Beyond Lean: Building Sustainable Business and People Success Through New Ways of Thinking

April 1, 2004
by Jamie Flinchbaugh, Lean Learning Center Lean starts with rules, not tools If you have followed my hypothesis so far, you will understand that Toyota

by Jamie Flinchbaugh, Lean Learning Center

Lean starts with rules, not tools

If you have followed my hypothesis so far, you will understand that Toyota has mastered lean through the Toyota Production System to such a level that their performance is extremely robust to outside influences and that learning to be like Toyota requires a long, disciplined journey of learning, engagement and leadership. We have also described most lean transformation plans as efforts of mimicking Toyota. This is insufficient and can lead to disaster. More is needed to guide us than simple descriptions of another company's operating system; therefore, we have crafted a set of principles to guide you through your lean transformation towards the ideal condition.

Principles, rules, theory and concepts are all examples of models. Models are by definition simplifications of reality. Because they are simplifications, there is no one model, no one theory that is all encompassing and failsafe to use. Models should not be trusted. At the same time, we need them to guide us in action and decision-making. Without models such as principles and rules, life would just be a long series of random experiments without any ability to learn from one day to the next. For that reason, we have articulated a set of principles - a model - of what we think best describes lean systems. These principles can guide us as we learn, experiment, and transform our organizations. These principles are not an attempt at completeness, but instead are crafted so that they are useful and effective principles to learn and internalize.

Using principles as a method to organize and align your organization for lean transformation will bring standardized thinking to your organization. Through that standardized thinking, people can work on making progress with a shared understanding of how the world works, or at least how the company will work. This will create both shared mental models and shared vision among those engaged in the effort. Without shared mental models, the team responsible for lean transformation will have words with different meanings, tools with different purposes, and projects heading towards different visions. That is not a recipe for success. It may not be imperative that the team member's mental models are identical with ours, but it is absolutely critical that their thinking is consistent with each other.

Many people have seen the Toyota Production System described as a house with elements such as kaizen, jidoka, and just-in-time. These are historically relevant tools to Toyota, but they don't represent the true heart of the Toyota Production System. Lean systems principles are where the power and leverage truly come from, and are represented as follows:

Each principle represents a deeply embedded way of thinking that true lean systems thinkers carry with them. They come alive as a lens on your organization to see new forms of leverage. Most of the tools and methods that we associate with lean today are only applications of this thinking.

Each principle carries with it leverage that can yield significant gains in the overall performance of your organization, but when you put them together, the synergy generated can drive your organization to best-in-class or best-in-any-class.

These are the five principles:

Directly Observe Work as Activities, Connections and Flows

If someone asked you to explain the structure of your organization, you would probably pull out an organizational chart and describe what each department or function does on a daily basis. Or perhaps you would explain the products, customers, culture and history of the company. All of these are valid views of the organization, but they aren't effective views of the organization for the purpose of improving its performance. For that, we need a different filter, a different way of viewing the current reality of the company.

We all have filters that are conditioned by our experiences, our environment, our education, and so on. We are usually unaware what our filters are, but they have a dramatic, even complete, effect on how we think, what we do, and how we see. Walk through a plant with a controller and ask that controller what he or she sees. He or she will see depreciating assets, inventory turnover, and labor and overhead. Is this view wrong? No, of course it isn't, but it won't help us create a lean company.

There are two elements to this principle.

Structure, operate and improve your activities, connections and flows. If we learn the language of activities, connections and flows, we will see things differently as we walk through the office, the warehouse, the factory, or any organization. This is the language of the lean organization just as credits and debits are the language of accounting. We must learn to talk about activities, connections and flows, think in terms of them, and act on them. The focus of lean transformation is utilizing the four rules while designing, operating and improving activities, connections and flows. This will be the makeup of your overall business system. You should be using the same principles when making design decisions as you do when making improvement decisions. Your activities must be structured to the minutest level of detail. Your relationships must be connected as binary customer / supplier links. All goods, materials and information must flow through simple and specific pathways. Thinking in these terms will help you focus on the right structure of the organization.

Understanding current reality requires deep observation. Many improvement efforts start with a team vision or a blank sheet of paper, but if you were dropped in the middle of the desert and asked to get to New York City, could you do it? Of course not because you don't know where you are relative to where you want to go. A deep skill and commitment to understanding current reality is crucial in what makes lean systems transformation different. Current reality does not just mean using measurements; it means direct observation of the activities, connections and flows of the organization. That understanding of the current condition applies to broad company issues such as culture, but also applies to very detailed problems such as why a certain tool isn't working or how to drive waste out of a process. Far too many companies rely on abstractions of reality to tell them where opportunities lie, such as measurement systems or stories. That is not sufficient. Direct observation of activities, connections and pathways is required to understand current reality. Furthermore, that observation requires a framework to digest and expose opportunities. The four rules are such a framework. Without using a framework to observe, our conclusions will often be vague and incomplete. The use of a framework provides the discipline of being thorough in understanding a current condition, and it also provides the opportunity to be specific about what needs to change. This principle requires a great deal of practice to master.

Systematic Waste Elimination

In any book, article or class on lean, you will hear someone talking about waste. "The purpose of lean," they will say, "is to eliminate waste." I don't believe that is true. First, the purpose of lean is to create a successful and robust business. If companies focus on eliminating the waste in their processes, they will differentiate themselves by being able to provide better quality and delivery at less cost. This particularly comes true when market pressures increase such as during a recession. The companies that have ignored the waste around them are the companies that end up bankrupt.

Second, in many lean efforts waste is talked about but then passed over in favor of preferred tools. If we adopt the principle of systematic waste elimination, we will think and talk in the language of waste and move beyond just memorizing the seven wastes. Then we will see everything our organizations do through that lens.

There are two elements to this principle:

Connect to your customer and always add value. Truly understanding what your external, or paying, customer values and seeking to deliver nothing less will help avoid waste. Any goal beyond delivering the right product to the right customer at the right time at the right price is waste. Any activity that does not actually change the product being delivered is also waste. Being waste does not mean that something isn't necessary, but if we don't treat it as waste we will never seek to reduce, eliminate or avoid it. Organizations must connect all of their resources to the customer in a flow-path designed to deliver value - nothing else. The information required to deliver that value must flow through the same flow-path. You must have clarity of what your customer values and how you are providing it. This includes internal staff functions, which have customers inside the company. Everyone has a customer, which means that everyone must find ways to add value for their customer.

Relentlessly pursue systematic waste elimination. We define everything that does not directly transform material or information to create value for the customer as waste. This does not mean the activity isn't necessary. For example, you still need to pay taxes even though it does not add value for the customer. However, you may only be minimizing the necessary waste. If you can't eliminate the waste, then don't quit; start reducing. If you do this relentlessly and daily for a long enough period of time, you will have a much higher ratio of value added to non-value added work than your competitors, and you may even find ways you never thought possible to eliminate waste. Remember, these principles also apply to the design activities of your organization. This means whether you are designing your supply chain, production process or products, you must seek to avoid the creation of waste in the first place. In fact, the greatest leverage in the war on waste exists in the up-front design and planning processes. Most companies talk about and memorize the seven types of waste, which are:

• Overproduction

• Transportation

• Motion

• Inventory

• Waiting

• Overprocessing

• Product/process defects

While teaching people what the types of waste are is a start, few companies develop a passion for eliminating waste. When people walk through the door in the morning thinking "how am I going to eliminate waste today?" you are then starting to adopt these principles. When the ongoing processes and practices of the company systematically address waste, you then have a sustainable effort for the war against waste.

Jamie Flinchbaugh is a co-founder and partner of the Lean Learning Center in Novi, Mich., and brings successful and varied experiences of lean transformation as both a practitioner and facilitator. Jamie was part of the development, training and implementation of the Chrysler Operating System, a widely-benchmarked lean change program spearheaded by Lean Learning Center partner Dennis Pawley. He most recently was at DTE Energy, parent company to Detroit Edison and MichCon, as a lean thought leader to help build the first lean program in a utility and to transform the operations, leadership and thinking of the utility industry towards a philosophy of lean systems. He is also a co-founder and director of Rev! Motorcycles, a start-up company that connects design and manufacturing to the customer to build-to-order powersports products such as off-road motorcycles. He also has a wide-range of operational experiences, including production, maintenance, product engineering, manufacturing engineering and production control. Most of this was experienced while at Chrysler Corporation and Harley-Davidson. While at Chrysler, Jamie was a major contributor to the design of the new Jeep Liberty plant in Toledo, OH, a major new asset for Chrysler and their first designed using lean concepts. Jamie can be contacted at 248-478-1480 or [email protected]

Other articles in this 5-part series:

Part 1
Part 2
Part 3
Part 4
Part 5