The Lean Machine: How Harley-Davidson Drove Top-Line Growth and Profitability with Revolutionary Lean Product Development

The Lean Machine: How Harley-Davidson Drove Top-Line Growth and Profitability with Revolutionary Lean Product Development

by Dantar P. OOSTERWAL

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Product Details

ISBN-13: 9780814432884
Publisher: AMACOM
Publication date: 01/13/2010
Pages: 272
Sales rank: 514,013
Product dimensions: 6.00(w) x 8.90(h) x 0.70(d)
Age Range: 18 Years

About the Author

DANTAR P. OOSTERWAL (Batavia, IL) has led global innovation improvements as Vice President of Innovation at Sara Lee, as well as Director of Product Development at Harley-Davidson.

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Introduction

Learning is not compulsory . . . neither is survival.

W. Edwards Deming

This book is written with one purpose in mind: it is intended to help you improve the effectiveness and efficiency of your product development system. The objective of this book is to provide you with the insights necessary to develop more new products of higher quality in less time with your existing organization. This is the story of my personal journey of learning and discovery and is intended to encourage you on your improvement journey, or perhaps persuade you to embark.

In 2003 Harley-Davidson was awarded the Outstanding Corporate

Innovator (OCI) award by the Product Development Management

Association (PDMA). The OCI award was won based on conventional phase gate thinking.1 Through the application of lean principles to product development, the same organization reduced their development time by half and quadrupled new product development throughput. This book provides the organizational learning practices and the knowledge-based development principles to enable your organization to achieve similar or better results.

This is a true story, not a novel. Some poetic license has been taken in the chronology of events to make the story meaningful to the reader because, as with any good road trip, the learning journey does not necessarily happen in a neat and orderly fashion. Any learning journey has its fair share of wrong turns and dead ends. To convey the message in a readable fashion our experience is abbreviated and presented more linearly than it actually happened. All of the people in the story are real people. In some cases real names have been used to recognize and acknowledge their contribution. In other cases names have been changed to protect identities.

All of the information presented in this book is actual data. If the information is discoverable through publicly available sources, then the actual numbers are presented unchanged. However, if the actual numbers are not generally available through public means, then the numbers have been modified to convey the message without providing actual values to maintain confidentiality.

Overview

The story has three parts: The current state of product development a the learning environment and organizational learning fundamentals a and the principles of knowledge-based product development. The book is structured to first allow you to see product development as an integrated system and recognize that improvement of the system is only achieved through a learning journey, then provide you with means to take the journey for yourself.

In Chapter 1 the story begins with the current state of product development, based upon firsthand experience working at a car company

I’ve chosen to call ‘‘Roaring Motors.’’ It is the way I was taught to develop products. It is the way almost everyone I know learned to develop products. It is what I see at nearly every company I visit. The current state of product development lays the foundation for frustration a and subsequent motivation to find a way to work smarter rather than harder.

Chapters 2 through 7 describe the learning environment that was present at Harley-Davidson and which allowed this journey of discovery.

These chapters present principles of organizational learning neces-sary to improve product development. They describe how system dynamics and organizational learning enable continuous improvement in product development. The foundational elements for effective product development necessary to build a knowledge-based development system are also described in these chapters.

Chapters 8 through 16 describe the learning and discovery journey in the application of lean principles, which resulted in knowledge-based product development. These chapters describe the principles necessary to make product development effective and the improvement outcome you should expect.

The Importance of Product Development

Product development is the lifeblood of our companies and it fuels the economy. Product development is the road that innovation travels on the way to market. It is the key which unlocks dreams and the spark which ignites the future. A recent survey by the Product Development

Management Association (PDMA) identified that the top performing quartile of companies in their study derive nearly 48 percent of their sales revenue from new products and nearly half of the company’s profits from new products (products in the market five years or less).2

As the effective life span of products and services in today’s market decreases, it drives the need for shorter product lifecycles. In some cases the development time for new products exceeds the life expectancy of the product in the market. The innovation rate necessary for a company to be successful is rapidly accelerating. The driver for business success is evermore becoming a company’s ability to innovate.

The Boston Consulting Group (BCG) conducts a global survey of senior business leaders annually to identify the strategic direction of firms. The results reinforce the importance of innovation; recent findings from these surveys indicate that innovation is consistently a top strategic priority. In 2007 the BCG survey polled 2,500 senior executives from fifty-eight countries across all industries and found that 66

percent of the companies identified innovation as one of their top three strategic initiatives. The study also determined that over 50 percent of the senior executives polled believed that their company did not innovate well in spite of this strategic focus. Most of the respondents indicated that their company did not receive the return on investment of innovation they expected. A similar study by the Economist Intelligence

Unit sought to understand the connection between innovation and company success.3 In this study, 87 percent of the senior executives polled identified innovation as either important or critically important to the success of their company. The study identified that the beneficial impact of innovation efforts goes far beyond corporate performance and actually drives the national economy. The development of new products and services is increasingly being identified as the engine for growth and prosperity.

Former Commerce Secretary Carlos Gutierrez has said, ‘‘Innovation is a driver of our economy.’’4 The role that innovation plays in the economy is so important that the United States Commerce Department has made the creation of a universal system of metrics to evaluate the impact of innovation on the economy their top priority. The importance of innovation is echoed in a recent Council on Competitiveness report, which identified that as manufacturing capacity becomes globally available at low cost, the competitive value of manufacturing declines.5 This global competitiveness study emphasizes that innovation is now the primary source of value for United States companies and American workers. The president of the council, Debora Wince-

Smith summarized the report by saying, ‘‘The only driver for productivity growth for the U.S. is our innovation capacity.’’

The need for innovation to drive economic growth goes well beyond the United States or the primary developed nations. China and

India have recognized the importance of innovation and are beginning to break out of their position as members of the underdeveloped world through investment in knowledge creation and innovation. These countries are embracing a culture of new product development by establishing favorable laws and regulations promoting learning and product development. China has recently become the second largest investor in R&D spending, surpassing even Japan. Only the United

States continues to outspend the rest of the world as a single nation.6

According to Dirk Pilat, head of the Organization for Economic

Co-operation and Development’s (OECD) Science and Technology

Policy division, ‘‘The rapid rise of China in both money spent and researchers employed is stunning. To keep up, OECD countries need to make their research and innovation systems more efficient and find new ways to stimulate innovation in today’s increasingly competitive global economy.’’7

Innovation has become the driver for productivity and growth for every developed nation, as well as for every company that is attempting to grow its business and control its own destiny. Whether country or company, innovation is the differentiator for success. Those who do not innovate will fall behind and will have their fate determined by those who do. This book shares lessons and principles to allow your organization to bring more innovation to market faster with fewer problems through a more effective and efficient product development system.

For more information about the principles enunciated in this book a see www.theleanmachine.org.

Table of Contents

Contents

Acknowledgments

Introductioni

1 Working Hard

Springtime in Paris

The Concurrent Product Development Process

A Reality Check

Unexpected Competition

Problems Late in the Development Process

2 The Harley-Davidson Environment

Harley-Davidson Was Different

Consensus Decision Making

We Fulfill Dreams

Lessons from the Dark Days

The Circle Organization

Consensus-Driven Organization

Managing Conflict

The Harley-Davidson Business Process

Organizational Learning

3 Harley-Davidson’s Product Development Leadership

Learning Team

The PDL2T Journey

Learning Organizations

4 The PDL2T

Systems Thinking

Learning to See the Product Development System

Learningful Conversations

Creating Shared Vision

5 Firefighting and the Tipping Point

The MIT Connection

Firefighting

The Tipping Point

Past the Tipping Point

Lessons from Beyond the Brink

6 Cadence and Flow, Bins and Swirl

The Outstanding Corporate Innovator

Product Development Flow

Product Development Cadence

The Application of Cadence and Flow

Bins

Heuristic Rules of Thumb

The Innovation Swirl

7 Supply and Demand

The System Dynamics Model of the Motorcycle Business

A Soft Landing by Reducing Shipments

Generating Product Demand

Developing New Products

8 A Left Turn: Implementing Lean Principles in Product

Development

Don’t Bring Lean Manufacturing Upstream

The Roots of Knowledge-Based Product Development

The Systems Approach to Flight

Work Smarter, Not Harder

9 The Product Development Limit Curve

Haste Makes Waste

Bad Systems Beat Good People

Design Rework Loops

Product Development Is Predictable

10 Integration Points and False Positive Feasibility

False Positive Feasibility

Design Cycles and Integration Points

11 Learning Cycles

The Learning Cycle

Set-Based Product Development

12 Set-Based Design

A New Framework for Product Development

The Second Piece of the Limit Curve Puzzle

13 Leadership Learning and Pull Events

The Leadership Learning Change Model

Early Pull Events

Creating Leverage Through Pull Events

14 Quickening Product Development

Railroad Planning versus Combat Planning

Establishing and Using Help Chains

Using Visual Management

15 Oobeya

Collaboration Using the Oobeya Process

The Oobeya Process

The Wall

Quickening the Pace of Innovation

16 Knowledge-Based Product Development

Indications of Success

Creating Change

Notes

Index

Customer Reviews

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The Lean Machine: How Harley-Davidson Drove Top-Line Growth and Profitability with Revolutionary Lean Product Development 4.7 out of 5 based on 0 ratings. 3 reviews.
RolfDobelli More than 1 year ago
The Harley-Davidson Motor Company revels in the marketing image it has crafted and maintained for more than a century. Mere mention of the motorcycle giant conjures up visions of tattooed, muscle-bound renegades blazing an intimidating trail on the nation's highways. Harley's corporate environment exists in stark contrast to this image. Their staff features progressive, astute individuals who enjoy a stellar reputation for innovative business practices. Author Dantar P. Oosterwal, Harley's former director of product development, is eminently qualified to critique the organization's operation. To his credit, Oosterwal resists engaging in self-congratulatory back-slapping. Instead, he presents a backstage tour of Harley-Davidson, expounding on its philosophies, procedures and problem-solving methods. Oosterwal, who earned a master's degree in management at MIT, focuses on business theories and dynamics, not personalities. While the book is not necessarily geared toward novice professionals, getAbstract nevertheless believes that Oosterwal's mantra should resonate loudly within corporations everywhere: Practice innovation and emphasize quality - or risk extinction.
Anonymous More than 1 year ago
MagicMom50 More than 1 year ago
Get a copy for all of your lean team members