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What is 'Lean' About?

In its first 25 years there have been many definitions of 'Lean,' typically centered around cost reduction or tool/technical in nature. But the idea of "Humans striving to better flow value to a customer" is a mindset that should perhaps underlie all of them, and may be a better place to start our thinking.

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WHAT IS “LEAN” ABOUT?
By Mike Rother
and Jeff Liker
January 2015
The word "Lean" was coined in 1990, as a new paradigm
of management that led to Toyota’s enduring success.
That's now 25 years -- or about one generation -- ago.
With this SlideShare we'd like to raise three issues for
us in the Lean Community to think about. Our goal is
to stimulate some reflection, thought and discussion
as the Lean Community marks its 25th anniversary and
looks ahead.
REFLECTION
& LOOKING
AHEAD
It's 2015!
Rother & Liker 2
• Toyota has been profitable for over 55 years, missing
only one year—that of the Great Recession.
• Toyota became the world's most successful auto company
in vehicles sold, brand equity and market value growing
organically.
• Many companies have had long runs of exceptional
customer satisfaction and bottom-line results because
of their Lean efforts, even if management changes
sometimes then derailed those efforts. These include:
Lean Has Had Lots of Successes
 Lantech
 Danaher
 U.S. Synthetic
 Thedacare
 Herman Miller
 Goodyear Tire
 Zingerman’s Mail Order
 Embraer
 Autoliv
 John Deere
Rother & Liker 3
On the Other Hand...
Jim Womack’s recent 25-year reflection on Lean:
Most management decided they could outsource Lean…
"Please go do it, here’s your budget, and please get some
results, we won’t be too precise about that, and now I will
be on to the next issue." And of course that is unlikely to
produce much of a result… It produces something, but it
doesn’t produce what we had intended, which was that
this would become the core way that managers think.
Planet Lean Interview, UK Lean Summit, 2014
https://www.youtube.com/watch?v=KYi6gkFYYpU
Rother & Liker 4
A Reflection on Lean in Three Acts
Each point we present
includes slides + a short video
1) A First Definition of "Lean"?
2) Lean = Exceptional Human Endeavor
3) Striving for Efficiency is Not Enough
Read the slides, watch the videos
and see what you think
Rother & Liker 5
In the past 25 years we've often tried
to define Lean by listing things like its
elements and principles.
A different kind of definition is less about
"things" associated with Lean and more
about describing the mindset of Lean.
For example, the following definition,
published in the February 2014 issue of
Quality Progress, could make a good
'first definition' of Lean.
(1) A First Definition of "Lean"
“Lean is the permanent struggle to
better flow value to each customer”
Rother & Liker 6

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What is 'Lean' About?

  • 1. WHAT IS “LEAN” ABOUT? By Mike Rother and Jeff Liker January 2015
  • 2. The word "Lean" was coined in 1990, as a new paradigm of management that led to Toyota’s enduring success. That's now 25 years -- or about one generation -- ago. With this SlideShare we'd like to raise three issues for us in the Lean Community to think about. Our goal is to stimulate some reflection, thought and discussion as the Lean Community marks its 25th anniversary and looks ahead. REFLECTION & LOOKING AHEAD It's 2015! Rother & Liker 2
  • 3. • Toyota has been profitable for over 55 years, missing only one year—that of the Great Recession. • Toyota became the world's most successful auto company in vehicles sold, brand equity and market value growing organically. • Many companies have had long runs of exceptional customer satisfaction and bottom-line results because of their Lean efforts, even if management changes sometimes then derailed those efforts. These include: Lean Has Had Lots of Successes  Lantech  Danaher  U.S. Synthetic  Thedacare  Herman Miller  Goodyear Tire  Zingerman’s Mail Order  Embraer  Autoliv  John Deere Rother & Liker 3
  • 4. On the Other Hand... Jim Womack’s recent 25-year reflection on Lean: Most management decided they could outsource Lean… "Please go do it, here’s your budget, and please get some results, we won’t be too precise about that, and now I will be on to the next issue." And of course that is unlikely to produce much of a result… It produces something, but it doesn’t produce what we had intended, which was that this would become the core way that managers think. Planet Lean Interview, UK Lean Summit, 2014 https://www.youtube.com/watch?v=KYi6gkFYYpU Rother & Liker 4
  • 5. A Reflection on Lean in Three Acts Each point we present includes slides + a short video 1) A First Definition of "Lean"? 2) Lean = Exceptional Human Endeavor 3) Striving for Efficiency is Not Enough Read the slides, watch the videos and see what you think Rother & Liker 5
  • 6. In the past 25 years we've often tried to define Lean by listing things like its elements and principles. A different kind of definition is less about "things" associated with Lean and more about describing the mindset of Lean. For example, the following definition, published in the February 2014 issue of Quality Progress, could make a good 'first definition' of Lean. (1) A First Definition of "Lean" “Lean is the permanent struggle to better flow value to each customer” Rother & Liker 6
  • 7. What We Mean by 'First Definition' What is Lean?? “Lean is the permanent struggle to better flow value to each customer” This first definition focuses on what we are trying to do, while many start with a definition of how to approach it “We do that by..." "It involves..." A 'first definition' + Rother & Liker 7 Further definition
  • 8. Start with Some Sense of Direction “Lean is the permanent struggle to better flow value to each customer” Why might a description of Lean like this be useful to precede ones that describe Lean elements, results & principles? In organizations that see strategic advantage in continually improving, leaders should articulate customer-related challenges that create focus and passion. Just saying Lean is about its elements or “developing people,” “continuously improving,” "problem solving," “cost reduction,” “efficiency” or "doing more with less" often turns into the uninspiring add-on programs that Jim Womack decries. Rother & Liker 8
  • 9. Source: "Lean practitioner’s definitions in max 3 words" www.linkedin.com/groups/Toyota-Way-4797470?gid=4797470&mostPopular=&trk=tyah Common Lean Definitions Miss Some Essential Lean Thinking More For Less • Strong Problem Solvers • Chase the Waste • Bias for Action • Quality, Cost , Delivery • War on Waste • Make Value flow • Cost Reduction System • Use resources effectively • Logical, efficient workflows • Flow, synchronization & leveling • Process Improvement These are not bad definitions, but they only emphasize Lean results, elements & people-as-problem-solvers Rother & Liker 9
  • 10. This first definition by its nature requires elements like continuous improvement and developing people’s improvement capability. For example, developing capability gets pulled by the overarching challenge of trying to get ever closer to a 1x1 flow of value to the customer. If one takes on that challenge, it will then demand that an organization develop and mobilize the human capabilities of its members and teams. In Other Words, Let's Not Put the Lean Elements Before Customers "The permanent struggle to better flow value to each customer" Rother & Liker 10
  • 11. Let’s take a closer look at this elevator-speech definition Rother & Liker 11
  • 12. Permanent and better mean never-ending and on-going, because any situation can be further improved. You’ll never, ever be at the ideal state of your distant vision…. and that is the beauty! The permanent struggle to better flow value to each customer Rother & Liker 12
  • 13. Struggle is recognizing that you may learn something from each step. It's about striving for the next Target Condition through the grey zone of uncertainty -- where you are not always right -- and realizing that there will be another Target Condition after that. You take a step, encounter new information, evaluate it, revise your understanding based on what you learn, and plan the next step toward the Target Condition accordingly. Without struggle we are only doing what we already know… and what our competitors know. The permanent struggle to better flow value to each customer Rother & Liker 13
  • 14. To flow is not simply to ‘provide.’ For instance, it’s not just holding items in inventory in the hope that you'll have on hand what a customer wants, but rather to create and provide what the customer wants when they want or need it. This ideal of such a pure 1x1 flow may not be entirely reachable, but it gives a perpetual target to those organizations who view this as strategic. The permanent struggle to better flow value to each customer Rother & Liker 14
  • 15. The concept value is defined by deeply understanding customers, and evolves over time. The permanent struggle to better flow value to each customer Rother & Liker 15
  • 16. To each customer means that at the end of a value stream there’s a single customer with particular wants or needs. Toyota has a saying: “We make millions of cars, but the customer buys only one.” From our perspective we may think we are supplying many customers, but turn that around to the customer’s perspective and there is only one. The permanent struggle to better flow value to each customer Rother & Liker 16
  • 17. Although a definition of Lean is not necessarily a ‘mission statement,’ the following video by Dan Heath about mission statements gets at a point being made here. On Next Page Video 1
  • 18. To aspire, strive or reach. A conscientious or concerted effort toward an end. Purposeful or industrious activity; enterprise. (2) Lean = Exceptional Human Endeavor Rother & Liker 18
  • 19. Let's Face It...We Are Almost Always in the Unpredictable Learning Zone Whether reacting to deviations from standards or striving for a new level, the Lean mindset & approach is roughly the same in each case... it involves a scientific process of testing and possibly adjusting as you strive to reach a goal. Why? Because you never know for sure how you are going to get there, until you get there and look back. Predictable Zone Current Knowledge Threshold Next Target Condition Unpredictable / Learning Zone ? We want to be here next ? 19
  • 20. On Next Page Video 2 We often think we are in the predictable zone when in reality we're in the unpredictable learning zone.
  • 21. (3) Striving for Efficiency is Not Enough Over the last 25 years the Lean community seems to have internalized and operated on the idea that Toyota's growth and prosperity stemmed from eliminating waste for greater efficiency. We've been selling Lean as a cost-reduction tool for so long that most leaders probably think that is its only goal. Today we know that Toyota's success came from striving scientifically to achieve many types of challenging goals, not just cost reduction. Rother & Liker 21
  • 22. What Do You Want to Achieve? Focusing on waste elimination and cost reduction alone is no guarantee of business success. The Lean idea of 'value' involves understanding your customer & environment, defining a strategic direction that will set you apart in delivering customer value, and mobilizing the organization in that pursuit. A narrow focus on minimizing waste and cost alone is ultimately not what will help organizations meet the challenges they face and differentiate themselves from competitors. Rother & Liker 22
  • 23. We often miss this point. It is many ideas that through experimentation develop into one winner! Experimenting our way forward Increasing Knowledge Innovation in All Areas of the Organization is the Result of Experiments Rother & Liker 23
  • 24. On Next Page Video 3 The third video is 16 minutes long, but well worth watching by anyone in the Lean community. Professor Clayton Christensen talks about the limits of efficiency improvements and the need to also pursue strategic breakthrough objectives.
  • 25. Best Wishes for a 2015 filled with experimenting, learning and success! Rother & Liker 25