Lean times for innovation

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Ex. 1 Suggest your title of the article and explain why.

Text 1

Unit4 Production Management

The best way to create new products is to create new work practices, writes Simon Caulkin.

It's often said that the UK has an innovation problem: it's good at inventing, but hopeless at turning the new thing into a commercial product.

So the official emphasis is on more research and development and scientific innovation while Harvard professor Michael Porter, in his report on UK competitiveness, urges companies to develop more innovative, higher-value goods.

Like all good cliches, the 'innovation deficit' contains a nugget of truth; but also like all cliches it has been repeated so many times that it has been all but drained of meaning. Yes, of course companies should innovate: that's what companies are for. Innovation, however, is not only a question of new products and services, but also the way companies do things - their practices and processes.

How things are made is often ignored but in fact it's an essential complement to the sexier field of product innovation. Trendy new products aren't much use if you can't make them properly (BMC and its successors reportedly never made a penny out of the original Mini). Indeed, some new products emerge out of new processes.

Moreover, process innovation is one of the best ways of stealing a competitive march on rivals. By adopting new production methods, Airbus UK boosted productivity in wing assembly by 25 per cent and quality by 40 per cent in six months. In recent research, the consultancy McKinsey identified innovation diffusion - the rapid take-up of promising management practices - as the single most important means of tackling UK's productivity problems.

The most important element in these innovative practices is the approach known as 'lean', which concentrates on cutting down the waste, variability and inflexibility in organisations that blocks them from responding to customers.

Such approaches are central to productivity and innovation, notes London Business School professor Chris Voss, who heads a research programme studying promising practices for the Advanced Institute for Management. ResearchLean is therefore a key link between macro- and micro-productivity issues.

Three McKinsey consultants - John Drew, Blair McCallum and Stefan Roggenhofer - have brought this alive at company level in a new book, Journey to Lean (Palgrave Macmillan).

This down-to-earth, nuts-and-bolts account claims to be the first to address the issue of 'stickability'. If lean works - and since it started in Japan in the 1950s there is plenty of positive evidence - why are companies so slow to pick it up? And when they do, why does it so often fail to stick, success fading into mediocrityas the bad old habits reassert themselves?

The answer, as the authors note, is that 'lean changes everything'. Much more than a collection of problem-solving tools and techniques, lean is 'an alternative to mass production, not a complement to it' in which production mix and quantity are dictated as directly as possible by the customer.

Redesigning the company's operations from that perspective involves business-wide changes, which can only be done through people, not to them. Since process innovation is delivered on the front line, employees take a much bigger role, for which they need different mental as well as physical equipment. The investment emphasis switches from machinery to people.

By the same token, managers are required to stop managing at one remove and engage with the shop floor or office where the issues surface - an unfamiliar and revealing exercise. Changes have to be supported by different pay and other administrative systems.

As the first part of the book describing the lean landscape shows, many of the changes are counter-intuitive. Under lean, you don't hide problems, you bring them to the surface, even if it means stopping production. Being responsive to the customer doesn't mean building more stock, but less. The economies of scale that managers have been brought up on no longer apply - in fact the whole apparatus of mass production is now a liability, not an asset.

In the book's second half, a fictitious UK manufacturing company embarks on the lean journey, encountering the practical pitfalls on the road. One is the failure to anchor the operational changes with institutional ones. Another is the temptation to take short cuts.

The blunt fact is there aren't any. You can't think yourself into a new way of doing things; there is no alternative to doing it. That goes (especially) for managers, and is why apparent remedies like outsourcing and IT may turn out to be painful mistakes.

Outsourcing can be a way of avoiding the hard work of internal improvement; in general, 'too many managers have an exaggerated sense of the role new technology can play in improving performance'.

Add 'r' to lean and you get 'learn', and that's what lean is: organisational learn ing in action. No other car company can replicate Toyota's operational excellence because it contains 50 years of accumulated knowledge of responding to customers.

'If you're serious about lean, it becomes your strategy,' says Drew. Or as BP's John Browne puts it: 'Our organisation is our strategy.' Quite so. Not every organisation can invent a product that will revolutionise the world; but every organisation can find a new way of doing things better every day.

Simon Caulkin, The Observer, Sunday 23 May 2004

Ex. 2 Find synonyms of the following word in Text 1 and give their definitions:

-recognized goods (para 1);(commercial product)

-marketability (para 2); (competitiveness)

-novelty shortage (para 3);(innovation deflect)

-partially acuraccy (para 3); (nugget of truth)

-to be in fashion (para 4); (trendy)

-rivals (para 5); competitors

-fundamental (para 9); (nuts and bolts)

-second-rater (para 9); (mediocrity)

-manufactory (para 12); (shop floor)

-trap (para 14); (pitfall)

-short cuts (para 14); (reduction)

Ex. 3 React to the statements: true \ false. If it's false, correct it:

1. It's good at inventing, but hopeless at turning the old thing into a commercial product.(f)

2. Innovation means not new products and services, but also the way companies do things - their practices and processes. (t)

3. Process innovation is one of the best ways of stealing a competitive march on shareholders. (f)

4. 'Lean', which concentrates on increasing the waste, variability and inflexibility in organisations. (f)

5. Research Lean is therefore a key link between macro- and micro-productivity issues.(t)

6. If lean works - and since it started in the USA in the 1960s there is plenty of negative evidence. (f)

7. Since process innovation is delivered on the front line, managers take a much bigger role, for which they need different mental as well as physical equipment. (f)

8. In case of lean production, problems are not hidden, they are very transparent. (t)

9. Economy of scale can be a way of avoiding the hard work of internal improvement. (f)

10. Toyota has a 50-years successful experience of implementing lean production. (t)

Ex 4 Discuss in groups: Group A: Advantages of lean production;