Monday, January 25, 2010

Being Lean is Not Enough

One of the hottest trends in business over the last few years has been lean.  Most of the Fortune 50 companies currently claim to be doing lean and the market is flooded with training and consulting companies touting the benefits of the approach.  I recently Googled the term lean+business and received 30.1 million results.  It appears that we're presently in the midst of a lean blitz.

Don't get me wrong, I think lean is a strategy from which virtually every company can benefit.  It is a great way to gain control over processes and improve quality while reducing costs.  Throughout my career, I helped many companies implement lean and have seen some great benefits as a result.

The problem I'm having is that lean is being oversold to business.  Consultants and practitioners are promoting lean as if it is the cure for all of a company's problems.  I have gotten into many discussions over the years with people who are disappointed when leaders don't place lean at the very top of the company's priorities.

Part of the Picture

Lean can be a valuable part of the company's overall strategy.  The critical word here is part.  There are other elements of a corporate strategy that are just as - if not more - important depending on the company's individual circumstances.  In the most simple example, a company can be highly successful with lean but go out of business if it is not offering products or services that people want to buy.

However strategic planning is specifically conducted, the process should generally include an analysis of the four high-level objectives that are necessary for success:  (1) People/Leadership Development; (2) Process Improvement; (3) Product/Service Development; and (4) Market Development.  There are times when one or more of these areas will need extra focus, but unless all are analyzed on a regular basis, the ability to understand which areas are in need of attention is limited.

Strategic planning requires an assessment of the company's situation to understand where the current barriers are to achieving success at any given time.  The barriers can be weaknesses that interfere with success, or opportunities that can help the company grow and improve performance, but they will become evident during the process of understanding and evaluating the four high-level objectives.  The analysis helps senior leaders understand where the company's focus (in terms of investment and resources) needs to be in the coming one to three years (or beyond, depending on the normal planning horizon).

Let's Maintain Perspective

The point here is not to oversell the benefits of lean, and to understand why executives don't necessarily put it at the top of the company's priorities.  As an initiative, lean can directly support the process improvement objective and indirectly aid product/service development, but to truly help an organization succeed, it is important to understand that it may be end up being something other than the top priority.


KathyCondon said...

Absolutely agree.....When companies are lean they cut out training. Thankfully, more and more executives are admitting they do not have the skills to fact, it is estimated 65 percent feel they do not have the skills to lead..they just inherited the job.

My own daughter was promoted to manager and she had no leadership she sought it on her own.

Hani Oueidat said...

When businesses get bigger and bigger, they need to be reviewed. Lean is not part of the strategy. Why not think of it as a tool that needs to be implemented during the maturity phase of a company.
I think one cannot just start a new business and put lean as the strategy in the backyard; I will use lean when things go messy or when I have a problem. It is not there to solve a business problem. It is there to lever businesses.
Gregg, you are saying, "a company can be highly successful with lean but go out of business if it is not offering products or services that people want to buy". One of lean's main element is to 'gather around end product'. That is knowing exactly what people want.
Kathy is saying, “… they cut out training”??? I wonder whether firms tend to use the word 'lean' as a contemporary portfolio/image without further right and meaningful implementation!

Ken said...

Firms absolutely use "Lean" as a thinning of the herd and costs program. I have experienced way too many of such programs.

Gregg Stocker said...

I agree with your comments - it is unfortunate that so many organizations go forward with lean without really understanding what it means. It is not about reducing headcount or cutting out training. It is about transforming the organization to focus on the customer and eliminate or reduce anything that does not add value to the customer.

This post was actually from the other side of the issue. I have also talked with people who believe that lean is everything. Even with the current situation at Toyota, they are still a great company (I believe they took their eye off the ball and forgot what got them to be no. 1 in the first place). Anyway, they invented and are continually perfecting lean - nobody does it better - and they understand that success requires many other elements. Lean helps them do the things they do, but they still need to do those things (e.g., marketing, leadership development, product development, etc.).

FYI - I wrote a post back in September about Toyota and what I felt was going wrong. If anyone's interested, it's at

Bryan C said...

I have to take exception. You keep saying "lean" and then infer that it only applies to the "fulfillment" aspect of a business ("It is a great way to gain control over processes and improve quality while reducing costs.", "a company can be highly successful with lean but go out of business if it is not offering products or services that people want to buy."). Lean thinking, truly being lean, applies to purpose (i.e. provide value to the customer through the product or service it provides) and people as well as the process. The lean enterprise applies lean thinking to all 4 of the "high level objectives" you list. Maybe that's why so few companies actually become true lean enterprises, they don't apply lean thinking to every system in the organization: design, fulfillment, customer support, hiring, training, supplier development, accounting/scorekeeping, etc..

Jon O. said...

Companies or managers that view Lean as a strategy for reducing or eliminating cost are missing the meaning of lean. The point is not to eliminate cost but to eliminate waste or muda. Truly implementing a lean culture involves knowing how your organization brings value to your customer and then tailoring your processes to focus on what you do well while eliminating activities that do not add value.
The right training adds value and so do workshops that focus on process and procedure and the elimination of waste.
Elimination of waste is the key, not elimination of cost. There is an important distinction that managers have to make.