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Lean Management and Organizational Transformation

Geoff Schaadt

Lean seems to be everywhere. Lean Startup, Lean Healthcare, Lean Manufacturing, Lean IT, Lean Accounting...

But – other than a label on your hamburger package – what is this Lean?

The BookMachine changed world

The simple answer is that a grad student at MIT (who, by the way, went on to become CEO of Hyundai America) decided to refer to the Toyota Production System as “Lean Manufacturing” because it “uses less of everything” while working as a research assistant in the writing of the book, The Machine That Changed the World. (I would argue that this new reference was invented for the book because the North American manufacturing firms weren’t going to admit, “We are using the Toyota Production System.”)

Like anything else that is compelling enough to capture the attention of a lot of people, there is an interesting backstory.

The History

You can take the story back as far as you like – all the way to the Industrial Revolution – but this being a blog post, I’ll guess you aren’t quite that invested. So let’s jump to the crucial bit where the Japanese industrial sector is struggling to emerge from the ashes of the Second World War…

These manufacturers were really having a rough time with quality. As a result, they had trouble finding customers for their products. Without attractive products, the international trade that was desperately needed to prime the economic recovery was not gaining traction. So, they turned to quality experts from the US, notably W. Edwards Deming and Joseph Juran.

Toyota logoAmong those who were highly influenced by the ideas of these men were Kiichiro Toyoda, founder of Toyota, and Taiichi Ohno, considered to be the father of the Toyota Production System.

Smash-cut to the 1980s when the quality and price of Japanese products were overwhelming European and North American manufacturing – with Toyota Motors as the international standard bearer. This is where that book, The Machine That Changed the World, comes into the picture. It was the first systematic effort to capture what Toyota was doing differently than everyone else, and became the starting point for the turnaround of a competitive North American manufacturing sector.

I’m not in manufacturing.

Where it has been effectively adopted and implemented, Lean manufacturing has been incredibly successful in transforming industries that were in real trouble.

Of course, the standard response is, “But I’m a nurse/programmer/accountant/public servant. Manufacturing has absolutely nothing to do with my job.”

This is a failure of curiosity. Leaders and managers from any workplace who are truly curious are always looking for ways to improve the way their work gets done. They don’t care about Just-in-Time parts delivery, or One-Minute Changeover, or the Andon Cord. What they want to know is the underlying philosophy:
“How are they doing what they are doing?”

Lean in Four Principles

As you might expect with a topic this encompassing, books have been written – many books. But the fact is that the Lean approach (let’s call it Lean management rather than Lean manufacturing) can be broken down into four guiding principles that direct the actions of every employee, regardless of their status in the organizational hierarchy.

  1. Create value for the customer. That’s it. Don’t do other things that the customer doesn’t want or value. In many situations the “customer” is internal, but this doesn’t change anything. The purpose here is to focus intent and attention. Which leads to #2…
  2. Eliminate waste. What is waste? Doing anything that doesn’t add value.
  3. Continually improve your processes. Never stop getting better. Every day. Constantly re-evaluate how you are doing things in the context of ‘create value’ and ‘eliminate waste’.
  4. Respect for people. This does not mean “be nice”. It does mean that we invest in our employees, we train them, we challenge them to be their best, we build mutual trust.

These are principles that apply – and they have been applied – to nearly any working environment. There are many tools, tips, and techniques that can be applied to the unique circumstances of various professional settings.

But as you try to understand what Lean management is all about, forget the tools – Kaizen, and 5s, and Kanban, and Muda-Mura-Muri, and Gemba (well, maybe not Gemba…) – and focus on the core:

  • Create value for the customer.
  • Eliminate waste.
  • Continuous improvement.
  • Respect for people.

What does Lean offer?

There is the bottom line question: “What’s in it for me?” What, as a senior manager, do you stand to gain by embracing Lean management?

There are a few things that will happen with a successful Lean implementation:

  • Productivity will increaseAnts teamwork
  • Employee attitudes and engagement will improve
  • Quality will increase
  • Speed will increase
  • You will be able to do “more with less”
  • Risk will be better managed
  • Silos will fall
  • Teams will communicate better
  • Employee churn will decrease
  • Training will be more effective

This isn’t pie-in-the-sky stuff. It has happened many times, in many places, and in many industries.

How to kill your Lean initiative.

The single most effective way to kill off a Lean initiative? Lack of senior management commitment.

Sound familiar? It should. This is the fastest way to kill any project. And there is the rub; Lean management can never be viewed as just a “project to implement”. This will guarantee failure.

Lean management will require a massive culture change for most organizations. And culture change is often most difficult at the top. If your Lean initiative comes as a directive from the C-suite that says, “Go do this”, don’t bother to start. It will fail. Guaranteed.

If your senior people don’t understand and completely embrace Genchi Genbutsu, Lean management can create some spectacular short-term gains, but they will not be sustainable. If going to Gemba becomes part of the executive culture, Lean management can transform a dysfunctional organization.


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I’ve been trudging down the thought-path about a re-org being the key trigger for making a change towards a new management system. I usually see confusion about how to ‘do’ lean management due to real, and artificial, structures within the organization.

A clean break from the constraints of “but that’ll never work here” can pay long-term benefits…despite the enormous amount of chaos a re-org will generate.

By Jason Little on 2014/06/05

Yes, Jason, I’m inclined to agree. Eighteen years ago, Dr. Kotter put “Establish a sense of urgency” at the #1 spot on his list of 8 points. And a re-org serves as perhaps best the best rational/emotional trigger for employees at every level to sit up and say, “oh, this time we need to pay attention.”

The downside to re-orgs is that so many (all?) senior managers believe that “re-org” = “lay-offs” and this simply isn’t true.

I can point to a conversation I had a couple of years ago when my next-door neighbour came home one afternoon and told me, “I got laid off today. Our president said that it was part of the Lean initiative.” That was at EDC - not exactly a group on the brink of collapse at the time. In fact, letting people go is completely antithetical to a true Lean implementation – it defies the point of “respect for people”.

(But then you already knew that. Sorry, sometimes I get wound up!)

By Geoff Schaadt on 2014/06/05

Effective and sustained cultural change in an organization cannot be imposed by any “flavor of the year” scheme - not even Lean. It has to be built from the bottom up. It requires a clear organizational direction, buy-in by staff and continuous reinforcement and interpretation by the head of the organization as “leader”. Once the direction is internalized by staff, (it might take a year) the change begins - they own it and they make it happen and the culture changes very quickly and is sustained by them. Also, the focus must always be on the client as the centre for all decisions. Beyond this, it is as simple as asking staff the question “if it was within your power to change something in this organization, what would it be?” Then provide the staff with the permission to act, the necessary supports as required, trust and respect. Efficiencies will naturally flow, quality will rise and clients will rave. It is as simple as that and does not require external, costly schemes to be imposed. This comes from real life experience as a transformational leader with a true OD background.

By Livia Martin on 2014/06/12

Thanks for your comment Livia. I don’t disagree with a single point you’ve made here.

In fact, I would suggest that you beautifully summarize the Lean approach to managing an organization:

1. It is not a ‘flavour of the year approach’. The fundamentals of Lean management have been in use in Japan for more than seven decades, and in North America since the early 90s.
2. It provides clear direction on a daily basis.
3. It requires buy-in at every level, especially at the top.
4. It will take time to fully implement. Nothing is quick or easy in this game - ‘constancy of purpose’ as Dr. Deming taught us.
5. The client is absolutely the centre for all decisions. Hence, point #1, ‘create value for the customer’.
6. Staff has not only the permission, but the responsibility to take control of their environment and communicate/implement necessary changes.
7. Trust and respect for your staff is a foundational element in the ‘Toyota way’.
8. It is not complex and it is not expensive. There are no costly schemes. White boards and post-it notes rule the day. In fact, if the senior people are sufficiently motivated, Lean can be well implemented without any external consultants.

This comes from real life experience as a transformational leader. I’m not sure what a ‘true OD background’ means, so I’ll not lay claim to that title.

  - Geoff

By Geoff Schaadt on 2014/06/13

Geoff, thanks for an excellent and readable summary of the merits of the Lean approach to management. Clearly, the precepts of Lean are applicable to organizations of all kinds. Your 8 points listed above have been forged in the fires of successful implementations and can be trusted. Occasionally, we hear comments such as “Lean comes at the expense of eliminating jobs”; and, that “Lean is antithetical to a triple bottom line approach”. None of these claims are true. I can only surmise that some unscrupulous managers are justifying staff reductions in the name of Lean management. Obviously, there’s a need for education to correct this situation.

By Alcide on 2014/06/13

Thanx for the concise intro about Lean. The confusion about how to do Lean can be solved by training, communication and activity engagement about the methodology, future plan and progress. One practice of “respect for people” is a no-lay-off policy for extra staff are needed for continuously promote Lean activities.

By Qin Li on 2014/06/14

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