Lean driven innovation powering product development at the goodyear tire rubber company

K24197 ISBN: 978-1-4822-5968-19 781482 259681 90000 “Lean-Driven Innovation illustrates that the application of lean principles and practices entails more than simple cut-and-paste impl

K24197 ISBN: 978-1-4822-5968-1

9 781482 259681

90000

“Lean-Driven Innovation illustrates that the application of lean principles and practices entails

more than simple cut-and-paste implementation of factory-floor practices to the complex

knowl-edge work of engineering and innovation… In sharing the compelling story of applying lean

principles to R&D processes in the large, global, complex enterprise that is Goodyear, Norbert

Majerus offers a path for improving innovation processes that readers will find practical and

applicable regardless of their business type or company size.”

—John Shook,Chairman and CEO, Lean Enterprise Institute

“Lean-Driven Innovation provides a set of guiding principles for how to build an innovative

organization that is based on science and hard-won experience The principles are brought to life

by great examples from Goodyear’s impressive lean transformation in R&D This is a must-read for

innovation leaders…”

—Peter T Ward,Director, Center for Operational Excellence, The Ohio State University

“A candid and well-told story of the process by which a strong and innovative engineering

culture incorporated the powerful principles of lean product development.”

—Don Reinertsen, Author of The Principles of Product Development Flow

“Norbert’s work is a particularly impactful effort as it is not purely academic or theoretical, but

rather based and vetted upon the years of hard-fought experiences and knowledge gained at

Goodyear throughout its lean product development journey…”

—Rich Gildersleeve,Chief Technology Officer, DJO LLC

“In Lean-Driven Innovation, Norbert Majerus brings insight and understanding to how Goodyear

successfully applied lean principles to its R&D processes, and he offers readers the know-how

and encouragement to do the same… These principles will help non-manufacturing processes

far beyond R&D as well, such as administration, services, and healthcare.”

—Peg Pennington, Executive Director, Center for Operational Excellence, The Ohio State University

“Norbert Majerus is a remarkable engineer and an extraordinary storyteller This book tells the

story of how he and his colleagues have taken their understanding of lean principles and applied

them to the difficult task of product innovation.”

—Mark L Spearman,Co-author of Factory Physics and Former Department Head, Industrial

and Systems Engineering, Texas A&M University

“In Lean-Driven Innovation, Norbert shares some of his deep knowledge with us, and puts

it in place with clear principles and real examples He shows that focusing on true customer

value—instead of the traditional focus on R&D cost—really pays off, and that building new

value streams is the true objective for a product development organization.”

—Peter Palmer, Senior Manager Process Support, Scania, and Board Member of LPPDE

Foreword by James Morgan and Durward Sobek

POWERING PRODUCT DEVELOPMENT AT THE GOODYEAR TIRE & RUBBER COMPANY

POWERING PRODUCT DEVELOPMENT AT THE GOODYEAR TIRE & RUBBER COMPANY

NORBERT MAJERUS

floor practices to the complex knowledge work of engineering and tion Lean thinking applied to product and process development shares the basic principles of lean operations but goes about actualizing them in very different ways In sharing the compelling story of applying lean principles

innova-to R&D processes in the large, global, complex enterprise that is Goodyear, Norbert Majerus offers a path for improving innovation processes that

readers will find practical and applicable regardless of their business type

or company size

—John Shook, Chairman and CEO,

Lean Enterprise Institute

Lean-Driven Innovation provides a set of guiding principles for how to

build an innovative organization that are based on science and hard-won experience. The principles are brought to life by great examples from

Goodyear’s impressive lean transformation in R&D. This is a must-read for innovation leaders. Although based on a transformation in R&D, the think-ing applies equally well to software development and other project-based knowledge work

—Peter T Ward, Director, Center for Operational Excellence,

The Ohio State University

A candid and well-told story of the process by which a strong and vative engineering culture incorporated the powerful principles of lean product development

inno-—Don Reinertsen, Author, The Principles of

Product Development Flow

Norbert’s work is a particularly impactful effort as it is not purely academic

or theoretical, but rather based and vetted upon the years of hard-fought experiences and knowledge gained at Goodyear throughout its lean product development journey Readers will undoubtedly gain insights into a number

of promising continual improvement processes that may be applied at their companies for immediate and positive impact

—Rich Gildersleeve, Chief Technology Officer, DJO LLC

cesses, and he offers readers the know-how and encouragement to do the same The book is especially effective at showing how Goodyear has been able to make its R&D capacity visible and manageable, repetitively surfac-ing and resolving constraint issues and regularly improving the innovation process These principles will help nonmanufacturing processes far beyond R&D as well, such as administration, services, and healthcare.

—Peg Pennington, Executive Director, Center for Operational

Excellence, The Ohio State UniversityNorbert Majerus is a remarkable engineer and an extraordinary storyteller This book tells the story of how he and his colleagues have taken their understanding of the basics of lean and applied it to the difficult task of product development He is one of the few people I know who has so com-

pletely absorbed the concepts of the book, Factory Physics, that he has been

able to apply them in a completely new environment—product innovation

—Mark L Spearman, Coauthor, Factory Physics,

and Former Department Head, Industrial and Systems Engineering, Texas A&M UniversityWhen I first got to know Norbert Majerus at an LPPDE conference some years ago, I felt he was a remarkable man He was sure of his deep knowl-edge, but he also was very interested in learning more, a lot more This is a

sign of a true lean practitioner In Lean-Driven Innovation, Norbert shares

some of his deep knowledge with us, and puts it in place with clear ciples and real examples He shows that focusing on true customer value—instead of the traditional focus on R&D cost—really pays off, and that

prin-building new value streams is the true objective for a product development organization I love the last chapter “Lean Never Ends,” showing that the journey has just begun!

—Peter Palmer, Senior Manager Process Support, Scania,

and Board Member of LPPDE

GOODYEAR TIRE & RUBBER COMPANY

Foreword by James Morgan and Durward Sobek

GOODYEAR TIRE & RUBBER COMPANY

NORBERT MAJERUS

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Contents

Foreword xiii

Acknowledgments xvii

Author xxi

Introduction xxiii

1 Goodyear Today: Lean Product Development 1

Goodyear Results from Lean Product Development 1

Lean R&D Helps Develop Profitable Value Streams 10

This Lean “Stuff” Really Works 13

Goodyear’s Brief History of Lean Product Development 14

Lean Is a Lot of Work 22

Lean Principles 25

Notes 27

2 Success to Survival to a Foundation for Lean 29

The Golden Age of Tire Technology 29

Early Building Blocks for Lean 36

Early Project Management and Project Teams 36

“Real” Project Teams 37

Knowledge Management 38

Why Knowledge Management? 40

Knowledge Assessment before Experiment 42

Knowledge in a Usable Form—Modeling and Design Tools 43

Sharing/Not Sharing Knowledge 47

Knowledge versus Capability 48

Capturing Knowledge Using Hansei 48

Preserving Knowledge 50

Encouraging the Use of Knowledge 51

Use of Product Standards 58

Knowledge Management Office 60

Stage Gates and the Product Creation Process 61

Technology Creation Process 67

ICP and BMI 69

New Business Objectives 74

Tire Modeling 74

Renewed Focus on Customer 76

TQC 76

ISO 78

Six Sigma and Design for Six Sigma 78

Notes 79

3 The Beginning of a Lean Process 81

The First Kaikaku—Eroding Profits at Goodyear 81

Change Management 84

Changes for the Worse 96

Policemen, Ambulances, and the Downward Spiral 99

Outside Help Does Not Help Out Enough 101

Matrix and Project Management 103

New Approach to R&D Project Management 105

Sponsor 107

Project Charter 107

Project Goals 108

Risk Management 109

Lean Firsts at Goodyear 110

Crusaders, a White Knight, and a Map 111

Our First Value-Stream Map 113

Lean 101 Training 120

Herbie Gets Help 126

The First Lean Process 128

Face to Face with Functional Optimization 133

Notes 136

4 Finding and Removing Waste from Product Development 139

Focus on the Customer 139

What Do Customers Value? 144

External Customers 146

Internal Customers 150

Creating R&D Value 152

Value and Waste 154

Waste Not, Want Not 159

Muda, Muri, and Mura 179

Waste Removal Gets Underway at Goodyear 182

Notes 187

5 Making New-Product Value Flow 189

Break Down Large Projects into Quick Learning Cycles 189

Early Attempts at Visual Planning 195

Finding Our Bottleneck—Herbie Meets Herbie 196

The Kaikaku We Needed 200

Exploring Pull and Flow Concepts 206

From Rope to Kanban 206

From Variable Demand to Leveled Operation 213

Cadence/Takt 215

Standard Work and Flexible Resources 220

Cycle Time and Little’s Law 224

Multitasking 229

Late Start 232

The Turning Point 235

R&D Lean Process Metrics 235

On-Time Delivery and the Law of Utilization 236

The Critical Path 242

Overlapping Activities 244

Other Lean R&D Tools That Help Flow and Speed 247

The Hidden Factory 249

Fast Is Better than Slow 254

Create a Kaikaku 257

Pit Crew Tries to Accelerate Speed 259

Notes 263

6 Lean and Innovation 265

Dispelling Lean Innovation Myths 265

Discovery of Lean Tools in the Innovation Creation Process 271

It Takes More than One Process 275

Execution Phase 277

Kentou Phase 278

Create Capacity and Resources for Innovation 281

Fund the Innovation Space 283

Manage Innovation Talent and Serial Innovators 284

Add Room for Failure .289

Standardize Innovation 290

Manage Incoming Work 290

Manage Work Entering the Product Creation Process 296

Cost of Delay (COD) 297

Manage Work Coming into Technology Creation Process 299

Assess Incoming Work into TCP 301

Manage the Innovation Process 311

Observe the Customer 311

Manage the Design Space 312

Keep All Options Open as Long as Possible 315

Concurrent Engineering 317

Set-Based Experiments versus Iterations 320

Quick Learning Cycles, Scrum, and Sprints 323

Avoid Lean Innovation Killers 328

Not Making Good Use of Standards 329

Limited Tolerance for Good Variability 330

Lack of Tolerance and Empowerment 330

Counterproductive Metrics and Targets 331

Cutting Corners Does Not Increase Speed 334

More Innovation than Ever Before 334

Goodyear Innovation Awards 335

Notes 336

7 Operating the Lean Product Development Factory 339

From Lean Initiative to Lean Function 339

Get the Process Right and Results Will Follow 342

Lean Support—Accounting for Value 344

Responsibility for Quality 345

The End of the Herbie Story—Managing Purpose, Process, and People 348

Lean Purpose 348

Hoshin Kanri 348

Developing Customer Value and Capability 353

Global Goodyear 355

Global Innovation Centers 356

Global Product Platforms 357

One Goodyear 359

Lean Process 360

Start with What You Can See 360

Make Visible What You Cannot See to Detect Process Problems 363

Visual Planning 367

Metrics 371

Collaterals 378

Managing Variability 380

No Problem Is Big Problem 383

Find Problems 383

Fix Problems 385

Lean People 393

Engineers 393

Project Managers (aka “Chief Engineers” at Toyota) 398

Teams of Empowered Experts 401

Lean Management and Leadership 407

Huddles 410

Design Reviews 411

Gemba Walks 412

Respect 415

Accountability 417

Leader Standard Work 417

Humble Servant 419

Champions 419

Support 420

Skills 421

Trainer and Educator 421

Courage, Perseverance, and Patience 421

Lean Suppliers 423

After Taking Care of the Business, It Is OK to Be Selfish 424

Lean Expectations and Endurance 427

Notes 433

8 Lean Never Ends 435

Lean Courage 435

Get Started 438

Notes 441

a particular company or country, the underlying fundamentals should scend industries and cultures because the act of creating something new, of generating new solutions to an identified problem or need, is fundamentally human Consequently, we worked to extract the principles at work with the thought that, by understanding principles, we could apply those principles

tran-in myriad forms to suit the unique realities of any specific context Over time, these principles have continued to evolve and coalesce, producing an emerging paradigm: lean product and process development

We know the ideas are powerful Compelling stories of successful uct development system transformation have been filtering in from many industry sectors Research in the United States and in Europe has further confirmed the efficacy of these ideas across dozens, if not hundreds, of companies But just what does one of these transformations look like?

prod-Norbert Majerus tells us through the pages of the book you are about to read In these pages, you will read about how the Goodyear team:

◾ Slashed tire development lead-time by more than 70%

◾ Increased on-time delivery from 30% to 98%

◾ Dramatically cut warranty costs

◾ Tripled the number of learning cycles or project iterations per year

All with no increase in budget Now that is a compelling transformation!

By sharing in depth how Goodyear transformed the business of ing new tires, Norbert makes an important contribution to our understand-ing of how to go about a successful transformation Success appears to hinge

develop-on at least a couple of key ideas The first is taking the principles and ing them to a specific context, in this case, tire development The second is deploying effective change management strategies along with a good dose

apply-of persistence The third is enabling people to make change on their own through systematic training and followup coaching Norbert shares how the team at Goodyear dovetailed these together to produce remarkable results

He also shares the many barriers and difficulties faced along the way They had to deal with all the common barriers faced by companies trying to incorporate lean thinking and practice into their development organization (and perhaps a few unique to Goodyear)

Fortunately for us, with much persistence Goodyear was able to come those barriers and is willing to share them with us so that we all can learn and improve We both walked the gemba at Goodyear Innovation Centers in Akron, Ohio, and Colmar-Berg, Luxembourg, and saw their

over-challenges and successes firsthand The story of the transformation of

Goodyear’s product development system should inspire product ment teams in any industry that they can do it, too!

develop-The Goodyear story is unique in another respect Most of the mation stories we hear about are from original equipment manufacturers, the companies that do the final production and assembly before delivering

transfor-a product to the mtransfor-arketpltransfor-ace But Goodyetransfor-ar is transfor-also transfor-a supplier As transfor-a plier, they must comply with performance, cost, safety, and delivery timing requirements from numerous customers in multiple industries (automotive, aerospace, heavy equipment) who all operate differently, in addition to the whims and demands of the aftermarket This requires an extra level of capa-bility not seen in other industries, making the transformation story doubly compelling

sup-But this book is more than a story Part narrative, part textbook, part instruction manual, Norbert seamlessly integrates his experience with his own self-study of relevant literature to give us the theoretical underpin-nings of the work he and the Goodyear team managed to accomplish

For example, he explains how WIP management and Little’s Law manifest within product development, and how those insights led to training exer-cises, educational materials, specific countermeasures in practice, and ulti-mately a new way of working that far surpassed the conventional approach

And he contributes a number of new concepts and insights, expanding our understanding of lean product development Thus, he shares not only the

“what” of the Goodyear story, but just as importantly he exposes many of the “whys,” which are the critical insights needed if practitioners are to adapt the ideas to their own contexts

The final result is a complete package! We get lean development ciples combined with change management and people engagement and development We get practice integrated with and supported by theory We get comprehensive coverage of all aspects of a product development enter-prise, from organizational structure to knowledge management, from the use

prin-of cutting-edge computing tools to simple, old-fashioned pencil-and-paper techniques, from stage-gate and conventional project management to invest-ing in people So get the highlighter out, and start your read There is plenty

to glean and learn from the experience and wisdom found in this volume.Thank you, Norbert, for this wonderful contribution!

James Morgan

Traverse City, Michigan

Durward K Sobek II

Bozeman, Montana

Acknowledgments

Writing and publishing a book is an innovation in its own right Like oping a new product, it creates and reflects a value stream of activities and roles Lean-driven innovation would not have been possible without the support and contributions of the many individuals in those roles

devel-I probably challenged Goodyear’s leadership with the idea of publishing our lean product development story I believed this transfer of knowledge was an important part of our lean evolution: sharing what we learned has become part of our new culture at Goodyear The change described in this book is only a small part of the transformation that Chairman, CEO, and President Rich Kramer and his leadership team led the company through in the last 10 years Goodyear is a better company and a better place to work today, as you may see when you read this book I am especially grateful to

Chairman Kramer for sharing his insights in Chapter 7.

Jean-Claude Kihn and later Joe Zekoski, our former and current chief technical officers (CTOs), respectively, are key players in this book, since they led the transformation to lean/operational excellence in Goodyear research and development I am especially grateful to Jean-Claude Kihn for asking me to lead this important undertaking in the product develop-ment organization Jean-Claude had the lean vision when few others would have believed in it and held to it through many challenges and setbacks After Jean-Claude moved on to another challenge within the company, Joe took over without missing a beat Jean-Claude and Joe also defined lean leadership and how to sponsor a lean initiative I also want to thank Andy Weimer, my director during the writing of this book, for his leadership and for giving me all the support and the time needed to accomplish this big and unusual task

In this book, I quote many Goodyear colleagues, leaders, coworkers, and friends Our lean transformation would not have been possible without their

contribution and support (Billy Taylor, Brad Heim, Brandy Moorhead, Chris Banweg, Chris Helsel, Dale Wells, Dave Hrusovsky, Dean Testa, Emmanuel Robinet, Guenter Wartusch, Jean Pierre Jeusette, Jeff McElfresh, Jeff Plauny, Jim Euchner, John Kullman, John Roman, Jon Bellissimo, Kelly King, Laurent Colantonio, Leyla Renner, Marc Nowacki, Matt List, Michael Rachita, Mike Wilps, Norm Anderson, Oliver Kim, Paul Dicello, Pawan Handa, Pete Yap, Phil Dunker, Rachel Graves, Ralf Mruk, Ralph Okonieski, Ricardo Gloria Olivera, Rick Laske, Rick Scavuzzo, Rob DeAnna, Romain Hansen, Stephanie Brown, Steve Rohweder, Surendra Chawla, Tim Lovell, Tom Laurich, and Tom Segatta) Some Goodyear associates helped me start the lean jour-

ney, and I am grateful for their coaching (Gene Miller, Karen Burke, Mark Whitmore, and Rick Laubacher)

Special thanks to Joe Zekoski, Dane Taylor, Bruce Hendricks, and Rob Whitehouse for “reading, correcting, and approving” the book content as it was developed

Some former work colleagues deserve special mention: I worked with Sam Landers, a true “serial innovator,” for many years in the trenches, inventing and commercializing innovative products Since my exper-

tise in innovation cannot measure up to that of Sam’s, I asked him to

challenge me in the chapter on innovation Sam is the best in the field of innovation—and we had a great time debating how to make lean and inno-vation coexist Cigdem Gurer, now CTO at Cyient-Insights, helped me to get started with lean product development It was Cigdem who encouraged me

to first learn lean principles, and then she helped me figure out how to rectly apply them

cor-I also have many friends outside Goodyear who are experts on lean product development and who taught me much over the years; they

directly or indirectly contributed to this book I start my sensei list with Jim Morgan Jim learned lean product development at Toyota and Mazda and got a chance to apply the principles at Ford as director, Global Body Exterior, Safety and SBU Engineering I also want to thank Durward

Sobek, author of Lean Product and Process Development, Second Edition,1for the insights he has shared with me over several years now

I want to thank the folks at the Lean Enterprise Institute, especially

Jim Womack and John Shook, for teaching, coaching, and sharing valuable insights—Jim and John had lean innovation right many years ago although they never worked in product development The advancement of lean,

in general, and lean product development would not be where they are today without them! I worked for many years with Don Reinertsen, author

of The Principles of Product Development Flow2 and Managing the Design Factory;3 Mark Spearman, author of Factory Physics;4 Ed Pound, author of Factory Physics for Managers;5 and many other experts and authors who

have inspired and taught me

There is a much longer list of friends and colleagues from other nies whom I have been fortunate to meet and from whom I learned a lot I believe, though, that only a small portion of lean product development knowl-edge has been published—a lot of it is still in the heads of people like them: Josh Keriewski (Industrial Logic), Rich Gildersleeve (DJO Global), Joe Patula (FPC Food Plastics Pty Ltd), Peter Palmer (Scania Group), Ovidiu Contras (Bombardier), Ken Bonenberger (PM Solutions), Will Lichtig (The Boldt Co.), Ron Marsiglio (Knowledge/PD), Peter Fritz (3M), Paul Zaffiro (P&G), and many others

compa-If you want to improve your operation, it is important to know what good looks like I learned this by doing gemba walks and benchmarking the best companies that I could find locally or globally This list includes Akron Children’s Hospital, Autoliv, Delphi, Rockwell Automation, Cardinal Health, Nationwide, Menlo Innovations, Gojo Industries, CNH Industrial, and many others on the leading edge of the lean product development movement

I also learned a lot about lean at universities and in consortia: The Ohio State University and its Center for Operational Excellence (Peter Ward

and John Dix, codirectors, and Peg Pennington, executive director); the Savvy Consortium (Jim Jacobs, founder); the Society of Concurrent Product Development (Frank Hull, Peter Fritz, and Sarah Darmody); the AME

Cleveland Lean Consortia (Richard Wiltse, chairman); the Northeast Ohio Lean Sigma Forum; and all the folks at the Association for Manufacturing Excellence (AME) and Lean Product and Process Development Exchange

I also want to acknowledge the hundreds of individuals at Goodyear and other companies whom I had the privilege to teach, coach, and mentor My students and mentees regularly provided great inspiration and feedback

I am grateful to my publisher, Taylor & Francis, for giving me the fidence to write my first book I thank Michael Sinocchi, executive editor

con-at Productivity Press, for offering me this opportunity, and his colleagues Jessica Vakili, Tara Nieuwesteeg, and Mohamed Hameed

An engineer-turned-writer needs help in pulling together a manuscript, especially if the engineer consistently received low grades for communica-tions in annual performance assessments and wrote the worst essays in high school It also did not help that I wrote this book in my fourth language:

I grew up speaking Luxembourgish, learned German and French while

in school, and eventually grasped English as my first “foreign” language I was lucky that Goodyear’s communications manager referred me to George Taninecz, who did a lot more than help me write a book; he became my coach and mentor I did not supply “ready to edit” material to him, and

I especially appreciate the patience he had in helping me turn my thoughts into a book George also took my vision for graphics and made them a reality, working with the book’s graphic designer Juan Quirarte Goodyear design artist Jonathan Schondel provided book illustrations and proposals for the cover page I am thankful for the work of Melissa Gould, who handled the tedious administrative chores necessary for publication

I would also like to thank my family for putting up with those long hours

of me traveling to learn all this stuff and for being holed away and writing.Last but not least, I would never have started this book if I had not bro-ken my leg in a severe skiing accident I think the only reason I finished it was because I was not able to walk for eight months Sometimes things hap-pen for a reason

Notes

1 Allen C Ward and Durward K Sobek, Lean Product and Process Development, Second Edition, Lean Enterprise Institute, Cambridge, MA, 2014.

2 Donald G Reinertsen, The Principles of Product Development Flow, Celeritas

Publishing, Redondo Beach, CA, 2012.

3 Donald G Reinertsen, Managing the Design Factory, Free Press, New York,

Author

Beginning in 2005, Norbert Majerus has mented a principles-based lean product devel-opment process at the three global innovation centers of The Goodyear Tire & Rubber Company, first in Akron, Ohio, and then in Colmar-Berg, Luxembourg, and Hanau, Germany For nearly a decade, he has been Goodyear’s lean champion in research and development

imple-Majerus, born and raised in Luxembourg, began his career there at Goodyear in 1979 with respon-sibility for materials development, aircraft tires, and competitor benchmark-ing In 1983, he moved to Akron to start a “short assignment” in innovative products, which continues to this day During that time, he was a recipient

of discretionary funding for a revolutionary new product and manufacturing process, and he earned more than 60 patents and trade secrets (patentable ideas that the company chose not to patent)

Further assignments in Akron have included innovative processes; new tire development and project manager for North American, Asian, and European OEM customers; corporate benchmarking; design and test stan-dards; activity-based R&D accounting; ISO/QS certification; and more

Majerus acquired a six sigma master black belt in 2003 and a lean ter black belt in 2005 He holds a master’s degree in chemistry from the Universitaet des Saarlandes, Saarbruecken, Germany

mas-Majerus would appreciate comments and feedback He can be found on LinkedIn or reached at norbert.majerus@gmail.com or norbert.majerus@goodyear.com

Introduction

Back in 2005, I would lay awake at night and review the day’s events in my mind, mentally applying six sigma tools to address an issue or search for a breakthrough in our product-development processes at The Goodyear Tire & Rubber Company Sometimes my sleepless nights yielded results, but just as often they did not

Up to that point in my career, I had been asked to learn and deploy ous improvement approaches, including six sigma As an engineer by educa-tion (master’s degree in chemistry), I appreciated the logic of the six sigma tools I had heard of lean and read about its application in manufacturing, but had not grasped that it could have a place in research and develop-ment (R&D) or in my life at Goodyear Even after reading many books on lean product development, I felt something was missing The engineer in

vari-me wanted to know more Why did companies adopt it? Why did or could

it work? One day a colleague handed me a copy of Factory Physics.1 I won’t claim that I understood everything in the tome by Wallace Hopp and Mark Spearman—nor do I today—but it opened my eyes to the science of why lean could and does work in product development I had just discovered the power of understanding the lean principles And eventually lean worked at Goodyear in product development

I was drawn into Goodyear’s first lean product development initiative in

2005 Goodyear had just won its first JD Power award, to the surprise of everyone in the company, including the chairman, as a result of my first six sigma project I was excited about applying the same six sigma approach

to other projects and was about to do so when Jean-Claude Kihn, eral director of Goodyear Innovation Center Akron (GIC*A), suggested that

gen-I experiment with some lean concepts He had encountered lean while on assignment in Latin America, and immediately understood its potential for product development I told Jean-Claude that I was not about to give up the fun I was having with six sigma, but he persisted He suggested I try

lean “on the side.” I was never appointed to any position to implement lean, but my “side” work eventually overtook all other work for me at Goodyear, including six sigma projects (Had we known about the A3 process at that time, I am sure Jean-Claude would have asked me to develop an A3 for starting lean in Goodyear product development.)

The years it took my colleagues and me at Goodyear to go from lean awareness to lean results were filled with fun, hard work, learning, and plenty of frustration Much of what I had read was clearly never actually tried in an R&D setting Other concepts were skewed to one type of organi-

zation or another or were purely theoretical With Lean-Driven Innovation: Powering Product Development at The Goodyear Tire & Rubber Company,

I hope to accelerate your fun and learning and minimize your frustration as you apply lean to the innovation processes of your company I am confident that what worked within Goodyear can work anywhere, provided a few fun-damental principles are understood and accepted

Today, many types of organizations—manufacturing, finance, care, construction, and so on—are adopting or considering lean thinking, and if you’re reading this book, your organization is probably one of them Ever since Jim Womack and John Krafcik coined the term “lean” in 1987 to describe the highly efficient processes of the Japanese auto industry, par-ticularly those within Toyota,2 “lean” has become a staple of the business lexicon

health-A lot of what we understand today as lean came out of Toyota Legendary Toyota executive Taiichi Ohno described his company’s lean efforts as trying

to minimize the time—from receipt of a customer order to when Toyota lects payment—by reducing all the waste in the process.3 Lean thinking also has major contributions from Henry Ford (flow production), Alfred Sloan (mass customization), W Edwards Deming (PDCA cycle), and countless oth-ers, including the U.S military (Training Within Industry training and con-sulting concepts) All influenced how Toyota went about its business

col-In describing what Toyota did and what lean is, Womack and colleague

Daniel Jones clarified five principles of lean in their book Lean Thinking:

identify value, identify the value stream, make it flow, as pulled by the tomer, in pursuit of perfection This description is as meaningful today as it was when first published more than 20 years ago,4 and it is especially rel-evant to new product development

cus-In the decades since Womack and company shook up the business world, the term “lean” has spread in many ways It has been grouped with six sigma principles to establish practices by which both methodologies coexist

and from which a lot of current product development ideas are found (e.g.,

by Michael George).5 Other significant lean-thinking contributions have come on the topics of knowledge management (e.g., by Michael Kennedy),6problem-solving and management culture (e.g., by John Shook),7 and prod-uct development (e.g., by Jim Morgan and Jeff Liker,8 and by Allen Ward and Durward Sobek9) Lean is currently in vogue as a way to create and nurture

an entrepreneurial organization through experimentation and fast learning (e.g., by Eric Ries).10 For some companies, though, it remains merely a corpo-rate statement to convince stakeholders that improvements might be under-way (e.g., you know who you are)

I initially thought that the term “lean” was nondescriptive, but over time I became convinced that it is capable of accommodating almost every type of process improvement imaginable, including those in product development Evan Duncan and Ron Ritter described the collective ability of lean thinking

as “ putting customers first by truly understanding what they need and then delivering it efficiently; enabling workers to contribute to their full-est potential; constantly searching for better ways of working; and giving meaning to work by connecting a company’s strategy and goals in a clear, coherent way across the organization.”11

Most companies begin their application of lean in manufacturing areas and use their successes there to enlist other functions This makes sense because there is ample lean manufacturing knowledge and proof of con-cept; the Toyota Production System (TPS) is well established in industry and many adaptations and further developments have been validated This also

is a good starting point because lean in production involves work that is generally visible, allowing any return on lean initiatives to be seen relatively quickly

But lean in product development is a different story:

◾ Work is not visible, and processes are complicated and often fuzzy, locked in the minds of experts

◾ Engineers and designers can be challenging to train and prone to resist lean as a “creativity killer” and not applicable to a less repetitive work environment

◾ Quick-win opportunities in product development are not as obvious as

in manufacturing (e.g., use of 5S, quick changeovers, inventory tions), and so there is a misperception that it is not working

reduc-◾ Product development has some good waste in its value streams, related

to exploring an innovation idea that does not initially bear fruit, which can still be a good use of time

One enormous difference of lean in product development is that cient returns on lean initiatives may be apparent only after the development

suffi-of a complete lean product development value stream—many will give up long before this moment is reached Even short-term benefits of lean as seen

in manufacturing do not necessarily appear in R&D: initial waste reduction

in R&D may save a little money, but it is often not enough for businesses to notice, and it is difficult to track the savings to the bottom line, especially since a high percentage of R&D resources are distributed What is more, R&D charges to the business are often small to begin with, but their indirect contributions can be an order of magnitude larger

So, if you are looking for reasons not to try lean in product

develop-ment, there are many But there are far more reasons why you should do it

At Goodyear, we started lean in product development before applying it in

manufacturing, and I think this helped We learned to apply it to our R&D processes, rather than try to change our processes to look more like manu-

facturing It was, nonetheless, not without many challenges, most of which

were overcome In Chapter 1, I share Goodyear’s lean product development

results: lean helped us dramatically improve revenue by having every new product available when the market needed it It enabled us to take advan-tage of various cost-reduction opportunities in development processes And the indirect contributions of lean R&D significantly improved our product development value streams, boosting Goodyear’s bottom line

When we started lean in product development, we noticed that we had

a lot of good, foundational concepts already in place to support lean We carefully left those in place, even though they were not exactly as the lean books at the time prescribed them For example, we already had a solid knowledge base and great computer modeling tools We also tried new lean things that had been validated and worked well in other companies, but we frequently did not find similar value from these efforts I soon real-ized that just like the many products and manufacturing environments that exist, there are huge differences in R&D and product innovation among companies and across industries Some industries focus on mature con-sumer products, where cost is a big deal Others focus on high-tech com-mercial products where capability and service are important Some rely on speed and efficiency Others employ an army of creative PhDs, inventing

and launching products over many years Those lean concepts that help one industry may not be as beneficial to another industry and vice versa.

Even within Goodyear, there is R&D diversity For example, we spend about 30% of our R&D resources researching new opportunities and 70% developing and releasing products Lean applies quite differently to these two work streams

What works for one company may not work for another, and what works

in one work stream may need to be modified to fit another work stream in the same company The application of lean will look different in each For

this reason and many others, there is a need to understand the principles

behind lean product development, not just the tools, and how to apply them.There are many good books on lean product development, many of which are mandatory reading for the lean training program for Goodyear’s product development staff These publications generally present six schools

of product development, and they they comprise about 50% of the lean product development knowledge that is out there I think many companies, like Goodyear, have developed knowledge far beyond what is published, but many of these companies have not shared their lean know-how

◾ Knowledge-based approach

◾ Flow-based approach

◾ Concurrency approach

◾ Toyota school

◾ What works in manufacturing

◾ Lean/six sigma school

◾ Rebranding an old or failed method

I also have found that many published works present two fundamental methods of implementing lean product development: (1) plugging in the same lean system that works in manufacturing and (2) carbon-copying what worked in product development at another company (like at Toyota) As a lean prescription, neither of these works well

When mimicking lean manufacturing, things like 5S and standardization

only create resistance and angst Don Reinertsen, author of The Principles of Product Development Flow,12 tells the story of R&D standardization in which one engineer threatened to leave if he had to take a banana off his desk because it was not a standard work item Hence, the standard was revised

to allow an “active” banana to be on the desk of an engineer, with “active” being defined as “within a standard time of being consumed.”

When copying another company’s lean product development, the nature

of a company’s goals and objectives uniquely drive their approaches For example, consumer product companies are trying to maintain mature prod-uct lines and they probably get the biggest benefits out of lean by looking at cost reduction, quick innovation, and fast consumer testing A company that develops high-tech products for a small number of commercial customers or the government may get the biggest benefits out of a knowledge-manage-ment approach or a focus on problem solving At Goodyear, we needed to

cater to consumers and develop fundamental technology, and so a greater

array of lean principles was applicable to our work

Talking with R&D colleagues in my industry and others, I repeatedly hear that most learning that has taken place—books, conferences, train-

ing programs—leaves recipients short of what they need to actually tice lean in product development I believe this contributes to why a lot

prac-of individuals and companies have difficulties with implementation and,

if they do succeed initially, they have a hard time making the change sustainable Roughly 10% of companies are venturing into a lean product innovation process.13 Research in Sweden shows that of the companies that start a lean product development initiative, only 15% remain active

5 years after the initiative.14 The two pieces of research combined cate that just 1.5% of all companies have implemented and sustained a lean product development program (in reality, it is probably closer to 5%) Hence, there is a lot of lean knowledge yet to be developed, published, and leveraged

indi-Lean-Driven Innovation: Powering Product Development at The

Goodyear Tire & Rubber Company validates some elements of the schools

of lean product development, and it presents pieces of implementation methods that can and should be applied It also describes new insights that we gained at Goodyear starting in 2005 I have come to understand what lean can accomplish—what will work and what will not work—and how to most effectively and efficiently apply lean to an organization’s inno-vation processes So, while there are libraries filled with books on lean and aisles of lean product development propositions, I felt that executives

as well as engineers needed a book based on principles, grounded in ity, and proved over nearly a decade From my learning and application of

real-lean, I have distilled ideas, practices, failures, and successes into key ciples for lean product development practitioners (Lean R&D Principles

prin-appear throughout the book in shaded boxes; learning sidebars that drill down into a specific topic appear in bordered boxes.)

As of this writing, I have worked a total of 36 years within Goodyear, of which 10 have been directly involved in trying to develop, implement, and sustain lean in order to achieve the company’s business objectives I am not

a consultant who applied lean to R&D, but an R&D engineer who pulled

in lean My experiences have convinced me that the best way to implement lean in product development—or any new process—is to learn the prin-ciples, teach the principles, and then let content experts and process experts figure out what change is needed and coach, mentor, and guide them

through the improvement process

At Goodyear, as we try to learn more about lean, we have had many

“lean experts” come in They have had a hard time selling their ideas It is not that they did not know what they were talking about—most did—but that they had not actually done the work to which lean is being applied Most of them never worked in product development It took us a while to realize this, and we have since taken a path to teach lean to the engineers

who work in the process, providing them training specific to what they need

to know and when they need to know it (a four-phase training program that eventually results in a black belt–like designation) Most of our engineers have been very successful implementing their own ideas developed through this training

I have met many successful lean R&D champions from many ent companies They have one thing in common—most are engineers who learned lean product development the same way we practice it at Goodyear: understand the principles, identify what is needed and where, and then do it

differ-Every day I learn something new about lean and our lean tion, and there is so much more to learn Nonetheless, I think that my expe-riences with lean, what Goodyear has accomplished, and the way in which

implementa-we accomplished it is worth sharing This book tells Goodyear’s lean uct development story, illustrates the application of lean principles and tools

prod-we used, and offers examples of what worked and why This book is not based on observations of other companies, but what I did in my company for nearly a decade This is an industrial novel, like those of Eli Goldratt15and Freddy and Michael Ballé,16 but my story is not fiction It is a true tale

with real characters, one that should entertain, enlighten, and help the many companies I see struggling when applying lean in product development (Many novels have a happy ending—my story of Goodyear does as well.)

My ultimate goal in writing Lean-Driven Innovation: Powering Product Development at The Goodyear Tire & Rubber Company is to provide a book

that, when finished, you walk away with a good idea of how to start your own lean product development story, knowing where to begin and what to

do, regardless of the industry or the process And, most important, how to succeed

Notes

1 Wallace J Hopp and Mark L Spearman, Factory Physics, Waveland Press,

Long Grove, IL, 1996.

2 James P Womack, Daniel T Jones, and Daniel Roos, The Machine that

Changed the World, Harper Perennial, New York, 1991.

3 Taiichi Ohno, Toyota Production System: Beyond Large-Scale Production,

Productivity Press, Cambridge, MA, 1988.

4 James P Womack and Daniel T Jones, Lean Thinking, Free Press, New York,

1996.

5 Michael L George, Lean Six Sigma, McGraw-Hill, New York, 2002.

6 Michael Kennedy and Kent Harmon, Ready, Set, Dominate, Oklea Press,

Richmond, VA, 2008.

7 John Shook, Managing to Learn, Lean Enterprise Institute, Cambridge, MA,

2008.

8 James M Morgan and Jeffrey K Liker, The Toyota Product Development

System, Productivity Press, New York, 2006.

9 Allen C Ward and Durward Sobek, Lean Product and Process Development, Second Edition, Lean Enterprise Institute, Cambridge, MA, 2014.

10 Eric Ries, The Lean Startup, Crown Business, New York, 2011.

11 Edward Duncan and Ron Ritter, “Next Frontiers for Lean,” McKinsey Quarterly,

February 2014.

12 Donald G Reinertsen, training class at Goodyear in Akron, OH, January 2013.

13 Dave Logozzo, Lean Enterprise Institute, presentation to Goodyear in Akron,

OH, February 2012.

14 Håkan Ivarsson, 50 Nyanser av Lean, Leadership Design Group Sweden AB,

2013.

15 Eliyahu Goldratt, The Goal, North River Press, Great Barrington, MA, 1984.

16 Freddy Ballé and Michael Ballé, The Gold Mine, Lean Enterprise Institute,

Brookline, MA, 2005.

Goodyear Results from Lean Product Development

Goodyear had pockets of lean activities in many of its functions, ing a few initiatives in manufacturing, dating back to 2003 Some func-tions, such as manufacturing and supply chain, had pursued a lean

includ-project or two earlier But Goodyear’s first sustained, large-scale lean initiative started in product development in 2005 Several leading experts

on lean, including Jim Womack, have since told us that they thought it was unusual to see a company start with lean in product development—but they all agreed that there really is no prescribed starting place in an organization

One of the primary reasons that we could begin lean in product ment was that we had begun to define and understand our value stream for the organization (even before actually mapping the stream as most lean con-sultants would advise us to do) Despite the hidden processes that existed in

develop-many R&D functions, I believe we had a better handle than most on what

steps took us from idea to product (see Goodyear Tire Development Value Stream).

Goodyear Tire Development Value Stream

There can be many disciplines involved in the tire-development effort, such as product design, materials development, and mold manufacturing Drawings are generated and prototypes are built and tested Eventually the product is released for production, manufactured, and distributed through the supply chain as original equipment for new cars or for aftermarket sales through the sales network

During the development phase, many critical decisions are made to meet the targets that have been established by R&D—choice of materials, designs, features, complexity, manufacturability, and so on—and these decisions

can have a profound effect on the product’s profit equation: profit = ume × (price − cost) For example, material choices affect the base cost of the

vol-product Design and construction decisions affect the manufacturing process and the conversion cost Performance and features affect the selling price of the product and the sales volumes

One critical lean learning within Goodyear was to recognize that product development makes most of the choices regarding these critical decisions, and, therefore, has a huge influence on the profitability of the value streams for new products What we do in product development reverberates

throughout the organization long after our work is done Ideally, all design decisions that affect the product’s profitability are made in collaboration with business leaders and all other key functions and stakeholders (manufactur-ing, sales, supply chain, etc.)

It is now hard to imagine that once in Goodyear we used to think that R&D should design the best possible product and then “hand over” the product to manufacturing to develop the manufacturing process Manufacturing eventually

“handed” the product to sales and the supply chain to sell And you know the rest of the story Processes like this take forever because a downstream func-tion sees a new challenge for the first time at the handoff Many decisions that created these challenges were made upfront, long before a handoff by R&D, and they cannot be reversed—at least not at an affordable cost or in an accept-able time frame Other decisions were changed downstream without involving those who made the initial decision, or the product came back to development for redesign long after the handoff It is clear as to why this process used to exist within Goodyear and still exists in many companies today: R&D always looks good playing this game because the product, as designed and based on prototype tests, frequently worked quite well, and R&D did not feel responsible for downstream challenges and changes to the product

Our approach to the product development value stream became more collaborative and concurrent when we implemented lean in R&D, but the fact remains that, even without lean, R&D still establishes the track for what happens downstream and is largely responsible for many decisions that determine product profitability But rather than hand a product over, as we once did, R&D now stays involved, even with product launch and the adver-tising of the product through the first year of manufacturing

One key principle that will come up repeatedly in this book is the need

to “get the process right and the results will follow.” This is true for all the processes in all the functions involved in a value stream And, to be clear, the “results” are profits You should be able to trace a profit back from every R&D project to the bottom line of the business or the company Good R&D processes are not the only factors that drive profitability of a company, but they are also a major force

In most North American manufacturing businesses, costs are driven by materials and manufacturing, with some costs contributed from carrying

inventory, distribution of products, and sales and administration R&D is typically a relatively small cost At Goodyear it is about 2%, which is typi-

cal for manufacturing companies (see Direct Cost to Business) Applying lean

thinking to manufacturing and supply-chain processes can have a quick impact on a company’s bottom line, as wastes of time, rework, inventory, and so on are removed from these processes For this reason, the pursuit

of lean throughout industry has spread quickly through manufacturing and supply-chain functions And as it spread, more knowledge (research, case studies, workbooks, guides) was made available to leaders, and, thus, more lean activities took place—a self-perpetuating improvement cycle of lean

Conversion 37%

Transport 4%

SAG 14%

R&D 2%

Materials 43%

Direct Cost to Business

Seeing what occurs in manufacturing, many executives take the same tack in R&D They look to remove wastes from the process, but they are try-ing to reduce the cost of their own function, not for improving the bottom line This is an approach that rarely, if ever, makes anybody happy: 10% of 2% is not a big deal (<1%), and, what is more important, an unbridled focus

on waste in R&D processes can negatively affect creativity and innovation Can lean help to improve efficiencies and costs within R&D? Yes Should that be the main objective of lean R&D? No

This common cost-focused path with lean R&D at other companies has led to a history of challenging lean implementations Few executives understand the potential they miss or see the negative effects on creativ-ity and innovation (equating idea generation that does not produce a marketable idea as waste) What ultimately happens for many of these

firms is that they find lean R&D hard to sustain because design staff feel suffocated and/or they do not see the impact to their bottom lines Why continue?

So where did Goodyear—and where should you—focus your lean R&D efforts?

Remember that R&D has a huge influence on value streams and a big

effect on profits (see R&D Shadow) Despite the relatively small cost base

of R&D, it has an enormous influence on profits Most understand what lean can do to reduce direct costs, such as in manufacturing, but few con-sider its application to influence profitability This influence or shadow on profitability makes R&D an excellent target for investment and improve-ment Lean can be used to leverage that shadow and lead to even greater profitability

Like most, Goodyear focused lean on the R&D efficiency (direct cost), but we also recognized and improved its impact on the much more impor-tant R&D shadow Rather than only impacting 2% of costs, we are impacting factors (performance gains, speed, agility) that influence a large part of our profitability The application of lean principles to the product development process has had a multiplier effect on our shadows and we further improved our safety record and product quality

R&D affects every part of the profit equation (profit = volume ×

(price − cost)) For example, R&D develops new materials that significantly

reduce the product cost R&D improves product performance to a level rior to the competition, so a significant price increase can be achieved R&D can enhance development speed and agility, significantly affecting the avail-ability and volume of new products At many companies that have not had success with lean R&D, these effects typically have been much smaller If you have a certain number of lean experts at your disposition, do you want to use them to just reduce the cost of the R&D organization or do you use them

supe-to further leverage the impact of R&D on the value stream and profitability?

Can lean help to improve efficiencies and costs within R&D? Yes Should that be the main objective of lean R&D? No.

As the shadows reveal, a cost-focused perspective of lean R&D misses

the crucial point about R&D/product development: The purpose of R&D is to help the company make money Joe Zekoski, Goodyear CTO, realizes this:

“My job as a CTO is to maximize the R&D investment.” R&D is an ment and this investment must generate dividends and profit The fact that R&D often gets cut or reduced in a downturn shows the perception of many executives that R&D is a cost Such R&D cuts do not only waste talent and knowledge that cost the company a lot of time and money to build up, but they also prevent companies from having new products ready to sell when market conditions improve

invest-Goodyear treats R&D as an investment, and the effect that R&D has had

on Goodyear profitability in its North American division—the one which has profited the most and longest from redesign of product development—has been dramatic Even during the recent recession, Goodyear leadership kept the product development process fully funded, which gave us a running start when an economic rebound occurred We aggressively were developing

new tires that would be on the market at the right time.

Goodyear Chairman Richard Kramer explained at one of our town hall meetings in 2008: “We are in a challenging economic situation today, but I

am optimistic for the future! We keep investing for the time when the omy will recover, and we all know it will recover eventually It takes a year

econ-or mecon-ore to develop a new tire line, and if we [wait to] fund the development when the economy recovers, we will miss an important part of the market That is why we invest in the bad times for the better times to come.”

Many factors beyond R&D affected Goodyear’s revenue rise in 2010, but

it is clear that R&D provided great products when needed, without which

none of the other factors would have mattered (see Goodyear North America Operating Income).

Goodyear North America Operating Income

In 2006, profits were affected by a 4-month-long URW strike The 2008 and 2009 results reflect the impact of the great recession on the overall automotive industry.

product development

By considering R&D as an investment that generates revenue, it forces

us to further leverage product development with lean principles and look well beyond cost reductions and other common lean efficiencies We need to focus first and foremost on the product performance and pricing benefits that lean improvements in R&D deliver, which overshadow the impact from other organizational components R&D impacts profitability because it

1 Generates ideas, some of which will turn into successful products These ideas do not come from marketing studies or boardroom

strategies

2 Develops products that outperform the competition and fetch a higher selling price

3 Affects most functions throughout a company’s end-to-end value

streams (e.g., manufacturability, complexity, material cost)

4 Controls new product availability, which drives profit more than thing else—a delay in availability directly impairs revenue and the maximum profit-earning window for a new product

any-The following chart (see New Product Pricing Benefits) gives one example

of how the application of lean principles in R&D can improve product ability—at the right time—and, eventually, profitability It also gives further direction of where to focus lean R&D: on the shadows

avail-The dotted line represents the typical price erosion of a new product in

the marketplace This erosion is due to the fact that as technology moves forward, competition reacts and advertising loses its effectiveness As soon as this erosion starts, it is time for the organization to have a new product in the

market (illustrated by the top line) Unfortunately, the optimum time

win-dow is not stable in time—it often moves forward, rarely backward A new product enters the market at a higher selling price than the old product was able to fetch The more the new product is delayed, the longer a company is

forced to sell the old product, and a profit gap (the vertical arrow) appears

The longer it takes to get the new product to market, the wider the vertical arrow and the greater the losses For Goodyear, this missed opportunity can

be very significant

At Goodyear, we used lean tools to make our product development process faster, more agile, and more predictable in order to ensure new product avail-ability at launch windows, with highest quality standards, and at the right cost level, giving the business the best chance to make the highest profit

New Product Pricing Benefits

The next chart (Optimum Time to Launch) illustrates the relative

differ-ences between using lean to gain efficiency in R&D versus using lean R&D

to create business opportunities:

◾ The optimum time to launch a new product is represented by the 0 on the time axis (see arrow).

◾ The tiny black bars above 0 on the dollar axis represent the gain to the

business from a 10% lean cost improvement in R&D, which accumulates month to month and, although quite small, still benefits the business