How do factories respond when the headquarters of a multinational firm rolls out a “new” corporate lean program? In a paper in the International Journal of Operations and Production Management*, Professor Arild Aspelund and I propose that factories can respond in four generic ways; explained by the “4A model”.
Developed from a review of the literature on managing global improvement programs, the 4A model explains how subsidiaries can respond to corporate lean programs. The model consists of two axes (see figure): The vertical axis explains the degree to which the subsidiary factory follows the corporate global standard or alters it into local solutions. The horizontal axis explains the degree to which the subsidiary deeply or shallowly implements the philosophy, principles, and techniques prescribed by the corporate lean program.
The 4A model leaves four generic factory responses to a corporate lean program: Adopt, Adapt, Avoid, and Act:
- The upper right quadrant, “Adopt”, means that the subsidiary embraces and implements the global lean standards in full. While adoption arguably represents the theoretical ideal for a corporate lean program, it is not necessarily the right strategy for all subsidiaries. It depends on the degree of fit between the corporate standard and local needs.
- The lower right quadrant, “Adapt”, means that the lean program—while profoundly implemented—has been adjusted to fit local needs and contingencies. Most of the literature recommends this strategy, but it should be warned that it increases the “stickiness” of the practices, complicating the transfer of best practices between factories.
- The lower left quadrant, “Avoid”, describes how subsidiaries sometimes simply sidestep the corporate lean program (or sub-practices) altogether. If the subsidiary has not achieved world-class status, this “business-as-usual” behavior fails to increase competitiveness, and is undesirable from a headquarter’s perspective. A good thing is that this response is easy to spot and, hence, deal with for headquarter managers.
- The upper left quadrant, “Act” (as in a spectacle), describes how subsidiaries engage in pretending behavior to comply with institutional pressures to implement the corporate lean program. For example, factories might put up a few team boards on the shop-floor, do a few 5S projects, and boast about lean implementation in PowerPoint presentations. Such fake adoption is undesirable because it requires investments without bringing about sustained operational improvement.
When firms launch corporate lean programs they aim for adoption or adaptation (right side quadrants) in their dispersed factories. Still, many factories will never be convinced to start the lean journey at all. In my experience, the factories that choose to avoid the program are either stuck in a terrible market position where they never had the time or energy to do a serious attempt at lean, or they are at the other end; having delivered strong results over many years they do not see the need to change.
Much worse than avoidance, is acting. Still, to “pretend doing lean” is an extremely usual response in many factories. Institutional theory explains that factories often have good reasons to do so; the headquarters may reward the plants that apparently implement its lean program, and the market believes that plants that appear lean deliver superior quality at better prices.
All four factory responses are usual and present in multinational companies that aim to implement lean in their dispersed network. By sorting the factories according to the 4A model, senior managers can better manage the implementation of corporate lean programs.
*An edited version of this blog post appeared as a Special Feature in the April issue of the Lean Management Journal (Vol. 4, Iss. 4, p. 30). It is an executive summary of the 4A model presented in our paper:
- Netland, T. H. and A. Aspelund (2014) Multi-plant improvement programmes: A literature review and research agenda. International Journal of Operations & Production Management. Vol. 34, Iss. 3, pp. 390-418.
Recommended further reading:
- Ansari, A. M., Fiss, P. C. & Zajac, E. J. (2010) Made to fit: How practices vary as they diffuse. Academy Management Review, Vol. 35, Iss. 1, pp. 67-91.
- Oliver, C. (1991) Strategic Responses to Institutional Processes. Academy of Management Review, Vol. 16, Iss. 1, pp. 145-179.
- Kostova, T. (1999) Transnational Transfer of Strategic Organizational Practices: A Contextual Perspective. The Academy of Management Review, Vol. 24, Iss. 2, pp. 308-324.
- Kostova, T. & Roth, K. (2002) Adoption of an Organizational Practice by Subsidiaries of Multinational Corporations: Institutional and Relational Effects. The Academy of Management Journal, Vol. 45, Iss. 1, pp. 215-233.
- DiMaggio, P. J. & Powell, W. W. (1983) The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. American Sociological Review, Vol. 48, Iss. 2, pp. 147-160.
- Jensen, R. & Szulanski, G. (2004) Stickiness and the adaptation of organizational practices in cross-border knowledge transfers. Journal of International Business Studies, Vol. 35, Iss. 6, pp. 508-523.
- Ketokivi, M. A. & Schroeder, R. G. (2004) Strategic, structural contingency and institutional explanations in the adoption of innovative manufacturing practices. Journal of Operations Management, Vol. 22, Iss. 1, pp. 63-89.