5 Lessons from the Shop Floor

“I know the last few days have been difficult for us all, but I want to be clear that nothing takes away from the huge amount of passion and expertise that I know exists in this business, or from what I believe we can build in the future.” E-mail to employees from Tesco CEO Dave Lewis on September 25, 2014.

Tesco, the multinational grocery and general merchandise retailer headquartered in the UK is in a major crisis. An accounting scandal that unearthed a $400 million gap in profits last month as well as declining sales from increased competition has newly named CEO Dave Lewis scrambling to turn the situation around. His answer? Send nearly 4,000 employees from Tesco’s headquarters, including senior executives, to work in his stores over the next three months. His program, called “Feet on the Floor,” is designed to get managers out of their “ivory towers” and into the stores to better understand their employees and customers.

This is a great example of a CEO who recognizes the value of gemba. Gemba is a Japanese term meaning “the real place.” In lean manufacturing terms, it means the shop floor, the place where real value-added activities take place, real problems occur, and real solutions are implemented. In other industries, gemba might be the call center, the warehouse, the construction site, or in the case of Tesco, the retail store.

One of the biggest mistakes companies make today is that leaders are too far removed from “the real place.” They are making decisions and trying to solve problems far away from where the actual value-added work is done. Taiichi Ohno, father of the Toyota Production System, had an interesting way of teaching the value of gemba to his engineers. He would take them on the shop floor, draw a circle, and make them stand in it for two hours. When he returned, he would ask them what they had learned. If he wasn’t satisfied, they would have to repeat the process.

Taking a cue from Mr. Ohno, we ran a program in our company called “Fridays on the Floor.” On the first Friday of every month, the plant leadership team would spend four hours on the shop floor. Instead of observing, however, managers would “work” along side manufacturing employees in different departments. Managers then shared their observations to the rest of the leadership team. What we learned changed the view of our business completely.

1. There is a significant gap between management expectations and reality.Despite the investments and improvements we had made in the plant, we were shocked to still find inadequate tools and equipment as well as inefficient layouts. We learned the most important point of gemba is to face reality. There is no substitute for witnessing first-hand how your employees add value.

2. Employees are creative and innovative and care about the success of the company. Throughout the plant, we found examples of processes that had been improved by employees to be more efficient and effective. We learned that “kaizen,” the practice of continuous improvement, was alive and well with our workforce. We only needed to tap into that talent to accelerate the process.

3. There is a rich and useful world of “tribal knowledge” to be discovered. The collective wisdom we found on the shop floor was incredible. Employees knew which procedures, work instructions, and training tools were good and ones that were not. They knew when equipment needed service, when tooling needed to be changed, and when there was a potential for a quality problem. Turning “tribal knowledge” into standard work and best practices became another opportunity for us to speed up our continuous improvement efforts.

4. Barriers are removed when management and employees work together. We found that by getting out on the shop floor and working with employees, they saw us differently. They respected us for being willing to get dirty and see the production line from their perspective. In turn, we respected them for their ability to produce high quality products with less than ideal tools, equipment, and procedures. The gap between “us” and “them” closed significantly as a result of this program. This led to increased trust and better communication.

5. Time on the floor makes you a better decision maker. The more time we spent on the shop floor, the better informed our decision-making became. We developed a better understanding of the full capabilities and limitations of our organization. We were also exposed to more challenges and opportunities for improvement. The time spent with shop employees also made us aware of the untapped knowledge we had in the organization.

Time will tell if Dave Lewis’ plan to get his leadership team exposed to gemba will work. There is no doubt they will be exposed to direct and real feedback from employees and customers. Each leader will develop a richer understanding of the problems that are affecting Tesco and the opportunities for improvement. The barriers between the leaders and store employees will be removed and Tesco’s management team will be better equipped to make critical decisions for the future of their business.