Case Elkamo

The only certain thing in the markets is change. But just adjusting to change is not enough: successful companies must take their destiny into their own hands and build their own future. This requires real, proactive systematic approach instead of reactive actions, and true engagement of the entire organization instead of "that is not my job" mentality. Such changes cannot be made through pep talks and disjointed brainstorming sessions. They require "walking the talk" and showing that everyone's ideas matter and are processed systematically.

Real team engagement requires that all members have both opportunity and ability to participate in decision-making. Many family-owned companies tend to revolve around the founder/CEO, who makes all the decisions, with management meetings focusing on reporting the past. In such environments, even one sudden change can collapse the entire operation.

In 2011 this was the case at Elkamo, at that time a Finnish family-owned company which manufactures electricity distribution systems, including low and high voltage switchboards, fuse switches, and instruments transformers. Mr. Timo Sivula had just been appointed as CEO when the main component vendor announced that it would cease the manufacturing of the key component for Elkamo's product. This meant that all Elkamo's products had to be redesigned practically from scratch, as otherwise the company would have lost 80% of its revenues, which then were around 11 M€. A huge product development effort was required - but the real challenge turned out to be the management and decision-making culture in the company. Management meetings were extremely long and unstructured, with no proposals or ideas from team members, and no follow-up of decisions, which were discussed again and again in every meeting. The universal solution of the team members to everything was "Ask the founder".

Luckily for Elkamo, the founder had heard about the IP program from another Finnish company Herrmans, which had recommended it based on its own good results. The newly appointed CEO decided to start the IP program with the Business Assessment module, and then continued to do the full program.

The first crucial result from the IP program was the redesign of the low voltage switch motherboard so that over 90% of all switch designs could be built with the same motherboard. Previously each motherboard had to be designed separately and manually drilled on the manufacturing line. This result was seen by everyone in the company, and it also convinced most of the staff about the efficiency of the IP program after initial resistance.

After this first result had shown the effect of the IP program, the other identified improvement projects began to proceed faster. Management meetings became systematic, with initiatives from everyone, well-prepared decisions, and structured follow-up. The IP program transformed Elkamo from a one-man business into a systematic, management-team led SME.

After starting the IP program in 2011 in a situation where the company was facing possible bankruptcy, Elkamo had its first positive month in August 2012, and achieved its history's best result in 2013.

"The IP program is excellent for improving the efficiency of manufacturing, thanks to it's several Lean tools," says Mr. Sivula. "But it is also an especially efficient catalyst for developing the management culture into systematic, fact-based leadership. The IP program requires commitment from the owners and top management, but I can recommend it warmly to all companies which want to produce concrete, measurable and sustainable results."