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Turn To Lean in Times of Crisis

by Lean Leaper
October 12, 2020

Turn To Lean in Times of Crisis

by Lean Leaper
October 12, 2020 | Comments (2)

Improving your work through lean practice may feel more daunting than ever given today’s profound challenges. And yet there’s no better time to redouble your efforts, says Jim Womack. He recently showed how lean thinkers can find courage and, in fact, guidance from facing crises, showing how many of the great lean "leaps" have been accomplished in challenging times.

Toyota, his exemplar of lean thinking and practice, has faced no less than three major crises over time; and responded to each with experiments and learning that have helped develop its enduring system of enterprise. Likewise, he suggests that you too face these tough times looking for ways to conduct lean experiments that help you and your peers learn and improve.

“The big leaps in lean thinking and practice in the past have always occurred during moments of crisis,” Womack said in Lean Leaps: The Progress of the Lean Community, an online session of the Virtual Lean Learning Experience. He cited four significant crises over the past century that helped form the complete lean system that we know today.

The big leaps in lean thinking and practice in the past have always occurred during moments of crisis, says Jim Womack.Henry Ford was the first to develop the seeds of an end-to-end system of improvement early in the 20thcentury. Facing a “crisis of runaway success,” Ford sought to avoid the mistakes of his previous two bankruptcies in which he was forced to cede control to financiers. He sought to sustain the success of his Model T automobile without having to take on outside investment, and thus developed what he initially called “flow production,” in which raw material would be converted to finished product without any interruption on the line.

Closely tied to the notion of no storage or interruption was the principle of no waste. The complete system of enterprise Ford pioneered, which was partly conceived by the challenge of growing fast without being entangled in other people, was renamed mass production in 1932. His revolutionary gains still apply today.

The challenge of conserving cash was a crucial factor in the second great crisis/opportunity, when Toyota went bankrupt (technically, the company ran out of cash) in 1950. This was a great crisis for the former textile company, which had already developed many key ideas of lean such as just-in-time. But the cash crunch of spring 1950 created an urgent need for change in order to survive; and this shared threat overcame the previous resistance folks had to adopting the complete system.

Pressured by conditions imposed by investors, the entire company agreed to a basic premise. “If you will embrace the new methods and improve the work while performing the work consistently, we [the owners] will be able to defend you in the future,” says Womack. Thus was launched “a great leap forward for Toyota—entirely driven by a crisis. Without that crisis, Toyota may well have been a mediocre company.”

The Challenge of Quality

In 1960 the quality challenge emerged as the next great crisis propelling lean progress. Until then, customers primarily bought cars on the value proposition of price. Yet several factors changed that basis to price PLUS quality. Toyota management recognized this shift and also realized the subsequent need to boost quality dramatically. Womack notes that Toyota leadership saw the need for this comprehensive improvement to be carried out by line managers.

“This was a line issue,” notes Womack. Managers at the workplace needed to learn to see gaps, and develop practical improvement plans. The company subsequently developed A3 thinking and practice as a tool to operationalize this, pairing it with the development of daily management practices supporting this. All of which resulted in Toyota becoming “close to the company we know today,” according to Womack.

The life of lean is experiments, says Womack, who calls for new tools and new mindsets.The fourth great challenge in this series came in 1967 when Toyota responded to the challenge of growth. Having launched the Corolla the previous year and needing to compete internationally, the company needed to grow its scale and sell globally—while maintaining independence without a cash reserve. Womack says it successfully met the challenge by forming its OMCD division (a cadre of sensei who helped to formalize and teach the system through a model line approach), which then helped spread TPS throughout the world.

Of course, there were more challenges to come. In the 1990s, the U.S. recession helped push many US automakers to the brink of bankruptcy. Japanese transplants set up shop within the U.S., and their success at building vehicles (more quickly than competitors) with higher quality and lower cost  demonstrated that success was not due to currency tricks or any other gamesmanship.

Faced with the stark truth that GM in America was not competitive with Toyota in America, domestic automakers developed their own improvement systems. Aided by resources such as The Machine that Changed the World, which showed lean as a complete interlocked enterprise system, the industry began a slow but inexorable march towards higher quality.

Noting that the lessons shared in Machine have gone on to inform experiments and progress in industries ranging from construction to healthcare, software to government, Womack said that this book “still has a story to tell.”

Facing the Challenges of Today

Teeing up the audience, and need, for such a story, Womack outlined six challenges facing current and potential lean thinkers. These are the challenges of work, management, software, our origins, solutions, and the environment--all of which pose new opportunities. He emphasized that such gaps to close are not gloomy but, in fact…great news. “The community going back 100 years has always made its dramatic leaps in thinking and in methods driven by crisis,” he said. “There has always been some necessity driving challenge.”

He summed up his talk with a call for action—encouraging people to take heart and apply lean thinking courageously in the face of what may seem to be daunting challenges.

“We need new tools. And new mindsets—about how you create good work and eliminate the waste. This is not theology. This is not carved in stone. Not dogma, not orthodoxy. It is continuous experimentation. And the life of lean is experiments. If we continue to run experiments, honestly assess the results, and then share the results with each other then I think we can continue to convert waste to value with better worker, customer, and societal experience.”

Search Posts:
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2 Comments | Post a Comment
Christian Reilly October 13, 2020
1 Person AGREES with this comment

I really enjoyed reading this blog. I agree completely that enduring hardships and going through these speed bumps will make companies grow and critical think more. With COVID I think many companies will come out of this pandemic more cautious and try to plan for the future. I also fully agree with your last statement saying that if we continue to truly run experiments and asses the results honestly we can turn waste into value

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Ricky Mankavech October 14, 2020

Just as a crisis drove Toyota to leap forward, I believe that the crisis we are currently facing will make a few mediocre companies into even better ones by focusing more on lean. When facing a crisis, a company's thinking and methods must change to keep up, so it is a great time to implement lean. It is important in challenging times to eliminate waste and potentially save money and time, so as Womack pointed out, now is the time to convert waste to value. Now is the time to make the changes companies normally would not make when the economy is good because they are making good money.

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Search Posts:
Lean Thinking, 2nd Edition
By James P. Womack and Daniel T. Jones
The Birth of Lean: Conversations with the Founders of TPS
By Koichi Shimokawa and Takahiro Fujimoto (Editors)
Avoid the Costly Work of Rework
Good Night Sweethearts
The Mythical Value Stream Manager
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