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The Battle for the Soul of Lean

by Michael Ballé
March 16, 2018

The Battle for the Soul of Lean

by Michael Ballé
March 16, 2018 | Comments (17)

I’ve been a student of lean for 25 years, and the more that I learn the more I believe that, despite conventional wisdom, lean is a profoundly disruptive way of working. From the time that this new approach was popularized decades ago, there have been two completely different ways to look at the same tools, materials, and stories. Some of us saw Toyota as a disrupter, a small bankrupt company that became the dominant automaker in a saturated market ruled by U.S. corporate giants, by doing something radically different. Others, however, were fascinated by Toyota’s “operational excellence” as a means of safe, incremental improvements—they would cherry-pick tools (total productive maintenance becomes total performance management and so on) to leverage productivity gains without ever challenging either the strategy or the attitudes of top management.

This great divide continues to this day. “Lean” was first introduced to the world-at-large with the publication of The Machine That Changed the World, an ambitious book which extensively described the complete management system that Toyota had developed over decades. At the time (and this was before the internet offered the disruptive possibilities we now have seen), this struck a broad chord, partly because many business commentators were seeing how time (lead-time in lean terms) was becoming an essential competitive factor. Yet to many others this new approach was no more than a bunch of tools to eliminate variation from work, further discipline people, and processes, and squeeze productivity through ever more rigid and detailed routines. The battle for the meaning of “lean” was on right from the start.

Really Radically Different

“To make products, first we make people,” was the phrase that got me deeply curious about lean in the early 1990s. In those days I was studying Toyota’s development of a French supplier as part of my thesis research (on “mental models”). The key difference (a radically different approach to the interplay of people and systems) became clear to me: where French engineers saw technical solutions that needed to be applied to people, Toyota engineers worked with the people to discover countermeasures to existing problems and then to systematically reduce lead-times in order to get value closer to customers (and eliminate waste in the process).

Top management thinkers were recognizing the power of this approach. The NUMMI experiment was underway. Individuals such as Richard Pascale realized that Japanese transplants in the U.S. would spell trouble for domestic automakers. In Managing on the Edge, Pascale clearly saw back in 1989 that GM was missing the real lessons Toyota was teaching the world: a way to work with employees and across functional divisions to create an enabling company focused on satisfying its customers, that stood in stark contrast to the mechanistic competitive strategic approach that Michael Porter and others championed. Pascale argued early on for a dynamic, people-based approach, rather than the tactical pursuit of monopolies and market advantages which treated the actual creation of customer value as a static “black box”.

My father had been a Renault executive all his life, and had discovered Toyota as early as 1975, organizing a study trip every year, but had never had the opportunity to engage with the full system until Noel Goutard, Valeo CEO, asked him to. He had learned that the same tools could be interpreted widely differently by different people, and what really mattered was to relentlessly focus on quality by using kanban and kaizen to identify and develop good management judgment and the ability to work with each other (whether we liked each other or not). As he became CEO of another automaker, he delved more deeply on the huge impact of value analysis/value engineering (VA/VE) on market share – following the full thought process from kaizen to product design and innovation.

Today lean is still widely interpreted by many as merely a way to optimize work: let’s discard kanban, ignore VA/VE, discount product decisions and customers, wait until we’re grown up to try jidoka, and not even bother with stable teams. Instead, let’s focus on eliminating “variation” from workers’ jobs to make them more productive. In fact, let’s deliver enough productivity that we can hide the massive underuse of capital, loss of product competitiveness, and Waste with a capital “W,” stemming from top management’s strategic blunders. Let’s keep lean focused on operations and management routines to control the system more tightly; by all means, let’s never use it to actually challenge the business.

Today, I think its fair to say that companies that have used lean as a disruptive force have thrived. Noel Goutard and Freddy Ballé were disrupting the auto suppliers business in France, leading to the creation of global giants Valeo and Faurecia, just as Art Byrne was doing the same in his industry with Wiremold, as chronicled in Lean Thinking. Meanwhile, Amazon, one of the most disruptive companies of our time, has based its success on its founders’ absolute obsession with customer satisfaction (actually, in a very lean way, responding to customer dissatisfactions) and a fully lean supply chain. Bezos cites Lean Thinking as one of his top business books,  and he hired a top lean executive who learned it the hard way from Taiichi Ohno’s Shingijutsu in Japan. Another disruptive company, Apple, was heavily influenced by supply chain effectiveness and releasing products at a regular rhythm, with a relentless focus on both innovation and quality. These lean concepts were discussed by management in the late nineties, as can be seen in this speech from Steve Jobs explaining how he intended to turn Apple around on his return in 1997.

Toyota remains amazing because it has become one of the largest automakers in the world, and it boasts the profitability of a premium boutique such as BMW. It has done so in a completely closed market in the Porter sense. Many people who see in Toyota a beacon of operational excellence miss the larger picture, which is how disruptive Toyota has been throughout its history:

  • Flexibility. In the fifties and sixties, the Ministry of International Trade and Industry (MITI) thought that each Japanese automaker should focus on a narrow segment, to build up the national auto market. Instead, the key players threw themselves into a headlong competitive race by offering customers wider lineups and frequent product renewal -- a race that helped Toyota become dominant in Japan through its innovative use of flexibility: building several models on the same lines to maximize every square inch of capital.
  • Quality. Having failed in its first attempt to attack the U.S. market, Toyota returned in the eighties with a vengeance by offering small cars at much higher quality, “free” options, and best buy in the category price. They attacked the lower segments and the U.S. automakers retreated. Then Toyota moved into the mid-range segments, and the automakers retreated, arguing that all the money was in SUVs and pickup trucks. Then Toyota released the Lexus to cap the luxury markets. Sale by sale, car by car, Toyota established itself as a dominant player in the world’s top market, just as it was progressing across the globe.
  • Sustainability. I still remember how the auto execs I know hated my first Prius. They hated it. With hybrid engines, Toyota first made a significant advance for society – sooner or later, we’re going to have to collectively face the music – by showing there was a door in what everyone said was a wall. But they also completely disrupted the world’s auto markets by starting the race towards greener cars, and greener factories. The competitive pressure is such that Volkswagen chose to cheat with a software trick, and as a result added billions of costs to its P&L when it got caught.
  • Digital connectivity. Toyota at first didn’t see the next disruption coming. They thought Tesla was just about full electric engines and realized late that the real challenge was full digital connectivity: tune-ups and upgrades through the wifi. They’ve woken up to it and are investing billions in catching up. We’ll see whether they succeed is or not, but the game is on.

 The Machine That Changed The World showed the world a fully new way to understand industrial thinking. It was a slap in the face and a challenge. Today I question how deeply the crucial message of its success has found its audience.

 Frames for Learning, Scaffold for Improving

What can we learn from Toyota? It all depends on learning how to view the system as a scaffolding for learning, and view many of the popular (and effective tools) as frames for learning and improving. Consider the famed kanban card.

Real kanban is not about switching from a work order-based scheduling system to cards, but about tracking the response time to every specific demand throughout the supply chain. The kanban cards have to be served in the order they arrive to visualize the “sell one, make one” strategy of just-in-time. What is more, each card is numbered, and its lead-time is tracked to see where problems accrue. Kanban forces management to put resources where they’re needed, as well as to focus on quality and rework issues right now. Beyond manufacturing, problems surfaced from delinquent kanban cards are the key to improving value creation in production (value analysis) and then moving all the way to product engineering (value engineering) to increase fundamental product value in terms of function over cost. It’s a unique system of solving problems now to imagine better products tomorrow.

Toyota turned the humble kanban card into a machine to take over the world. And yet most people today still see only a way to replace the SAP with cards. Lean becomes disruptive when used to rethink value creation at a deep level. Amazon used the internet as a way to have an infinite shelf to offer consumers everything they can possibly wish for, while others think it’s about having a sexier website. Apple turned phones into a luxury hand-held terminal for a connected world of apps through better quality in design, manufacturing and supply chain while others still think in terms of phones.

The tool is what you make of it. In ancient times, bishops refused to look into Galileo’s telescope for fear of what they would see. The ancient Mayas ignored the wheel for fear that it would displace human work. Chinese emperors abandoned their exploration of the world by sail because of the scary new ideas that were coming back with the imported goods. And so it goes with any system. Lean can be either a method to disrupt your industry as my father or Art Byrne have done. Or it can be a way to teach internal consultants to make each team marginally more productive so that you don’t have to ask yourself the hard questions about how markets are changing and what alternative technologies are your real competitors.

I believe that when confronted with a complex problem, people naturally substitute a simpler problem they feel they can solve. Not surprisingly, rather than embrace the full strategic import of lean, with its revolutions in flexibility, quality, energy performance, and connectivity, it’s easy to reduce lean to balancing work content in a production cell to seek spot productivity, or to improve performance in a process by eliminating “wasteful” steps. The meaning of the word “lean” depends on which lessons you intend to draw from Toyota’s incredible rise over half a century from a bankrupt local company to the world’s largest, most profitable automaker.  Aggressive disruptive competitor or bureaucratic big company obsessed with imposing standards and eliminating variation? Your choice. Your results.

 

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
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17 Comments | Post a Comment
Bob Emiliani March 16, 2018
1 Person AGREES with this comment

Nicely written. The challenge that Lean has long faced, which I have explained in my recent book, is that the past is ever-present. Ancient times are still with us.

In addition, it is clear that customer (executive) demand has long been for marginal productivity improvement, and this will remain so into the future.

Therefore, knowledge of and competency in Lean are no longer enough. One must also possess a detailed understanding why organizations abandon Lean and why execs ignore Lean to begin with.

More comprehensive knowledge will lead to better results.

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Michael Ballé March 17, 2018

Thank you Bob, I agree, exec demand is what it is, we can only continue to search and share knowledge as we can :^)

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Daniel Jones March 16, 2018
4 People AGREE with this comment

This is the most significant summary of the ways we see lean yet. Very important you figure out where you stand.

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Michael Balle March 17, 2018

Thank you Dan, for your comment and your mentoring!

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Ken March 16, 2018
2 People AGREE with this comment

Love this article but how does one keep up one's optimism for the future if one is part of the internal OpEx team, or a Lean consultant trying to win a contract from executive clients?

If executives keep insisting that Lean be applied exclusively as a technocratic productivity tool at an operational level, without embracing it as a larger, disruptive strategy, a Lean enthusiast/advocate/consultant/teacher is then either branded as a heretic or misfit within corporate culture he or she is trying to change, or accepts his/her humble fate as someone who optimizes the parts and not the whole. 

Are there examples of companies where Lean started out as "OpEx" productivity improvement but then grew (incrementally)  to fulfill Lean's full, people-centric potential?  If not, this start of affairs suggests that only the CEO (or perhaps COO), or those who can profoundly influence them, can really make Lean happen.

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Michael Balle March 17, 2018
2 People AGREE with this reply

Hi Ken,

I'l not sure things are ever that black and white when it's down to people. For isntance, the in the case of the company  our co-author Jacques Chaize, which is extensively described in The Lean Strategy, all three happened.

First the Danish group owning the company started a programatic lean effort. Jacques, always curious about ways to improve, bought into it and started lean workshops with a premium consultant.

This had short term productivity gains, as always, but then results petered out, people got tired and reverted to normal. Still, this led to hiring - and training - Eric Prevot, the internal lean coach, who would have a pivotal role in the transformation.

Eric was tasked to continue lean activities once the consultants were gone, and had the usual run of successes and failures, but, as usual, got in an increasingly difficult place with the department heads. In the end he contacted a sensei for help.

The sensei really shook Jacques and his management team up, and Jacques was actually ready to stop (this is in 2009, when everything got a bit crazy), but his COO, Frederic Fiancette had seen the potential of what had been started and insisted to continue. As they did, Jacques saw the increasing potential of kaizen, first as a team involvement device, and then as a potential for discovering and focusing the right challenges.

Two year into the stroy, he had an aha! moment and realized, as he describes in the book, he had to lead the transformation and first change his way of thinking befaure transforming the company - he became a lean advocate and practictioner.

This is not an unusaly story - what is unusual is that all the participants here were open-minded and trusted each other, so they kind of gave each other breaks and accepted each other's positions and intuitions - in the end they converged, as a CI coach, COO and CEO and did great things. When they acquired another company, they had specatcular results (not without another false start first).

All thsi to say I see no reason to be optimistic or pessimistic. I see pklenty of reason to continue to challenge our own understanding of lean, and practice Toyota Way as well as TPS, in particular Teamwork. The ability to work with others across boundaries is usually the key ingredient that makes it all come together - does that help?

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Prateek March 17, 2018
1 Person AGREES with this reply

Spot on with the quote: "when confronted with a complex problem, people naturally substitute a simpler problem they feel they can solve."

This resonates at two levels. Firstly, we often see see indiscriminate use of LEAN concepts. Things like Kanban are used superficially without understanding the purpose of the tool and its underlying philosophical dimension. Secondly, LEAN is seen in a narrow sense, mostly by people who only have a superficial or a very "literal" understanding of Lean. 

For me, LEAN is a precursor for strategy. It allows people to start seeting the forest from the trees. When we eliminate the unessential, only then we can start to see, value and improve the essential. 

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Michael Balle March 17, 2018

Oh, absolutely - we can change the world with a lever and a place to stand :^) the tool is the lever, but the deeper concept, the intention of the tool is the place to stand!

Bob Emiliani March 17, 2018
1 Person AGREES with this reply

Hi Ken - I think we now have a much clearer understanding of the problems than ever before. That, in turn, allows us to identify and try practical countermeasures.

I see no reason to lose hope, but we also cannot keep doing what we have done in the past which clearly does not work. 

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Ken March 22, 2018

It seems to me that the existing model works with the presence of 3 factors: 1. a strong reason for change (the proverbial "burning platform" like impending bankruptcy); 2. a C-level executive who has the passion and determination and persistence to drive a Lean transformation in a large area (if not the whole) of the company; and 3. this same executive, as a result of 1 and 2, hiring an experienced sensei and putting a lot of trust in him or her.

Sadly this leaves a lot of companies without these factors in play with superficial Lean-- they might have a VP of "Business Excellence" (or some such title) and a "Lean Team" of black belted toolheads, but they cannot evolve beyond the tool age.

From what I have gleaned from your writings Bob, the most promising antidote to this is to somehow get executives to leave the metaphysical realm and walk amongst the value-adding workers in the material world (aka at the gemba).  The trick is to convince leaders to do this and sustain this behaviour.

I haven't quite cracked that nut yet-- building trust, rapport, and credibility is vital, but this takes a long time, often years, before one can even suggest a "radical" departure from traditional management and not be rebuffed or politely ignored.

Jacob Stoller offers some interesting thoughts: https://www.lean.org/LeanPost/Posting.cfm?LeanPostId=838

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Phil Coy March 17, 2018
1 Person AGREES with this comment

Great post and a refreshing reminder that true breakthroughs come when we move well beyond the production and administrative processes to address product development processes including the pace of product introduction.

I am one of your classic lean consultants with lots of tools in my toolbelt who gets invited in from the outside.  Often times, the invitation is only to solve a tactical problem like too much inventory or OTD or long lead time.  So that's the focus at least initially.  But seeing cross-functionally, it becomes apparent that there are other opportunities for improvement.  With that comes credibility and the opportunity to suggest further and deeper opportunities that end up challenging the traditional paradigms for operations and design engineering.  It's a slow road but I've been involved with a couple of companies who realized that lean wasn't for OpEx but for line management across the board. In one instance, the CEO reorganized his senior leadership into value stream leaders away from the traditional silos of Engineering, Quality, Sales, and Operations.  Unfortunately, the vast majority of engagements are point solutions only until "enough" improvement has been acheived.  Then they stop.   

Tools are what get me in and in fact are the enablers that support process improvement.  As a tools guy, I'm constantly pressed towards the data and a quantitative understanding and not just a qualitative one.  Takt is a number, not only a concept.

With the emergence of IoT and big data analytics, we are awash in data but the challenge is to how to sift through it all so that it can become meaningful insight.

I fear that disengaging from tools as I have seen in the lean community do in the past decade or so, we risk getting left behind as data-orientation takes over.

I'm trying to keep a balance of tools and management system but its a challenge especially since everyone it seems is looking for the quick fix.

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Michael Balle March 17, 2018

Hi Phil,

Can't agree more - of course lean is about the tools - astronomy doesn't make much sense without a telescope, just as lean doesn't make sense without kanban. But experience shows that lean done without a sensei reverts down to only tools - local optimizations without full company benefits.

Just as Chief Engineers are the scarce resource in Toyota, senseis are the scarce resource in lean, and we haven't figured out a way to reliably develop sensei, other than work with one as a senior exec, retire, and then coach other execs.

Conundrum indeed! 

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art byrne March 19, 2018
3 People AGREE with this reply

Michael, thanks for this. It is a terrific summary of the two contrasting ways that people see lean. I was taught the Toyota Production System by the Shigijutsu consultants that Taiichi Ohno pushed out into the world to spread the word. It took only a couple of kaizens with them for me to understand that this was the greatest strategic weapon I had ever seen. Heck if you focus on constantly [i.e. the daily work] removing the waste you will get better quality, lower costs, free up lots of space and cash from lower inventory, get faster new product development, drastically shorten your lead times, provide more value to your customers than your competitors can, grow market share and increase your enterprise value. If your competitors don't keep up you will crush them. Whats not to like?

Unfortunately, the lean movement in my opinion has been too busy promoting "tools" and cost reduction instead of strategy. This fits the comfort zone of most traditional managers. Tell a traditional manager that in order to become lean EVERYTHING must change [i.e. your sales approach, your accounting system, your new product development approach etc.] and they will run away and hide.

Think of Kodak who I believe invented digital photography but didn't try to exploit it to protect their cash cow film business and as a result went bankrupt. Thinking of lean as a cost reduction program or a bunch of tools instead of seeing it as strategy is the same "head in sand" approch that Kodak took.

 

 

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Michael Ballé March 23, 2018

Thank you Art, as you know, your opinion matters enormously to me :^). And, yes, the winds of conformism never cease to blow, even, I believe in the lean movement. You were one of the first to see the disruptive potential of SMED and freeing up capacity for growth, but by and large the demand I see from companies is a demand to improve team management/process organization for higher productivity. Our very own kodak moment!

Andrew Bishop March 30, 2018
1 Person AGREES with this comment

I moved into healthcare in a "performance improvement" (read:  lean) coach role recently.   From what I've seen so far, the lean healthcare movement (if there is such a thing!) would do well to heed your comments here, as well as your more recent column on kanban.

The disruptors are arriving and established healthcare institutions are dabbling at the margins. 

The value that healthcare delivers is in services.  There is a great deal of point optimization is going on.  Lots of focus on "patient flow" (a depersonalizing notion:  services should flow, not patients!), particularly in emergency departments, overcrowded hospitals and anywhere with a waiting room.  Seriously facing and embracing kanban for services and service and information flow maps (as an alternative to material and information flow maps*) can highlight the astonishingly long lead times built into conventional healthcare delivery.  This is at the heart of the waste there.  Just as lead time was Ohno's deep insight, so it can be for healthcare.

*Material and information flow maps, the classic value stream maps, are the round hole to healthcare's square peg.  Hitting harder doesn’t help! 

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Michael Ballé March 30, 2018

Andrew,

I so completely agree with you! Unfortunately, I've just failed again with healthcare - at ward level people perform miracles every day, but the politics at board level are murder - that I just wouldn't know where to start!

Keep pushing!

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Ted LaCrone April 26, 2018

Andrew

I like your comments! I also work in healthcare as a "Lean Director" (still trying to figure out that title). We seem to be good at fighting fires and re-organizing ourselves when finances suffer.  But we lack the discipline to solve problems over the course of time.  I would also argue that we lack good examples of 'lean healthcare' that endure over time. Many hospitals proclaim themselves lean after a two or three year effort.  I prefer to look at the marathoners like Virginia Mason. Interestingly, their production system seems closer to TPS than not.  I am hoping that new entrants into healthcare delivery (like the Amazon-JP Morgan-Bershire effort) can light our shoes on fire. 

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