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Lean-Driven Innovation: Powering Product Development at The Goodyear Tire & Rubber Company
In 2005, Goodyear’s research and development (R&D) engine was not performing up to its full potential. The R&D organization developed high-quality tires, but the projects were not always successful. Goodyear embarked on a major initiative to transform its innovation creation processes by learning, understanding, and applying lean product development principles. Within five years, Goodyear saw its product development cycle times slashed by 70 percent, on-time delivery performance rise close to 100 percent, and throughput improve three-fold – all achieved with no increase in the R&D budget.Lean-Driven Powering Product Development at The Goodyear Tire & Rubber Company describes in great detail how the Goodyear team was able to achieve such significant improvements. Revealing the ups and downs of this successful transformation, the book shares experiences of how this seismic change was managed, how people were engaged, and how Goodyear dramatically reinvigorated its product development and innovation processes—and, in the process, delivered substantial more value to customers and to the company.The book also explains how lean product development helped Goodyear dramatically improve revenue by having every new product available when the market needed it. Presenting wide-ranging perspectives from all levels of leadership, this book is ideal for anyone in R&D daring to take on a lean initiative in R&D or who is struggling with a lean transformation that is not delivering to its full potential. Since the book focuses on universal lean principles, it is as insightful to other manufacturing and nonmanufacturing disciplines in any industry as well.The book presents invaluable insights gained by the author during his 36 years within Goodyear, of which 10 have been directly involved in trying to develop, implement, and sustain lean to achieve the company’s business objectives. It distills ideas, practices, failures, and successes into key principles that lean product development practitioners can easily implement.After reading this book, you will gain a practical path for applying lean to the innovation processes of your organization, including where to begin and what to do, regardless of the industry and the status of your transformation.Watch Norbert Majerus discuss Lean-Driven Innovation
493 pages, Kindle Edition
First published August 18, 2015
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November 14, 2018
Norbert Majerus is a veteran Goodyear Tire Development engineer turned lean sensei (guru). For over a decade, he has been Goodyear’s lean champion in its three global innovation centers in Akron, Luxembourg, and Hanou.
Goodyear has great tire technology and robust quality systems. Innovation was allowed to take on a life of its own, in what Majerus nostalgically refers to as “the golden age of tire technology’ in the closing decades of the 20th century. However, R&D ended up with too many ideas and not much value. Market forces such as foreign competition, acquisitions, tire regulations, Japanese carmakers’ demands for consistency, delivery, service and so on, nudged the move to lean innovation management processes. Goodyear’s lean initiative started in product development, rather than in manufacturing, in 2005.
Majerus shows that focusing on true customer value and building new revenue streams is the right objective for a product development organization. R&D is a root process, which is intertwined with all value streams, with an overarching effect on business and profits, despite its relatively minor direct cost to the business. As R&D specifies design, materials, and processes that affect product performance and cost, it has a sizeable indirect influence on profitability. Its timely launch of new products with pricing benefits affects the operating income and competitiveness. Therefore, in innovation, a company must always be disciplined by the marketplace. Its alignment of development with capacity and capability is crucial to assure success in implementation through monitoring, adaptation, training and resource allocation.
Goodyear chairman Kramer thinks of processes like the current in a river. “With the right flow, everyone must paddle in the same direction and in unison. You will get to your destination without having to paddle as hard. Plus, time can then be spent on ways to improve the journey.”
Goodyear’s footprint and traction for lean was greatly aided by an organizational structure change from functional to matrix with the active support of its globally experienced directors, Jean-Claude Kihn, Joe Zekoski and Jean Pierre and Chairman, Richard Kramer. Cross-functional teams were formed to handle the tire development processes, which were aligned with the adjacent functions in the value stream (marketing and manufacturing). In five years of lean-driven innovation, new tire development lead time was slashed by more than 70% and on-time delivery raised from 30% to 98% with a dramatic reduction in warranty costs. Goodyear launches about 1500 SKUs annually worldwide, so this is no mean achievement. Additionally, warehousing and logistics costs of development tires were slashed. By getting the process right, Goodyear could cope with the flood of evaluation required under the new European tire labelling system introduced in 2011. Project priorities are often changed based on the ‘cost of delay’, which is a measure to translate waiting time to dollars. Think of new tire development as a sort of an assembly-line production.
Exploratory development of new ideas and technology that can be incorporated into a product requires a risk-taking dissociate focus. Think of this as a banana with peel, with the peel having a non-monetary function. For disruptive innovation with uncertain timeframes for development and implementation, a collaborative approach by team synergy in the creative( Kentou) phase, and effective project management to move from innovative idea to innovative product are both dovetailed with a new business model. Concepts like the airless tire, smart tires that recharge the car battery or which adjust inflation pressure/stiffness are examples of successful disruptive innovations launched by Goodyear in 2011-15.
If Goodyear’s lean innovation objective had been confined to cost and waste reduction and downsizing, as it tends to be in manufacturing and crisis situations, the lean practices would not have been sustainable. Goodyear had legacy systems such as TQM, QS 9000, six sigma, knowledge and project management, as well as computer modelling know-how. To these were added new techniques like the Toyota production system, NASA’s FMEA, linear programming, queuing theory models, risk-based thinking, critical path network models, inventory models, the theory of constraints, problem-solving and reflection. By converting this heterogeneous assortment of techniques to a continuum of methods embedded in concepts, which are aligned with business opportunities, Goodyear has established the cornerstone of a learning organization. Also, more value was created by overall alignment than with local excellence.
Goodyear is now trying to leverage capabilities and capacities globally as much as possible by driving toward standard work and processes in ‘one Goodyear way.’ The mission of Goodyear R&D also aligns with the corporate strategy. R&D efficiently delivers a continuous flow of consumer-relevant innovative products and processes that align with business strategy and drive profitable growth.
There was no special budget for lean. Employee training at four lean levels covered the whole organization. Re-skilling of employees and training at all levels including leadership facilitated a cultural shift from engagement to empowerment. Over time, it drove the creation of a new organization and facilitated a change in its culture and behaviour.
The book is a practical guide for implementing lean-driven innovation in manufacturing and services organizations. A significant feature of the book is the simple way in which concepts are explained without mathematical derivations. Majerus deals with intense conflict and failed attempts with aplomb. The book is highly recommended for lean practitioners in the automotive industries. It will be welcomed by everyone interested in R&D management systems and in particular, by managers who are keen to improve efficiency in their operations. It is hoped that some of the material in the book will be included in undergraduate engineering courses.
Goodyear has great tire technology and robust quality systems. Innovation was allowed to take on a life of its own, in what Majerus nostalgically refers to as “the golden age of tire technology’ in the closing decades of the 20th century. However, R&D ended up with too many ideas and not much value. Market forces such as foreign competition, acquisitions, tire regulations, Japanese carmakers’ demands for consistency, delivery, service and so on, nudged the move to lean innovation management processes. Goodyear’s lean initiative started in product development, rather than in manufacturing, in 2005.
Majerus shows that focusing on true customer value and building new revenue streams is the right objective for a product development organization. R&D is a root process, which is intertwined with all value streams, with an overarching effect on business and profits, despite its relatively minor direct cost to the business. As R&D specifies design, materials, and processes that affect product performance and cost, it has a sizeable indirect influence on profitability. Its timely launch of new products with pricing benefits affects the operating income and competitiveness. Therefore, in innovation, a company must always be disciplined by the marketplace. Its alignment of development with capacity and capability is crucial to assure success in implementation through monitoring, adaptation, training and resource allocation.
Goodyear chairman Kramer thinks of processes like the current in a river. “With the right flow, everyone must paddle in the same direction and in unison. You will get to your destination without having to paddle as hard. Plus, time can then be spent on ways to improve the journey.”
Goodyear’s footprint and traction for lean was greatly aided by an organizational structure change from functional to matrix with the active support of its globally experienced directors, Jean-Claude Kihn, Joe Zekoski and Jean Pierre and Chairman, Richard Kramer. Cross-functional teams were formed to handle the tire development processes, which were aligned with the adjacent functions in the value stream (marketing and manufacturing). In five years of lean-driven innovation, new tire development lead time was slashed by more than 70% and on-time delivery raised from 30% to 98% with a dramatic reduction in warranty costs. Goodyear launches about 1500 SKUs annually worldwide, so this is no mean achievement. Additionally, warehousing and logistics costs of development tires were slashed. By getting the process right, Goodyear could cope with the flood of evaluation required under the new European tire labelling system introduced in 2011. Project priorities are often changed based on the ‘cost of delay’, which is a measure to translate waiting time to dollars. Think of new tire development as a sort of an assembly-line production.
Exploratory development of new ideas and technology that can be incorporated into a product requires a risk-taking dissociate focus. Think of this as a banana with peel, with the peel having a non-monetary function. For disruptive innovation with uncertain timeframes for development and implementation, a collaborative approach by team synergy in the creative( Kentou) phase, and effective project management to move from innovative idea to innovative product are both dovetailed with a new business model. Concepts like the airless tire, smart tires that recharge the car battery or which adjust inflation pressure/stiffness are examples of successful disruptive innovations launched by Goodyear in 2011-15.
If Goodyear’s lean innovation objective had been confined to cost and waste reduction and downsizing, as it tends to be in manufacturing and crisis situations, the lean practices would not have been sustainable. Goodyear had legacy systems such as TQM, QS 9000, six sigma, knowledge and project management, as well as computer modelling know-how. To these were added new techniques like the Toyota production system, NASA’s FMEA, linear programming, queuing theory models, risk-based thinking, critical path network models, inventory models, the theory of constraints, problem-solving and reflection. By converting this heterogeneous assortment of techniques to a continuum of methods embedded in concepts, which are aligned with business opportunities, Goodyear has established the cornerstone of a learning organization. Also, more value was created by overall alignment than with local excellence.
Goodyear is now trying to leverage capabilities and capacities globally as much as possible by driving toward standard work and processes in ‘one Goodyear way.’ The mission of Goodyear R&D also aligns with the corporate strategy. R&D efficiently delivers a continuous flow of consumer-relevant innovative products and processes that align with business strategy and drive profitable growth.
There was no special budget for lean. Employee training at four lean levels covered the whole organization. Re-skilling of employees and training at all levels including leadership facilitated a cultural shift from engagement to empowerment. Over time, it drove the creation of a new organization and facilitated a change in its culture and behaviour.
The book is a practical guide for implementing lean-driven innovation in manufacturing and services organizations. A significant feature of the book is the simple way in which concepts are explained without mathematical derivations. Majerus deals with intense conflict and failed attempts with aplomb. The book is highly recommended for lean practitioners in the automotive industries. It will be welcomed by everyone interested in R&D management systems and in particular, by managers who are keen to improve efficiency in their operations. It is hoped that some of the material in the book will be included in undergraduate engineering courses.
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