2013 has been a huge year for companies and organisations going lean. As always, new theories and tools were developed and value has been created for customers in in a whole new light. But what does the future hold? In this exclusive article for LMJ, lean stalwart Daniel T. Jones reflects on the year that was and looks forward to the lean innovations on the horizon in 2014.

Three developments truly stood out for me in 2013. First of all, lean is now being done top-down as well as bottom-up. Secondly, lean transformations now seem to be about developing capabilities and not implementing tools for people. And finally, the way lean has captured the imagination of the software, entrepreneurship and startup communites. All of these have stretched our experience and should help us reflect on the deeper purpose of the many lean practices we tend to take for granted.

Hoshin

I would like to start by saying how delighted I am to see the growing interest in Hoshin planning. I think it reflects the struggles many organisations are having in turning bottom-up lean improvements into business results. I first learnt about Hoshin from the outstanding management team at the Nissan plant in Sunderland in the UK that opened in 1986. However, over the next few years I watched this same team struggle to make Hoshin its core management strategy and feed its principles along to their suppliers, the same feat Toyota managed to do only a few years later.

But before any management team or company starts using Hoshin, it is worth asking what the business problems are that need to be solved. It is about aligning the or ganisation to create more value by unblocking the flow of value creation the customers are paying for while developing the capabilities to do so. It is also about improving the effectiveness of a management system in making all of this happen.

A good place to start implementing Hoshin is by asking how managers use their time and how much of their time is spent creating value for the organisation? This is a tricky question because management does not directly create value for customers. It is either necessary and enabling non-value creating work or an expensive waste of time and resources. Three sets of questions shed light on what is really going on.

How many live projects are there in your organisation?
The consequence of Management by Objectives is always too many. Throughout the year, I have seen more than 500 live projects in a typical hospital while also witnessing boards struggle to get the list down into single figures. How many targets are reviewed each month and how much effort goes into compiling and reviewing them? Again the answer is usually several hundred. How overburdened are managers? A time budget analysis often reveals that their workload adds up to 150 to 200 per cent of the time available. It is no wonder managers complain that they do not have time for additional lean projects. If management could really agree on the vital few actions and have confidence that they would be done, how much management time would this free up that is currently spent on doing unnecessary things?

How much management time is spent in long meetings, planning and reviewing initiatives, and projects across the organisation?
How easy is it to get cross-functional agreement to cooperate on projects? How much management time could be saved by making commitments to action visual? Can the work be broken down into small increments of time so deviations from the plan can be reviewed and responded to on a daily or weekly basis?

How much management time is spent in fire-fighting and dealing with emails?
Usually a lot. How much of this time could be saved by spending more time at the Gemba along the value stream helping to establish basic stability? It is amazing how the emails and fire-fighting fade away when the work is stable and when there is a clear escalation process to resolve issues quickly.

These three tasks are a simple way to free up management time. However now that the time is there, what should be done with it? Does this, for instance, allow managers at every level more time to mentor their subordinates to develop the capabilities across the organisation? Does this also allow managers to spend more time preparing to meet new challenges, leading initiatives to develop new products and solutions for your customers that will steal a march on your competitors?

All these issues need to be brought up and discussed before any Hoshin journey begins. It will not be easy to agree on the vital few, deploy the right projects or create stable value streams. However, it will develop a common language and behavioural system as well as the necessary cooperation to face the future with confidence.

Lean Transformation

After a move is made to a new management assignment or a lean training course has finished, can the team that is left behind build on what they have been taught about lean? Or do they struggle with what they have learnt and revert to their previous ways? This is undoubtedly frustrating and entirely detrimental for those bitten by the lean bug. It often leads managers to ask how to enforce compliance to sustain the gains from lean. And it leads the sceptics to conclude that lean does not work.

Two related perspectives on lean transformation can help answer this important question. First, lean reverses the separation made by Frederic Taylor between the experts and managers who think and direct and those who do the work. Going beyond optimising individual activities to improving the horizontal flow of value creation reveals the problems currently hidden by buffers between them. Linking a complicated set of activities together into a value stream promises superior performance, but also multiplies the probability of problems interrupting the whole system.

While expert guidance and better systems are important, lean goes further to mobilise the knowledge and experience of those actually doing the work. They are best placed to improve their work and to respond quickly to problems as they arise. This is why lean thinkers often think of a value stream as the sum of the problem solving capabilities of every person along the stream as well as the capabilities of every activity and machine.

“After a move is made to a new management assignment or a lean training course has finished, can the team that is left behind build on what they have been taught about lean? Or do they struggle with what they have learnt and revert to their previous ways? This is undoubtedly frustrating and entirely detrimental for those bitten by the lean bug”

Second, the scientific method embodied in PDCA lies at the heart of these problem-solving capabilities. But reconfiguring the way we think and therefore, how we work together, is only achieved through repeated practice, just like learning to play a musical instrument or to excel at a sport. Training Within Industry created the methodology for “learning by doing” that is the basis for Toyota’s approach to developing its people. Using the A3 framework provides the common language for solving problems together. Kata shows us how to build while practising these skills into our daily work. Frequent practice is why lean thinkers place so much emphasis on engaging everyone in Kaizen every day.

The true significance of learning to use the scientific approach is revealed by the sensei or teacher saying “so what” after the team successfully completes a problem solving cycle. While the specific results are adequate, the lasting value is the improved capability to solve the next set of problems. This is the ultimate objective of lean thinkers. It also implies that we judge the success of managers and teachers by the ability of the teams they leave behind to sustain and improve once they have moved on. All too often these capabilities are destroyed by an incoming manager seeking to make their mark by setting off in a different direction.

These two perspectives challenge us to rethink the way we intervene in organisations to plant the seeds of lean. They also question the traditional expert-led consulting model. We can summarise the challenges as follows:

John Shook keeps reminding us of the TWI motto; “if the pupil has not learnt, then the teacher has not taught”. This motto undoubtedly rings true, but is never easy to get right. We still have to do a better job in explaining the underlying purpose of lean practice and how it leads to sustained and improving performance, rather than quick fixes that do not last.

The Lean Startup

There is a lot we can learn from the lean startup movement. The Lean Startup book tells a good story well – better than most lean books. It is written Eric Ries who is an entrepreneur and businessman, which automatically gives him a different view point from the usual expert or consultant. Eric Ries struggled to use lean ideas to solve a very different set of business problems in his own businesses before sharing his results and reflections with others.

The lean movement has at least three key tasks:

The lean startup movement has taken this third strand to new territory.

As lean practices were taken from discrete manufacturing to process industries, retail and distribution, service and repair, administration, healthcare, construction, financial services, IT systems and government it was discovered that different tipping points unlocked the potential to transform different types of value streams. Yet understanding where and why today’s value streams are broken is just the first step to designing new ones back from customer or user needs rather than forward from existing assets and structures. At the same time the internet has opened up new possibilities of building a two-way dialogue with key customers and users. The lean startup movement has gone one step further. It has gone beyond lean product and software development and strategy to managing innovation and building whole new business models.

So how lean is it? Lean folk should quickly recognise the underlying premise which Eric Ries took from studying Toyota’s management system, namely seeing the whole activity of the organisation as a learning process. The Build-Measure-Learn cycle is of course a variant of the familiar PDCA cycle, with a strong emphasis on defining what the enterprise needs to learn next, how to validate this learning through quick testing cycles with customers and therefore, which innovations to develop for the next test cycle. Validated learning, minimum viable product, split testing, actionable innovation metrics and being prepared to pivot the strategy in response to feedback from customers all follow from this approach to learning. The big challenge for existing organisations is creating the space for entrepreneurial management to drive these actions.

So maybe the right question to ask is not how lean it is, but whether it works and if so what the implications are for existing businesses. Maybe it is time to conduct more rigorous valuations of the effectiveness of the different approaches to lean business transformation in different situations, something the lean movement has not yet embraced.

For me the lean startup movement could make an extremely positive contribution if it not only creates new business models, but also helps existing organisations to move beyond the relics of the era of mass production. These are seen everywhere, from functional silos, big focused factories, extended supply chains, big warehouses, big superstores, big hub airports, big district general hospitals and big IT systems to name but a few. The future is no longer “one best way” delivered to everyone through a single channel, but instead is the ability to deliver exactly the right solutions to help business customers create more value in their work and help end users create more value in their lives. The lean startup movement has offered a fresh approach for all kinds of organisations to come up with innovative new solutions and business models.

But for me there is still a missing piece to this puzzle, which I am sure will come into focus in the years ahead. This missing link is developing the capabilities of every individual, household and community to manage its own life through managing its own data. They are all mini businesses managing many complex processes to combine the right products, services and knowledge to create value in their lives. Mining “big data” to track what users do today and split testing to see their reactions to changes are well advanced, but articulating the voices of expert users can allow us to take one giant step further.