Pain Killer or Vitamin? The Real Role of Lean in Transformation

Lean has a little branding problem; but of course, it’s much bigger than that. I recall sitting in my undergraduate Industrial Engineering classes at the University of Nebraska-Lincoln in 1999 and being introduced to Lean for the first time. I was enthralled. First, I found it nearly impossible to believe that there was so much room for improvement in businesses that are being run by these highly competent and experienced professionals. Second, it amazed me that massive gains could be relatively easily captured using simple tools like 5S, 5-why’s, Kanban, and all the others. What the hell was going on out there in the real world?

Lean was introduced to me and much of the world as a pain killer. A Lean implementation had the power to quickly reduce costs, increase productivity, improve quality, decrease lead time, free up working capital, and enhance company culture. It was sold as a transformation in a pill – and the exact same pill was prescribed to everyone. The tools and techniques presented in the Lean toolbox were supposed to cure all ills. As I gained experience in industry, it became increasingly obvious that the technical know-how was hardly the problem, it was a lack of motivation. It wasn’t that people didn’t know how to improve; they just didn’t want to. There was either no perceived need, or the organization was so fear-driven that people became acquiescent to the status quo to avoid punishment. Even companies that went so far as to staff up entire departments of Lean practitioners struggled to make progress. There was clearly a lack of understanding of what it takes to transform company culture. Leadership believed that Lean was for the people on the frontlines. Leaders were reluctant to make time for Gemba walks and participate in kaizen events. Meanwhile, the people on the frontlines complained that leadership did not support Lean efforts. The workers had become disillusioned with the idea that the culture could really improve, dreading the introduction of another “flavor of the month” improvement initiative.

In the latter half of my career, my work has shifted from frontline Lean activities to primarily working with executive leaders of companies big and small to help execute strategy and improve business results. It turns out that executive leaders are pretty serious about improvement, as are middle managers, and so are the people on the frontlines. Things tend to fall apart somewhere in between. Each level speaks a different language when it comes to Continuous Improvement. CEOs are interested in strategy execution, middle managers want compliance and sustainment, while folks on the frontlines are interested in improving working conditions. Lean is often packaged as the solution to this problem but it’s not – and here’s why.

The CEO’s main job is to increase the value of the company. Her mindset is growth, expansion, and increasing value. Lean, as the term implies, assumes that the problem that all companies have is too much waste. They are too fat and need to get skinny or shrink. Therefore, the perceived solution is to implement Lean principles and practices. The problem is that Lean, as widely understood, is unidirectional. It lacks respect for the company’s goals, or mission. Just like with the human body, skinny is not always better; and may not be necessary at all or even healthy. Lean may be a means to an end, but it’s not the end of itself. It really depends on what the person or organization is trying to achieve. In fact, there are many situations where a little extra fat is essential for success. For bears who need to store fat and hibernate through the winter or sumo wrestlers who need the extra weight to remain competitive, becoming “leaner” could spell disaster. During the pandemic where supply chains were starved, the companies that had built their entire delivery models on Just-in-time practices were the first to falter. Companies need to become Fit to achieve their missions. To become Fit means to develop the people, processes, technologies, and capabilities around what is necessary to succeed at what the organization is trying to accomplish. To become Fit to win an NBA championship requires very different activities than becoming Fit to be competitive in the Boston Marathon. As a D1 track athlete at UNL, we snickered at the basketball players who struggled to run a mile during pre-season conditioning. However, these same guys could outplay us 1,000 over in a 42-minute full-court game of hoops. Fit-ness takes function into consideration while Lean-ness does not. Companies are creating Lean departments but have no clear mission defined to be achieved. There is no wonder why an overwhelming majority of Lean initiatives fail. If there is no goal other than compliance with Lean, there is no need for Lean. People will resist as they see it as impeding on their freedom.

There’s an irony about the way the world has approached Lean. Several decades ago, teams of consultants went into Toyota to learn what made the company so successful. The findings were documented in a series of books including Jim Womack’s, “The Machine that Changed the World” and Jeffery Liker’s “The Toyota Way”, contributing to the advancement of an entire Lean movement. Nowadays, it seems that a new Lean book is published every few hours. As Mike Rother so keenly pointed out in the bestselling book, Toyota KATA, the consultants that originally benchmarked Toyota mainly observed the more visible aspects of the company’s operating system, failing to see the conditions that made these tools and processes necessary. They failed to see why Toyota found these practices essential to its ability to thrive. Companies across industries are rushing to “implement Lean” as quickly as possible, hiring armies of Lean Managers and consultants to help accelerate the transformation. Everyone is trying to emulate Toyota by copying tools in hopes that they can experience a bit of the sweet success that the automotive manufacturer has enjoyed for so long. Notice that these hopeful companies are not creating Strategy Execution departments, they are copying shop floor Lean practices, expecting the pain to dissipate immediately. The irony is that Toyota does not have a Lean department. In fact, they really don’t practice “Lean” at all, although they do have the following set of guiding principles:

• Always be faithful to your duties, thereby contributing to the Company and to the overall good.
• Always be studious and creative, striving to stay ahead of the times
• Always be practical and avoid frivolousness
• Always strive to build a homelike atmosphere at work that is warm and friendly
• Always have respect for God, and remember to be grateful at all times

Toyota, however, does have a Strategy Deployment and Execution function. The role of this function is to help the organization to continuously transform, implementing the policies needed to achieve the its goals. The implementation of policy is not simply creating a document, training everyone, then having them sign a form confirming that they were trained. Their policy deployment process, Hoshin Kanri, is a strategy execution method designed to drive a real sustaining transformation. This means constantly realigning the way the company operates behind its mission, or becoming Fit to accomplish its goals. While those trying to emulate Toyota are working hard to discipline themselves to a rigid set of practices called “Lean”, Toyota is free to adapt as needed to continue its market domination, using TPS as more of a guide than a policy. These copycats will never catch up. Today, these same consultants visit Toyota and are shocked to discover that the old “Lean” practices have been abandoned and new ones in use. Today, it is rumored that Toyota is completely revamping the “Toyota Way” with a much greater appreciation of the role digital technology plays in transformation. Should companies ditch their Lean departments and create Strategy Execution departments instead to help become more Fit? Maybe, maybe not; but they should definitely understand Lean to be more of a vitamin than a pain killer. It is a supplement to company strategy and not a cure for poor leadership or lack of motivation. The so-called “quick wins” that we often see with early Lean efforts are more of a placebo effect. Real transformation comes at the rate of behavior change, which requires an engaging challenge, persistence, and reinforcement over time. It also takes clear direction, focus, adaptability, and systematic execution of action needed to achieve goals.

Executive leaders, middle managers, and frontline workers often suffer from a lack of alignment of priorities. They struggle to see how their interests and fates are intertwined. Strategy Execution is the mechanism for aligning and driving execution against the organization’s collective priorities. Strategy gives direction to improvement. Execution gets everyone marching to the same drumbeat. Agile Strategy Execution, therefore, is the ultimate method for ensuring that the company can adapt to rapidly evolving conditions and still reach its goals.