Why is Lean Management Important?


In his 2010 blog “What makes lean work?” Dan Jones discusses Toyota’s lasting contribution to the practice of management. The blog starts to explain why lean management is important. Dan describes how Toyota created a unique synthesis of three fundamental approaches to improvement:

  1. The analysis of quality and the use of the scientific method learnt from Shewhart and Deming.
  2. Process thinking about organising the flow of work inspired by early Henry Ford and honed through Taiichi Ohno’s own experiments.
  3. How people learn, drawn from the Training Within Industry programme developed by the US Government during World War II.
Lean Principles

Many organisations have experienced the power of engaging employees in using lean tools to eliminate waste in their workplaces. Others have gone on to use the lean principles to streamline the flow of work through their value streams. But in fact these are only part of a very different way of managing and leading change. A lot has been written about Toyota’s management tools. However, it is equally important to understand the purpose or the glue that makes them effective. The key is not the tools themselves, but how you use them. A good way of seeing this is by asking four fundamental questions.

First: How to focus everyone on the vital few improvements that will make the biggest difference to the organisation?

The lean answer is to use the scientific method to understand the choices. Lean management is important to dig down beyond what are in many cases symptoms to the underlying causes, which are often common. Addressing these common causes is much more effective than jumping to many different solutions. When we jump to solutions we launch hundreds of projects, hoping that some of them succeed.

It is no accident that the first things a new manager at Toyota is given is a problem and an A3. The A3 frames the dialogue between the new manager and their superior. The process ensures that no step is missed on the journey of:

  • Really defining the problem.
  • Through going to gather the facts (rather than just relying on past data.)
  • Establishing a target condition or the gap to be closed.
  • Understanding the root causes.
  • Proposing a series of countermeasures (not just one.)
  • Checking whether these worked.
  • And reflecting on the lessons learnt.

All the time the superior is asking questions rather than telling the subordinate the answers.

Struggling to define the problem, understand the root causes and come up with alternative ways of addressing the problem is a really formative experience. It lays the basis for a deeper understanding of more complicated problems as managers rise through the ranks. This experience greatly facilitates the tough discussions about deselecting the many to focus on the vital few in drawing up the strategy. It also helps to frame the deployment discussions with each level down the organisation. Thus translating these vital few goals into the vital few actions that will close the important performance gaps. The deeper point of using the scientific method to focus on the vital few is that everyone learns to think in the right way about the right things.

Second: How to close the performance gaps which are critical for the organisation?

Lean management is important because it helps remove the obstacles to the flow of work that creates value customers are paying for. We call that flow a value stream. This means:

  • Combining previously separately managed activities into an integrated value stream.
  • Eliminating the sources of unnecessary variation.
  • Optimising the whole rather than the parts,.
  • Removing queues, bottlenecks and handoffs as they cross from one department to another.
  • Aligning the flow of work with the rate of demand.

In most organisations no one sees or is responsible for these horizontal, end-to-end value streams. There is now a wealth of experience in using the right lean principles and tools in the right sequence to redesign all kinds of value streams.

However no value stream is an island. Exactly the same principles are needed to streamline and synchronise all the support activities that enable the primary value streams to flow. Examples include delivering the right drawings and parts to assemble an aircraft. Or delivering the right test results, take-home drugs and therapies to be able to discharge a patient from hospital.

The Importance of aligning management decision making

There is a third critical dimension to enable value streams to flow. That is aligning management decision-making processes with the heart-beat of the value stream. Therefore, response to problems and escalation happen quickly. Projects don’t wait for infrequent review meetings. Quite simply this means seeing and managing the organisation as a collection of inter-connected processes or value streams as well as the traditional, vertical organisation chart.

The final piece of this puzzle is to see how streamlining these work flows translate into bottom line savings. Cash freed up by reducing unnecessary inventories and delays. Capital investments in extra capacity or warehousing for instance that are no longer necessary. Lower unit costs from being able to make more with less and growing sales from more satisfied customers. The deeper point of taking a value stream perspective is learning to see the whole and where to act to close the critical performance gaps.

Third: How to change behaviour in order to work together more effectively along these value streams?

Lean management is important because it helps plan not only what should happen to every product, patient or drawing as they progress through the value stream but exactly when this should happen and to make progress and deviations from this plan as visible as possible. Reviewing progress on an hourly or daily basis enables teams to respond quickly. This enables them to get back on plan and to prioritize recurrent problems for root cause analysis.

Making progress and problems visible in a no blame environment is much more productive than hiding them from view or in a computer. It is also essential to be able to manage a much more interdependent process where interruptions have a much greater impact on overall system performance. Anyone who has been part of a value stream mapping exercise will have witnessed the dramatic change in behaviour as participants stand in front of the map and see for the first time how to fix their broken process rather than blaming each other Managers also begin to recognise that their role is to support front line staff in doing their work and helping them resolve the most important hindrances to doing so.

This is equally true in a project environment. Toyota’s Oobeya or visual project room is an effective way to gain agreement from different departments on common actions. Lean management is important as it enables teams to agree the few common metrics on which to measure. Managing in daily and weekly increments enables progress reviews in short intervals. This results in fast response to issues, rather than waiting for the next gate review meeting. Capturing these issues also provides a rich source of learning for future projects. The deeper point about making everything visual is learning to work together to optimise the whole system.

Fourth: How to sustain the gains?

The lean answer is by building new knowledge through learning by doing. We have already described the power of mentoring using A3s throughout the organisation. In a complicated social environment where causality is not always clear real learning comes from doing many controlled experiments to see what works and what does not. Very often problems are not where people think they are and the root causes are also not always obvious. Lean management is important in establishing a common language for all kinds of problem solving makes it possible to capture and share not only what worked but also how problems were solved, so others can do the same.

Learning by doing is also the basis for a very different approach to lean transformation. Instead of spending a lot of time planning and then deploying a centrally designed training programme across the organisation that is quickly forgotten when the experts move on, a lean transformation begins with a series of controlled experiments in key activities to build an experience base as quickly as possible. This then forms the basis of further experiments and for building communities of practice to share results and experiences. These may also be consolidated on an intranet accessible to everyone in the organisation and reinforced by competitions and recognition ceremonies for the winning projects. The deeper point to this experimental, evidence based approach is that everyone learns how to learn by doing and reflecting.

The net result of all of this is that organisations are able to do new things that were previously impossible to do economically. The business opportunity is to use these new capabilities to turn the tables on your competitors, until they learn to follow your example, by which time you should have moved further ahead.

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