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Lean and The Future of Management

Geoff Schaadt

The phrase “Lean manufacturing” was invented in 1990 for the book The Machine That Changed the World to describe the approach that Toyota used to manage operations and employees.

The impact that this book had on manufacturing in North America cannot be overstated. Written at a time when Japanese industry – especially the autosector – was eating everyone’s lunch, industrial leaders jumped on the concept of Lean as the best path to return to a competitive position in the world marketplace.

The concept of “Lean production” proved so influential that it eventually jumped from the manufacturing sector to other industries: health, accounting, banking, logistics, even government!

Lean Startup

Even in high-tech circles, the Lean approach has taken off with the 2011 publication of The Lean Startup by Eric Ries. This book has been wildly influential in the tech community and eventually made it to the #2 spot on the New York Times Bestsellers List.

In fact, it’s now almost impossible to have a conversation with anyone in the tech sector without discussing an ‘MVP’ No, that has nothing to do with “Most Valuable Player”. Rather, it is the concept of “Minimum Viable Product” which promotes the idea that early stage development of new products should only create enough capability to allow users to validate whether or not they are interested in using it. Only after this validation has taken place should the company invest in further development – and even then the development should be incremental and continuously validated.

They Are All Wrong

OK, forgive the hyperbole. They are almost all wrong.

When I speak with senior managers across a variety of industries – including the precious tech sector wunderkinds who have grabbed hold of Lean with both hands as the philosophy that is going to deliver them to the promised land – almost none of them understand what Lean is really about.

When the authors of The Machine That Changed the World chose to use “Lean manufacturing” rather than just calling it the Toyota Production System, they probably never had a clue as to the amount of damage they would cause as a result of this word choice.

The Lean and The Damage Done

Why would the word “lean” be a significant problem?

Think about what “lean” means in our society – it is the opposite of “fat”.

And our senior managers love anything that encourages them to “trim the fat”. How many times have you heard…

“We have to learn to run lean.” “We’re going to have to figure out how to do more with less.” “In light of our current situation, we need to reduce our headcount.” “This is a rightsizing event.”

As Mike Myatt brilliantly puts it:

Reducing headcount in an economic downturn is almost a Pavlovian response for many executives.

So, in my experience, “lean” has become synonymous with efficiency and layoffs.

What Lean Isn’t

A couple of years ago I was standing outside watching my kids play. A neighbour walked over and we had our usual end-of-day small talk. Then he says, “I got layed off today.”

“You’re kidding me. Why?” I asked. “Was this a surprise?”

“Not too much.” He replied. “Layoffs have been happening for a couple of weeks.”

And then the punchline…

“It’s all part of the new Lean initiative.”

“Uh, that’s just layoffs. That has nothing to do with Lean.”

What Lean Is

The management philosophy that emerged from the work of Shewhart, Demming, Juran, Ohno, and Toyoda, and was ultimately expressed in the production system at Toyota, can be viewed in four guiding principles:

  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 treat everyone, at every level, with respect. We invest in our employees, we train them, we challenge them to be their best, we build mutual trust. And we do absolutely everything that we possibly can to avoid laying off anyone. Ever.

Not Any Longer

Lean – in it’s original form and intent, not the bastardized and corrupt “MBA” version – is a philosophical approach to managing and leading people that is utterly at odds with the typical 20th century, heirarchical, command-and-control brand of management with which far too many executives still expect to run their companies.

“Respect for people” used to be a novel idea in a corporate environment where capital was scarce and talent was abundant.

Not any longer.

The future is here. Y2K was 15 years ago. Capital is practically free and talent is scarce.

And executives who continue to use “human capital” as a tool to manipulate bottom line results are clearly committed to an MVF – Minimum Viable Future.


"Frohawk Dodo" by Frederick William Frohawk Via Wikipedia

Comments

Good article Geoff. On a very minor note, I would correct the spelling of Deming’s name :-)

By Cliff Norman on 2015/05/13

Thanks Cliff!

...and, you know, I’ll bet that for every 100 times that I type his name, I put an extra ‘m’ in there half the time!!

By Geoff Schaadt on 2015/05/13

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