Monday, October 18, 2010

Lean Thinking for a Scary Economy

The Role of Lean in the "New Normal" World

The "New Normal" often means we are hanging on, and feel our best days are behind us. For the first time in the USA, many feel their children's future will be filled with less opportunity than they experienced.
We need to embrace the "New Normal" as a both a challenge and an opportunity. [North Carolina University] IES is working to help organizations move toward making "circumstances" that will generate true job growth in this "Flat World".

The improvement aspects of lean manufacturing are very beneficial. And the quick response to the market (reduce inventories, pull...) are very beneficial. Both help in any economic climate and are useful today.

I actually think some even more beneficial traits exist in lean thinking for the current economic climate. Lean, the way Toyota practices it, is not about optimistic hopes (focusing on great potential gains) but instead on minimizing risk. I can't find it now, but I believe Taiichi Ohno was clear that he was very focused on making Toyota safe for the long term. Not chasing after quarterly or yearly profit targets.

While many focus on Toyota's quick changeover, pull systems..., and rightly so the importance of long term thinking is huge. When you are focused on long term benefits - you don't take huge risks. You don't over leverage your company. Long term thinking along with respect for people means you focus greatly on avoiding a situation where your company into a position where you have to have layoffs. If that means you leave some potential profits on the table in rabid markets - fine.

I own stock in Toyota and am very happy I do.

The economic future is still bright. But it is also more demanding. The huge amounts of relative wealth the USA enjoyed from 1950-2000 is becoming a thing of the past. Riding on the success that came automatically from that wealth will not work. Improvement is needed to succeed.

Related: Bad Management Results in Layoffs - Managing Our Way to Economic Success (1986) - CEOs Want Health-Care Reform

Tuesday, October 05, 2010

Work on System Improvements for Best Results Not Problems with Individuals

The Deification of Deming

When people discuss how best to change an organization, Lean proponents will invariably cite Deming and argue that since he has shown that 94% of the potential for improvement is in the system there is little point in working with organizational culture.
If lean is ever going to become more mainstream people must start treating it less as a religion with its own gods and more as a collection of insights that have to be carefully tailored to the context you are working in.

Also "94% of the potential for improvement is in the system there is little point in working with organizational culture" is about the opposite of the point he was making. His point would better be stated that there is little point in working on "problems with individuals."

Working on "culture" can mean many things. And often it is just a big waste of time. But the reason for that is not due to systemic/common cause versus special causes.

What Dr. Deming was suggesting is you need to look for systems improvements (which could be cultural - a culture that operates with data based decision making, an understanding of variation...). I think the red bead experiment illustrates the point he was making - any focus on fixing the employees on that system is futile if you don't change the system.

Related: Blame the Road, Not the Driver - Common cause variation - Deming on Management