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Yes, Lean is a Strategy!!!

by Orest (Orry) Fiume
August 10, 2017

Yes, Lean is a Strategy!!!

by Orest (Orry) Fiume
August 10, 2017 | Comments (72)

Since the publication of our book The Lean Strategy last month, my co-authors (Michael Balle, Dan Jones, and Jacques Chaize) and I have heard numerous people challenge a core belief of ours. We argue that lean is indeed a strategy, and here’s why.

What is strategy? It’s a word that is used in many fields of endeavor…war, sports, business, etc. When you look at the literature about strategy it is described in various ways. Some common descriptions are:

  • A high-level plan to achieve one or more goals under conditions of uncertainty
  • Shaping the future by attempting to get to desirable ends with available means
  • A system of formulating and implementing a plan to create competitive advantage

With regards to business I prefer to use the third definition. Each business seeks a competitive advantage over its competitors in order to grow and thrive. The way to do this is to differentiate yourself from your competitors in a way that customers believe that you can deliver more “value” to them than your competitors can. If we think of this relationship as a triangle, then the customer is at the apex of, my company is at one end of the base, my competitor is at the other end of the base and the length of the base is determined by the amount of competitive differentiation between us. If there is almost no differentiation (think commodities) then the triangle has a very narrow base and the only thing that I have to compete on is price. On the other hand, if I can do things that my competitors can’t do that create value for the customer, the length of the base grows and although the subject of price doesn’t go away, it but becomes embedded in a larger conversation about value. 

Looking Back

When we examine the history of Toyota, we find that when it decided to make cars, the company was strapped for money. In 1950 it nearly went bankrupt. In addition, Toyota was entering an industry that had intense competition led by the American “big three” manufacturers who offered a large variety of choices. Toyota was faced with a tough situation: no money, the need to have variety, and no ability to carry a lot of inventory. Toyota had to find a way to build cars only when it needed to, an approach we now refer to as “just-in-time”. Over time Toyota created systems that continually worked on eliminating all unnecessary work (“non-value adding work” or waste), thereby incurring less total costs, and using capital more productively that its competitors. The common denominator of all of Toyota’s efforts is time. In the Publisher’s Foreword to his book Toyota Production System, Taiichi Ohno is quoted as saying "All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes."

Over time Toyota created systems that continually worked on eliminating all unnecessary work (“non-value adding work” or waste), thereby incurring less total costs, and using capital more productively that its competitors. The common denominator of all of Toyota’s efforts is time.

While this statement could be interpreted as strictly an inwardly focused operational issue, it helps show how Toyota in fact used time to differentiate itself from competitors. Toyota introduced new models faster and more frequently than its competitors. Toyota used time to minimize capital investments through mixed model lines, quick set up, little inventory, etc. It used it deliver more value to customers and become the most profitable automobile company in the world.

Let’s look at a simple example, paraphrased from “The Lean Turnaround” by Art Byrne:

Assume that Companies A and B are competitors. They buy the same equipment from the same vendors. The only difference is that A takes one hour to change over its machines, whereas B has figured out how to do it in one minute. If they both can afford to dedicate only one hour per day to setup, B will have better customer service based on being able to produce 60 different products per day verse two. If the industry lead-time is six weeks, but B can use its flexibility due to rapid setups to offer a two-day lead time, they can gain market share. And how will A respond? Probably they will build more inventory (incurring more cost) or cut prices, which further erode profits. B, however, can use its greater speed and responsiveness to continue to gain market share without cutting prices.  Does it sound strategic now? All B did was cut setup time-something that most people see as a ‘manufacturing thing’- and they realized a huge strategic advantage (i.e. lower costs and better customer service) by dramatically changing the length of time it took to fulfill customer orders.”

This is a good example of how you can use the tools of lean to reduce costs for a short-term operational benefit. This translates into an even deeper strategic benefit when you figure out how to turn that improvement into an advantage for your customers by creating more value for them than your competitors.

At The Wiremold Company, we continuously looked for ways to use time to differentiate ourselves. At one of our OEM supplier companies, we improved our process and were able to give customers both a quote and a prototype before the competition could even generate a quote.  In another of our companies we taught our distributor partners how to use our “rapid replenishment system” to reduce the amount of their inventory of our products from months to weeks worth, thereby freeing up their cash to be used more productively. This improved the GMROI (a major metric of capital efficiency for distributors) on our products and when distributors ranked their suppliers on this basis it put us on the top of the list of favored suppliers. A nice competitive position to be in.

Time is the Currency of Lean

Referring back to the definition of strategy as a system of formulating and implementing a plan to create competitive advantage, there is absolutely no doubt in my mind that what Toyota does (that we now call “lean”) is to use time as a strategic weapon. As I like to say “time is the currency of lean”. This definition refers to not only formulating a plan, but also implementing it. And this is where lean truly shines.

In The Lean Strategy we describe the traditional top down strategic approach that companies use. The executives define what strategy they will follow. They then decide how to implement that strategy and drive that decision down through the organization. And because the original decision is often based on incomplete or erroneous information about the company’s capabilities, they, and everyone else, have to deal with the fallout. This is what we call a “people-free” strategy. The people are looked upon as “labor” that only needs to do as they are told.

On the other hand, lean is a “people-centric” strategy. It recognizes that the people doing the work generally understand their problems best and generally have good ideas of how to solve those problems. In a lean company, the executives come to understand that their own role regarding the strategic question is different. The first thing they do is acknowledge the reality that they can’t go from where they are to perfect in one step and need to commit to becoming a learning organization. At the core of this is to form a plan to give every person the education and training they need in order to become problem solvers. The executives also recognize that their role is no longer one of giving answers, but of asking questions. This now puts everyone in position to find problems that are standing in the way of providing customers the best quality products faster than the competition at an acceptable cost. These problems are not found in a meeting in a conference room. They are found where the work is being performed…at the gemba. It’s only then that they can face the reality of the situation and create meaningful operating, non-financial metrics to capture both the current state and improvements as they happen. At this point, the executive needs to frame the issues in terms of improvement directions (stretch goals) that everyone can understand and they must be able to articulate the business, and personal case for them.

In a lean company, the executives come to understand that their own role regarding the strategic question is different.

Part of this discussion has been around the question of “go fast” or “go slow”.  The “go slow” argument is based on the “principle” that we have all heard many times: “people are afraid of change and will resist it”. I have come to believe that this is not true. Whenever this subject comes up in a workshop that I am teaching, I ask the question “Who has gone on vacation to a place that you have never been to before?” Naturally, all hands go up. I then ask “Why did you do that? Why did you risk your limited vacation time and money to go somewhere different? Why didn’t you go back to a place that you knew you liked?” The reason is that someone, or something, convinced them that they would like it when they got there. People are not afraid of change, they have anxiety about the unknown…and as leaders we are not very good at describing why they will like the changes that lean will bring. We introduce change without explanation and our people are anxious about whether it will require them to work harder (most think that’s what productivity is all about) or whether they will have a job tomorrow (LEAN means Less Employees Are Needed). At Wiremold we spend a lot of time talking about this…the work will be easier and safer, you will not lose your job, your profit sharing will go up, etc.  We used this approach in all 21 acquisitions that we made and based on that experience I can attest to the fact that most workers understand this message quickly when they see positive results quickly.

In a recently published Lean Post that contained a discussion between Art Byrne and Dan Markovitz about lean strategy, Art made the observation that in his opinion “about 95 percent of all lean conversions fail”. One of the commenters on that article used this statement to argue that a failure rate that high that is evidence that lean has limited applicability and is not a strategy. I would argue that the failure rate is that high because about 95 percent of the companies that say they are “doing” lean don’t approach it as a strategy but only as an operations tactic.

When a company decides on the strategy it wants to follow, be it lean or something else, everything that the company does needs to support the strategy. However, when lean is thought of as an operations tactic, everyone else in the company has permission to continue operating the way they always have.  Thus:     

  • Sales policies continue to encourage batch buying (e.g. quantity discounts): We discontinued those policies.
  • Purchasing policies continue to encourage buying base on lowest piece price only: We chose suppliers based on quality, delivery and cost.
  • Accounting continues to use standard cost accounting systems that hide both problems and improvements: We moved to Lean Accounting.
  • Engineering continues to be bogged down in too many projects resulting in very long new product lead times: We adopted QFD to reduce our new product cycle from years to months.
  • IT continues to purchase “best practice” solutions that impose traditional thinking on the company’s processes: We eliminated IT systems in areas where they caused more harm than good (e.g. MRP), and allowed the systems we did use to evolve based on our continuous improvement efforts.

Human Resources continue to hire people based on skills only: We used skills as a base requirement and then selected people that were comfortable with continuous change.

When a company allows the support functions to continue to operate using traditional thinking rather than lean thinking it is eventually faced with internal conflicts. For example, let’s say that the sales manager’s bonus is based on increasing sales and she decides that offering extended payment terms is a good way to do that. But the accounting manager’s bonus is based on improving working capital turns and he is working to reduce accounts receivable days outstanding. Under that scenario both cannot earn their bonus…only one of them. You can image the arguments that will occur between them. Everyone and everything must support the chosen strategy.

In conclusion…is lean a strategy? Absolutely YES. Strategy is about deciding how to win. Lean is about how to win with a focus on both creating more value for your customers and doing so with the best utilization of the resources at hand, i.e. with the least amount of waste. The concepts, principles, practices and tools of lean are universal. Whether your organization is “for profit”, “non-profit”, NGO, government or any other form of organization, the lean strategy can be used to “win” at whatever your mission is. In addition, lean uses a people-centric approach to strategy that respects people by continuously challenging them to become the best that they can be and finding ways to create more value for customers. What's better than that?

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
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Anonymous August 10, 2017
1 Person AGREES with this comment

I read the first few chapters of the book and I don't recall you or the co-authors clearly stating an answer to "what is strategy?"

The book would have been stronger if that had been addressed head on. There was a lot of repetition about how Lean is a great strategy without covering the basics of what a strategy is... how you decide to compete to win, what differentiates an organization.

If everybody in an industry is "implementing Lean," it can't be a differentiator, can it? TPS used to be a differentiator for Toyota... is it anymore?

 



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Michael Balle August 10, 2017
3 People AGREE with this reply

We concluded about ten years ago that lean could not be implemented, it had to be led. Intereeting to see that people still try - and fail.

I'm sorry to hear the book could not grab you all the way to the middle chapter where we actually try to explain how lean is a strategy and what is the underlying business model.

And then the further chapeters where we show from business cases the link between this business model and innovation - why lean is a growth strategy, actually.

But the immediate point is this: some CEOs, starting with Art Byrne, consider lean is their strategy. So, in any case, it's their strategy to compete. That's their opinion.

Maybe we didn't good enough a writing job to explain why they would think that, how that would work out and where to start - but it's surprised us all that the reaction has been "no, lean is not a strategy." It is to some, and I would have thought this is big enough news in the lean world by itself. Or have we given up that much?

The very reason lean can't be implemented but must be led is that lean thinking radically changes the decisions and behaviors of the guys at the top, which model the way the rest of the organization behaves and decides (tryng to anticipate the leaders and give them what people think they want). 

As co-author Jacques describes from his own experience as a CEO in the book, when he got it and changed his reactions, the rest of the business pivoted alongside. 

Lean officers keep complaining that their CEOs is not engaged or supportive enough. Our argument is to learn to show how lean is a strategy to the CEO so that they practice lean everyday and as Art Byrne has described in both his books, transform the business.



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Bob Emiliani August 10, 2017

“We concluded about ten years ago that lean could not be implemented, it had to be led.”

Only 10 years ago? It should have been apparent 30 or more years ago. It was apparent to me soon after I participated in my first kaizens in 1994. What were you guys thinking to have missed that for so many years?

“But the immediate point is this: some CEOs, starting with Art Byrne, consider lean is their strategy. So, in any case, it's their strategy to compete. That's their opinion.”

Opinion and fact are not the same. The book should have clearly made that qualification that it is an opinion that Lean is a strategy.

“…but it's surprised us all that the reaction has been ‘no, lean is not a strategy.’"

That’s because, in fact, Lean is not a strategy - it’s an opinion. Opinion was one the primary impediments to improvement that Frederick Winslow Taylor was trying to overcome with Scientific Management. Why take us backwards?

“Lean officers keep complaining that their CEOs is not engaged or supportive enough. Our argument is to learn to show how lean is a strategy to the CEO so that they practice lean everyday and as Art Byrne has described in both his books, transform the business.”

Calling Lean a strategy is guessing at a solution to the problem. As such, it is not an effective countermeasure. See the A3 report I posted on LinkedIn a few days ago https://www.linkedin.com/feed/update/urn:li:activity:6297761559628247040



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Orry Fiume August 11, 2017

Anonymous, please see my composite response below.  #'s 1 and the last paragraph of # 7 address your comments.

Thank you



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Bob Emiliani August 10, 2017

If you BELIEVE Lean is a strategy, then, inarguably, Lean is a strategy. But the facts say otherwise. Aren't Lean people supposed to be fact-based? Fact: Ohno said TPS was a method, not a strategy. Other creators of progressive management (Taylor, Ford, Woollard) did not think their method was a strategy.



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Anonymous August 10, 2017

Do you have citations you can share, Professor?



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Bob Emiliani August 10, 2017

Read their books.



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Anonymous August 10, 2017

You know how to provide a proper citation. Otherwise, you're saying "believe me."

Did Ohno say "TPS is a method, not a strategy" or did he say "TPS is a method" without using the word "strategy." 

Context matters. Since you're the expert, you could enlighten people.



Daniel Jones August 10, 2017

so you disagree with Art Byrne and other successful lean CEOs?



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Bob Emiliani August 10, 2017

Dan - Who is your question directed to?



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Bill August 10, 2017

Dan, are you implying that they shouldn't be questioned or challenged because they are successful?



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Bob Emiliani August 10, 2017

I'll assume Dan's question is directed at me. 

By your logic, one must not disagree with the (many) CEOs who have enjoyed great personal and business success using zero-sum tactics, over and over again (a strategy?), such as laying people off, closing plants, and squeezing suppliers.

Yes, of course I disagree. I have since 2002, when Art suggested we title our book about Wiremold as Lean Strategy. I said no because it was not true.

Wiremold's strategy (ca. 1993-2003) did not explicitly say anything about TPS or Lean. The strategy could have been achieved using a combination of well-worn tactics, none of which are associated with TPS or Lean.

I may view Lean as a better method compared to all others, but most CEOs do not. They use methods that they are familiar with, that are more common among their peer group, and that are easy for them to execute.

Should we strive to change that? Certainly. And it remains a long road ahead to do so. The many methods tried thus far to change CEOs thinking-and-doing habits have been largely ineffective. Improvement is clearly needed.

Perhaps it is finally time to widen your circle or widen your sources of information to drive more and faster experimentation, the betterment of all.



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Orry Fiume August 11, 2017

Bob, see my composite response below.

Thank you



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Anonymous August 10, 2017

Arguably, from what Orry wrote about, Toyota's strategy and differentiator was TIME... and TPS is just a means to that end. It's still unclear if Lean is "the strategy" or if it's a way of making the strategy possible.

"Time-based competition" is a general strategic term that doesn't necessarily use Lean/TPS as the way of making that happen.



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Michael Ballé August 10, 2017
1 Person AGREES with this reply

Well, when you re 1/ commited to never losing a customer by 2/ aggressively delivering more safety and quality through 3/ greater flexibility 4/ which you achieve by supporting teams and developing their autonomy in problem solving so tgat 5/ you can sustain innovation for real, you find that as a CEO you ve got your hands full, you re competing against competitors on concrete topics and you re working full time on developing people and suppliers. If that's not a strategy, I don't know what is. The CEOs in the case studies definitely say lean is their strategy. Hmmm....



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Jesse DePriest August 22, 2017

well said, Michael!  



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Orry Fiume August 11, 2017

Anonymous, please see my composite response below.  #4 addresses your comment.

Thank you



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Mark Graban August 10, 2017

"People are not afraid of change, they have anxiety about the unknown…and as leaders we are not very good at describing why they will like the changes that lean will bring."

The first sentence is parsing words.

The fact is that people are afraid (or "anxious") about change, even when it is a positive. Read Robert Maurer's "The Spirit of Kaizen" book for more on the evolutionary brain science about our amygdala and the natural "fight or flight" response we naturally have. 

Telling people to not be afraid or anxious isn't an effective strategy for reducing fear.

Telling people why they should like change isn't necessarily the best strategy. Anytime you're in "telling" mode, it's also a natural human reaction to oppose what's being told. 

"Here's why you should like that change."

"No, that's not why" or "No I don't believe you" is a natural response.

The field of "Motivational Interviewing" teaches us a lot of alternatives to telling. See former Toyota manager Ron Oslin's recent LEI webinar for more about this.

A more effective change strategy is to "evoke" the reasons why. Let the person who has to change articulate why it matters to them rather than telling them.

Telling, at best, leads to compliance, which isn't the most sustainable change strategy, either.

 



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Orry Fiume August 11, 2017

Mark, please see my composite response below.

Thank you



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Frank Castillo August 10, 2017
1 Person AGREES with this comment

Hi Orry,

Thank you for sharing your insights. My humble opinion based on experience, the question of whether Lean is a strategy or not depends on where you are, but it ultimately needs to lead to how you run your business every day. If your company is in an industry where continuous improvement is not the norm, than Lean can be leveraged to gain a competitive advantage as long as your strategy includes a way to avoid your competitor's pitfalls & enable longer term value. In order to drive that long term value, the culture of daily problem solving & continuous improvement needs to be imbeded to how you run your business & is it strategic at that point. There maybe other strategies that are deployed and over time may provide greater differentiating value, but does that mean that the Lean strategy is deprioritized or goes away, which leads to an errosion of the value that was created initially. 

Not an expert, but I'm simply stating my thinking with the hopes of gaining more insights to what you & others see that I may not.

Thanks,

Frank



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Orry Fiume August 11, 2017

Frank, thank you for your thoughtfull comment.  Please see my composite response below.

 



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Michael Balle August 10, 2017
5 People AGREE with this comment

This thread has maybe me rethink again. One of the arguments of the book is that we don't accept the traditional distinction between strategy and execution.

Back in the 1950s, Toyota hit upon the fact that flexibilty had strategic advantages both on the product line-up and on the detail of operations.

Flexible production lines means that one can introduce new products on existing lines, and not make the new product carry the cost of a full production line, and the new models help to keep capacity up to full capacity.

But at the micro-level, flexibility also forces one to solve deep quality issues since one can't afford "start-up parts" with small batches or no batches, parts have to be right first time after any change.

So here is an operational feature, flexibility - which requires engineering, production and supply chain teamwork - that is a strategic advantage is used as such. Indeed, the mix of wide non cannibalized range/ safety/quality/flexibility, is, I'd argue a specific strategy in itself - as opposed to lower cost, technological disruption, and other market strategies.

All this to say that it's amazing how many companies profess to practice "lean" without having flexibility as a key part of their strategy. 

I guess I have to be thankful for all the pushback (although a more positive tone would not be amiss) because, indeed, we might not have pushed the argument far enough. How lean is lean without flexibility and quality? And there is no human way to achive quality and flexibility withought people involvement, engagement and recognition - respect for people. 

Yes, I believe that Toyota as much to teach us yet, both in what it did historically and what it does now. Yes I believe some have a business model based on calling "lean" stuff that has nothing to do with lean - precisely because it misses the strategic vision. And yes, I'm an optimist and believe these exchanges continue to make us think and progress - but why the bitterness guys? This is still such an exciting field and we still have so much more to discover!



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Bob Emiliani August 10, 2017
1 Person AGREES with this reply

So, the strategy is the tactics... and the tactics are the strategy? No.

Perhaps the negative reactions are due in part to people recognizing that the authors have reached beyond the facts in an attempt to solve a problem that is far more complex than merely claiming Lean to be a strategy.

There is no question that Lean (meaning, versions closest to TPS) has strategic implications and can make significant contributions to competitiveness, but so do many other things (mergers and acquisitions, divestitures, sales and marketing, workforce, supply chain, IT, debt load, management decision-making, etc.).

Saying that Lean is a strategy immediately strikes one as an ineffective way to get CEOs attention because the facts clearly don't line up with the claim. CEOs are not subject to the same confirmation biases that proponents of Lean are.

Empirical evidence indicates that what Lean asks of CEOs appears to be exactly what the vast majority of CEOs do not want to do and don't have to do. And, unfortunately, Lean (and progressive management in general) is at a great disadvantage with respect to the many other (easier) things that CEOs can do to achieve business objectives.

These are structural problems that have yet to be adequately addressed after nearly 30 years. Why? In my view, it is due to many things such as confirmation bias, incomplete research, poor problem-solving, and spending too much time in the Lean bubble, lack of teamwork, etc.

Yes, there are many reasons for optimism, discovery, excitement, and progress. But, I think if you push the argument forward, you weaken both Lean and your own credibility.



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Anonymous August 10, 2017

Positive tone?

Much of the author response has been to criticize the criticism and then re-state their original thesis more loudly (and sometimes more clearly than the book itself).



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Jon Miller August 10, 2017
12 People AGREE with this comment

This whole debate misses the point. 

The book's main thrust is that lean is a path to success through organizational learning. Call that a strategy, a method, a scheme, a policy, whatever.

Titles sell books but don't always describe their contents.



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Tom Ehrenfeld August 10, 2017
3 People AGREE with this reply

Bravo Jon, thank you!



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Bob Emiliani August 10, 2017

The point is missed only if one forgets the months of marketing hype preceding the book's release that characterized Lean as a strategy.

Titles that sell books but which don't describe their contents disrespects customers and makes them unhappy. Not cool to do that.

So consider changing the title of the book, as Steve Spear did (from Chasing the Rabbit to The High Velocity Edge): From The Lean Strategy to Bravo! Success Through Organizational Learning.

 



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Michael Balle August 11, 2017
2 People AGREE with this reply

Hi Jon, Yes, absoluletely, thank you. The book is about learning to compete, learning to learn and using TPS to build a learning organization in order to do so. Right on.

But the strategy thing is not a gimmick. Orry has been saying lean is a strategy for as long as I've known him. When Dan (Jones) and I looked back on the cases we both knew firsthand (we both knew the people involved) of lean successes, starting with my father's work at Valeo, etc., we realized that these CEOs far more than supported lean - they were fully commited to lean, they studied lean, they did talks about lean, and, yes, they all said lean is their strategy.

So we thought this might be the missing piece to the "why are executives not more involved" enduring question. After all, tech disruption is a strategy, low cost footprint is a strategy - why not lean?

Dan has been introducing lean thinking to new fields all his life and we did expect the usual pushback from the strategy guys, but I have to say we have been taken aback by it starting so close to home, which is a great opportunity to hone the arguments if - and that's a big if because the business school world has historically ignored anything lean - we engage strategy experts in this discussion.

It's not just the title, the title specifically describes our attempt to show what lean thinking looks like at a strategic level, how Toyota has followed a lean strategy to become dominant in a saturated market, and how companies can develop lean strategies to thrive in disrupted, turbulent market. And yes, challenge-response learning and people-centric thinking, as well as flexibility and innovation, are core to this new look at strategy.

Your thoughts? 



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Jon Miller August 11, 2017

My thoughts.

A strategy is a plan or policy for achieving an aim or goal.

"The Lean strategy" needs to be followed by "for achieving aim X." The strategy does not contain the aim. A strategy is a means to an end.

The Lean strategy is employed in service of whatever and organization's aim, goal and purpose. In that regard, Lean is an enabler.

I have never head a CEO says "Lean is their strategy" but rather "Lean is part of the strategy" or "Lean is an enabler" or "Lean is a way we do everything" including strategy.

Toyota followed an operational excellence strategy, no doubt, in contrast to a customer intimacy strategy or a innovation strategy, to borrow the 3 categories from The Discipline of Market Leaders.

Toyota's aim after emerging from bankruptcy was to survive as a business. To never have layoffs again. To never borrow from a bank. To sell cars in the USA. The plan was to reduce inventory and accumulate cash, drive out cost, and to deliver basic, reliable cars. Their superior rate of learning and improvement over time let them capture market share and generate a profit and cash. Once their TPS / op ex / Lean was solid, and Japan's high growth period ended, they shifted from product-out to market-in, adding customer intimacy to their strategy. Unlike Telsa or Apple, they have yet to lead with innovation.

1) The aim: acquire more customers, keep costs low, profit

2) The plan: a set of guesses, bets or hypotheses by the leaders for how certain place, product or promotion, presentation or pricing will result in profitable growth

3) Lean: learn through experiments, problem solving and application of Lean methods

The first two parts are "strategy" and the third is Lean.

Toyota's strategy has not always been enabled by Lean. Under the late Okuda period and Watanabe CEO terms, they over-built overseas plant capacity aiming for volume leadership. They replaced seasoned design engineers with new hires and automation. They aggresively took cost out of suppliers. Toyota suffered the consequences and hit the reset button with Akio Toyoda at the helm. Toyota continues to shift their Japanese workforce to part-time and temporary labor in order to keep costs low, and to prepare for future declines in volume. Toyota's aim remains to sustain profitability but the plan (strategy) is not always Lean.

Strategy needs to be enabled by Lean, and Lean needs to be guided by strategy. Lean can't always provide valuable input on the content of a strategy, but it can always provide guidance on how it is developed and executed.



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Bob Emiliani August 11, 2017

I agree, particularly with the last sentence. In a blog post of mine dated 28 October 2016, I paraphrased a conversation with Mark DeLuzio that concluded with: If the corporate strategy is sound, then Lean can help an organization achieve its strategy. But Lean, itself, is not a strategy.



Claire Everett August 10, 2017
3 People AGREE with this comment

Personally I think a lot of this debate comes down to differing opinions on what strategy is.  I haven't read the book yet, so my opinion is based off this post (and the comments) only.

In the post Orest states that his preferred definition of strategy is "A system of formulating and implementing a plan to create competitive advantage", this doesn't match with how I think of strategy and I'm assuming from the debate it doesn't match with other peoples ideas of what a strategy is either.

When I think of strategy I think of "a particular long-term plan for success, esp in business or politics", to me strategy is the plan and only the plan, strategy to me is the 1, 3, 5 and 10 year plans for where the business is going.  How you go about getting there is the method, so for me Lean is the method not the strategy. 

However, Orest's definition includes implementing the plan and by that definition Lean is strategy.

Part of the problem could be that we're trying to move people away from the incorrect idea that Lean is a bunch of tools rather than a mindset that utilises tools.  To get away from the 'toolbox' concept we have to move towards something but there's no agreement on what that something is.  And this is made worse when we have different ideas on what a word like strategy means.

The Anonymous commenter had a good point in the first comment; the definition of strategy should have been clearly defined at the beginning of the book.  This definition is key to whether people agree or disagree with the fundamental concept of the book.  Waiting until the middle of the book to say "oh yes, by the way, here's what we mean by strategy" seems less than ideal.

Regardless, I'm grateful for the debate this post has triggered, it's given me a lot to think about (and a book to go and read).



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Michael Balle August 11, 2017
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Thank you Claire for this very thoughtful response, and yes, you've hit the issue square on the nose - we are indeed proposing a new way to think about strategy based on lean thinking and better adapted to today's disrupted and turbulent markets than the classic "define market segments, use power advantages, draw the action plan, execute flawlessly" traditional approach.

The book 1/ pinpoints lean thinking as a different way of thinking starting from the worplace (the 4F as opposed to 4D) thinking model, 2/ shows this thinking is inbedded in the organization through using TPS as learning system, 3/ describes how lean thinking opens up a new way of thinking about strategy, a lean strategy, and its related, lean specific business model, and 4/ how this strategic vision aligns kaizen and innovation, to offer new products successfully built on careful capability development (which is the sum of individual competence development).

And yes, your insight is spot on, Dan and I had been discussing for a long time how to explain the "not a bunch of tools but a mindset that utilises tools" issue, which got us to talking to CEOs such as Jacques, our co author, who has lived this switch firsthand (and he describes his moments of "change of mind" in the book) and realized these guys thought at a much higher strategic level that we anticipated - hence, again the "lean strategy" angle.

Dan Jones has been a pioneer of lean thinking in various fields, such as distribution, healthcare, digital companies, etc. and it's has been a privilege to work with him in this exploration of a different field, strategy, and, with Orry and Jacques who have both lived it firsthand, capture what others had taught us before - the "helicopter" technique of thinking at a higher level, and then thinking in most detailed gemba levels asking "why" - and through this up-down exercises and challenging and stretching our understanding, discovering new insights - indeed, strategic ones. Which is the exciting part of refusing the traditional distinction between  strategy and operations but realizing that true strategic though actually is a blend of both intent and capability (to our surprise, the current military strategy field is way aheaf of us there - another book you might want to check out is McChrystal's Team of Teams)

Thanks for participating to this discussion, hope you get a chance to read the book and would be very curious to hear your thoughts!



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Orry Fiume August 11, 2017
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Claire, thank you for your thoughtful comment.  See my composite response below.  



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Orry Fiume August 11, 2017
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I have followed the comments on my article with great interest. Please see below for some of my observations.

1) “If everybody in an industry is "implementing Lean," it can't be a differentiator, can it? TPS used to be a differentiator for Toyota... is it anymore?”

That’s a great question. In 1995 Robin Cooper wrote a book called “When Lean Enterprises Collide”, which basically said that if all competitors in a given industry are using a lean strategy then they are back into competing on the basis of price. I don’t agree with everything that he says about that, but at Wiremold we didn’t worry about it. When our competitors tried to copy us, because of the nature of continuous improvement, we would always be ahead of then…as long as we didn’t rest on our laurels.

2) “If you BELIEVE Lean is a strategy, then, inarguably, Lean is a strategy. But the facts say otherwise.”

Because Ohno didn’t use the word strategy doesn’t mean that it isn’t. The facts that I look at are what Toyota has actually done to become the dominant automobile company in the world. IF lean is not Toyota’s strategy, I have yet to hear anyone describe what its strategy is. All I hear is “no, it’s not a strategy”. And “Lean is not TPS”. In the President’s letter of Toyota’s 2016 annual report, Akio Toyoda says:

           “Since its foundation, Toyota has grown through pioneering innovation…In parallel (with) the distinctive characteristics of Toyota, exemplified in the Toyota Production System, that were formed by and have been handed down from our people in earlier days are still being upheld to date. Going forward, we wish to realize sustainable growth through further innovation and the evolution of Toyota’s unique characteristics.”

If that is not a statement about strategy, then I don’t know what is. And that also ties right into our book since chapter 9 is about innovation.

By way, I suspect that at least one person will say that when the above statement that says “exemplified in the Toyota Production System” proves that TPS and Lean are different. However, in another part of the annual report it says the “Toyota Motor Corporation's vehicle production system is a way of "making things" that is sometimes referred to as a "lean manufacturing system…"

3) “Wiremold's strategy (ca. 1993-2003) did not explicitly say anything about TPS or Lean. The strategy could have been achieved using a combination of well-worn tactics, none of which are associated with TPS or Lean. “

Bob, you are flat out wrong about this. Even your own book “Better Thinking, Better Results” has a lengthy discussion about our strategy:

             Page 26: “However, only the time-based competition and new product development models fit all of Wiremold’s needs and had associated them with specific implementation models. Art Byrne arrived at this conclusion independently, based upon the books by Ohno and Shingo, as well as his prior experience with the Toyota Production System at Danaher Corporation as taught to him by consultants from Shingijutsu Company, Ltd.”

This is followed by a quote from me about how we did not understand “Just-In-Time” as a business strategy before Art’s arrival (NOTE: the word “lean” did not come into common usage to describe TPS until later, and we just called it JIT) and that Art presented a strategy statement to our associates in an all employee meeting, and to our shareholders, that contained the following statement: “Become one of the premiere time-based competitors in the USA…” A subsequent version of that statement substituted “World” for “USA”. Admittedly, a pretty cheeky thing to do.

This section is then followed by a section entitled “Evolution of the Strategy” where you discuss how our concept of this strategy matured.

I’m afraid that you have forgotten that you, Art and I spent many, many hours discussing lean strategy when you were writing “Better Thinking, Better Results” and you never disagreed with that concept. And the reason you didn’t name your book “The Lean Strategy” had nothing to do with you thinking that is isn’t one. It was because you wanted the word “thinking” in the title as a reference back to the book “Lean Thinking”.

PLEASE NOTE: I still recommend that everyone read Better Thinking, Better Results because it is still the best book on the market that gives a detailed description of what one company (Wiremold) did over a ten-year period in successfully using its Lean Strategy.

4) "Time-based competition" is a general strategic term that doesn't necessarily use Lean/TPS as the way of making that happen.”

Once again, referring to Toyota’s Annual Report they describe how:

    “based on many years of continuous improvements, with the objective of ‘making the vehicles ordered by customers in the quickest and most efficient way, in order to deliver the vehicles as quickly as possible’."

Can you compete based on time in other ways…probably. When ships were powered by galley slaves you could probably have the fastest ship if you found the biggest and strongest slaves. But the fact that there may be other ways to create a time advantage doesn’t negate lean as a powerful time-based strategy.

5) "People are not afraid of change, they have anxiety about the unknown…and as leaders we are not very good at describing why they will like the changes that lean will bring."  (This) sentence is parsing words.

Mark, I don’t agree. I used those words with specific intent. The definition of “fear” is “an unpleasant emotion caused by the belief that someone or something is dangerous”. Thus I can be afraid of heights, snakes, etc. I can identify what I am afraid of. On the other hand “anxiety” is defined as “a feeling of worry, nervousness, or unease, typically about an imminent event or something with an uncertain outcome”.   With anxiety I can’t identify its cause other than “uncertainty”. And that’s where as leaders we fall down. We don’t deal with this anxiety. But part of “Respect for People” is recognizing it and dealing with it effectively. See my next response.

6) “Telling people to not be afraid or anxious isn't an effective strategy for reducing fear”.

Mark, here I agree with you 100%. But I didn’t use the word “telling”. What we did was spend a lot of time explaining why the changes would be good and then acted quickly with kaizen so that people would experience those good things quickly. It’s the experiencing of the good things (work being easier and safer, no one getting laid-off, profit sharing increasing) that dealt with anxiety, not the explanations that we gave…those just were to just clarify expectations. And it’s the experiencing of those good things that lays the groundwork for culture change.

7) “Personally I think a lot of this debate comes down to differing opinions on what strategy is. I haven't read the book yet, so my opinion is based off this post (and the comments) only.”

Thank you for this thoughtful comment Claire. And thank you for your honesty about not having read the book yet. I’m not sure everyone else that has commented has either, but hasn’t admitted to that.

You are right about strategy being long term. And that’s exactly how we looked at it. This article was triggered by the “debate” between Art Byrne and Dan Markovitz on the Lean Post. In that discussion the subject about “go fast” and “go slow” became controversial. The “go fast” approach that Art favors does not mean that the lean strategy is short-term thinking. The “go fast” element is used to demonstrate to all of our people that lean is good for them. (See my response #6) But to become really successful with a lean strategy, you need to understand that it is really long-term. Look at how long Toyota has been at it. The fact is, it never ends…isn’t that the nature of continuous improvement and staying at least one step ahead of the competition?

And yes, we are trying to get people to think differently about strategy and clearly state that. We don’t believe that separating the formulation of strategy and the executing of strategy should be separate and we spend a lot of ink discussing how different the lean strategy is from tradition strategy in this regards.

Lastly, yes, we could have given a “clear” definition of strategy at the beginning of the book. However, that could risk that someone who disagrees with that definition would stop reading at that point and lose the benefit of our thinking. The construction of the book is to slowly build a case for thinking differently about strategy before trying to define it. The core of this book is a rallying cry to think differently…to Think Lean.

 

8) I want to thank everyone who has participated in this discussion. It’s through thoughtful, but polite, give and take that progress is made in advancing everyone’s thinking.

 

 

 

 

 

 



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Bob Emiliani August 11, 2017

RE: "I’m afraid that you have forgotten that you, Art and I spent many, many hours discussing lean strategy when you were writing “Better Thinking, Better Results” and you never disagreed with that concept. And the reason you didn’t name your book “The Lean Strategy” had nothing to do with you thinking that is isn’t one. It was because you wanted the word “thinking” in the title as a reference back to the book “Lean Thinking”."

I did not forget the hours we talked about Wiremold's strategy, and I never disagreed with Wiremold's strategy. What I disagreed with was characterizing Lean as a strategy and Art's suggestion to title the book Lean Strategy.

I did not use the word "thinking" to reference back to the book Lean Thinking. In fact, my co-authors and I struggled for a long time to come up with a title. We were going to use Better Thinking, Better Processes, Better Results - but that title was too long.

When we stepped back, what we saw among the leadership team at Wiremold was consistently much better thinking than is usually the case, and that produced better human and business results. It was better management thinking than "Lean thinking" because it was much closer to TPS thinking, which the management team learned from Shingijutsu kaizen consultants.

TPS has its roots in industrial engineering, in which the word "method" is common or ordinary and the word "strategy" completely foreign.

Toyota doesn't practice Lean. What they say in the statement is that some people call TPS a "Lean manufacturing system." Lean is a derivative interpretation of TPS; why would Toyota practice that? 

Finally, it is interesting to read in this thread how only positive feedback is referred to as a "thoughtful comment," and the inference that only such comments lead to progress. Confirmation bias does not lead to progress; it blocks progress.



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Orry Fiume August 11, 2017
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It looks as if we have very different recollections of conversations that took place 17 years ago. However, I’m not sure how you can state “I never disagreed with Wiremold’s strategy” and then say that you disagreed that Lean is a strategy. You clearly knew that we considered Lean a strategy and did not consider it a “derivative interpretation of TPS”, but just another word for TPS. Admittedly, in hind sight I don’t know anyone that is happy that the word “lean” was used in this way…not even the authors of “Lean Thinking”. In fact, I have objected to the phrase “Lean Accounting” to describe what we did in accounting to support our strategy, but we seem to be stuck with the word “lean” and reluctantly use it. To me what’s important is what we did, not what we, or anyone else calls it. In fact, we blatantly tried to copy Toyota’s strategy and it doing so achieved spectacular results as reported in Chapter 10 of “Better Thinking, Better Results”.

You talk about “confirmation bias”…but that cuts both ways. So, exactly who is blocking progress? Our book is an honest attempt to shine a light on an aspect of lean that we see, based on our collective experience, is the missing link in so many attempts at lean transformation.

I guess that the bottom line is that you and I will agree to disagree, but hopefully not become disagreeable.

 

 

 



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Bob Emiliani August 11, 2017

To my eyes, Wiremold practiced TPS as an overall system of management (as Ohno said it should be practiced), and that was the reason for the spectacular results.

As far as confirmation bias, I was referring to the comments in this thread, not the book The Lean Strategy

You consider Lean strategy to be the missing link in Lean transformation. If you do a fishbone diagram or A3 of why leaders are not engaged in Lean (or why Lean transformation processes fail), it does not reveal a singular cause: no Lean strategy. It reveals many different causes. Therefore, Lean as the company strategy is not "the answer" to the observed effect.

As I have said for many years, the lack of leadership engagement and Lean transformation process failures are a more challenging problem than is generally realized, and working separately to solve it seems inadequate. 



Mark Graban August 11, 2017
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Thanks, Orry. You used the word "explaining" -- but that sounds like "telling" to me. It's a different word, but either way, the implication is that a reason for change is being pushed on the employees. You're telling them why they should care.

I'm suggesting that a more effective model is "evoking" and drawing ideas about motivation for change from the people you're working with. That's the key to having true sustainable change instead of compliance, which might not last.

But, I do agree that trying something out to prove benefit is a necessary step. Even if people are participating at first out of compliance, they might discover motivation along the way.

My main suggestion is that a discussion about motivation for change should be more like two-way "catchball" than a one-day telling or explaining from the boss to the employees.



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Don Scott August 11, 2017
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I do not come from Toyota training, never had or met a sensei, nor even been to Japan. I also haven't read Lean Strategy as yet (be assured, its on the list).

But I never looked at Lean as anything less than a customer focused business strategy with an included plan for execution. A recent letter of resignation stated so in those words. To me a strategy is a statement of approach to competitiveness. So "Our competitive strategy is to give the customer what he wants, when he wants, in the quantity he wants, at a price he wants" seems to me to be the Lean strategy. It is what is implied by "Step 1: Specify value from the perspective of the customer" and the remaining transformational steps (follows) are an operational plan to execute that strategy, which includes but is in no way limited to waste reduction and continuous improvement.

Step 1: Specify value from perspective of customer
Step 2: Map VS and reduce waste
Step 3: Flow
Step 4: Pull
Step 5: Seek perfection

I love this discussion. So many thoughtful, generally like-minded people contributing to the conversation, fact checking, and even splitting hairs over nuance - a good thing, ultimately. Lean is many things. It is a social system, an improvement method, a leadership developer, a problem solver, a cost saver...I spend much time describing lean in different ways based on my target audience. So I can easily buy the argument that lean is more than a strategy. I can in no way however, think that it is anything less.

Lean IS a strategy, but its certainly not JUST a strategy.



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Mark Graban August 11, 2017

This is not the core topic here, but I've never seen the five principles from "Lean Thinking" to be sequential steps.

Creating flow and seeking perfection can happen simultaneously. Pull might not happen. I was taught the idea of "flow where you can, pull where you must."



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Don Scott August 11, 2017

Absolutely agreed Mark. They're done opportunistically, in small doses, or giant leaps, in no particular order, all the time. In my mind, a pretty good idea of what opportunites to look for to better serve a customer every day, though in no way an exhaustive list.

Thanks!



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Katie Anderson August 11, 2017
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I'm late to the game in adding my thinking to this article, as I wanted to get through all the comments (currently at 41) before posting.

Michael Balle and I had an interesting conversation - and a bit of a debate - ourselves as we planned for my blog post interview with him about the book. You can read both parts of the interview in these links (and sign up to win a copy of the book):

http://kbjanderson.com/book-review-and-interview-with-michael-balle-on-the-lean-strategy-part-1-is-lean-a-strategy/

http://kbjanderson.com/interview-with-michael-balle-on-the-lean-strategy-part-2-innovation-and-personal-transformation/

I'm more aligned with how Jon Miller has described his thinking. Lean isn't a strategy unto itself, but rather a strategy in service of achieving a specific aim, of delivering value to customers in a specific context. Lean can't be "the strategy" in isolation. But as I said in Part 1 of my book review and interview with Michael: "I fully support the idea that Lean thinking is a better way to frame all problems in an organization – including strategic ones, is a better way to deeply understand how to to win with customers and in the market, and is a more effective method to achieve the organization’s goals and develop people at the same time."

I agree also with the comment that it would have been more helpful in the book if the authors' definition of strategy was shared upfront. I struggled with the conflicting definitions of strategy and lean as strategy throughout my reading of the book, but I still found tremendous value in the content of the book - particularly in regard to lean as a framework for thinking and the personal change each person must make to be a more effective thinker and leader.

I look forward to more ongoing thoughtful and respectful discussion and debate. It is through challenging our thinking, respectfully, that greater insights are learned.



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Don Scott August 12, 2017
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It occurs to me that what is missing here is input from CEOs and business leaders where we can get their perspective on Lean, continuous improvement, strategy et al. There's pretty wide agreement on what our problem is (lack of leadership support and commitment) but not a word from that reticent leadership group. I love this discussion and value it immensely. Since we're in the position of trying to "sell" lean, I'd love to see it elevated to include our customer, sans the sales pitch. I can pretty well guarantee they are not monitoring this forum. Any thoughts?



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Orry Fiume August 12, 2017
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Don, you touch on a critical point. As we discuss in “The Lean Strategy”, what is needed in not just CEO “support and commitment”. That’s too passive. What is needed in active, hands-on leadership. It’s only with that do you have a chance to have a personal transformation at the top and you need that in order to have organization transformation.

When CEO’s look at lean as an operational tactic, they believe that they can just delegate its implementation to operation’s management and don’t see the need to follow blogs like this one. As a result they remain out of the discussion loop. How do we get them into the loop?  

I wish that I had a “silver bullet” answer to that question. The CEO’s that I know that have made the personal transformation had done so because someone they respected, and understood the strategic nature of lean, convinced them to learn it “hands-on”. You don’t learn it by just reading a book or going to a seminar. You learn it by doing it and practicing again and again. The more you practice, the better you become at it. And while you are creating internal improvement, like flow, always thinking about how to turn that improvement into a benefit for your customers in a way that your competitors can’t. So, I guess it’s still up to those of us that have access to CEO’s to engage them in discussions that will convince them that we don’t just need their support. We need their involvement and leadership. Some will respond favorably (I’ve seen it happen) and some won’t.



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Jacques Chaize August 13, 2017
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To build up on Orry's response, tactics can be delegated; this is what I did when I initiated our first lean program using "lean experts".
Then I realized that these tactics were not in line with our strategy and were driving us to dead ends. And vice versa.
But it was hard at first for me to go to the gemba; it was hard to find out and accept that the reality was in contradiction with my "vision".
Thinking against myself was difficult; this is where the Sensei role's is critical.
Looking back, Lean is definitely a strategy. I remember one of our companies- just acquired- were we decided and succeeded in multiplying the sales by two in 4 years, with the same footprint, the same number of people, generating huge amounts of cash and doubling the net result. This is when I discovered that Lean was freeing and creating new resources to serve bigger ambitions through better results.
To bring Lean at the level of a Strategy, you need to embark the strategist. As a CEO, you "own" the purpose, the design of the path and the uncertainties of the journey. Lean is encompassing these three dimensions; to leverage them, you have the power, but you also need to have the will. The will of learning.



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Bob Emiliani August 13, 2017

Orry, your response begs some questions about engaging CEOs.

You and others associated with LEI have had access to many CEOs for many years and have personally engaged them in discussions about the need for their involvement and leadership.

It appears you and others are unhappy with the results (hence, the new book).

One or more processes has been used to personally engage CEOs. There is obviously a persistent gap between the plan and actual outcomes.

  1. Have you and your colleagues done an A3 for this critically important problem? If not, why not?
  2. What aspects of the past or current process(es) have not worked well?
  3. What improvements can to be made to the existing process(es) so that more CEOs make the personal transformation?
  4. Should the old process(es) be scrapped and new processes developed to achieve the desired outcome?
  5. How can members of the Lean community help with the CEO engagement problem, even though they do not have access to CEOs?


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Fabiano Clerico August 13, 2017
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In my Experience Lean is really a strategy, we have been trying in the past in doing lean as an exercise but only when we were fully involved as CEO in delivering better products and services involving and listening to both customers and employees we succeed, for me lean is make our customer happy and make our people proud of doing it.



Orry Fiume August 13, 2017
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Bob, I never said that I was unhappy with my personal engagement with CEO’s. In fact, just the opposite. When I can discuss this with CEO’s, one-on-one, I have had good success in helping them understand lean as a strategy. However, those of us that understand the lean strategy are not as plentiful as the academics and consultants that say lean is just an operational cost reduction tactic. It’s difficult for CEO’s to change their thinking and behavior in order to follow a lean strategy, and the naysayers give them an out. It allows them to do what they have always done…delegate the implementation to someone else. As a result they get what they have always gotten…results which are not very impressive.

Let’s approach this question from a different angle. Let’s say that those of you that don’t believe lean is a strategy have been hired by Toyota to write a clear statement of what its strategy is. What would that statement say?



Bob Emiliani August 13, 2017

Hi Orry - I do not see the naysayers as influential among CEOs. Sure, the naysayers may confirm the bias of CEOs who already see Lean narrowly as an operational cost reduction tactic.

Empirical evidence indicates the more likely scenario is that CEOs prefer to use Lean as a cost reduction tactic and (apparently) don't have much use for it beyond that. Generally speaking, it's been that way for nearly 30 years. Quoting Professor Haber (1964) in relation to progressive management:

“Yet most business firms… need only be more efficient than their competitors. This was one of the reasons that businessmen preferred efficiency stunts, devices, and mechanisms to a complete system of… management. The adoption of a complete system was often not the most profitable use of investment capital. Here… commercial efficiency did not automatically come first."

The practical concern is this (even if one aces your theoretical Toyota strategy test):

The future of the Lean movement may depend on people such as yourself who have access to CEOs. How can the personal process you use to engage CEOs be improved to yield better results? What is the process for spreading your process around to obtain a multiplier effect?



art byrne August 14, 2017
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Wow, this is quite a debate. It took me over an hour just to read through all this stuff. No wonder lean hasn't gotten the traction we might have expected when so much energy, from very smart people can go into debating minute word definitions and nuances on what is strategy. Since I have thought of lean as a strategy for over 30 years and since my name seemed to pop up in a few of these posts I thought I should perhaps provide some idea of why I think that way.

 

Before I do lets step back a little and ask the question "what is a business?" as this might help you to understand  my thinking. To all businesses are the same on a basic level. They are just a collection of people and a set of processes tryimg to deliver value to a group of customers. You only increase your enterprise value by delivering more value to your customers than your competitors can over long periods of time.

With TPS/lean all we are trying to do is teach our people how to see and remove the waste from our processes in order to deliver more value to the customers. In order to do this you have to create a learning environment so that everyone can contribute.

Back when I was a Group Executive with the Danaher Corporation we started working with Shingijutsu Consulting which at that time was just four people all of whom had spent their carrers at Toyota and in fact for the 10 years or so prior to forming Shigijutsu had all worked directly for Taiichi Ohno helping to implement TPS in their suppliers. We were their only US client for about four years. They taught us how to see and remove the waste in all our processes. We spent a lot of time on the shop floor with them and at nightly dinners pumping them with questions. It was eye opening to say the least.

One day myself and George Koenigsaecker, who worked for me as President of Jake Brake [Jacobs Vehichle Equipment Company] were talking and agreed that we thought TPS was the greatest strategic weapon we had ever seen because of the competitive implications it had for running any business. We mentioned this to Mr. Iwata, Shigijutsu's President one day and asked how Toyota could let them loose to teach other companies. [Ohno had pushed them to do this and even found their first five clients for them]. He just laughed and said, "Look, I can tell you about TPS, I can even take you and show you TPS but I bet you can't go home and do it." He was of course correct.

So when I went to Wiremold as the new CEO I already had a good understanding of TPS and its strategic power. I inherited a company that had seen its earnings decline about 80% in the two years prior to my arrival, had and old and tired product line and that had basically no sales growth. So of course the logical strategey to put in place was to say we wanted to double in size every 3-5 years and be one of the top ten time based competitors in the world. As Orry said in this exchange, pretty cheeky stuff.

But I had faith in TPS and what I had learned at Danaher so it wasn't cheeky to me. We were going to use the TPS [the term lean didn't even exist until 1996 with the publicatin of Lean Thinking and this was 1991] as our basic strategic approach. I believed that if we could remove all the waste from what we were doing that this would allow us to deliver more value to our customers and distinguish our selves from the competition. I knew that everytime you remove the waste you shorten the time it takes to do anything and as a result you can compete on time. A powerful strategic weapon. If we did this we would gain market share and grow. In fact part of our strategy was to double in size every 3-5 years using a combination of new product development and acquisitions. 

Easy to say but how do you do it? We had 6+ week lead times, we had 50% on time delivery, 3.4 inventory turns, 2-16 hour set up times on all of our equipment, 60 odd job classifications, an aging work force that spoke about 8 different languages, an old and tired product line, no cash and most of our customers yelling at us all the time. What fun.

But I knew from my experience at Danaher that if we aplied the TPS principles and approach that we could free up cash and space that could be reinvested in the business to create new products and grow. Competing on our operational excellence [which of course was non existent at the time] would allow us to deliver more value to our customers. But first we had to create operational excellence and that was the core strategic approach. Some of the debate in this string seems to revolve around how we did this. Did we just TELL people what to do or lead them?

Well, we explained the approch, i.e. why do we want to do this, we explained what we expected, and we said when we should see results and what they meant for every employee. But the key was that everyone had a say in the HOW. How would we do this? How to remove the waste and deliver more value. This was done through a series of kaizens that included both hourly and salaried employees. The best ideas always came from the people doing the work. At the same time everyone was learning at a rapid pace. It was exciting to come to work as things were constantly changing for the better and everyone was learning.

Someone i this string suggested "that Wiremold could have acheived its strategy using "a combination of well worn tactics none of which are associated wit lean or TPS". I have to tell you that is simply not true. There is no way without TPS that we could have cut set up times from hours to minutes, reduced lead times from 6+ weeks to one to two days, improved inventory turns from 3 to 18 and freed up more than half our floor space, cut our new product development time from years to months, doubled in size the first time in four years and then doubled again four years later, increased our gross margin by 13 points and best of all taken a company that was worth $30 million before we started our TPS implementation and sold it for $770 million about nine years later.

 We only could do this by focusing on TPS as a strategy to allow us to compete on our operational excellence. Having a "strategy" with no reasonable plan for execution is no strategy at all. It is just words on a peice of paper that you pull out of the draw next year and wonder what went wrong.

Saying that lean is the strategy or is your strategy doesn't mean that all the things that we traditionally think of as strategy are wrong. Not at all. They can and should still exist. It is just that by implementing TPS/lean as the main focus of the organization all of the strategic things you thought of become easier to do and a number of things that you thought were impossible now become possible. For example, set up reduction, flow and pull can reduce lead times from 6 weeks to 1-2 days. Tell me that is not creating strategic advantage.

As a management team we all understood that, 1.] Lean is the strategy, 2.] It has to be led from the top and 3.] That the thing we were trying to transform was the people.

So yes as a guy who has to run a business and take care of his employees and customers TPS/lean is very strategic. All of you consultants and professors debating what is the meaning of the word strategy is kind of a waste of time. Kind of like Bill Clinton talking about the definition of the word "is".

Put yourself in my position. If you were running a business are you saying that you would not use lean as your fundamental approch? Or if you did would you just relegate it to, "some manufacturing thing or some set of tools?" Heck the reason most companies struggle with lean is they see it primarily as a cost reduction program. They try and dump it on a functional organization without changing anything else. Sure they will get some results but they won't become a lean enterprise unless they uderstand that lean is the strategy and everything must change.

Now this is just my opinion and is based on my experience and the tremendous respect I have for all my people. But I have to say it is sad for me to see smart people who should be helping others to understand the strategic benefits of TPS/lean engaging in sort of a circular firing squad about the meaning of strategy. If strategy is the process of creating competitive advantage and you know that TPS/lean creates tremendous competitive advantage why is there such resistence to calling lean a strategy or at least admitting its strategic advantage in running any business?

If I reduce set up times from say 2-3 hours to 2-3 minutes do you not consider that strategic just because it is called set up reduction? After all by doing this I can cut my lead times from weeks to days, I can free up maybe half my floor space, I can free up lots of cash from inventory reduction that I can then reinvest in new products, I can be much more responsive to my customers and have much higher quality at lower costs. Still doesn't sound strategic to you?

That's my two cents but I'm already smiling at the massive amount of comments this may generate. Even so I have great respect for all who have contributed to this. You of course are entitled to your opinions. As for me, lean is the greatest strategic weapon I have ever seen and I will use it to improve any business I am associated with. Art.

 



Michael Balle August 14, 2017
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How can we better reach CEOs? That is a very interesting question.

I believe it needs - and can - be learned. And central to how we came to write The Lean Strategy.

Like most people in the mid-1990s, I first learned to run one-week kaizen workshops, in the crazy days when we moved the machines around the shop floor on the night of Wednesday to Thursday to create flow.

Then I designed lean programs ("excellence systems") for COOs based on my father's work at Valeo, Sommer Allibert and Faurecia.

And sure enough had the same results we hear about: two years of fast progress with visible productivity savings, one year of slowdown and then the company moves on to the next program.

I was working closely with two COOs at the turn of the century and we were looking to break that cycle. We quickly concluded we had to involve the CEO more. In one case we failed, but when he retired, this COO became sensei to another CEO, and they led together a very successful lean turnaround. The other case was Frederic Fiancette, Jacques COO and we succeeded in persuading Jacques, as he mentions in his above post.

Jacques and I shared a systems thinking background (my first business book) so we took a new look at the situation and worked our way through several challenges - it all became clearer when Jacques himself used lean as a strategy to grow a business he acquired.

We realized we had to face four key challenges to grab CEOs attention.

The first challenge is to "talk CEO" - the CEO's job is strategy, and his or her language is finance, not financial accounting, but valuation. Luckily, I was coached by Orry in linking the P&L the balance sheet and the cash flow statement to show the impact of various lean decisions on the bottom line (such as the extra warehouse you don't build and so on). So the first challenge for us lean guys is to learn to think at that level.

The second challenge is that strategy is mostly, at the end of the day, about the product range and line-up - and all its technological, operational and financial implications. Thankfully, lean has a lot to say there in from 1990s VA/VE practice and LPPD - and here I was coached directly by my father - we wrote a paper about this back in the mid 2000s. So the knowledge is there, it's a matter of acquiring it, and linking it to a financial vision. Dan and Jim's first lean principle "value" is the key to a strategic understanding of the firm from a lean point of view.

The third challenge through which Jacques walked me through step by step is explaining to a CEO why a gemba focus matters as much. CEOs need a plan, they need to see where they're going with whatever approach, which is fair enough, and are very uneasy about the "let's go and see, see what we find and solve problems approach." As Jacques progressively saw the immense strategic value of gemba walks and developing flexibility to catch opportunities, we also discussed for a very long time about how to explain this to other CEOs - which in the end, by an accident of a Toyota plant visit in Taiwan and discussion with TPS sensei Joe Lee, we came to express as the difference between Find-Face-Frame-Form and Define -Decide-Drive-Deal. As Dan will testify, this is a framework that doesn't resonate with "lean guys" much, but really touches executives - and is essential to explaining gemba to CEOs.

The fourth challenge, and not the least, is accepting that the balance between JIT and Jidoka reverses the chain of command to create a chain of help. This means getting the management team to face 1/teamwork and 2/helping operations to follow the pull system. This complete reversal of the chain of command, which I tried to describe in "Lead with respect" is another key issue in convincing a CEO. One, however, that they take on board with a vengeance when they "get" it and see how much traditional corporate hinders rather than helps.

This is one path, one that we tried to describe in The Lean Strategy, and I'm not claiming it's the only one, but as the cases in the book attest, and to follow on Orry's point, it is one where we do have a measure of success of getting lean to become the main management system of the company - this path does start with the CEO seeing lean as a strategy.

Which is why, back to the previous thread on the Dan Markovitz/Art Byrne debate I believe the onus is on us, lean experts to learn to "talk CEO" and to frame lean is a strategic way so that the CEOs see the promise of it (and, to tell the truth, the fun of it) and go for it.

And by the way, our internal debates really don't help if we want to reach CEOs. They intuitively grasp the difference between lean and operational excellence or six sigma, but are also quite put off by all the various debates and factions in "lean". I'm not suggestion debating is a bad thing, and certainly, it's a way to clarify ideas, but if we want to reach CEOs we'd do better centering on our common points rather than endlessly picking at our differences.

Access to CEOs is never a given - they have many demands on their time and mostly only really listen to other CEOs - but it's not impossible either, as Orry shows, if we, in the lean community, learn to express ourselves in their terms and discuss issues relevant to them. This, in turns enables us to take the CEO to the gemba, create conversations between CEOs and frontline teams and completely change the management culture of the company in a couple of years as well a generated financial results and long term sustainability - which is something extraordinary to witness, and, I believe, well worth the effort.

The harder question is where do we start to convince the lean community this is a viable path for the continued development of lean?



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Don Scott August 14, 2017
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I can't imagine adding much to this after Art's comments. It is clear to me that not only IS Lean a strategy, but it has always been one. It's how I've always thought of it. What is new is presenting it as such. For anyone interested, I reference the following passages from "Lean Thinking" (forgive the improper citations, but we do all have a copy, right?) that describe it as just that, and this is not an exhaustive list:

"The lean alternative is to redefine the work of functions, departments, and firms so they can make a positive contribution to value creation and to speak to the real needs of employees at every point along the stream so it is actually in their interest to make value flow. This requires not just the creation of a lean enterprise for each product but also the rethinking of conventional firms, functions, and careers, and the development of a lean strategy, as explained in Part III."

"Indeed, the rapid introduction of these techniques is Wiremold’s fundamental strategy."

Art is also quoted thusly: “To my way of thinking, this (prioritizing long-range “strategic” planning efforts) is exactly backwards. Introducing lean techniques in every business activity should be the core of any company’s strategy. These provide both the opportunity and the resources to generate and sustain profitable growth. Profitable growth is what the strategic planners of the world are always seeking, but find hard to achieve because their company’s operations can’t deliver on their strategies.”

"By 1995, after a decade’s march, Showa was finally reaping the full rewards of its conversion to lean principles driven by a lean strategy."

 



Bill Baker August 14, 2017
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Yes, indeed, Lean is a strategy!

CI and Respect for people are the building blocks that help us focus on the customer with great attention to speed to excellence. The speed of market change and out of the box thinking are the currency of our times. Leadership needs to mentor and grow the organization at all levels.

Great article, Orry



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Mitra Burns August 15, 2017
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This article really made me re-think business objectives. I really like the conclusion and that businesses desire to win/deliver its mission/goals. This is specifically true in a organisation where there are no competitors.  (I work for one). 

I wonder then if Lean is not the strategy, then where does it fit within an organisation in line with its objectives? Is it a project based approach but what is it improving and why? Is it a series of tools to achieve what? It is a separate function, then what is its purpose? Is it a division but where does it fit into the bigger picture?

Where does then Strategy deployment (Hoshin Kanri) fits in?

Interested to understand your thoughts.



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Orry Fiume August 18, 2017
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Mitra, if I understand your questions properly they are (1) if a company does not adopt lean as a strategy, where does it fit into the organization and (2) what is the role of Hoshin Kanri?

As to the first, my recommendation to companies that don’t want to establish lean as their strategy is don’t try to “do” lean. It will only confuse people. If you do cost reduction projects (which have had different labels over the years), call it anything except lean. The results will probably be sub-optimal and will give the impression that either lean doesn’t work, or it’s OK for someone else but not “us”…because “we” are different.    

As to Hoshin Kanri…Although Wiremold began its lean transformation towards the end of 1991, we didn’t learn about Hoshin Kanri until 1994 or 1995. Up until then we were doing lots of things, but not fast enough. The Hoshin Kanri process gave us insight into the fact that we had too many “number one priorities” and most of our key people were over burdened. It helped us recognize that we couldn’t do everything at once, prioritize what we needed to do, and allocate sufficient resources to those priorities to insure that they got done on a timely basis. By making that visible (the deployment matrix) people could now see how their efforts supported those priorities (i.e. hoshins), which supported our lean strategy.

 

 



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Don Scott August 19, 2017
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Orry, I felt that this final question deserved answers and was thinking about adding mine - I'm glad you saved us all from that and you put it more succinctly than I would have.

Mitra, you also asked your questions in relation to a business with no competitors - Strategy as we've discussed it here includes "competitive advantage" in its definition, so this I gather is a concern.

Lean does have an answer to that. Another quote from Lean Thinking - "Our earnest advice to lean firms today is simple: To hell with your competitors; compete against perfection by identifying all activities that are muda and eliminating them."

The Lean strategy achieves its goals by focusing on customers, not competitors, because competitors never pay you a dime. In my own experience, focusing on competitors is self-limiting. After a nearly disatrous year in a company I worked for, the CEO described it as "a great year in so many ways, because for all the challenges we faced, our competitors fared even worse." I understand he was trying to put a happy face on a difficult situation, but it was nonsense and we all knew it.

Compete against the best version of yourself you can imagine and it will remain your only true competition.



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Daniel Markovitz August 19, 2017
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How many angels can dance on the head of a pin? Who cares?

I'm with Jon Miller and Art Byrne on this: call it whatever you want -- a strategy, a method, a thinking process, an approach. It doesn't matter as long as you embrace it. 

Perhaps it's time to get back to the gemba?

dan



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Michael Ballé August 20, 2017
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Yes, Dan, thank you, absolutley!

One of the main points in our book about what makes lean transformative is that strategic thinking occurs at the gemba - what we called "leading from the ground up."

A central contention of lean thinking is that studying and solving how creating value also generates waste will lead you to discover hitherto unknown new ways to create more value (and generate less waste). This is often counterintuitive.

As leaders look closely into how frontline employees face and solve problems they encounter, on the gemba, they see, through asking why? and connecting to the bigger picture, that some of these problems are easy to solve, and some are hard. The harder problems often reflect a poorly famed issue at strategic level - misunderstanding something in the bigger picture, missing an opportunity or sustaining a mistake.

Leaders truly benefit from go and see at the gemba if they keep the bigger picture in mind, as well as focus narrowly on details - what we've described as "helicopter thinking."

If we only narrowly solve narrow problems, as Orry mentioned, the risk is following the path of least resistance and devolving the lean effort into a cost reduction program, at which point, I agree with Orry, it's better not to call it lean at all.

One can argue that we'll get to strategic thinking on the gemba when we've grown up, but in fact, practicing strategic thinking through the eye of the needle of concrete gemba problems is precisely how we grow up.



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Mark Graban August 20, 2017

Is part of the issue in this whole debate a matter of confusion between "corporate strategy" and "operations strategy?  It's hard to have a good discussion when people have different working definitions of one of the main words in the question.

I believe MIT Sloan, right next to LEI, still teaches separate courses in "strategic management" (which I believe is a required course) and "operations strategy" (which is probably still an optional course). 

https://ocw.mit.edu/courses/sloan-school-of-management/15-902-strategic-management-i-fall-2006/index.htm

https://ocw.mit.edu/courses/sloan-school-of-management/15-769-operations-strategy-fall-2010/index.htm

I took those courses when I was a student there. Most students, in the late 1990s didn't care about operations as a strategy, a tactic, or anything.

Is MIT Sloan wrong to treat these two levels of strategy as separate things? Perhaps, but that's the typical business school view and people working with strategy typically have MBAs.

Is Lean "an operations strategy?" Yes!

Is Lean "a corporate strategy?" Doesn't it depend on the industry and the setting? If you are a plastics supplier to the auto industry, can Lean really be a corporate differentiator that leads to success if "everybody is doing it?"

Or can it be a corporate strategy to be better with Lean than your competitors, leading to lower prices, better quality, and better on-time delivery?

If everybody is delivering the same quality, price, and delivery, you'd probably better think about product innovation or some other dimension of "corporate strategy" even if you have amazing Lean management and "operations strategy" down pat.

If strategy is defined as an organization defining how they are going to win, is Lean a strategy for winning? Is it a corporate strategy? The only answer I can give is, "It depends."

 



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Orry Fiume August 20, 2017
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Mark, you raise some really good questions here. I have copied your posting and inserted my responses in BOLD.

Is part of the issue in this whole debate a matter of confusion between "corporate strategy" and "operations strategy? It's hard to have a good discussion when people have different working definitions of one of the main words in the question.

You are correct. Having different definitions only leads to talking at cross purposes.

I believe MIT Sloan, right next to LEI, still teaches separate courses in "strategic management" (which I believe is a required course) and "operations strategy" (which is probably still an optional course).

https://ocw.mit.edu/courses/sloan-school-of-management/15-902-strategic-management-i-fall-2006/index.htm

https://ocw.mit.edu/courses/sloan-school-of-management/15-769-operations-strategy-fall-2010/index.htm

I took those courses when I was a student there. Most students, in the late 1990s didn't care about operations as a strategy, a tactic, or anything.

Is MIT Sloan wrong to treat these two levels of strategy as separate things? Perhaps, but that's the typical business school view and people working with strategy typically have MBAs.

Yes, I believe that MIT, and every other school that teaches that an enterprise can have two strategies are wrong in that they are behind the times. You can only have one strategy. Everything else is in support of that strategy. I accept the fact that the concept of two strategies is the way it has been taught for a long time, but in “The Lean Strategy” we challenge that thinking.

Is Lean "an operations strategy?" Yes!

Is Lean "a corporate strategy?" Doesn't it depend on the industry and the setting? If you are a plastics supplier to the auto industry, can Lean really be a corporate differentiator that leads to success if "everybody is doing it?"

Or can it be a corporate strategy to be better with Lean than your competitors, leading to lower prices, better quality, and better on-time delivery?

If everybody is delivering the same quality, price, and delivery, you'd probably better think about product innovation or some other dimension of "corporate strategy" even if you have amazing Lean management and "operations strategy" down pat.

As stated above, an organization can only have one strategy. Having more than one is the equivalent of having multiple personalities. It can only cause confusion.

One of Wiremold’s directors, who was a CEO of an automobile supplier, took what he learned at Wiremold, applied it to his company, gained market share and increase profits using that strategy.

Towards the beginning of this discussion I responded to the question about if everyone in an industry is “lean” how do you differentiate yourself. Robin Cooper wrote a book about that in 1995. (By the way, at the first Lean Accounting Summit, twelve years ago, in response to the question of when business text books will reflect the reality of lean as a strategy, his response was that industry was ultra conservative and that it takes fifty years for new ideas to work their way into text books. At the time I thought he was exaggerating, but today I’m not sure of that.) As for innovation, in “The Lean Strategy” we devote an entire chapter to that subject (chapter 9). At the risk of sounding “snarky”…have you read “The Lean Strategy” yet?

If strategy is defined as an organization defining how they are going to win, is Lean a strategy for winning? Is it a corporate strategy? The only answer I can give is, "It depends."

In summary, an organization can only have one strategy. We believe that lean is the best strategy for today’s world. We also reject the idea that in the real world there is a differentiation between “corporate” and “operation” strategies (or sales strategies, etc). Everything the enterprise does needs to support the chosen business strategy. Certainly a company can chose to follow a different strategy and if they do, everything the company does needs to support it. However, our experience says other strategies will only achieve sub-optimal results.



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Mark Graban August 21, 2017

Thanks for your thoughts, Orry.

I think the B-school view would be that "operations strategy" supports the "corporate strategy." Operations strategy is subordinate to the corporate strategy. It's not having two strategies.

Likewise, an "HR strategy" or "IT strategy" would also be subordinate to corporate strategy.

At the risk of sounding "snarky," I stopped reading the book after three chapters because it never defined what "strategy" is and I thought there were a lot of repetitive platitudes about Lean. I decided it's not a book for me. Sorry.



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Michael Ballé August 21, 2017
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Mark,

You hit the issue squae on the nose and, yes, we are challenging the business school split between corporate strategy and operations strategy - as I understand it, as does military thinking strategy in trying to catch up with new thinking to deal with the modern evolution of conflict.

One of the key US strategic military thinkers was John Boyd and in this amazing lecture, he brings up Toyota and TPS (yes, Ohno, shingo, etc.) https://www.youtube.com/watch?v=i5c3yMy-llA as an example of operational flexibility giving you strategic flexibility. There's a lot of that in the McChrystal's book you mentioned.

To go back to corporate strategy, I believe there are a few broad strategies competing out there. There's the Porter-based strategies, using power to lock-in customers, squeeze suppliers and treat work as a commodity. There are footprint strategies - purchase your way to be number one or two in a segment, sell or close everything else. There are gateway strategies of controlling distribution. There are tech disruption strategies, and so on.

In this sense, I believe that the lean "corporate" strategy of offering more value to customers by facing and exploring the waste you generate and involving all your people in finding new ways of working better through the elimination of muda, particularly the mudas on non-quality and non-flexibilty is a corporate strategy. Seeking to never lose a customer leads to improvement and real innovation.

Clearly, no strategy is universal, since firms compete on markets with different strategies, but I also believe that this lean strategy is what enabled Toyota to become number one in a completely saturated and dominated market. I also believe that this is a winning strategy for any company that doesn't have an outstanding advantage like a lock on some resource or a revolutionary new tech. Toyota actually ended up revolutionizing the car industry with the Prius.

This is the debate we need to have in the community because without a strategic vision of lean, you never get to the product range/line up discussion of lean - which we do address at length in the book, looking quite in depth in the Corolla example. 

In my experience, lean truly delivers on its promise once you go beyond the false separations between engineering, manufacturing and supply chain - VA/VE - and practice the helicopter thinkign of always going more into the details of the problems people face and then always up to the bigger picture (for instance Dan J completely opened my eyes to the impact of China on all Western industries). This going back and forth from detail to big picture is how you see faulty assumptions and discover completely new ideas.

And, honestly, this is where the fun is :^)))



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Mark Graban August 21, 2017

Thanks, Michael.

Having "a strategic vision for Lean" or "Lean being strategic" is not the same as "Lean being a strategy."

I'm still on the fence about this. Lots of words being chewed up... to me, I'm not sure it matters frankly. But we can disagree on that.



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Mark Graban August 21, 2017

How does Toyota define their corporate strategy today? I can't find any clear statement of strategic vision on their website.

I'm sure they would say they have a "corporate strategy" that is more than TPS or The Toyota Way.

Is this a statement of their strategic thinking?

http://www.toyota-global.com/sustainability/ar-smr/smr16_message_en.pdf

They also have "an environmental strategy," so I guess they can have two strategies (or more), Orry:

https://www.toyota.com/usa/environmentreport2016/strategy.html



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Michael Ballé August 21, 2017
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Mark, 

Good point. Here's what's on Toyota's website: 

Toyota Global Vision

Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people.

Through our commitment to quality, constant innovation
and respect for the planet, we aim to exceed expectations
and be rewarded with a smile.

We will meet our challenging goals by engaging the talent and passion of people,
who believe there is always a better way.

http://www.toyota-global.com/company/vision_philosophy/toyota_global_vision_2020.html

What I'd call their strategy, but then again, financial analysts have been complaining that Toyota has no clear "strategy" as far back as I can remember, so different expectations of what a strategy should look like.



Mark Graban August 21, 2017

Is a "vision" the same as a "strategy?" Seems like another definition issue.



Bob Emiliani August 25, 2017
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I think the bottom line is this:

1) The authors (and Art) believe Lean is a company strategy. This point can be argued forever as a result of not having made the case in the book; i.e. explain: 1) What is corporate strategy? b) What is functional (e.g. operations) strategy? c) Examples of corporate and functional strategies. d) Why Lean is not an operations strategy. e) Why Lean is a corporate strategy. So, it is best to accept that some people believe Lean is a company strategy.

2a) Lean as a company strategy is believed by the authors to be the "missing link" in Lean transformation (Orry) or why "Lean has not gained traction" (Art). Yet, we see no structured problem-solving to back up that belief. This is a complex problem that touches all parts of a fishbone diagram and does not reveal a singular cause (i.e. Lean not understood by CEOs as a company strategy). Rather, it reveals many different and interconnected causes that contribute to the observed effect. The authors can be taken to task for not having done the formal problem-solving necessary to convert their belief into fact in order to make the case that that Lean as a company strategy is the missing link (or why Lean has not gained traction).

2b) It's not too late: Michael, Daniel, Orry, and Jacques (and Art) can use the same tools that they tell others to use in problem-solving. Let's see an A3 for this important management problem. (Interesting fact: The working professional graduate students that I teach have long been required by their managers to do structured problem-solving. Yet after thousands of students, only one has said he saw structured problem-solving used by a manager [it was a 5Whys analysis of a management problem]. That kind of inconsistency causes Lean to lose lots of traction).   



Katanonymous August 22, 2017

Orry, it really appears that the thinking through this post (and I’m guessing the book) is exclusive to the manufacturing industry. Would you agree with that statement?

I know that what you write is dependent on your own experiences and knowledge, but with such a “Lean” focus, I’m curious to understand what your thoughts on the strategy that the Improvement Kata might be. I’ll explain.

Late 2014, I had an opportunity to start in a role working towards Continuous Improvement, while there was very little institutional knowledge when we started down our CI path. I work in a centralized “design” studio. We have artists that work in a high volume, high mix environment (We didn’t even understand what that meant at the time).

We began by going through several LEI educational workshops, learning the fundamentals of lean and left those workshops empowered to try things. Imagine our frustration when we got back and started to understand that most of the “waste” in our environment was dependent on our computer program vendors. But we kept trying things and experimenting. While we created boards, we were somewhat less-than-functional as an improvement group unless it was some sort of major change that effected all of our employees (aligning schedules to incoming materials, re-configuring our work queues). That was most of our 2015, and it felt like putting a round peg in a square hole.

Late 2015, I was able to again continue learning from LEI through the Improvement Kata. Day one was fantastic and I felt like I was learning a lot. However, on day 2, the information I was learning felt completely against the grain of all of my other Lean learning and experience.

I went home and struggled with that, trying to explain what Kata was doing and how it could help us, but I was unable to really grasp the difference. We kept working, researching and trying to understand what were the failures with our own lean efforts.

I’m not sure how or why this sparked, but we finally realized that our company structure didn’t mesh with our lean approach and setup. First, we were unable to work on our own culture by being employee-led because our structure and setup didn’t allow for our employees to do anything for improvement other than identify & complain. (And who wants to hear complaints all the time?) Secondly, while we felt our boards were doing a GREAT job at identifying obstacles, there was little we could do at the time to remove these obstacles.

We eventually changed our structure (Leaving specifics out on purpose here). This enabled our approach to be altered to more of a low volume, high mix environment. This changed everything. We now had a chance to eliminate some of these obstacles that we had been identifying. (And our people started to buy-in).

The reason I’m being so long winded is that once we started to understand the layout and workability of the Improvement Kata, it basically answered our questions about “strategy”. Upper Management is able to create the direction that the company needs to go in, while Middle Management can develop the challenges that support the direction, and our teams create their own target conditions that support the challenges and experiment.

Is it perfect? No. But our team is learning, trying, and experimenting. Because of this, we are increasing our value to the customer( and I haven’t had to have a focused discussion on “waste” for a long time). The other side of that is that we are also increasing the value of our employees, as they are gaining more and more knowledge as we tear down our silos.

I definitely understand better how our strategy works, and I know am able to comprehend how lean ties in to what we do because we jumped in and started using the Improvement Kata.

I’m just wondering (and it could be my own ignorance) why Kata and Lean are so absolutely separated in the field, and how that didn’t enter the conversation as a piece of lean strategy. (If it’s in the book, I apologize, I have a backlog to get to).



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Orry Fiume August 23, 2017

Katanonymous, interesting questions.

As for the lean strategy being applicable to only manufacturing…not true. I have seen it being used in different type of service industries, with the fastest growing one being healthcare. You can lean more about that by looking at the Catalysis web site (https://createvalue.org) . In addition, Michael Balle knows a group of digital companies CEOs and CTOs who are doing a study group to Japan to visit Toyota and affiliates in order to deepen their understand of agile practices and go to the root: lean

As for kata…from 1991 when we began to use our lean strategy, until 2002, when I retired, none of us at Wiremold had ever heard the word “kata”. However, our ignorance of it didn’t seem to hurt us. I must admit that since I retired I have not made any effort to learn about kata. So, is it useful? Maybe. Is it required? Based on my, and others’ experience, no.

As for organizational structure…yes, that can be a barrier. Many companies change/evolve their structure to accommodate this different way of thinking and acting. However, even within Wiremold no two of our companies did it exactly the same way. As we discuss in The Lean Strategy, the principles are universal, but their implementation is local, based on each organizations particular challenges.

 

 

 

 

 

 

 



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Katanonymous August 24, 2017

Orry, I understand that lean has been used in healthcare, and we’ve done research on that, trying to understand how the service environment differs from a production environment. And actually, that research has led us to almost re-identify how we do our work. (I do realize that the healthcare industry has found some success with using just lean principles).

At the beginning of our lean journey, we would have identified as a pure production environment. But after working through continuous improvement, we now identify as a customer-service environment that designs unique “widgets” for our customer. This has allowed us to have the customer as our focus, which was needed in our environment, and has allowed us to significantly reduce the amount of re-work that we do, while improving the impact of our design time.

We’ve definitely understood that no 2 companies or environments can follow lean the same way, as it’s the personal touch to the needs of the company that allows success to happen. That’s why the Improvement Kata has helped us: it gives us a basic routine that can be followed in any business model, with the development of problem solvers at the heart. Do I think that it is necessary everywhere? No. But I do think it helped us understand strategy better with focused goals we continue to aim to reach. And since we are developing problem solvers at every level, our teamwork has never been better.

For me, it clicked watching Mike Rother talk about waste. He talked about how the focus on removing waste at Toyota was maybe more of an outcome of trying to reach a particular stretch goal, instead of going on a hunt to try and eliminate waste. That’s where maybe I differ on how I see lean: it’s not the root, it’s a piece of the equation.

Personally, I see Lean + Kata = TPS. Both come from research at Toyota, and I perceive Lean to be the things you can “see” Toyota doing, while Kata is the problem solving system that you don’t see walking through a Toyota plant. Rother’s work has helped create a process for that problem solving technique, which at the heart is goal-focused.

Now, I do understand manufacturing environments as well, and know that process improvement can be easier in that type of environment, when one process is continually happening. It’s easier to see how removing waste working towards continuous flow can have a great impact to cost savings and inventory reduction.

However, in an office environment, a lot of these principles don’t always directly apply from what our experiences are. That’s why for us, Kata was the missing piece to keep us moving torward a Continuous Improvement environment with strategy.

Thanks for allowing me to share, and I’d love to hear your thoughts on my response.



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Claire Everett August 28, 2017

When I posted my previous comment I hadn't read the book, but I was intending to because of the discussion this post stired up.

Michael you said you'd like to know what I thought when I did read it, so here goes...

I don't think I'm the intended audience of this book, or at least not the main audience.  It seems to me that the book is written to be read by CEO's and other members of Senior Leadership Team (SLT).  Lean/quality professionals feel like a secondary audience at most and perhaps this is why there's so much pushback about the book from the Lean community. 

I think this would be a great book to hand to members of the SLT to help them understand their role in a Lean transformation.  But I don't think I'd recommend it to another Lean professional.

Overall I thought it was well structured, clearly written and I liked all the examples.  It was worth reading, but I can't see myself re-reading it, I'd give it 4 stars.

The first definition of startegy that I found in the book is on page 141 (of 250 not including references etc), that's almost 60% of the way through the book.  Personally I would have prefered to get this much earlier.  And when the definition is included it doesn't have included executing the plan in the definition "A strategy is a high-level plan to achieve competative advantage in conditions of uncertainty." This post makes it clear that executing the strategy should be included in the definition and yet the first time a definition is given there is no mention of executing.  And why only in conditions of uncertainty?  Or does this definition rely of all times being uncertain times?

Figure 7.1 has the wrong key (I think).  The graph is supposed to show revenue from independents doubling but the line matching the key for independents does down not up over this period in teh graph.  The other line goes up so I'm assuming your key is wrong.

Figure 7.3 says it shows the doubling of margins between 2011 and 2014 but the dates on the graph are 2012-2015.  Either the description or the graph is wrong.

Table 7.6 the sales figure for 2009 shows as 72 million Euro but the text that goes with the table says that sales were 79 million Euro for 2009 so one of these is wrong, I'm assuming the text since 72 makes sense in the context of the other years figures in the table.



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Owen Berkeley-Hill September 15, 2017

71 comments so far! Wow! And many from the big guns of Lean!

I have not read the book, and I am unlikely to: pensioner; nearly 70.

I agreed with the points in Orry’s post as they resonated with my humble experience, but I did question the use of the word “strategy” and, perhaps, the use of English, the best language for misunderstandings take place. Throughout my career I was very sensitive about the use of words: if they could be misunderstood, the almost invariably would be, and sometimes deliberately. I refer to that great etymologist, Humpty Dumpty:

“When I use a word, it means just what I choose it to mean — neither more nor less.”

Do CEOs have the same understanding of the word strategy, or does it mean something else to them?  Calling Lean a strategy, might undermine this body of knowledge, because there is a risk that (as so often happens) the CEO can delegate a hapless soul “do Lean” while he (still usually a he) takes care of more important stuff.  Or he could buy a very expensive, gift-wrapped from one the number of consultants circling his domain: the modern version of Snake Oil? And then we wonder why 95% of Lean initiatives fail.

With 71, now 72 comments, the dialogue was descending into a theological debate, against which I would strongly advise, because that will lead to bad hair, worse dress sense and objectionable personal jewellery.

There are more pressing matters to discuss, the most pressing of which could be the useless Lean education model we have today.  Why do we try to persuade today’s CEOs who have climbed the ladder to the top successfully to consider Lean? Why not tomorrow’s?  Is it because Lean is given little if any house room in the business schools of the world.  Even those like Cardiff or Buckingham or John M Huntsman, who have or had some connections with Lean, make sure that this Lean stuff does not pollute the minds of their MBAs. We cannot have these vulnerable young people doing anything dangerous like thinking.

How effective is it to try and persuade a CEO, as he gazes at his palatial office, the reserved parking space and the three “administrators” who do a great job of running defence, that for Lean to succeed he must change his thinking by about 180 degrees?

Rather than arguing whether Lean is a strategy or a means to one, might we try developing an education process which follows Aristotle’s advice of getting them early: “give me the child until he is seven and I will show you the man”? At the moment, I cannot help seeing a parallel between the regard the B-Schools have for Lean and the early plight of Harry Potter: misunderstood by his muggle relations and only just allowed the live in the space under the stairs. What I fear is that there is no Dumbledore or Hagrid coming to his rescue anytime soon.

 

 



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