Using Kan Ban to Manage Business Expansion

A number of years ago, I had the privilege of meeting William Gore of W.L. Gore Associates. I was scheduled to meet with him over some technical things and toward the end of the discussion he got into how he decided when to split a division into two or more divisions.

He said that he believed that the optimum size of a business was 200 or so employees. This allowed for a very shallow management hierarchy and more importantly kept his vision of how you grow a large business with highly motivated employees.

In all the discussion about Innovation Cultures and such, very little is said about how you can structure a business to almost guarantee its ongoing innovation culture. I know from experience that it is difficult to start that discussion and sustain any progress in a 6,000 employee manufacturing facility. It is almost impossible for all the reasons everyone knows.

If there are only up to 200 people in a building, you can guarantee that if you have an idea, someone is going to listen. It just works that way. If nothing else you can stand on your desk chair and probably shout to everyone. If you look at the number of W. L. Gore Associates personnel records you will see that they have about 10,000 employees spread over 500 facilities, which works out to about 200 associates (employees) per facility. And employees didn’t have a boss, they migrated to the “leader” that they felt most comfortable with. How that works is the basis of another discussion.

What Gore’s goal ultimately was: create a culture of innovation that would sustain the company’s future. W. L. Gore Associates develops products that are based on special properties of organic chemicals that Gore discovered. His work led to other products and the company became an industrial and financial success. But it didn’t just happen.

It was based upon the following principles. I am paraphrasing these in the language that I use in the War on Waste and what we call the Tribal Knowledge Paradigm.

  • Associates are encouraged to improve corporate Tribal Knowledge (both for themselves and others)
  • Associates should embrace “No Blame” as the foundation of their daily activity
  • An Associate makes good all commitments to clients and fellow Associates
  • If an Associate makes a decision, it must not hurt the company.

That sets the stage for the point of this article.

In essence, how does an executive maintain the maximum 200 associates per plant as the business expands?

Gore was smart in that the parking lot only had spaces for parking of 200 people. When it filled up, it was time to think about some logical break-up of that facility.

The reason that this is like a Kan Ban system is that when Bill would visit a facility and he would see the parking lot getting full, he would broach the subject of a breakup of the division to his managers.

To me that is a basic component of the Toyota Production System, visual control. If all his managers knew that rule, they would start to think about this problem long before Gore raised the subject after a visit to the plant. I noted in the title that this was a Kan Ban System, but it really is an inverted Kan Ban System because it requires someone to take action when a “bin” gets full not when it is empty. But the principle is the same.

This is an out of the box solution to an issue that probably drove Bill to arrive at his solution. To me it is brilliant. But that is what all good “out of the box” solutions are.

Thank you,

Len Bertain.

About Tribal Knowledge Series

In a career spanning over 30 years, Len Bertain has coached over 150 CEO’s to help them understand and correct inefficiencies and lost profits in their business. He created the well-known “War on Waste” program, a preeminent Lean Business tool, to guide leadership teams through the process. He is an author of four books on the War on Waste and a frequent speaker to CEO groups. Since its inception, the War on Waste program has generated over $1 Billion in first-year profits from over 10,000 ideas, all generated by client company employees. The companies involved in the War on Waste have been as small as 10 people with Fortune 100 companies at the other extreme. His books include: How to Win the War on Waste in 90 Days, The War on Waste Paradox, War on Waste Innovation, and The Tribal Knowledge Paradigm. Len's Bookstore In 1994, he founded the Institute for Productivity and, in 1999, CEO University, both based in San Francisco, CA. He holds a Ph.D. in Physics from the University of Nevada and a B.S. in Physics and Math from St. Mary’s College of California. He lives in California with his wife and has 3 grown sons and 9 grandchildren.
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