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Lean Alone is Never Enough

by Brent Wahba
May 27, 2014

Lean Alone is Never Enough

by Brent Wahba
May 27, 2014 | Comments (7)

I was never a huge fan of Simon Cowell’s TV talent competition, The X Factor, but I do like the premise: Raw ability alone is never enough to make you a star or even allow you to quit your day job. No, you need to constantly cultivate your talent and then add something special, an “X Factor” if you will, if you want to stand out in the audience’s eyes.

Sorry to dash your dreams of becoming the next Toyota through Lean, but the same holds true for business. Lean can help almost any organization become more efficient and effective at whatever they choose to do, but there is much more to being a successful company than just being lean. You still need an outstanding source of competitive advantage if you want to beat that bakery across the street who is currently just a little bit leaner (or cheaper) than you are in customers’ eyes. Customers demand more than just incrementally improved value to switch suppliers or better yet, become vocal fans.   

Let me explain. You can enlighten all your executives, engage your entire workforce, and apply every one of those great lean tools to allow your R&D labs to run their experiments in half the time. BUT, they still have to be well-designed experiments that answer questions important to both your strategy and exceeding your customers’ expectations to make the R&D effort useful in the first place. In other words, there is a core, company-specific science beyond Lean that is necessary for any business to thrive. That core science, that outstanding source of competitive advantage is that X Factor. 

Ferrari surely knows how to leverage theirs in designing and producing sensation and emotion through exotic Italian racing and sports cars. But the same theory holds true for the Acme Plumbing Fixture Supply Company’s sales and marketing team down the street. They can create great factory-like processes for running day-to-day selling activities: reducing waste, creating pull, leveling workload, etc. But unless they understand the core science behind satisfying and influencing their specific customers, Acme doesn’t stand a chance at increasing sales significantly.

Capital One has done some great lean work in their internal operations, but they also understand and continuously leverage the science of producing engaging commercials and promotions. And Trader Joe’s surely knows the science behind how to hire, develop, and maintain a truly engaged, foodie-friendly workforce to support their limited but highly satisfying grocery selection.

The reason this is so important is because there are A LOT of companies that believe that (or at least act as if) Lean is their strategy, and thus the only thing they need to continuously develop. I’ve visited quite a few who are very proud of their years of stand-up meetings, 5S workshops, value stream maps, culture change, etc. But when you ask them how the business is really doing, they look at their shoes in shame because their version of Lean (mostly just cost cutting or window dressing for management and visitors) rarely leads to growth. They are clearly missing something big that could make their businesses competitive investments.

How does an organization start down the path of discovering and cultivating their X Factor? Unfortunately there is no easy, “follow this formula,” answer. Some companies get lucky the first time around while others struggle for years. Dell had a great operational thing going with custom PCs in 3–5 days until customers decided that they needed more immediate (and in-stock) gratification or something cooler like a Mac. You can, however, get started by trying to answer (and stumbling and learning and improving and trying again for the rest of your company’s life) two basic strategic questions:

1) What REAL VALUE do (or could) we supply customers? Not the value-added from your Value Stream Mapping workshops, but something big, important, and advertise-able that customers will actually be excited to part with their cash / time / other opportunities to obtain. It also needs to be something they would be proud to recommend to their friends and colleagues. The Big Ass Fan Company does it with industrial fans and so does Blendtec with commercial blenders, so it doesn’t have to be some super-sexy consumer product like a Harley to capture customers’ fleeting attention. Lean may be all about delivering value, but what X Factor science do you have, or need to have, to define that value in the first place? 

2) Do our processes enable us to deliver our REAL VALUE in a manner that grows a REAL ADVANTAGE in customers’ eyes? Or in other words, does Lean truly support your X Factor, or is it just another good thing to do along with everything else? Being lean is not necessarily a competitive advantage, but if you use Lean properly, it helps to grow one. I once worked with a company who was very proud of their standardized “lean” quotation process. Every quote, no matter how big / complex / thorough, would be processed and approved in three weeks per their internal cadence. Except their customers really wanted most of their quotes in a day. And if they could get their quotes in a day, those customers could avoid a burdensome internal global sourcing process which also opened up existing contracts for renegotiation. Being “lean” without understanding how to leverage value delivery not only created customer dissatisfaction, but actually cost that company millions and they just couldn’t see it. 

There is obviously a lot more to strategy than just two deceptively simple questions, but I hope this at least opens the door to starting a scientific learning process of improving your own strategy. You can easily begin by gathering your leadership team, product development organization, and / or sales & marketing group together and asking these questions. Remember, your goal is not to incrementally beat your competition on the same playing field; it’s to make them completely irrelevant in customers’ minds when it comes time to buy. Lean alone is never enough to do that. 

What’s your X Factor?   

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
Keywords:  leadership,  management,  strategy
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Bill Robinson May 28, 2014
Great post and so true.  What builds success is not just being efficient but also being effective in meeting the current customers needs along with being able to plan and morph towards what the future customers want.  Sometimes we lean people get compartmentalized into our own lean world and forget that a team does not win on its individual players merits, but on those individuals working towards the greater good of the team.  I enjoyed your post

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Brent Wahba May 30, 2014
Thanks, Bill! 

Brent


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John Shook May 30, 2014
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Interesting post, Brent. Is it a matter of how we define lean? For example, the classic Womack & Jones definition of lean begins with specifing value, from the customer's perspective. Do you think they were talking about some different kind of "value"? Or, Toyota's articulation of its business system always begins with the customer. Or, for something more fashionably up-to-date in leanworld, Lean Startup principles and actions totally revolve around defining value for the customer as the first step. My own defintion of lean starts from a similar place. Are you saying something different? - john

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Brent Wahba May 30, 2014

Thanks John - I appreciate your question.  In short, no, I am not at all suggesting that any of those definitions are inadequate for Lean.  What I am saying, however, is that there is a core science or knowledge behind doing any type of work (whether it’s smashing atoms or designing handbags) and that science (which can still be improved through Lean) differentiates companies / products / services in customers’ eyes.  If Toyota decided today to give up on cars to focus on, say, children’s toys, they would no doubt use their TPS skills to try to be the best at designing and making children’s toys.  But, they would still need to learn the science behind what makes good children’s toys along the way.  Taking this back to value, I’ve seen many supposedly Lean companies throw that term around pretty loosely without a good understanding of the technical AND emotional elements of what drives their customers’ buying and recommending behaviors.  It’s impossible to define where on the iPhone production line the “cool” is added, but somewhere inside Apple they appear to have making cool products down to a science.  And that is no doubt a combination of technical engineering analysis, and both individual and group psychology - which often seem counterintuitive to us “logical,” Lean thinkers.  Whether it’s Apple’s process or Procter & Gamble’s, there are whole other scientific worlds of Market Research and Consumer Behavior that rarely overlap with our Lean world.  And that’s a huge shame, because we appear to need a lot more help defining value.  What I love about the Lean Startup philosophy is that there is a focus on creating a learning process to understand value up-front, rather than the more common approach of continuously improving an inadequate existing process.  I’m not sure that both paths would eventually get us to the same place.

So my point is not to stop at JUST becoming more efficient and effective through applying Lean to what we do today, but simultaneously to more deeply understand the fundamentals of our own market-specific science to drive us to where we need to be tomorrow.  In doing so, we can better define and deliver even more customer value.

Brent



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Brad Thornton June 05, 2014
Brent
Fabulous post!  Lean truly has little sex appeal and won't pay the rent, but it solidifies and de-wastes processes (the goal).  

Lean doesn't offer much to attract new customers and, by itself, may not be entirely effective at keeping them unless you can align with the voice of the customer, both Current AND Future.  

No "pull" for a Lean product/service is as disastrous as no pull for a wasteful product/service.  For this reason I ALWAYS add a Kano Diagram in our planning to keep the "X Factor" in front and center.

Thanks again for the insights....brad. 


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John Shook June 11, 2014
Thanks again, Brent. Sorry I didn't make my question clear. I was actually trying to ask your definition of lean. Yes, Womack, Toyota, Ries and Lean Starrtup, or maybe add Spear as another example, all define "lean" as beginning with specifying value for the customer. In other words, it starts with doing the right thing (not doing things right). You seem to be saying "lean" is something else ("lean is not enough, begin with market specified value..."). What is your definition of "lean" - a set of tools to achieve efficiency? - John 

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Brent Wahba June 11, 2014

Thanks, John – I better understand your question now.  The abridged Lean definition I typically use is “Principles and tools for delivering the most customer value while consuming the fewest resources.”  I actually think we are saying the same things, but maybe a more accurate (albeit far less catchy) title would have been: “The way that most companies think about and implement Lean is never enough.”  Developing my X Factor would obviously fall under “doing the right things” strategically.

Where I am suggesting there is a significant gap, however, is that most organizations apply the common Lean tools to existing value streams without first deeply understanding their highest level strategic problems.  They focus on incrementally improving what’s there without using science to determine what those “right things” specifically are in the first place, or in extreme cases, if those value streams should exist at all.  I don’t mean to imply that companies don’t understand Lean principles, but they (for a myriad of reasons) struggle sometimes with practical application and then default to efficiency improvement.  In Lean we have a methodology to deploy and manage strategies, but I think we are only scratching the surface of how to help create competitive and sustainable strategies to begin with. 

Brent



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