Even with the press attention that the Toyota story has enjoyed in recent months, most executives are still uncertain about what “Lean” really refers to. Here are some misconceptions I find myself encountering on a frequent basis:
1. Lean is not the same as resource starvation
I often hear the phrase “we are running a lean organization.” Lean does not refer to a lack of resources. When there is a lack of resources, it is often an indication of the opposite, waste! Either that, or the company isn’t successfully and profitably delivering value to its customers, causing revenues to shrink. The only exception to this would be an early-stage company that is still developing its initial products, but even here there is often plenty of waste.
2. Lean is not “mean”
We often hear the phrase “lean and mean”. But Lean isn’t about “getting tough” with employees. It is about working together to identify and eliminate useless work, and create more customer value faster. This won’t succeed with a draconian attitude towards employees. A profound respect for people forms part of the cultural foundation for a Lean transformation in a company.
3. Lean is not a substitute for a good strategy
Lean is primarily about execution. A Lean initiative mobilizes people to work smarter, innovate faster, remove waste, and create more customer and shareholder value. This does not take place in a vaccuum, however. Your strategy defines what markets you are in, who your customers are, and what you need to accomplish in order to win. Lean will make you a better athlete, if you will, but it won’t tell you what sport you are playing. That is what strategy is for, and Lean is no substitute for strategy. It can be part of your strategy, however, to ensure that you execute better than your competitors.
4. Lean is not a substitute for good leadership
Leadership is the process of inducing others to pursue a common vision . Any new initiative or project depends on good leadership to succeed. So does day-to-day management of the business. Without good leadership, there will be no clarity in direction, no motivation for people to go there, or both. Lean is about organizational improvement and change. It too depends on a clear vision of what to work towards. It also requires us to motivate people to think about the business differently and work to continuously improve it. Leadership coaching and development will often be a key part of a Lean initiative.
5. Lean is not a substitute for hiring and developing good talent
It is true that Lean helps unleash creativity and allows people to discover better ways of working. All else being equal, however, the organization with the best people will still win. When I talk about the “pursuit of perfection”, I always discuss three aspects: People, Processes, and Products. The three of these should be integrated: Hire great people, help them grow, use Lean to unleash them to innovate and develop truly great products and processes, and reward them for results. Far too often I see companies ignore the talent side. A good indication of this is a weak HR function that is primarily concerned with regulatory compliance and reducing the risk of lawsuits.
6. Lean is about enabling profitable growth, not just waste reduction
The Lean literature focuses a lot on waste reduction. This may be exciting to management in mature companies with modest aspirations for growth, but in general I think it is not the best way to make executives interested in Lean. Growth is a better story. There is almost always tremendous potential for creating new products and coming up with more ways to deliver customer value. Unfortunately, precious resources needed to pursue such opportunities are wasted on non-value-added work. Lean is really about improving the organization’s capacity for innovation and growth.
What Lean is
So how should we define Lean? Lean is a comprehensive business methodology with a set of practices to help people rapidly and continuously innovate to deliver more customer value faster and at a lower cost.
Lean is comprehensive, because it applies to all industries and all portions of a business, including those with internal customers (like hiring and payroll). It can even be used to improve the performance of an entire supply chain. Lean is a methodology that contains specific, practical methods that can deliver exciting results very quickly. It helps people across organizations, departments, groups, and teams work together to find end-to-end solutions.
Lean helps people focus on what really matters to the customer. Because customer needs change and because there is always something that can be improved, an organization’s Lean journey is a never-ending one.
1. I attribute this definition of leadership to Dr. Edwin Locke, Dean’s Professor Emeritus of Leadership and Motivation at the University of Maryland. URL: http://www.edwinlocke.com