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A Great Time for Lean Thinking

6/25/2002
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I’ve just been reading the financial news and realizing that this is a great time to be a lean thinker. In fact, it’s the best environment for lean thinking that I’ve seen in more than a decade. Here’s why:

In the 1990s most senior managers in North America, Europe and Japan were obsessed with finding new business models, led by all of the dotcom and telecom commotion. They hoped these would make it unnecessary to do the heavy lifting needed to take out waste and create value in mature firms. (My rule is that most of us will try anything easy that doesn’t work before we will try anything hard that does work, and my sum-up on the bubble economy is very simple: easy answers that didn’t work.)

Other managers – Dennis Kozlowski at Tyco is the best example but there were dozens more — were on frantic acquisition sprees, made possible by their rocketing stock prices. But they had little interest in the hard work required to fix the businesses they were buying.

Meanwhile in countries newly emerging from state planning, managers were focused on privatization with the belief that once companies were privatized they would automatically improve their operating performance.

Finally, in other countries like India, China and Korea, managers were hoping to hold on to trade and investment barriers or traditional conglomerate structures that would fend off competition and the need to improve the fundamental performance of their businesses.

In short, the ebullient 1990s were actually a terrible time for lean thinking, and I’m impressed with how much we actually accomplished. But the collapse of Asian conglomerates, the bursting of the tech bubble, the failure of naïve privatization, and the march of India and China into the WTO, have shattered the illusion that businesses get better through anything but hard work. And that’s when lean thinking comes in. We have the state-of-the-art formula for listening to the customer to hear about value and then taking out waste with pull and flow while aiming for perfection in every value stream flowing to the customer.

Now that we’ve turned the corner on the recession – taking off some of the pressure for immediate headcount reductions – I hope you will realize what a great time this is for lean thinking. More important, I hope you will set aggressive goals for your lean transformation and seize the initiative.

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