Breaking new ground in product development

Published on
July 10, 2023
Roberto Priolo
Roberto Priolo
Roberto Priolo is editor at the Lean Global Network and Planet Lean
Share this article:

Roberto Priolo: You have an impressive career at Caterpillar. Would you like to walk through that with us, touching on some of the key milestones in the company's LPPD journey?

Steve Shoemaker: I worked at Caterpillar for 33 years and for the first 10 years I thought lean was something the factories did. I didn't see the opportunities beyond the factory floor. It wasn't until 2003 that I really began to develop a good understanding of Lean Thinking.

A turning point for me was reading Michael Kennedy's Product Development for the Lean Enterprise - we called it the "blue book." It was about how to get four times more productivity out of your engineers. As a manager, who wouldn't want that! I owe it to that book that I really started thinking about Lean , along with The Machine the Changed the World by Daniel Roos, Daniel Jones and Jim Womack, and Lean Product and Process Development by Dr. Allen Ward.

From then on, there were four major phases in my career. First, I was technical manager at Cat Electronics, where we developed the computers and displays that controlled engines, machines and transmissions. Anything you could put software on was under the control of our division. We worked a lot with suppliers on products, and then I discovered how important a solid supply chain is for a company like ours.

Later, as I began to delve into the Toyota Way as described by Jeff Liker, I moved from the parts world (I grew up with engines and was now in electronics) to the machinery side of the business. In the Building Construction Products division, which makes small machines, we faced tremendous business challenges. I joined the division in 2006, and a few years later came the financial crisis, which was a huge problem for a company so dependent on the housing market. We had to turn the business around. I was leading the engineering organization at the time, but Caterpillar was already working with Dr. Liker on a larger scale to get the Toyota Way into our plants. We looked for ways to get involved in the lean work as well, and I soon began working with John Drogosz, who now leads the product element of LPPD at the Lean Enterprise Institute.

Then I went to our plant in Akashi, Japan, and became chief engineer of the excavation department. While living in that position in Japan, I really began to understand what lean is all about. After all, I was living in the society where the methodology came from! Over the years, I visited Toyota and its suppliers several times, which allowed me to "connect the dots" and understand what made Akashi's product development so effective. During my tenure, we revamped our product line and developed a new excavator portfolio. Looking back, I realize that the most important lesson I learned there was how important people development and respect for people are.

After five years at Akashi, I was asked to return to the U.S. to head the earthmoving division, the core business of Caterpillar's engineering division, where bulldozers, tracked and wheeled loaders, pipe layers, paving equipment and motor graders are designed. That was my last role before I retired. The division was too expensive, our quality was not where it needed to be and the perception of the rest of the organization was that we needed to be "fixed." Over time, we made tremendous progress, improving our quality by 50% and reducing our expenses to bring an additional $200 million into our bottom line. Crucially, we reinvented the belief that the company is the best place in the world to become an engineer, and we did that through many of the lean principles. Around 2018, when Jim Morgan's Designing the Future came out, we began working much more closely with LEI and achieved amazing results.

Roberto Priolo: When you started, there wasn't much information available about LPPD. There weren't many books, except Michael Kennedy's. Where did you get your inspiration from?

Steve Shoemaker: The "blue book" is what we leaned on for a lot of our activities. We had book clubs in every division I went to, and I gave the books to all my bosses. But yes, there wasn't much in those days. There were elements of LPPD in Liker's The Toyota Way, but it wasn't until Jim Morgan's The Toyota Product Development System was published that we finally got our "textbook." It really became our road map.

Roberto Priolo: Lean teaches us how important it is to make the work visible. How difficult is that in an LPPD environment?

Steve Shoemaker: If you have one program, it's easy to understand - you set up an obeya, you set up a VSM, and so on. However, in my last position at Caterpillar, I was leading the engineering organization for a $7 billion company, with hundreds of programs running simultaneously, 400 product improvement activities running simultaneously, and hundreds of millions of dollars in R&E. In such a scenario, it is incredibly difficult to see the bottlenecks (especially in an environment that had migrated to digital), which is why we came up with the concept of the Design Factory. It allowed us to see the flow of work - something easy to do in a factory, but very difficult in the design world. When you walk into a design office, you can't immediately tell if we're behind or not, which technicians are overloaded, and so on. The Design Factory has helped us understand the process and make sure it is stable so it can be improved.

Let me give you an example. Shortly after I joined the earthmoving division, one of our teams called and asked for five additional technicians. They said they were behind and needed to get drawings finished. "Are procurement and production ready to accommodate the drawings when you release them?" I asked. They didn't know, but insisted they were behind and needed the extra help. They did not get the engineers - and were angry about that - but I tried to show them that there is no point in piling up work if there is no one to receive it. In the world of knowledge, situations like this are common precisely because the flow is so difficult to oversee.

Roberto Priolo: Looking back on your career at Caterpillar, what has been your biggest challenge?

Steve Shoemaker: One of the hardest things I had to do was convince our engineers that the suppliers who built the parts we needed and the plant that assembled the machines were actually our customers. People thought that the customer is the person driving the bulldozer. That's true, of course, but so is the next person or process in the value stream. Identifying your customer is without a doubt one of the most important elements in Lean Thinking applied to knowledge creation.

In this respect, my years at Akashi were definitely a revelation. There we had International Concurrent Product and Process Development teams, whose goal was to have manufacturing, engineering and supply management tackle problems together (whether it was a cost or quality problem or approaching the development of a new product). It seems so simple and basic, but it is very complicated because all of these functions have a different focus.

Roberto Priolo: What do you think LPPD would mean for Caterpillar?

Steve Shoemaker: In my last division, Earthmoving, we certainly gained a greater appreciation for process management. As I said, we achieved great results there, including a 50% improvement in quality, but I think the biggest gift LPPD gave us was understanding how important collaboration is. We began to consider it a defect if a supplier asked for a deviation, or if the plant couldn't assemble a product properly. That realization was monumental and opened up a whole new set of possibilities.

Roberto Priolo: From the perspective of leadership, what behavior makes such a system possible?

Steve Shoemaker: Jim Morgan refers to an equation I love: the management system equals leadership behavior times the operating system. What that means is that when leadership behavior is good, results multiply and things improve. Conversely, bad behavior can destroy a company. In most companies, traditional management behavior is rewarded and it is very common to give engineers unrealistic goals and tell them to work harder. We would never do that on the factory floor, so why do we do it to engineers and knowledge workers? Because we don't see their work!

The lean approach is completely different. It encourages you to listen to the people doing the work, understand what they need to get the work done and then support them. As a lean leader, you need to develop people so they have the knowledge to do the right things and the time to do those things the first time. The time aspect is so important, otherwise you will see people cutting corners to meet deadlines.

In reality, it is much easier to be a Lean leader than a traditional manager. Lean managers rely on people and support them, while traditional managers think they must have all the answers. It just makes more sense to be a lean manager, and if there still aren't many, it's because lean is somehow still unconventional. I have had very uncomfortable discussions with my bosses over the years, trying to get them to understand that lean takes time to work, that it takes patience to manage change until we see the fruits of our labor.

The interviewee

Steve Shoemaker is former Vice President of Engineering at Caterpillar Inc.

More Lean news

See all blogs

Stay tuned!

Sign up for our newsletter

Thanks for your registration
Something went wrong, please try again.