What is the philosophy underlying lean thinking?

While lean thinking has its origins in manufacturing, understanding the domain-agnostic, abstract philosophy behind lean thinking is necessary in order to be able to apply lean to new domains.

New domains like software development or healthcare are different enough from manufacturing that lean manufacturing techniques cannot just be transplanted to the new domain.

But it is possible for any domain of human activity to apply lean thinking principles, as long as you understand, not the specific practices and tools themselves, but the mindset you must have that allows them to be thought up, to invent your own relevant tools and practices applicable to your domain and your work.

What then are the underlying principles of lean that one needs to understand to think lean?

Understanding what is value and how it is created

An activity that adds value is one that gets you closer to a finished product, a completed service or achieved goal in meeting the needs of the end customer, the person who is going to realise that value and therefore be willing to pay for it. They expect a high quality product or service, and quality is defined by meeting their needs, usually both their stated needs, and their unstated needs – things they derive value from but did not know they needed or were not able to articulate. In that latter case however, be wary of the waste of overwork – doing more than is necessary to please the end customer. If you add more value than the end customer is expecting, then make sure you are reimbursed for that somehow, whether through extra payment or customer loyalty.

How to recognise and remove waste

For something to be ‘lean’ in english, it should have no fat.

Waste is anything that has a cost (in time, money or other means) but that does not add value. Paying people to stand around waiting for something that is late to arrive, is waste. Incurring the cost of storing something that has not already been sold is waste. Making products no one wants to buy is waste. Being blocked in your programming is waste.

Sometimes the waste is obvious. Other times not so much, or while on the surface it seems obvious, the real cause is hidden. It’s important therefore to understand the root cause of any given waste that you find. Only by fixing the root cause that led to the wastage can you stop it from reoccurring. To find it, one simple technique is to ask why, five times, until you get to the bottom of it (called, unsurprisingly, the Five Whys technique)

Shared ownership of the product and the process

Just as everyone in the organisation needs to be ready to accept a state of constant change, so does everybody need to be bought into and aware of the philosophy. From management down and shopfloor up. Fortunately, once you get started this is pretty easy, as people’s enjoyment of their work and job satisfaction goes up. Churn goes down because people realise leaving to go somewhere else less enlightened will not be as good. Make sure everybody gets taught about lean – what it is, why you’re doing it, how to do it – from all disciplines and at all levels. Don’t rely on external consultants to do the transformation for you, because when they leave, you’ll still be the same, and anyway they can never know your job as well as you do, so no one is better placed to make your work more efficient than you. Become the transformation yourselves.

If your organisation is part of a chain, working with lots of other organisations, or if you are only one organisation in a bigger one, and only your division is implementing lean, then you need to understand that while you will get some improvements, you will hit a plateau when you have nothing left to improve except those things that can’t be improved without the engagement of others. It will have an exponentially greater effect if you can get your whole organisation, and your whole supply chain implementing lean practices.

Remember also that an organisation is made of people, and the organisations that are your customers and suppliers are people too. So to change an organisation, it’s really the people that need to change (or occasionally be changed, if they’re just too dogmatic).

By involving everyone, you create a shared sense of ownership in the process and in the output (the product or service) of the process. Shared ownership makes it much easier to be objectively critical without individuals feeling defensive or unfairly criticised, and it makes sure that teams work together and support each other. It avoids a blame culture. Instead of teaching people a specific way something should be done, you teach them how to come up with their own best way. To avoid the chaos of everyone doing the same thing in different ways, you have them collaborate and share their ideas. Create peer groups of different mixes reflecting the circles or spheres of influence in your organisation – everyone in a team, all the team leads, junior representatives from each team, specialists from each discipline, and have them regularly meet up and compare thoughts on improving practices and empower them to spend time, and money, to make improvements that those teams think will have a positive effect.

If something is not working the first assumption should be “it is the process, not the people, that is broken”. Equally, if after eliminating all other causes there are still problems that you suspect are down to poor individual performance, you have then successfully made the case necessary to dismiss someone from their job. And, if something isn’t working – stop doing it, look at the reasons why, and try something different. Keep trying different things until it works, and then make it even better.

Use the right tool for the job, and modify it

Lean practices form a toolkit, one that you pick and choose yourself, starting with the works of others in your domain, with books like the Lean Toolbox or Lean Software Development – Agile Toolkit, but then adapting them to your own circumstances. This is the reason why these books are called Toolbox and Toolkit!

With each new project or activity, look at the tools in your toolkit, in the form of practices, tricks, ways of setting up your work environment, ways of organising your teams, as well as physical and software tools you have, and pick the ones you think will best support you in the activity.

Adjust for size, length, complexity, experience of the team you have or implement changes and new tools based on lessons learned from previous endeavours (this is where your project postmortems should be inputting to!).

Revisit your toolbox often and make adjustments based on how things are going, don’t dogmatically stick to the approach you chose to the end of the project if new information and experiences tell you something could be improved as you go.

The greatest mistakes made in applying lean, are in copying specific practices that are instantiations of lean without understanding the principles that led to the practice being invented. Since a key element of lean is modifying and selecting the right tools to fit your particular needs, copying someone else’s approach without adaptation might not work. This is exactly the reason why the American automotive industry has not been able to keep up with the Japanese, despite regularly copying their manufacturing techniques.

Change is good

In becoming lean, the organisation must see continuous, incremental change as it’s desirable natural state. This is hard for many organisations, who associate change with cost and who are naturally conservative. Most companies prefer to do a programme of change to get from A to B in one fell swoop.

But big, disruptive, rushed change leads to high costs, inefficient processes and especially, reinforces dogma and attitudes that change can only happen in windows when big sweeping changes are approved and not the rest of the time. Organisations that try to change in such a way easily slip back into less mature practices soon after anyway.

How do you eat an elephant? One bite at a time. It’s the only way. A company that has a natural state of change is the only kind of company which is not at risk from disruption, from new competitors, from changing trends and world events. Importantly if someone ever tells you ‘we do it that way because it’s always been done that way’ – that means it probably needs to be improved if it hasn’t changed in such a long time!

Similarly, by competing with perfection rather than by watching your competitors, you will naturally become #1. Those who follow can never get better than #2. If they become #1 by some metric of volume, they stumble and fall. Like Pepsi, when it used aggressive price cutting on F&B sales to get ahead of Coca-Cola and then didn’t know what to do with their lead and got there at the expense of profit, or like Samsung, which followed Nokia, and then Apple, but once it became #1 itself, it didn’t have anyone to copy, innovation dried up, faults crept in (like exploding batteries!) and sales and more importantly profits plummeted.

Now you understand lean philosophy

Start using it today. A 1% improvement in your efficiency every day will mean in 100 days you have doubled your organisation’s productivity or lowered its costs. That’s less than six months!

Shipping containers, and keeping them full – or, how understanding lean thinking can make you rich

The Intermodal Shipping Container. A standard way of moving goods by ship, rail, road and even airplane. This might seem obvious now, but having a standard size container for shipping products big and small, that could fit on a train or a truck, or be easily stacked and loaded onto cargo ships, with standardised fittings to allow for rapid loading and unloading anywhere in the world, has only been possible since the middle of the 20th century, and all thanks to freight hauler entrepreneur Malcom McLean and engineer Keith Tantlinger.

Prior to the standardisation of the container, cargo would require huge amounts of manual effort to load and unload, and be packed and unpacked into different sizes and shapes of container depending on the ship, the port, the country, the truck, the train and always different methods of connecting and stacking things to cram the most in.

Standardising on a size that would fit everywhere it needed to go, on any type of vehicle, reduced loading times from weeks to hours – an extremely good example of reducing the waste of wasted time! It also made it much easier to use space more efficiently, and ships could even be designed around the container size multiples.

There were lots of obstacles to overcome in getting this change through though, on a global scale for it to work, and vested interests especially – unionised dock workers in particular tried to thwart their plans, because it would reduce how much work they had and make them more efficient.

But what made it’s inventors truly rich, was a simple application of lean thinking, or indeed common sense, and yet somehow not obvious to most freight haulers of the day, was that after you shipped something one way, you have to ship it back again empty, in which case you’re paying a lot of money to ship thin air.

So it was that the ironically-named McLean took advantage of the opportunity to ship military supplies from American to Vietnam for use in the war there, and then return the ships via Japan to pick up Japanese products to bring back to America, just at the time that Japanese became the centre of world manufacturing and the leading exporter of mechanical and electronic products. In the military, he also found a customer who’s biggest concern was speed and efficiency, and who had the political might to force change upon those who were stuck in their ways.

Several years later, and without any more wars taking place in Asia, Chinese entrepreneur Zhang Yin noticed that while ships were full going from China to the USA, their containers were empty going in the opposite direction and apart from being an obvious sign of the decline of American manufacturing years before their politicians noticed, she smelled an opportunity that made her China’s wealthiest woman. She researched what could possibly go in that space that China wants but the US does not, and she hit upon the one thing American’s are really good at producing – Trash! By setting up a recycling business in China, she was able to not only get paid on both sides of the deal by being paid to take away people’s paper and cardboard trash, and then ship it at discount rates by buying up otherwise unusable shipping capacity, she then recycled it in China into cardboard to be used for shipping products back to America, effectively creating a kind of perpetual motion machine, or at least, a perpetual money printing machine!

Both McLean and  became insanely rich because of this simple application of lean thinking, what opportunities to apply lean thinking can you think of that will make you rich?