Twenty five years ago, James Womack, Daniel Jones, and Daniel Roos introduced our world to a modern understanding of the concept of Lean Production. This came as a result of a 5-year study of the automotive industry that culminated in the book The Machine That Changed the World, which celebrated the Toyota Production System. With its foundational philosophy of waste elimination, Lean Production built on prior work that reached all the way back to at least Benjamin Franklin, and spanned the work of such notables as Frederick Winslow Taylor and Henry Ford. As a result of its widespread adoption over the past 25 years, there have been substantial strides made in the overall balance of value that consumers and businesses have received. Lean Production was, and still is, a profoundly powerful management philosophy for the mass production of uniform goods.
But then a whole bevvy of consultants got the notion that if the “Lean” philosophy could work so well in the production environment, maybe it would also work just as well in other environments where tasks could be codified and made uniform, and where process flows could be dissected and analyzed for the various types of waste. Thus the much broader notion of “Lean Thinking” was born, sometimes known simply as “Lean”. Lean Production, for its part, had been defined as “a customer focused production system based on continuous improvement through constant elimination of non-value-added activity.” As with Lean Production, the whole point of Lean Thinking was the elimination of waste from the process stream. Thus, when applied to other systems, Lean became a war on “non-value-added activities”. In many situations this proved very helpful, as it streamlined people’s work and eliminated not only wasted time and effort, but with them many points of frustration. In this regard, it has been a very useful tool for achieving new levels of efficiency. But as with anything that is over-applied to places and situations where it does not fit, there have been situations where it has done more harm than good.
The problem has not been with Lean itself, but rather with companies embracing Lean Thinking as their only way of thinking. This has led to the misguided notion that Lean could be — and needed to be — applied everywhere across the organization to all of its activities. That, unfortunately, is simply not the case. Lean is a tool for driving efficiency. But what is needed in many situations is not greater efficiency, but greater effectiveness. In particular, those activities that lead to breakthrough innovation are much more about effectiveness than efficiency. The world has begun to wake up to this fact. Whereas Lean would seek to eliminate “non-value-added” activities, innovation demands that we reconsider our understanding of “value”, and with it, which activities add real value and which do not. In many ways, the sorts of discovery and experimentation activities required for innovation are not the sort of activities that lend themselves to traditional “Lean” analysis. As a result, companies that embrace Lean Thinking as their only way of thinking often fail to recognize the need for these activities, and quite honestly, don’t even know what to do with them.
So, in as far as Lean’s ability to drive long-term growth is concerned…
Lean is dead.
More specifically, the inappropriate use (abuse) of Lean has lead us down at least two seriously wrong alleys. The first wrong turn happened when it was believed that streamlining procedural tasks meant we could reassign responsibility for these tasks into an increasingly smaller pool of contributors, creating “role contamination”. This meant that individuals, many of whom were key contributors, have had their focus so diluted by the numerous “streamlined” processes that they have ceased to be effective at their core function. Examples include salespersons being tasked to handle all customer service calls, product designers being tasked to handle all of the manufacturing engineering and quality assurance tasks, and so forth. Not that role swapping isn’t a good practice… it can be a great practice for cross-training, but that is a different matter from concurrent role responsibility. At any given time, the ability of individuals to have complete focus on select areas of contribution is critical to their teams being able to explore and experiment together. This sometimes means that people are not as efficient as they might be, but as a team they are highly effective at finding and developing new opportunities.
The second wrong turn happened when the relentless pursuit of efficiency took away any “room” for the creative activities companies must pursue if they are to leverage strategic innovation for long-term growth. For this, organizations must have a certain amount of “headroom” to explore new opportunities and a certain amount of “elbow room” to experiment with ideas in order to discover their next big “what’s next” opportunity. Indeed, the pursuit of human-centric value delivery approaches like Design Thinking demand that we be able to test out many market and design hypotheses so as to prove or disprove them. Doing this necessarily demands a certain amount of time, space, and resources that don’t easily lend themselves to “lean” analysis. Without due care, traditional Lean can easily pare back this work to the level that it ceases to be effective.
The underlying problem here stems from the fact that Lean presupposes we have already come upon the most effective process or state, and it picks up from there, trying to make that process or state more efficient by eliminating waste from it. But by definition, discovery and experimentation never start out as “most effective”… we cannot already have the most effective answer to “what’s next” before we begin. If we did, we would not need discovery and experimentation. These are inherently “inefficient” processes, yet when viewed from a long-term perspective they are highly effective ones. Stated otherwise, Lean micro-defines “value” with a narrow viewpoint (doing things right) whereas strategic innovation, by contrast, macro-defines “value” with a broader perspective (doing the right things). The former has a tendency to drive short-term thinking while the latter tends to drive bigger picture and longer term thinking. It’s a microscope versus telescope situation. The search for long-term growth is a task that demands a telescope, not a microscope. Here, effectiveness is immeasurably more valuable than efficiency could ever be, and Lean would be misplaced; the toll it would take on long-term effectiveness will cost companies substantially more than it gains them in short-term efficiency. Accepting this fact will prevent companies from taking either of the wrong turns described above.
Companies who get this… who are focused on their long-term resilience and who are striving to use strategic innovation as the means to that end understand that the sort of work they need to do here is not the place to apply “Lean Thinking” — at least as it is traditionally understood. These companies take particular care to provide the headroom and the elbow room their teams need, along with venues to support these, and to guard against the sorts of role contamination that will dilute the level of focus needed.
And yet… another strange thing is happening. While more and more businesses have been recognizing the need for this sort of innovation work, in many cases their approach to it has in fact been slow and bloated, particularly where they are having to work around (and protect) established brands. This is where “Lean” has been reborn into something completely new and different, namely the Lean Startup Model. The Lean Startup Model is a paradigm for rapid discovery and experimentation first introduced by Eric Ries exactly twenty years after Womack, Jones, and Roos introduced us to Lean Production. In Ries’ model, the focus is onagility rather than efficiency, and the emphasis is on methods for pursuing rapid learning and adaptation… developing and launching a minimal viable product, or MVP (thus the offering itself is “lean”) and then rapidly reiterating to arrive at a more robust offering. Or to reframe it in the language of traditional Lean Thinking, efficiency means something different for entrepreneurial work… it means how can we take waste out of the learning and adaptation process so as to learn and adapt faster and more cost effectively… i.e., how can we be agile?
“Agile” is the new “efficient”.
While the MVP approach is not suited to every situation, particularly inside of established organizations, there are important lessons to be learned from it about agility… lessons that can be applied inside of every organization. In this sense, companies must pivot their understanding and application of Lean Thinking. They must put the process of “Lean Thinking” to good use for finding new means of learning and adapting more efficiently, so that they can respond to new opportunities more quickly… so that they can be agile.
Maybe there’s new life yet for the Lean consultants.
Long live Lean.
Anthony Mills is the Founder and CEO of Legacy Innovation Group, a growth strategy and strategic innovation consulting firm.
Learn more at www.legacyinnova.com.