WHAT IS “LEAN” ABOUT?

By Mike Rotherand Jeff LikerJanuary 2015

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The word "Lean" was coined in 1990, as a new paradigm of management that led to Toyota’s enduring success. That's now 25 years -- or about one generation -- ago.

With this SlideShare we'd like to raise three issues forus in the Lean Community to think about. Our goal isto stimulate some reflection, thought and discussionas the Lean Community marks its 25th anniversary and looks ahead.

REFLECTION& LOOKING

AHEAD

It's 2015!

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• Toyota has been profitable for over 55 years, missing only one year—that of the Great Recession.

• Toyota became the world's most successful auto company in vehicles sold, brand equity and market value growing organically.

• Many companies have had long runs of exceptional customer satisfaction and bottom-line results because

of their Lean efforts, even if management changes sometimes then derailed those efforts. These include:

Lean Has Had Lots of Successes

Lantech Danaher U.S. Synthetic Thedacare Herman Miller

Goodyear Tire Zingerman’s Mail Order Embraer Autoliv John Deere

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On the Other Hand...Jim Womack’s recent 25-year reflection on Lean:

Most management decided they could outsource Lean… "Please go do it, here’s your budget, and please get some results, we won’t be too precise about that, and now I will be on to the next issue." And of course that is unlikely to produce much of a result… It produces something, but it doesn’t produce what we had intended, which was that this would become the core way that managers think.

Planet Lean Interview, UK Lean Summit, 2014https://www.youtube.com/watch?v=KYi6gkFYYpU

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A Reflection on Lean in Three Acts

Each point we presentincludes slides + a short video

1) A First Definition of "Lean"?

2) Lean = Exceptional Human Endeavor

3) Striving for Efficiency is Not Enough

Read the slides, watch the videosand see what you think

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In the past 25 years we've often triedto define Lean by listing things like its elements and principles.A different kind of definition is less about "things" associated with Lean and more about describing the mindset of Lean.For example, the following definition, published in the February 2014 issue of Quality Progress, could make a good'first definition' of Lean.

(1) A First Definition of "Lean"

“Lean is the permanent struggle to better flow value to each customer”

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What We Mean by 'First Definition'

What is Lean??

“Lean is the permanent struggle to better flow value to each customer”

This first definition focuses on what we are trying to do, while many start with a definition of how to approach it

“We do that by..." "It involves..."

A 'first definition'

+Further

definition

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Start with Some Sense of Direction“Lean is the permanent struggle to

better flow value to each customer”

Why might a description of Lean like thisbe useful to precede ones that describeLean elements, results & principles?

In organizations that see strategic advantage in continually improving, leaders should articulate customer-related challenges that create focus and passion. Just saying Lean is about its elements or “developing people,” “continuously improving,” "problem solving," “cost reduction,” “efficiency” or "doing more with less" often turns into the uninspiring add-on programs that Jim Womack decries.

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Source: "Lean practitioner’s definitions in max 3 words"www.linkedin.com/groups/Toyota-Way-4797470?gid=4797470&mostPopular=&trk=tyah

Common Lean Definitions MissSome Essential Lean Thinking

More For Less • Strong Problem Solvers • Chase the Waste • Bias for Action • Quality, Cost , Delivery • Waron Waste • Make Value flow • Cost Reduction System• Use resources effectively • Logical, efficient workflows• Flow, synchronization & leveling • Process Improvement

These are not bad definitions, but they only emphasize Lean results, elements & people-as-problem-solvers

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This first definition by its nature requires elements like continuous improvement and developing people’s improvement capability.

For example, developingcapability gets pulled bythe overarching challenge of trying to get ever closerto a 1x1 flow of value to the customer. If one takes on that challenge, it will then demand that an organization develop and mobilize the human capabilities of its members and teams.

In Other Words, Let's Not Putthe Lean Elements Before Customers

"The permanent struggle tobetter flow value to each customer"

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Let’s take a closer lookat this elevator-speechdefinition

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Permanent and better mean never-ending and on-going, because any situation can be further improved.

You’ll never, ever be at the ideal state of your distant vision…. and that is the beauty!

The permanent struggle tobetter flow value to each customer

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Struggle is recognizing that you may learn something from each step. It's about striving for the next Target Condition through the grey zone of uncertainty -- where you are not always right -- and realizing that there will be another Target Condition after that.

You take a step, encounter new information, evaluate it, revise your understanding based on what you learn, and plan the next step toward the Target Condition accordingly.

Without struggle we are only doing what we already know… and what our competitors know.

The permanent struggle tobetter flow value to each customer

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To flow is not simply to ‘provide.’ For instance, it’s not just holding items in inventory in the hope that you'll have on hand what a customer wants, but rather to create and provide what the customer wants when they want or need it.

This ideal of such a pure 1x1 flow may not be entirely reachable, but it gives a perpetual target to those organizations who view this as strategic.

The permanent struggle tobetter flow value to each customer

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The concept value is defined by deeply understanding customers, and evolvesover time.

The permanent struggle tobetter flow value to each customer

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To each customer means that at the end of a value stream there’s a single customer with particular wants or needs.

Toyota has a saying: “We make millions of cars, but the customer buys only one.” From our perspective we may think we are supplying many customers, but turn that around to the customer’s perspective and there is only one.

The permanent struggle tobetter flow value to each customer

Although a definition of Lean is not necessarily a ‘mission statement,’ the following video by Dan Heath about mission statements gets at a point being made here.

On NextPage

Video 1

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To aspire, strive or reach.

A conscientious or concerted effort toward an end.

Purposeful or industrious activity; enterprise.

(2) Lean =Exceptional Human Endeavor

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Let's Face It...We Are Almost Alwaysin the Unpredictable Learning Zone

Whether reacting to deviations from standards or striving for a new level, the Lean mindset & approach is roughly the same in each case... it involves a scientific process of testing and possibly adjusting as you strive to reach a goal. Why? Because you never know for sure how you are going to get there, until you get there and look back.

Predictable Zone

Current Knowledge Threshold

Next Target

Condition

Unpredictable / Learning Zone

Obstacles

Unclear

Territory

?We want

to be here next

Complexity

?

On NextPage

Video 2

We often think we are in the predictable zone when in reality we're in the unpredictable learning zone.

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(3) Striving for Efficiencyis Not Enough

Over the last 25 years the Lean community seemsto have internalized and operated on the idea that Toyota's growth and prosperity stemmed from eliminating waste for greater efficiency. We've been selling Lean as a cost-reduction tool for so long that most leaders probably think that is its only goal.

Today we know that Toyota's success came from striving scientifically to achieve many types of challenging goals, not just cost reduction.

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What Do You Want to Achieve?

Focusing on waste elimination and cost reduction alone is no guarantee of business success. The Lean idea of 'value' involves understanding your customer & environment, defining a strategic direction that will set you apart in delivering customer value, and mobilizing the organization in that pursuit.

A narrow focus on minimizing waste and cost alone is ultimately not what will help organizations meet the challenges they face and differentiate themselves from competitors.

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We often miss this point. It is many ideas thatthrough experimentation develop into one winner!

Experimentingour way forward

Increasing Knowledge

Innovation in All Areas of theOrganization is the Result of Experiments

On NextPage

Video 3

The third video is 16 minutes long, but well worth watching by anyone in the Lean community. Professor Clayton Christensen talks about the limits of efficiency improvements and the need to also pursue strategic breakthrough objectives.

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Best Wishesfor a 2015 filled with

experimenting, learningand success!