The majority of Lean transformations will fail. Sorry, that’s just the sad truth. The reason for this failure rate is because Lean has two fundamental pillars that most organizations don’t know about, let alone understand the importance of the second. Thesetwo pillars are:
Lean actually differs slightly from the traditional Toyota Production System in the first pillar. Most organizations trying to become “Lean” focus on reducing waste while Toyota promotes creating flow. Although the approach is different, the tools are generally the same and the end goal is still to create value from the perspective of the customer. (One danger of the first approach is that focusing only on waste reduction can lead to an emphasis on cost-cutting instead of true improvement.)
In Lean thinking, there are seven primary forms of waste: unnecessary transport, unnecessary inventory, unnecessary motion, waiting, overproduction, overprocessing, and defects. Others add the waste of human potential, where employees are thought of as just a pair of hands instead of a brain with creativity, knowledge, and experience.
These forms of waste are present in manufacturing as well as office and administrative environments. In fact, you can even find them at home. Did you cook too much food for dinner last night? Did you have to wait in line to take a shower? Did you have to search for hours to find a tool in your cluttered garage? All these are types of waste as defined by Lean principles.
Is important to remember that something is only waste if it does not create value from the customer’s perspective. Identifying the customer and then looking for waste (and value) from the perspective of the customer is far harder than it sounds. Some activities may appear to be waste for one customer and not another. Is a long commute a waste of time? To some it is, to others it is a valuable time to relax and refocus. To add even more complexity,some forms of waste may even be necessary, such as regulatory paperwork. Another example is advertising, an expenditure that doesn’t generally add value for the customer but is necessary to help sustain the business.
Even if a company is good at eliminating waste, it still needs to implement the second pillar—respect for people—if it wants to be successful. Respect for people grew out of Toyota’s concept of “autonomation.” Autonomation means “automation with a human touch.” At Toyota and in TPS, machines aid humans, not vice versa. To this day, when you visit a Toyota factory you will see far more humans than at comparable factories of other automakers. Robots are primarily used in dangerous processes and to lift heavy assemblies
I have come to believe that respect for people is the most important pillar of Lean. However, because it is the least understood (or accepted), it is often the primary reason why most Lean transformations fail. Companies focus on eliminating waste and do not emphasize having respect for people, which causes the whole system to collapse. People are the core value-creators of a Lean organization, something many companies do not understand. Toyota is known for saying “we develop people before we make cars.”
Respect for people takes many forms. First, it aims to create an environment for employees where ideas, knowledge, creativity, and experience are valued. Traditional accounting practices measure the cost of the pair of hands, but do not measure the value of experience and creativity in the brain attached to the pair of hands. The lack of a defined value offset is why traditional accounting drives decisions to move factories to countries with lower labor costs, even if hundreds or thousands of experienced, creative people are replaced by even more people with less knowledge.
Respect for people also applies to customers. Every customer is considered to be very important, and their problems are taken seriously. This is part of why Toyota failed with their series of recalls in 2009 and 2010. Instead of holding to a strong culture of respect for its customers, the company tried to play down the stuck accelerator problem for years before the negative perception and press became too great. Imagine how much different those years—and the resulting financial and reputational costs—would have been if Toyota had publicly treated each incident as being extremely serious.
Respect should also be promoted among a company’s suppliers and community, which is why a more accurate translation of Toyota’s “respect for people” is really “respect for humanity.” Engaging the entire value stream and business environment in continuous improvement efforts and knowledge development can pay huge rewards in terms of trust, ideas, and support.
Lean’s reputation is not always one of having respect for people. When Womack and Jones wrote their book in 1990, they could not have anticipated the problems associated with “Lean” rhyming with “mean.” Not a day goes by without some reference to a “Lean and mean” organization. This is a misperception. Real Lean is definitely not mean to the people implementing it.
Real Lean companies leverage productivity improvements to capture new business, which allows them to keep the people impacted by those improvements. Some Lean companies go so far as to pledge that there will be no layoffs due to Lean efforts. This is often necessary to get buy-in for what can appear to be job-threatening improvement programs. And Lean companies like Toyota are generally not unionized simply because the employees are already treated with respect and often paid better than at comparable organizations.
At its most fundamental level, Lean is about enabling people to create improvements that add value for the customer. Leadership is also about people, including ourselves. Together, this is the foundation for our exploration of how Lean can help transform personal and professional leadership.