In recent decades, we have become accustomed to frequently seeing the disappearance of a large number of companies that, a priori, seemed to be in good health. In less than a century, the life expectancy of large corporations has fallen by more than 50 years, from an average of 67 years at the beginning of the 20th century to a mere amount of 18 years today. The vast majority of analysts expect this trend to continue in the future. Some studies even go a step further, claiming that 75% of the organisations currently in the S&P500 will have disappeared in less than a decade.
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In contrast to the volatile and unpredictable environment affecting the vast majority of Western organisations, there are more than 20,000 companies in Japan that are still in good health despite being more than a century old. An extensive list that, just by way of anecdote, includes the Nissiyama Onsen Keiunkan, a hotel founded in 705 which has the honour of being the oldest company in the world.
Professor M. Kanda has studied these long-lived companies for decades to identify patterns that they all share, some of which may help to understand why they live so long. The main findings of their studies indicate that these are mostly family-owned companies which, regardless of their evolution, had a clear focus on satisfying the client’s needs and offering an excellent product. The purpose of its existence had never been limited to making a profit from its activities.
In the book ‘Tree ring management’, T. Hiroshi explains this business model in detail, equating the life of an organisation with that of a tree and arguing that organisations which focus their objectives on profit (fruit) are likely to kill the company itself. Using the metaphor of the tree, the author concludes that a gardener should dedicate his efforts to ensure that the tree grows strong and healthy, as the benefits are a consequence of this care and dedication.
Following this approach, we can say that the management of a company should devote its efforts to cultivating a specific culture and promoting certain action principles. That is the only way to achieve results better than those of your competitors.
Organisational culture
We could define the culture of an organisation as the sediment which, over the years, is deposited by its leaders’ behaviour, which we can also understand as a transmission process of habits and attitudes throughout time. This sediment is the organisation’s engine and has the capacity and power to propel it to success or, depending on the case, to mediocre results and collapse. It is the engine which can either generate innovation or fall into stagnation. It can promote transparency or secrecy, encourage teamwork or individualism and competition between departments, thus generating internal winners and losers.
Therefore, the culture of an organisation’s health is a matter for top management to address directly. It is not an aspect to be delegated to improvement departments and, even less so, to external managers who are experts in people management or lean methodologies. Managers must devote their own time to creating a culture which encourages the transmission of specific values. To a large extent, because organisational culture has a direct impact on the performance of both individuals and teams.
Technology is not the answer. Successful change in organisations is achieved by acting on all elements of the system, generating the routines necessary to turn objectives into actions and actions into results sustainably.
"Lean" culture
When we talk about “lean” culture, we refer to a set of action principles applied by companies working under the umbrella of continuous improvement. This is not a minor change, nor can it be seen as a quick process, as it requires a change in the behavioural habits of all employees working under the same umbrella.
For this reason, before adopting a system built on a specific “lean” model, it is necessary for management to consider whether the values promoted by this model are in line with the company’s own culture. In lean culture, we can summarise these values in the following four points:
- Purpose. Ambitious long-term insight and objectives shared by the whole organisation at all levels. All staff must be able and willing to contribute to achieving this insight.
- Process and continuous improvement of operations. Availability of lean methodologies to achieve this continuous improvement objective.
- Respect for people. Ability to develop people individually and teams collectively.
- Problem solving on the ground. Analysing each situation on the ground in order to have real information on the facts and to be able to build consensus on the actions to be implemented.
Obviously, “lean” culture does not respond to a monolithic and standardised work scheme that we can copy from one organisation and paste it into another one. On the contrary. In every organisation, before starting an implementation process, it is necessary for the management to define in detail what the four principles mean. Only on the basis of this commitment is it possible to build a whole system based on lean culture.
Naturally, many of the organisations which have started their journey into the world of continuous improvement have simply replicated those parts of a programme that they knew had worked for others. And, as one would expect, copying something which works in a leading organisation does not automatically make another company excellent.
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"Lean" culture results
It does not seem sensible to think that a company can last forever, but it does seem logical to ask what has gone wrong when an organisation collapses unexpectedly or prematurely.
Many companies around the world have worked on the implementation of lean manufacturing programmes and improvement dynamics over the last decades achieving no tangible results.
20%
An article in ‘The Economist’ published in 2000 revealed that only 20% of companies which had initiated an improvement programme had achieved the expected benefits. Around 60% of the organisations had achieved improvements for a short period of time and 17% had seen no improvement at all.
The adoption of a lean culture can only be tackled successfully if management is able to approach cultural change as a task for which it is responsible and which must extend throughout the organisation.
We are at your disposal to explain the details of a real change, an implementation of “lean” principles that will lead your organisation to achieve the results you want, and to face the challenges you need to overcome with guarantees.
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