Lean Thinking: do the right thing with less

Talking about “Lean Thinking” may generate some misunderstanding and discussion: let us cut this waste to help people who have to run their business, large or small, or to transform the community they belong or the whole civil society.

Credit: Giglio News

The first gross misunderstanding about “lean” is about the nature of its approach: strategic or tactic. Here is the argumentation that it’s an approach to expand and consolidate market share, as well as reduce costs and increase the productive performance. Infact it allows to set a successful strategy (in many contexts, nobody says it’s for all), and to apply pratically in organizations, processes and in companies’ operations.

Eiji Toyoda, young engineer starting his job at Toyota, together with Taichi Ono, the most valid and needful of his collaborators, studied in the years after the world war, a production system to sustain the automotive company in leveraging the distinctive character of the local market, in riding the opportunity of the Japan reconstruction, and growing fast so to tackle the big american competitors in their national market, in just 20 years. Due to that inheritance (the model has been named “Toyota Production System”), people is archiving the “lean” thing into the folder “production system” till today. In the meanwhile other keywords have been used like “lean production” or “lean manifacturing”, based on its usual application in large production contexts.

So the first misunderstanding has been generated in those years (and it resists yet today), when american businessmen undervalued the japanese model, sure to have very few things to learn, having the most powerful of the large scale industrial productions, from a small country in trouble to restart his development. At the beginning of 50's Ford has been producing 8000 cars a day, and Toyota had produced 25000 of them in the last 13 years. But, due to the constraint to tackle a much smaller local market, made of low spending customers, and thanks to the higher quality and widely spread of their handicraft workers, the japanese had the objective:

“build the right product for the customer, using the minimum amount of resources”

There were, even at that time, all the key elements that made the success of this approach in a so long story, up to nowadays. At that time those made the success of Toyota, so that the Corona model, designed focusing on the needs and wishes of the average american, gained in USA a very large success: 20000 units sold in one year (1966). Powerful engine, air conditioning as standard option, automatic transmission: it had everything the customer was appreciating — but not available in the national producers’ offer, at same price — and nothing more.

So it’s not only about making production more efficient, reducing costs, specially cutting “wastes”, working through “continuous improvements”. It’s a real business development strategy, also, greatly innovative at those times, based on putting the customer at the center, and letting him to have the power to fix what “value” is to be generated and transferred to himself: the value that he is willing to pay for. Only when that value is identified, and so its flow (“value stream”) through the company, decisions about what waste is (the no-value) and how it can be cut, become possible: transferred value can be maximized, costs can be cutted, so efficiency and efficacy can be both improved. In other words, this strategy allows to identify and exploit business opportunities, with sustainability as long term objective, and economic performance in short term.

All credit goes to James P. Womack and Daniel T. Jones, for having studied and disseminated the real strengths of this approach, first with the book “The machine that changed the world” (1991, edited also in 2007) — the title expresses very well the big potential recognized in this methodology by the authors — then with the book “Lean Thinking” (1996) — again the title introduced a keyword become famous in all over the world, and it underlines how the japanese approach deserves to be considered as a philosophy. From that moment the “lean” approach has been spread in the western business contexts, and it has been used in many application fields, with some opportune but never radical adaptation.

That said, there’s a large and robust body of practices and techniques (tactics) that cannot be disregarded: starting with the work of Taichi Ono, then along the following years, it has been defined and revised to make the “lean” approach practically and successfully applicable in the real life of the companies. From kanban to regulate the flows, to poka yoke to reduce errors; from “one piece flow” to “pull flow”; from just in time in production to hoshin kanri to support strategic decision making; from the kaizen events to the standup meetings; from Six Sigma to improve quality, to the 5S method to rationalize the work spaces; and many others. This solid architecture at the methodological level, I think, is one of the causes of the returning gross misunderstanding, because it mainly links the “lean” thing to cost cutting and efficiency recovery.

We should be grateful to Eric Ries, author of the book “Lean Startup” (2011, even if it’s focused on the startup stage of new companies. He brought under the glare, for the first time after so many years, how the basic principles of “lean” are valid in driving properly the identification and definition of new sustainable business models. That approach gained a rapid success at global level, mainly in the startup ecosystem, where lean management had not aroused a great interest. The same approach is now exported in many important radical innovation project, in companies already established and forced to change.

Basically this book allowed to refocus on the strategic value of the “lean”: priority to the customer and the value appreciated by the customer; the importance of the whole flow, in this case the plot of the links between the components of the business model; the logic of small but frequent improvements, tipical of kaizen; the valuable contribution of human resources (obvious in the case of startups) in terms of expertise and also of humble assessment and critical analysis; the needful support of metrics. Undoubtedly the “lean startup” has yet to evolve and develop a complete architecture, and more methods and operational techniques (tactical) have yet to come. However it’s already credited as “the approach that is transforming the way new products are developed and launched in the market”, therefore not only in startups. Moreover we can not forget the words of Peter Drucker:

“To be successful, doing the right thing is more important than doing the thing right”
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