Sunday, October 27, 2013

What is Lean?

I run into people on a fairly regular basis who want to know the definition of lean and what makes it different from the "normal" way businesses operate.  Because lean can be fairly complex and easy to misunderstand, I generally avoid any attempts to simplify it by describing it in a sentence or two.  There is such a common misconception about what lean is, though, that I finally felt compelled to come up with something.

Wikipedia defines lean as, "a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination."  Although I generally agree with this definition, there is not much in it that differentiates it from a traditional approach to business.  I've worked with some very non-lean thinking people over the years who would argue that they focus on their customers and continually work to eliminate waste from the company.  The difference here is in how they define waste and the steps they take to eliminate it (e.g., reducing costs by cutting rather than improving).  The point is that these leaders could argue that lean is not much different than what they already do.

The Definition

After a lot of thought and discussions on the subject, I've come to the conclusion that lean can be defined as:

A continual experiment to eliminate uncertainty from a business and achieve absolute perfection by leaving nothing to chance.

I believe this definition of lean incorporates the PDSA element that is absolutely necessary for learning and improvement.  By performing a process in a specific way (standardized work), we are predicting that a desired outcome will occur.  When it doesn't, the process needs to be adjusted (through kaizen).  We don't stop kaizen until the process is perfect because every problem identifies a weakness somewhere in our system that needs to be addressed.

A key difference between this definition and traditional thinking is the idea that the only acceptable result  is perfection.  The traditional approach to business does not usually consider perfection the goal.  People generally consider it impossible to achieve perfection and lower the bar by striving to be the best, among the best, or simply to meet a target.  While an organization with a lean mindset does strive to meet targets that take into account a given level of errors, defects, and variation, the people do not consider these things acceptable and will continue to drive improvement until things are perfect.

Although related to the drive for perfection, this definition also differs from traditional thinking by looking at all work as an experiment.  If you truly believe in continual improvement, you are always looking for problems.  You will standardize your processes  with the best knowledge you have at the time, but as soon as a problem occurs, you analyze the cause(s) of the problem and work to eliminate or reduce it.  And the changed process becomes the new standard.

Help or More Confusion?

I'm not sure that defining lean does much more than provide a starting point to the conversation about how a business can improve.  Although people generally want quick, easy-to-understand descriptions that will help them understand new methods, a definition that can be read in under 30 seconds will never provide enough understanding to intelligently accept or reject the concept. Improving understanding requires thought, discussion, and application to real situations - but if a one sentence definition starts someone thinking, than developing it was worth the effort.

Friday, October 4, 2013

The Lean Formula

As I've said many times, lean is simple but not easy.  The concepts are fairly easy to understand, but making it happen requires such a deep level of reprogramming of the way people think and act that few are able to carry it through.

There are many ways to begin a lean journey and one is not necessarily more correct than another.  I adjust my approach depending on a variety of organizational factors, but I generally like to start with a basic formula that keeps people focused on the results the organization is trying to achieve, the results they are actually getting, and how to close the gap between the two.

The basic formula to follow a targets-results-gap approach is:


This basis of this formula is that all elements must be present in order to achieve success.  For example, having a business plan that clearly identifies the organization's desired performance levels and a plan to get there won't do much without dashboards that provide a consistent and discernible picture of results.  Although more common than one might think, this type of situation makes managing the business extremely difficult by leaving too much to chance.

The components of the formula are as follows:

CLEAR BUSINESS PLAN:  There must be a plan that provides very clear direction and targets for the organization.  The plan should break the company's long-term strategy into specific results to be achieved in the coming 1-2 years.  Included in the plan is information or results that drive daily work (i.e., help people understand the level of performance that must be maintained to meet objectives) and breakthroughs, or the big steps that must be taken to move the organization forward (i.e., the areas where business as usual is not acceptable).

VISUAL DASHBOARDS:  The dashboards is the scoreboard to identify the gaps between current performance and the targets or objectives listed in the business plan.  At the highest level, this is the actual safety, quality, production, and cost targets.  As you move deeper into the organization, though, the measures on the dashboard will become more focused on the processes in a particular area.  Also, the information on dashboards must be clear, easy to understand, and include leading, as well as lagging indicators.

EFFECTIVE MEETING RHYTHM: The organization must implement a meeting cadence that is focused on actual performance versus targets.  The meetings should be short and focused on hotspots - i.e., the problems that are, or have the potential of, interfering with performance.  These meetings are not a forum for people to tell everyone how much work they did since the last meeting - the dashboards will do this.  The meetings should used to highlight the problems and ask for help.  The meeting schedule should be set at as closely as possible to the pace of work so the problems can be identified and addressed quickly.

CONTINUAL IMPROVEMENT:  Knowing the gaps between targets and current performance is futile if people do not know how to address problems.  Having an effective kaizen or continual improvement process will enable the organization to close the gaps and react quickly to existing and potential problems.

Although the basic formula appears simple, there are a lot of elements necessary to make it effective.  Without effective leadership or a culture that supports, rather than hinders, teamwork and the ability to question the status quo, success will be elusive.  
Using the formula as a starting point for a lean transformation, though, will tend to make the organization's weaknesses visible, which is the first step in making the change.