating believers if you will, we can’t sustain the improvement and we certainly can’t get any scale. And if we’re not working on the most important things we got in the business, then everybody already knows that it’s just a freakin’ hobby. So it’s a critical element for people to also learn, and also learn what’s important to the business.”

One of the key business problems at Lantech was deterioration. The Lantech Daily Management System, which is outlined in The Work of Management, was created to fix that issue.

 “If we don’t a proactive process that’s happening daily, that will go back to its original state very quickly. What I realized was that for us to be able to accumulate competitive advantage, which means accumulate benefit over our competitors, we had to plug the hole in the bottom of the bucket, if you will, of all this improvement we were doing,” Jim said. “That deterioration is such a sucker-punch because it tries to draw you into blaming people for ‘not having the intestinal fortitude or accountability system in place to hold it,’ and that’s just the furthest thing from the truth, but that’s the even bigger danger."   

What About Healthcare?

I wrapped up our conversation asking Jim about his thoughts on healthcare in his community of Louisville with respect to Lean. While he has run into a lot of healthcare professionals in places like the Lean Enterprise Institute’s conferences, etc., he hasn’t really had the opportunity to speak to healthcare leaders locally. With that said, like all of us he did have enough personal experience with the healthcare environment to see the is opportunity there.

“What I’ll say is work is work,” Jim said.

“It’s really not any different than the kind of work that we manage. The challenge I see in healthcare is that they’ve got some cultural issues between doctors, and nurses, and administrators that culturally are different than manufacturing that poses a bit of an issue.”

Jim offered the great analogy of a traffic cone. Depending on the size a traffic cone is somewhere between five and 25 pounds and it’s made out of plastic. And yet if you put out a traffic cone in front of a parking space people will 99.9 percent of the time not park in that spot, even though they are driving a 3,000-pound car.

“The reason I make this analogy is that some of these cultural elements between doctors, and nurses, and administrators are like a traffic cone. They look impenetrable, they look huge and they’ve always been there, they weigh 25 pounds, they’re made out of plastic, and they’re sitting in front of a parking spot. The reason I say that with such vigor is that I see that in my own organization.”

If you'd like to listen to it, the full audio interview with Jim Lancaster is available at www.leanblog.org/283. You can also download a PDF summary of the discussion via that link.

?Mark Graban (@MarkGraban) is a consultant, author, and speaker in the “Lean healthcare” methodology. Mark is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen. Mark is also editor of the book Practicing Lean.

He is also the VP of improvement and innovation services for the technology company KaiNexus and is a board member for the Louise M. Batz Patient Safety Foundation. Mark blogs most days at www.LeanBlog.org.