Is lean an innovation killer?

Have lean killed your innovative and creative mind? I am just thinking about this after visiting an exhibition displaying innovations from a lean manufacturer. They had some cool innovations in display, but I thought they could have done much more.

Lean by very definition is about PDCA cycles and small improvements done over a period of time. Continuous improvement projects, Kaizan activities are among the most popular things in any lean organization. At least most of these activities are to improve the way they do their work. Improvements are mostly targeted to solve an issue you have in your hand, not to think about a totally new way for doing things, or revolutionizing the way things are done. Lean is much more evolutionary than revolutionary.

If an organization exclusively focuses this kind of innovations, there is a good chance their competitors coming up with some completely new way of doing things and taking the competitive advantage. If Toyota has not revolutionized the auto industry with its JIT thinking, we all will be driving almost the same car, manufactured in a mass assembly line.

I think it is a mistake most of the organizations commit in the name of lean. Pioneers like Toyota are not stuck in the area of innovation. They have come up with tons of industry leading innovations. So next time when you think about lean and continuous improvement, think about how you can make room for big ideas and revolutionaries. Once revolutionaries give you the edge, evolutionary can take it from there to make it much more effective.

Recommended Book : How To Implement Lean Manufacturing by Lonnie Wilson

Mr. Miyagi’s Christmas

After their long stay in US, Thanksgiving, Christmas and other celebrations have become a part of life for Mr. Miyagi and Mrs. Miyagi. This time they are preparing for the season little early. They had many things to get done before the Christmas. With Mr. Miyagi’s heavy involvement in recent projects, he had no much time for all these. But somehow he managed to take control of everything. When one of his friends asked how he can keep things in control, he smiled and replied with his unique accent “I’m a lean man, you know.” What do you mean? Asked his friend. Mr. Miyagi replied “You know Michel, lean is not about business. It’s about life. You do lean not only in business. You do lean in your life.” Michel paused for a moment and said OK, but he was seemingly little confused. Mr. Miyagi smiled.

Later that day, Mr. Miyagi and Mrs. Miyagi had a chat about the things they had to do before the Christmas. As Mrs. Miyagi took the lead, Mr. Miyagi was listening to his wife. Mrs. Miyagi talked about so many things they had to get done before the Christmas; it looked like almost too much for them. After a while Mr. Miyagi interrupted his wife and said “Miki, please bring me a pen and a notebook.” Mrs. Miyagi slowly got up from the low mattress they were sitting on and went to the office room, grabbed a pen and notebook and handed it to Mr. Miyagi. “Thank you very much Miki” said Mr. Miyagi while taking his pen and the notebook. Mr. Miyagi said, Miki we shall put down all the things we have to get done before the Christmas on a piece of paper. Mr. Miyagi with his lean experience knew, you have to know what you want to do before thinking about doing them better. So they started.

Their list did include about 20 items, which was already looking manageable. Among them were getting new cloths, buying gifts and arranging a party. Mr. Miyagi asked his wife “What do we have to do immediately?” Mrs. Miyagi highlighted few of the items on their paper. Some of them were about making a phone call. So Mr. Miyagi made a phone call immediately and completed the job. Now two items disappeared from the list. Things to be done shrunk, almost immediately. Then came the bigger stuff. One of them was buying gifts for the family and friends. Mr. Miyagi knew this needs some planning. OK, we will list down what we should buy for each person, said Mr. Miyagi. In a new page he started writing down.

Who are the people we should buy gifts for? Asked Mr. Miyagi. They prepared a simple list. There were about 15 people on the list. Then they started a small brain storming session to decide on the gifts each of them are going to get. Mr. Miyagi knew in Christmas, recipient of the gift is his customer. So Mr. Miyagi wanted to satisfy his customer. It began with understanding what exactly they want.

Mrs. Miyagi said “let’s check on Facebook. We can get some ideas”, she added. So, Mrs. Miyagi logged into her Facebook account and started searching. Mr. Miyagi also had a Facebook account (yes, he is not young by any means). But he couldn’t remember how to login or how to do anything on it. Sometimes he wandered why everyone is so excited about this thing. Anyway he was watching his wife doing the search. Then she came up with some ideas. “Look, Yuu wanted something called Xbox. He said few days back, he would love to get one for this Xmas. Hina wanted a doll” She added. Mr. Miyagi was very excited. He thought to himself, “isn’t this a cool tool to have, even in the business. You can know about what employees and the rest of the world is thinking about you?” He was silent for a moment, until Mrs. Miyagi came up with some more useful ideas.

Once the Facebook search is finished, Mrs. Miyagi proceeded to the Amazon.Com’s wish lists. She found some information about gifts too. At the end they could come up with possible gift ideas for 10 of the people. Mr. Miyagi was very impressed, but had a question. “What will happen if someone else is also buying the same things for the same person?” we can return them, replied Mrs. Miyagi. Although Mr. Miyagi knew inventory is a waste, this time he had no choice. So he agreed.

So they had to buy a 1 Xbox, 1 doll, 1 iPad for their grandchildren. Yes, these were somewhat expensive. But they valued the joy of their grandchildren than the money they had to spend. So they finalized on the gifts. In addition they had to buy a 1 Kindle, and 1 set of Lego and few more items which were not expensive. For the others they decided on Giftcards. Both Mr. Miyagi and Mrs. Miyagi agreed, Giftcards are the perfect gift if you do not know what exactly other person wants. Although they lack the looks and feel, they are very effective as a gift, as they provide the ability to exactly meet the requirement of the person who receives it.

At the end of this exercise they planned out where and when they are going to buy the gifts. Some of the gifts will be bought online. For the things they had to deliver to Japan, they decided to buy them immediately and ship. At the end of the exercise, both Mr. Miyagi and Mrs. Miyagi were very happy. They felt two hours they spent on the exercise was well worth it. They had much more in control over the things they had to do.

Mondays, Fridays, super deals and lean

Just like any of you I am really excited about this season. I love the shopping experience. I always wonder how a retailer can sell their stuff with such large discounts. Are they selling at a loss? Why can’t they always give this kind of a discount? I always wonder. Let’s remove the shopper’s hat away and let’s put the lean cap on.

How come a 55 inch 3D HD TV which was selling for about $4000 is available for about $ 1900? How a women’s watch can be sold for 50% of its original price? How a men’s watch can be sold with a 79% discount?  How come there are 50%+discounts on ladies shoes? Amazing isn’t it? Ideally, if anyone can offer a discount this season, they should be able to do so in any of the seasons. But why is that not happening? Are retailers and these big brands ripping us off?

We will have to check how this buying season works to understand these huge discounts better. Think about it? All the year, retailers and brand owners spend tons of money advertising asking us to come to them and buy from them. They use their advertising money to create their brands and creating a need in us. But we do not have money they are asking for to buy their product. So most of us want the stuff, but do not have the money or the mood for buying.

But in this season, we certainly have the mood for buying, and we somehow manage to keep some extra cash with us. So in this season all the ingredients are in place. We have a real or a perceived need for the products and services. We have the money and mood for buying. And everyone else is buying too. So why should we wait? This is the thinking behind this season.

So sellers do not have to spend tons of money on creating the mood and the need. They can spend this money as a discount to get more customers. In addition sellers do not want to carry the old inventory to the New Year. Especially electronics might be outdated in the New Year. So it will be actually profitable for them to sell their inventory as soon as possible. And some sellers may even lose some money on discounting products heavily so that they can drive as many customers as possible to their shops. Once the customer is in, they can sell other stuff to them. So overall the seller can make a profit. This is how some of the retailers get 40-50% of their annual sales in this season. Isn’t this amazing?

In addition, I am currently thinking about what are the gifts I should buy for my loved ones. I am in the process of preparing it. I want it to be interesting, useful and not so expensive. Can anyone help me? Any suggestions?

Why lean works well in crisis situations?

Crisis has almost always made lean to work. But why? Let’s discuss the possible reasons for this.

Lean requires huge amount of change. It will challenge your core beliefs. For an example you believed having work in progress is going to save you when there is a problem. But lean tells you the exact opposite. It tells you WIP is a waste. You believed you should be smart to continue your work when there is a problem in the system, till your system gets corrected. Lean says exact the opposite. Lean tells you to stop and fix the error. Put you in the shoes of people out there in your factory floor and offices. How would they feel? Will they resist lean? Surely they will.

When your organization does well, there are plenty of ways and logics to continue in the good old way. People will argue saying when everything is working fine why should you change anything? Remember management by exception? It makes perfect sense when everything goes good. Every executive and worker feels secure and their basic needs are satisfied. They get their salaries. They have no risk of losing their jobs. Everyone wants to climb the organizational ladder.

But when things are not smooth and not going well, it will throw few challenges to the people. Everyone is worried about their jobs and they want to be secure. When things got worse, when you have a crisis, this problem is much more pronounced. So everyone will try securing their basic needs. That is, everyone will try securing their job. In other words, needs will change.

This is when a movement like lean, where major changes required in organizational structures and organizational thinking, can thrive. You can now prove the good old way of doing things is not working. Nobody can challenge you. Consciously or unconsciously, people will be more receptive to your new ideas as they fear losing their jobs. Some people will want to see organization coming out of the problem. You can bring some hope to people including top management and to the shop floor workers.

Changes will become a part and partial of life when there is a crisis. People tend to learn new things quickly in these tough times. Making your organization lean is much easier in the times of crisis.

According to the Abraham Maslow theory of motivation, people are motivated by their basic needs first. When they have no job, hence no money, they are looking for money to fulfill their needs like food. When they find a way to satisfy their basic needs, say by getting a part time job, they want to have some security like having a full time permanent job. It goes on like it. But one of the most important aspect of this theory is basic needs do motivate people much more. For an example, when you have no money, rarely you will skip a job even if it is not an acceptable job in other circumstances.

In the time of crisis, people are motivated by their basic needs. When they are motivated by these lower level needs, the motivation levels are very high. This is why a system like lean can thrive in a situation where everything seems to be failing.

But will change happen if you threaten to throw people away from their jobs if they do not follow the process. I really doubt it. People will react negatively to such forces, making your implementation much more difficult.

It was not my aim to say crisis is a good thing or a bad thing. I am not even suggesting fear of losing jobs or the instability is a good thing. But I was fascinated by all the organizations thrived in these situations and wanted to look for a possible cause.

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Why lean manufacturing wins over efficiency improvement movements?

In almost every organization, sometimes so called lean organizations there is a movement to improve the efficiency of a particular process of an activity. They measure efficiency figures in %, like 80% or 90%, and generally aim for an improvement of less than 10%. For an example if they are at 80% they would want to be in 90% range within a year or a month or whatever the timeline is set to. While this looks fine and absolutely required, does this provide the ultimate outcome organizations are looking for? Do these drives contribute to a better user experience? Do they lower the costs of the products to the customer? Do they help delivering the goods when the customer wants them? In most of the cases they don’t. This is because most of these improvements happen in isolation with minimal understanding of the bigger picture. Yes, they may put hours into work and get the efficiency of the work floor by 10%, reducing the cycle time by 1 day. But ultimately they will deliver their goods to the warehouse a day earlier and the goods will stay in the warehouse a day longer. That is all they have achieved. From the customer’s point of view, there is no change, hence no value is added, instead resources are wasted in the name of improvement.

In addition, it is much better to understand what are the wastes available in the process and attack them instead of trying to squeeze an improvement in an already value adding process, thereby putting more stress on already value adding operations. As a lean thinker, you must know what is value in relation to the lean definition. Value is defined from the customer’s point of view, not from your point of view. For an example, if you think you delivered great value by increasing the production efficiency by 10%, think again, and think how your improvement is translated to the customer value. If you fail to translate your savings to the customer value, you have failed.

Let’s us have a look at the below figures on how easy or difficult it is to add value to the customer using “Improve efficiency” and with “Lean Thinking”. Before that, we all lean thinkers understand, more than 90% of the resources can be categorized as “Muda” or waste in lean terms. That is more than 90% of the resources goes without adding any value to the customer. Below figures are based on that assumptions. 

While, “Lets improve efficiency” guys work in the Small Blue area (Which is about 10% of the total area), Lean works on the larger (90%) of the green area. Let’s say you managed a 10% improvement on the Value added activities. So you will have a net effect of 1% in the full spectrum. (That is 10% of 10% = 1%).

In contrast, when lean thinker does a 10% improvement in the green area, which is 90% of the spectrum, you will get a net improvement of 9%. This is 9 times the result you achieved by increasing the efficiency. Most probably eliminating the non-value added activities will be easier than squeezing some efficiency from already value adding operation. 

Original status

Normal Process. 90% of Non Value Added Activities + 10% Value Added Activities

1% improvement by increasing the efficiency of value added activity by 10%.

10% Efficiency Improvement on Value Added Activities. Net Improvement of 1%.

9% net improvement by increasing the efficiency of non-value added activity by 10%.

10% Efficiency Improvement on Non Value Added Activities. Net Improvement of 9%.

So what is the moral of the story? 

Try attacking non-value added activities. You can get greater improvement by doing so. Above example shows how 10% improvement in non-value added activities can translate to 9 times higher improvement to the 10% improvement made on non-value added activities. Please click the "Like" button below, if you like this post.