Systems Thinking, the Heart of Lean and Kanban

Understanding the systems thinking foundation of Lean and Kanban will lead to far more successful implementations and outcomes

Lean manufacturing is a production method derived from Toyota’s 1930 operating model “The Toyota Way” (Toyota Production System, TPS). The term “Lean” itself was coined in 1988 by John Krafcik when the overwhelming superiority of the Japanese way evident.

Kanban (Japanese 看板, signboard, or billboard) is a lean method to manage and improve work across human systems, particularly knowledge work. Work items are visualized on Kanban boards where progress is tracked and managed. The Kanban method is based on Lean principles applied to knowledge work. The Kanban approach to knowledge work emerged after the publication of Kanban: Successful Evolutionary Change for Your Technology Busines around 2010. It has proved highly effective in software development as well as other areas of knowledge work.

A sample Kanban Board

Lean has been the key factor behind Toyota’s extraordinary success. An example of this is that plants that supply Toyota in the U. S. have 14 percent higher output per worker, 25 percent lower inventories, and 50 percent fewer defects than operations that supply other automakers.

The question remains is that if the lean movement has been so successful why hasn’t it spread more quickly through industry: Many try, few succeed. The answer could be in misunderstanding what Lean actually is.

Systems Thinking

Lean is popularly known as s system for doing more with less. A system for eliminating waste and getting more efficient. But Lean is far more than that.

Lean fundamentally is an implementation of systems thinking. The TPS is probably the most highly developed, best articulated, and most successful example of systems thinking applied to a business organization in the world.

Lean is an approach that views the system as a whole interacting with its environment to meet its objectives. The system then evolves constantly based on feedback and continuously adapts to opportunities and challenges in its environment. Elimination of waste is not the main objective of Lean. It is the efficiency and responsiveness of the whole system in meeting its objectives.

Some characteristics of systems thinking are

• Thinking in terms of a purposeful whole that is greater than the sum of its parts. The system as a whole has a purpose that is fulfilled when all its parts interact together. All the parts of the system are integral for the system to function and fulfill its purpose.
• Feedback that allows the system to adapt to its environment and learn in the process. The feedback could be positive (self-reinforcing) or negative (self-correcting). Feedback is more effective than feed-forward or anticipatory regulation. The system optimally adapts to its environment.
• Bottom-up adaptation and evolution of the whole system rather than top-down command and control. Intelligence, learning, and order emerges in the system through feedback and adaptation. It is not imposed through top-down design and control by the executive function.

Lean Principles and Systems Thinking

Womack and Jones defined the five principles of Lean manufacturing in their book “The Machine That Changed the World”

Each of the five principles leads to the building of the systems thinking model.

1. Define Value: By value here we mean the overall purpose of the system. The overall purpose of manufacturing systems is to deliver value to the end customer. It may seem to be an obvious point but many systems are managed without this purpose in mind.
2. Map the Value Stream: In this step, the elements of the system are defined. These elements are integral to meeting the system's purpose. Activities that are unnecessary are considered waste and are eliminated.
3. Create Flow: After eliminating waste from the value stream the remaining activities are designed to run smoothly without delays or interruptions. This could be achieved by reconfiguring the workflow, training workers, or breaking down the activities into more granular steps.
4. Establish Pull: This is the key to the systems thinking approach. Pull ensures that the system responds to its environment and every activity is driven by the system as a whole and not its individual parts. Work is pulled right across the value stream. More than just eliminating waste such as inventories what Pull does is to establish visibility into the behavior of the system as a whole. Feedback loops can then be used to evolve the system continuously.
5. Pursue Perfection: This is the most important part of lean where it all comes together in the pursuit of perfection. Once Pull is established the systems behavior is transparent to everyone. Every member of the system can now be engaged in improving the system supported by continuous feedback. The system then moves from just eliminating waste to adapting and responding to challenges and opportunities.

Thus the principles of Lean are meant to establish a systems thinking approach to continuously adapt and improve the system.

Why Lean and Kanban implementations fail — the reductionist industrial era paradigm

Lean delivers amazing results when implemented correctly. When it became obvious that Japanese industry was head and shoulders above its counterparts there was a rush to understand Lean and realize similar benefits. The results have been far from what was expected. Lean terminology is found everywhere in industry today, — kanban, kaizen, TQM, Five S, Six Sigma. Yet the results that lean promised are not to be found.

The failure is not in the Lean methodology but the mental models of the teams implementing them. There is a lack of understanding of the systems thinking foundations of the Lean approach. The main obstacle to this understanding is the reductionist thinking paradigm that dominates western culture. The reductionist approach has served us well so far particularly with the success of the industrial revolution leading to huge gains in wealth and well-being. We do not recognize it but reductionist thinking pervades all aspects of life. Every problem is seen as solvable only with the reductionist approach. The economy, the human body, companies are all seen as machines consisting of separate parts that can be understood and managed independently. This approach, unfortunately, does not work in the case of such complex dynamic interconnected systems.

Most organizations and managers operate on the basis of the reductionist paradigm. Their view of systems is that of mechanical systems consisting of unintelligent parts. Lean implementations fail in these environments.

1. Inability to think of the system as a whole and continual focus on its parts. This is when Lean techniques such as kanban, kaizen, TQM, Five S, Six Sigma are implemented in a non-systems way and used as traditional means of control. The power of pull and the purpose of the system as a whole is overlooked. There is no thinking in terms of feedback loops and systemic cause and effect. In the end, Lean is seen as a means of cutting costs and not a means to systemic change.
2. Reluctance to let the system learn and evolve spontaneously. Traditional leadership has come to mean command and control. Order is imposed from the top down. In systems thinking order emerges from the bottom up as the system interacts with its environment, learns, and evolves. In traditional models, workers are required to follow orders from the top and all planning emanates from the top. In Lean every worker is respected as an intelligent part of the system and is encouraged to learn and improve to meet the purpose of the system. The system thus learns and adapts continuously from within. A far more powerful model than trying to impose order from the top.

Training in systems thinking principles is still rare. The command and control paradigm still dominates business. At the turn of the century, new systems approaches emerged in software development following the complete failure of the earlier reductionist command and control methods. The Agiles, Scrum, and lean methods since have revolutionized software development. Yet a deep understanding of the systems thinking approach that is the basis for these methods is still not widespread.

The paradigm with which we look at the world depends to a large extent on our culture. The Japanese culture has an innate understanding of the systems thinking approach. When Taiichi Ohno the founder of the Toyota production system and Lean studied Ford’s production plants he saw a unified flow. He saw the system's ability to pull whereas the Americans saw separate parts that they could push. What is needed is more of us to have the same vision of a unified whole as Taiichi Ohno. It is time to embed the systems thinking approach in our culture if we are to solve the challenges that complex dynamic systems present.