Why I don't do LEAN transformations

"Do you do Lean transformations?", I was recently asked at an event. I will let you participate in the dialog that ensued.

"Before I answer, let me ask you first, Tom: What does Lean mean to you?", I asked - "Maximize efficiency, remove waste." This is a common answer I hear many times. A superficial answer that cuts short of what Lean means to me.

"I can briefly answer your question - I don't do that, because it doesn't work." Tom looked slightly perplexed. He had a good forty years of industry experience, much more than me, and most companies on his record had undergone a Lean transformation. Yet, those last three words struck a chord.

"Do you know where Lean comes from?", I asked Tom. "It's from Japan. Toyota Process for Manufacturing, or something like that." - "Well, that's the origins. But when you dig deeper, that which us Westerners understand as Lean isn't what Toyota did." This wasn't the story Tom had heard before. "You know, when Westerners realized that within just a few decades, Japan - which had very limited resources, was starting to overtake the big American car manufacturers, of course, the Americans wanted to find out the secret." I paused. "So, they sent consultants and managers to Japan to learn." Tom nodded. He knew this part.

The birth of Lean Management

"Taiichi Ohno, who is considered the Father of Lean in the Western hemisphere, was very open to share the secrets of Toyota - with other Japanese. To help Japan prosper on the International Market. But he knew that his small country couldn't compete with the US without some kind of advantage. And Japan's advantage was in their way of working, not in any material thing." Tom nodded. This is business-101: You need some kind of advantage to compete. "He gave himself open to the Western world, always sharing some knowledge, but basically, he was giving them red herrings. What the consultants understood was the truth - but a truth without the full story can be quite deceptive." Tom agreed.

"Then, what is the other side of the story?", Tom mused.

"Ohno taught them some management practices, and off they ran to implement this stuff in the Western world." I paused. "They did it, but things didn't get better. So, they figured that there had to be something more." - "They came back for more. To learn more". It was my turn to nod: "Yes, And Ohno gave them another tidbit. More practices, and he even took his time to explain why and how these practices would help increase efficiency." I paused. "Now, Western consultants are smart. They got what he was saying, and implemented what Ohno taught them, and efficiency increased. Significantly." - "A success." - "And then they packaged those efficiency gains as the Lean methodology we know today." - "But then, where is the problem?", Tom asked.

The problem called efficiency

"Ohno didn't tell them why and how Japan succeeded. He told them how to become more efficient." - "But isn't efficiency good?" - "I will answer that with a reflection question: Imagine that there are two highways. The first is empty, the second is full. Car next to car, rear-to-front. On which of the two would you rather be?" - "This has got to be a trick question. Let me think." It wasn't intended as a trick question, but he figured it was one: "I'd say, it depends on where I want to go." - "It's an imaginary highway. They are both the same distance, both go to the same place." - "It still depends." - There was a thought barrier. I changed the angle: "If cars are rear-to-front, what is the situation on the highway?" - "Traffic jam." This is where I was going: "Now, from the perspective of the road management company, a fully utilized highway is more efficient in terms of cars-per-day than an empty road. But as a driver, what do you call efficient?" - "When I get from A to B quickly." - "On which of the two highways would you get to your goal faster?" - "On the empty one, of course." - "So, what is efficient from a utilization point of view isn't efficient from a customer point of view. But companies are optimizing efficiency from their own point of view." His eyes lit up.

It was Tom's time to tell me a story: "You know, we had a plant manager who was extremely good at utilizing resources. Production lines were always running smooth, there were no idle times and we produced 24/7. Except that customers didn't like what we produced." I probed: "In which way didn't customers like it?" - "We had a 22-month lead time for new product lines, because the manufacturing plans were made 2 years in advance." - "But the plans were efficient!" - "Yes, except they didn't match what the customer would request. If the customer would request something new, we could only deliver it two years down the line."

The problem called Customer

"Do you know why this is happening?", I asked Tom. He was unsure: "I guess it has to do with efficiency thinking?" - "Let me get back to my traffic jam example: The road is planned for 100% utilization. That's great as long as no car gets onto the road. But what happens when a road is 100% full, and a single car comes in?" - "It messes up everything down the line!" - "A queue that is 100% full can't have anything added to that. Mathematically, it's that simple. If you already plan for 100%, any addition messes up your plan. So - when you plan for 100% utilization, your customers will always mess up your plan." Tom couldn't agree more: "This was happening to us! We produced and hoped that customers would buy exactly what we produced. We couldn't produce the things that customers actively requested, because that didn't match the plan!" - "So, while your company was efficient, their biggest problem was actually their customers, because customers messed up the plan?" Tom's eyes lit up: "That's exactly what was happening!"

I concluded the interlude. "It's neither efficient nor desirable to tune utilization to 100%, but this is exactly the kind of game Ohno would play with Westerners. He'd throw a stick, they'd run after it, think they were making progress while actually messing up their organizations even further." I paused. "Ohno was a master at deception. The decline of the Western automotive industry was because people implemented the stuff which they thought was the propelling engine of Toyota, when in reality, they were shredding whatever their organization still did well." Another pause: "Even decades later, people still haven't learned this lesson. We need to un-learn the idea that an efficient company is a successful company. In fact, Toyota's secret was never its efficiency. That was just a stick Ohno threw out for Western consultants. They ran after it - and companies are still running after it today. I don't."

Efficiency is the problem, not the solution

Let's keep matters simple: A business wants to be profitable. It doesn't matter how the profit is being generated, as long as it's there. This fake "Lean Thinking" is focused on reducing cost. But as soon as your company is focusing on cutting costs, they're losing sight of what really makes them successful: their customers, and their workforce.

Efficiency initiatives usually mean that instead of doing new things, we do the same thing better. But it's the thing we used to do that doesn't work which is the reason why we're no longer profitable in the first place, so instead of innovating and exploring new business, we entrench ourselves on a sinking ship.

Efficiency means we increase utilization of our workforce. We steal the time that our workers need in order to try out different things, and we measure success by how well we reduced the potential for innovation to Zero.

To get out of this mess, we need to un-learn everything we have learned about efficiency and re-focus. We need to engage our workforce and focus on our customer.

I will gladly help you if this is what you're looking for, but I'm just the wrong person if you're looking for faster ways to go out of business.