The Learning Way to EBITDA Improvement

Part 1: Learning LeanInternational audienceMulti-national firms pursue enhanced marked positioning by production performance, profit realization and cost reduction. As such, a key strategy is to apply standardized management concepts such as lean and Toyota Production System, or more recently, to develop a Company-Specific production System (XPS). However, a fundamental challenge is how to document the financial impact of such programs. The promise of cost reduction is frequently discussed, often hidden behind other organizational initiatives, such as downsizing and restructuring. This study investigates a Norwegian multi-national in Process industry, producing silicon to the global market. The company has developed, implemented, and institutionalized its own XPS since 1991 and claims that this has directly contributed to extensive cost reduction and significantly strengthened competitive position. The company claims a cost-reduction of 5–7% of total production cost, year-on-year since 2013. This is supposedly the result of planned change activities related to the XPS implementation. We challenge this claim, assuming that such a significant and sustained cost reduction must be explained by other variables. Our findings, however, indicate that the XPS first created institutionalized learning and secondly that this ‘learning capability’ managed to link continuous improvement work directly to improving the cost level of the organization. Our data were controlled against downsizing, marked change, exchange rates, new investments, new technology and other contingency factors. The findings have implications for how firms might pursue business improvement. By using an XPS as catalyst for organizational learning, continuous improvement work might be linked more directly to financial performance for the company