Many people see Lean purely as an improvement method, not a total enterprise solution or a new way of doing business. In reality, it is a new method of production and a new way to organize the whole enterprise, including the development of new products. A lean organization allows us to create products not only faster and cheaper, but better because we know they provide more value to costumers.
In June I had the pleasure of attending a special class on innovation at MIT given by John Shook. On my way there, I walked past the building where Jim Womack led a group of international researchers in the late 80s to make sense of the global auto industry. This was the research team that discovered a new production and management paradigm Womack and John Krafcik dubbed “Lean.” In my mind, this has turned out to be one of the most significant organizational innovations in recent history.
Joseph Schumpeter, a great economist of the first half of the 20th century, examined the role of innovation in economic development. To him, innovation meant new products, new methods of production, new sources of supply, new markets, and new ways of organizing the business. If we think of Lean only as an improvement method—just improving current product lines isn’t enough for a company in the long-term. (No matter how much kaizen one might do in stage coach production, a stage coach never becomes an automobile or a railway, Schumpeter would argue). Thus, the emergence of radically new products or processes can turn irrelevant all the efforts to improve existing business.
How might we view to this dilemma through a lean lens?
Innovation is a process in which ideas are translated into new products and processes to create, improve, or expand business opportunities. How does Lean stimulate and support innovation in existing companies? What does Lean mean for innovation performance? Lean management not only improves the current business performance, it better prepares organizations to meet the challenges of next customer demands and of consistently developing new products and processes.
Looking at the foundations of Lean provides us with some important insights. For example, what can we learn from doing kaizen effectively that can help us develop new products and processes and improve existing ones?
Let’s take the basic problem solving process. If done properly, this should allow for the creation of multiple paths forward. Using the scientific method widely, a company should always be developing new ideas and seeing new possibilities and alternatives. Many ideas will be discarded. Some may be kept in a supermarket of ideas and used later on. Idea generation should be ongoing, even an intense process. The goal is to create an organization that learns, improves, and innovates permanently.
As Lean attempts to transform every employee to become a master problem solver, it creates an enormous organizational capability to generate new ideas and solutions all the time. Lean challenges everyone to learn and become experts in what they do. Traditional companies interested in reaching quick solutions typically do not develop this broad repertoire of ideas, nor do they fully develop people’s capabilities. The result is they become less innovative.
3P (Production Preparation Process), as a method to design a new product or redesign radically the production process, forces a multi-skilled team to devise multiple solutions and, after an objective analysis, initiates a simulation process as close as possible to the reality to finally reach the best possible solution. It forces people to think outside the box and come up with ideas and solutions that weren’t a part of the existing portfolio of solutions.
The A3 process recommends for the process owner to come up with a number of possible countermeasures he/she can use to discuss, negotiate, and reach a consensus with the people involved, as important as the quality of the solution itself. This process reinforces the idea that one should be responsible and fully own a problem or an improvement need. A3 thinking (and the A3 tool) can be employed all the time, by just about everyone, even for the most significant organizational issues. It encourages everyone to act like an entrepreneur—creating a culture of innovation and ownership.
These same ideas and principles can be used in the functions of Strategic Planning, Product Development, Marketing, Engineering, and in principle, are mostly helpful to those directly involved in the innovation process. As the lean leadership style stimulates people to take responsibility, it also becomes a process for developing internal entrepreneurs. Big companies don´t necessarily have to become bureaucratic and conservative. Lean helps companies do just the opposite, turning organizations into dynamic, entrepreneurial, and innovative teams.
The majority of innovations happen within large companies. But how about the significant flow of innovation that arises from new companies and new entrepreneurs? The Lean Startup movement which aims to apply lean thinking to the innovation process (and mainly focuses on high technology fields such as IT, biotech, etc.), provides some new, very useful tools and concepts such as rapid cycles of innovations, performance evaluation, and learning new innovation (that is, running frequent experiments).
In essence, Lean is one of the most important organizational innovations of the recent management history and a leading force to stimulate the innovation process within existing companies as well as startups. Lean foundations, basic assumptions, practices, and tools have the potential to transform a company into an organism of knowledge, ideas, and innovations generation. Lean has always been more than just an improvement method. We are only just beginning to see its potential for helping to drive innovation in 21st century organizations.