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

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