“More for less” is the mantra of today’s economy, challenging businesses to produce more goods or provide more services with lower overhead. While they are always churning out exciting new products, industries, or innovations, by and large, companies generate more profit by cutting costs. In other words, they make more by maintaining their revenue and reducing expenses.
Since the Industrial Revolution, the titans of capital have explored many different management philosophies to meet marketplace demands. As the economy evolved, so too did these philosophies. Lean management is one of the most popular. Widely used across many industries today, it remains relevant and useful despite constant market disruptions.
In this guide, we’ll learn what lean management is, its history, guiding principles, and most important, how to implement it in your organization.
The lean philosophy
Lean is a philosophy and methodology for gradually removing waste from processes. Business leaders can apply it to individual tasks, larger projects, workflows, and entire companies to maximize value.
The lean philosophy offers a clear definition of waste — any use of time or resources, including labor, that doesn’t create value for customers. Value also has a clear, if broad, definition within lean — any process that customers are willing to pay for.
This is a nuanced shift from the final product to the process of creating it. For example, an automobile manufacturer’s value is the process through which each car is made.
With lean, organizations increase value by preserving their existing worth through less work — they eliminate waste from processes to maintain value with less time and resource consumption. If the automobile manufacturer uses the lean methodology, much of employees’ work involves finding ways to eliminate waste from each aspect of the manufacturing process.
Lean philosophy is guided by these principles:
- Focus on building with quality
- Eliminate waste in every form
- Advance knowledge
- Deliver results quickly
- Respect people, hierarchies, and existing processes
- Implement change to benefit the whole
- Focus on measurable improvements, not commitment to a preconceived idea or goal
We’ll dive more deeply into these principles in a later section.
What is lean management?
Lean management applies the lean philosophy to how you run your organization. Leaders focus on creating value, especially when it comes to generating revenue. Any projects, processes, teams, and other aspects of a company that aren’t creating some form of value are considered waste that leadership finds ways to remove.
Here is what managers keep in mind when they implement lean strategies.
Customers are the most important stakeholders
Customers and end users are the ultimate decision-makers when it comes to what’s valuable and what’s not. If they don’t buy a particular product or service — or deem some aspect of an existing product or service nonessential — then it’s wasteful for the company to continue investing in it.
Companies need to conceive and develop all new projects from a customer’s point of view. If it’s not something customers will ultimately find valuable, it’s not worth pursuing. Similarly, organizations should analyze existing projects and processes from customer viewpoints.
Streamline and reduce production times on an ongoing basis
There’s always room for improvement, and the more experience you have performing a certain task, the faster and more precisely you can perform it. This is true of everything from manufacturing to helping customers and beyond.
Lean management tasks leaders to always look for ways to reduce production times. Eventually, strategies for reducing further waste will reveal themselves.
This is especially obvious when you consider how advancements in technology — like machines that operate more quickly or have higher throughput — have contributed to the production process. Lean management demands leaders and employees be aware of market innovations they can implement to remain competitive.
Analyze and learn to resolve problems
Lean management strategy emphasizes data collection, especially from customers, to eliminate waste. Feedback does more than get managers to understand what works and what doesn’t — it can also show why something doesn’t work.
Many workflows in lean management systems revolve around analyzing various forms of feedback and devising ways to respond to it so that waste is clearly identified and removed.
Focus on employee success
Customers may be the most important stakeholders in lean management systems, but employees are the most important resource. Leaders look to cut waste from employees’ responsibilities, so they can pay attention to what’s most important to them and maximize their value.
What industries use lean management?
Lean isn’t just a method companies should implement when they want to reduce waste. It’s an entire management system that provides a framework for how leaders should think about their organization. It also structures how they take action.
Companies that use lean systems the most may not even refer to their management strategy by that name. For example, the Toyota Production System and the Danaher Business System are both branded lean methodologies.
This methodology has benefitted companies in almost every type of industry and sector. Below are some examples.
As we’ll learn in the next section, Toyota first developed the lean philosophy to reduce waste in its factories, and other companies followed suit to remain competitive. Because of lean methodology’s intense focus on process, it’s still most popular in the manufacturing industry to maximize efficiency and protect delicate profit margins.
For example, John Deere uses lean manufacturing in its automated quality control processes. The company avoids over-producing while getting more items out the door and onto shelves to be sold for lower prices than competitors who don’t have a holistic approach.
The as-needed lean production model allows John Deere to pivot quickly in response to customer feedback and concentrate more on producing popular and in-demand items.
Software development and technology
These days, you’re most likely to hear about lean in reference to Silicon Valley startups, including tech hardware companies and software developers.
Lean is part of the agile framework for software development that optimizes resources, reduces waste, and directs efforts to deliver value. In this system, developers create a minimum viable product (the bare-minimum version of their product) as quickly as possible and continually refine it after release.
Since customers and their satisfaction are the biggest aspects of any lean management system, lean is incredibly useful to businesses in the hospitality sector and teams that specialize in customer service, such as tech support.
Through lean, hotels redesign their booking, staff scheduling, housekeeping policies, and other processes with their customers — and customer convenience — in mind. Similarly, tech support teams can provide better service by designing processes around their customers’ desire to be understood and assured that workers are handling problems as quickly as possible.
Lean is uniquely qualified to help companies improve processes while finding out how to satisfy customers.
Efficiency in healthcare is paramount to ensure everyone gets treatment without overburdening the system. Lean thinking and management systems help hospital administrators and other industry leaders identify waste and excess so they can work on what’s needed most.
The National Health Service in the United Kingdom drastically cut waiting times, sped up access to treatment, upgraded quality of care, and increased patient satisfaction when managers implemented lean strategies to cut unnecessary processes.
Lean management in healthcare also enables the system to handle unexpected crises. Healthcare providers all over the world used lean principles to effectively and quickly address the COVID-19 pandemic.
With their heavy emphasis on bureaucracy, government institutions can profit the most from lean management systems.
Taxpayer money is incredibly valuable, as citizens expect their funds to be put to good use and aid society. At the same time, budget cuts to needed services are also incredibly common. Lean management mitigates the loss of funds so institutions continue functioning without too much disruption to taxpayers.
The benefits of lean management
As you can imagine, lean management wouldn’t be so popular if it weren’t so helpful to the companies that implement it. Here are some of the rewards.
One of the primary ways a business can increase profits is to cut costs while maintaining or even expanding current revenue levels. This is exactly what lean management does. The framework helps company leaders identify what’s most valuable to their customers, eliminate waste, and properly allocate resources to create the most value.
Improved customer satisfaction
Each aspect of lean management benefits customers, so naturally, their satisfaction improves after implementation. The lean framework challenges business leaders to see all of their operations from the point of view of their customers, so they optimize each product and process to increase value.
Feedback is incredibly important in this process. Businesses may solicit customer feedback directly through surveys or other forms of outreach. Or they may collect it indirectly by analyzing sales data. Either way, lean allows businesses to hear their customers and meet their needs as quickly as possible.
With its emphasis on waste reduction, lean management looks closely at internal processes to find ways to save time and resources.
Are there any steps in a process that aren’t essential? Cut them. Are there redundant tasks? Combine them. Can software handle a task? Automate it.
Lean management cuts the fat so employees stay engaged with the most relevant work and get tasks done more quickly.
Another way lean management reduces waste is by encouraging businesses to make products as they’re needed through a “pull system.” Most workflow systems are about “pushing.” In traditional push systems for manufacturers, managers decide they must produce a certain number of items in a given time frame.
However, their estimate may be wrong, or the market may suddenly change and no longer demand the product. Companies then have a lot of inventory on hand they can’t sell — and they’ve wasted valuable time and resources making something customers don’t want.
Streamlining workflows allows workers to think more about tasks that matter, which enhances the overall quality of products and services since there’s less distraction and resource allocation to nonessential tasks.
In manufacturing, this can translate to a reduced defect rate and products needing less reworking. In customer service, reps can take more time to connect with customers and provide more hands-on service instead of worrying about tasks that don’t help their clients.
A culture of improvement
Fully implemented lean management changes how everyone in the company thinks about work. After all, reducing waste makes processes easier for everyone, especially when they’re motivated to make things as effortless as possible.
At the same time, lean management gets people in touch with their natural inclination to achieve and excel. Efficient processes make achievements more attainable, so workers stay motivated longer thanks to the high of accomplishment. This also increases employee morale.
Now that you have a solid understanding of what lean management is and how it can change your company, let’s dive into how to implement it. But first, let’s explore the origins of the lean philosophy in more detail to give you even more insight into how you can apply it to your company.
The roots of lean
Lean as we know it has been centuries in the making. In this section, we’ll explore the philosophy’s origins so we can better understand how it helps companies today. Engineers developed lean principles to help them overcome workflow challenges. Seeing how far we’ve come is a great way to inspire us to go farther.
The origins of standardization and workflow
If you’re already familiar with the history of lean, you know it’s most closely associated with Henry Ford and Toyota. However, the groundwork for lean manufacturing was established much earlier in 1450s Venice.
Engineers in the Venetian Arsenal created a system of manufacturing standardized galley ship parts and designed a sequencing system and production lines that completed one ship per hour. The Venetians’ ideas and practices have stood the test of time, and their principles are still present in workflows today.
Around the same time, completely unknown to the engineers in Venice, the Chinese navy is believed to have constructed ships using similar processes. Over 10 years, they built nearly 300 ships, a feat that would be impossible without the use of some sort of waste-reduction process that incorporated lean principles.
In the 1890s, Frederick Winslow Taylor, who would later become known as the father of scientific management, began closely analyzing factory workers. He conducted several motion and time studies to better understand how work is done. This allowed him to develop concepts of work, processes, and operations standardization, some of the earliest workflow forms.
In 1911, he published The Principles of Scientific Management, outlining the modern organization and decision theories still used today. The book was groundbreaking for its time as it detailed how individual workers could drastically improve their productivity but acknowledged their fear that this could eventually lead to fewer jobs.
In 1910, Henry Ford pioneered a new manufacturing strategy most people recognize as the origins of modern lean. Recognizing time, machines, tools, and people as resources, he systematically arranged them at a manufacturing site to create a continuous flow of production — the assembly line. By its nature, this system eliminated waste in most of its forms, including time and motion.
Using the assembly line to mass-produce the Model T, Ford became the richest man in the world. These are some of his best-known contributions to manufacturing.
As far back as the 1450s, engineers understood the value of standardized parts. Ford took this further with standardized assembly processes and movement. Every employee who put together the bumper of a Model T did so the same way, every day. This process and its associated movements were periodically updated as engineers found more efficient ways to do it.
No wasted movement
Like Taylor, Ford liked to study how people worked, once observing that farmers waste 95 percent of their time being unproductive. Their tools, storage areas, and workstations were often scattered with little thought about how they were organized. As a result, farmers spent unfathomable amounts of time walking between tasks to fetch objects they needed.
As a result, Ford designed his assembly lines for maximum efficiency. He arranged workstations and machines sequentially so manufacturing and assembly could flow without any wasted movement. For example, the stations that manufactured the steel components for the Model T’s body were located next to the stations that welded them together.
No wasted material
Any time we use industrial processes to make a product, there are inevitably raw materials that go unused. While Ford couldn’t completely remove waste, he reduced it by finding innovative ways to use excess material.
The Ford factory distilled wood scraps into chemicals that could be repurposed for other uses, such as charcoal production. It converted blast furnace slag into materials used in road paving. Sulfur leftover from cooking coal was converted into fertilizer.
The assembly line was great for making high-quality cars, but it didn’t allow for any variety — something consumers grew to want more of. Early Model Ts were available in only one color and a handful of body styles. In fact, Ford had a 19-year model cycle.
Other automakers answered the call for variety, quickly gaining some of Ford’s lost market share. At the same time, they immediately encountered the same issues Ford sought to alleviate: lower throughput, longer delivery times, and lower profit margins.
Toyota learns lean
Before Toyota became one of the biggest automotive manufacturers in the world, it was known as Toyoda Automatic Loom Works. Sakichi Toyoda founded the company in 1926 and changed the name to Toyota a few years later when it expanded to cars. Over two decades, it rose to prominence as a midsize car manufacturer focused on the Japanese market.
In 1950, Sakichi Toyoda’s nephew Eiji Toyoda, a rising star in the company, visited the Ford factory in Dearborn, Michigan. At the time, it was producing 8,000 cars per day, dwarfing Toyota’s output of 2,500 cars per year.
As he studied Ford’s factory system, he realized it wouldn’t be tenable in the Japanese market. The population was too small and the needs too diverse to effectively deploy something like what Ford did with the Model T. However, it did spark several ideas, inspiring Toyoda to pursue a new form of qualitative production.
The seven wastes
Toyoda enlisted engineer Taiichi Ohno to find a way to overcome the limitations of Ford’s system and develop a manufacturing model that would work in Japan. The biggest challenge was meeting the diverse needs of customers.
The Ford system focused on mass production, without any concern for the needs of customers. Toyota was perhaps too focused on meeting customers’ needs — the company was manufacturing both compact and midsize cars for the wider consumer market, as well as luxury vehicles for the elite.
To truly grow, Toyota needed to merge the efficiency of Ford’s system with its ability to meet market needs. As Ohno searched for solutions, he became obsessed with identifying and cutting waste. In the end, he found seven wastes that slowed factory throughput and performance, keeping Toyota from reaching its potential.
Overproduction is perhaps the greatest waste because it uses every resource in a factory — materials, energy, labor, and time. It also has the biggest detrimental impact on profit.
A company that overproduces depletes workers and systems, leaving them without any ability to recoup costs, as there’s no way to sell the products that were completed. Any model emphasizing production over need ignores issues related to market research, consumer insight, and even lack of quality.
Any time goods aren’t moving through a production line, a factory is wasting time. This happens for many reasons, including waiting for more production orders after a large batch is finished, poor material flow, or even excessive distance between workstations. This is especially costly if workers are on the clock but not getting anything done.
Transportation of products and materials between work or distribution centers is often unavoidable, but it’s still waste in the grand scheme of things.
That’s why companies should decrease transportation until they can fully eliminate it. The primary way transportation manifests as waste is when it leads to waiting, while the actual moving of goods incurs labor and energy costs.
More doesn’t always mean better. Ohno quickly recognized that using unnecessarily precise or expensive equipment can be a form of waste. It costs more money up front than can reasonably be recuperated and can inspire overproduction to justify capabilities or the investment the equipment represents.
If overproduction is making more of a product than the market needs, unnecessary inventory is the creation of too many different products, which can dilute a company’s focus and profitability.
Perhaps it was limiting for Ford to produce only one type of Model T. On the other hand, competitors who produced dozens of car models, as well as accessories for each of them, were also limited by their lack of focus. This type of excess increases lead times and obscures major problems about a company’s market position and its customers’ needs.
Taylor’s study of worker movement was ahead of its time. Ohno picked up where Taylor left off by identifying the ways employees waste time and energy through unnecessary motion. His classification of motion as waste paved the way for modern-day ergonomics.
The final waste Ohno focused on was defects that occur during the manufacturing process. Workers waste time and energy when a product requires additional reworking. But if it’s entirely scrapped, it also wastes material.
The Toyota Production System
After extensively studying the different types of waste, Ohno and Toyoda devised a production strategy that minimized all of them. One of the hallmarks of the methodology was to produce only what was needed as it was needed to prevent overproduction while ensuring work was constantly in motion. But how do you achieve this?
Ohno devised a system through which managers could determine how many specific products they would need in the marketplace at any given time. By analyzing sales in real time, and understanding how long it would take to manufacture and deliver products for sale, it was easy to work backward to determine what should be in production and when.
The next issue was ensuring workers were never over or under capacity. Waiting was as much of a waste as overproduction, so it was important for a product to always be in process.
However, it was never good to stress workers too much, as that could also harm productivity. Ohno installed capacity limits that dictated how much could be in process at any given time. Managers decided which items would be in process based on market needs.
But how could all this be represented efficiently? Ohno created paper cards that workers attached to each item and then followed through the entire production process.
Once a card reached the end, managers could return it to the beginning of the line to signal the production of a duplicate item or replace it with a card for something else that was more urgent to manufacture. This system of paper cards would later become known as kanban, an important type of lean production still popular today.
The lean rebrand
Thanks to its lean manufacturing process, Toyota became one of the largest automakers in the world, and its innovative method influenced operations in every industry.
In 1988, John Krafcik coined the term “lean” in his op-ed “Triumph of the Lean Production System.” The piece finally gave an umbrella term to the techniques Toyota and thousands of other companies were using to reach new heights in efficiency and profitability.
Lean has now expanded beyond manufacturing to influence how teams develop software, handle finances, tackle human resources issues, and manage other forms of knowledge work.
The main principles of lean
Now that we know the history of lean management, it’s time to look at what it is today. At its core, lean is based on two pillars practiced through five principles. Because it’s an ideology, managers and workers can adapt it to nearly every industry.
Let’s dive into the structure of this framework.
The twin pillars of lean management
Let’s distill lean into two concepts: continuous improvement and respect for people. These guideposts don’t just encapsulate the ideology — if followed correctly, they can form the foundations of an ever-growing and long-lasting enterprise.
Let’s look more closely at the lean pillars.
Unlike most workflow ideologies, lean management doesn’t view work as a process with a beginning and ending but as iterative, with a never-ending series of cycles. It’s in this series of cycles that workers have the opportunity to make improvements — to their processes and procedures, to the flow of work, and even to themselves.
Continuous improvement is best understood as any effort to streamline processes and reduce waste. These efforts differ in every organization, but the basic improvement cycle is as follows:
- Identify waste
- Plan strategies to streamline operations and processes
- Execute the solution in the next cycle of work
- Review the solution to see how it performed
We’ve already discussed the seven types of waste identified by Ohno. During each work cycle, managers take note of waste and devise ways to streamline operations in the next cycle. If the solution doesn’t work, they can try another in the next cycle or further refine what they’ve implemented.
As the name implies, continuous improvement is always happening, and activities that enable it are included in every work cycle.
Respect for people
We’ve discussed how lean systems center customers as the key company stakeholders. Consequently, lean organizations greatly respect their customers. But that respect goes beyond consumers — it extends to employees, managers, vendors, and everyone else involved with the organization.
Lean organizations recognize the value of everyone’s time. They avoid involving employees in fruitless activities that don’t ultimately bring any value. The ruthless elimination of waste isn’t just good for a company’s bottom line — it keeps employees focused only on tasks that drive value to customers.
This in turn feeds employees’ sense of value and worth to the company, inspiring them to push harder and reach new levels of productivity. Waste elimination also promotes hunger for greater achievement, the basis of quality work.
In lean companies, marketers don’t generate campaigns just to look busy or because they should have something in the works. They’re free to deeply research the marketplace and potential customers, and find the perfect combination of content and targeting to generate leads.
Similarly, salespeople aren’t desperate to chase weak leads and fill quotas. They’re encouraged to develop their pipeline and invest in building quality relationships with leads that are more likely to convert.
Because lean companies focus on value and quality, they don’t waste customers’ time and attention on products they have no use for. This completely changes the company’s motivation for creating a product or service, and customers recognize this.
Think about the difference between a cheap, mass-produced trinket, and a quality luxury item. Mass-produced items are usually created to exhaust a manufacturer’s supply of otherwise useless raw material. Creating something out of the raw material is the only way to turn a profit, however modest. In contrast, a lean company thoroughly tests and painstakingly crafts the luxury item based on the customer’s feedback and wants.
The way these two products are marketed is different as well. The conventional company highlights the low price of the mass-produced product to encourage as many sales as possible. The lean company draws attention to the item’s craftsmanship and deliberate utility.
Lean organizations also prioritize teamwork and respect for both their individual members and the unit they comprise. With work-in-process limits controlling workflow, teams are unlikely to be overburdened with too much to do at once. At the same time, work is distributed fairly among team members in a way that’s most efficient and beneficial to customers.
The five lean principles
The two pillars of continuous improvement and respect for all people make lean management one of the best systems for workplace culture today. These two ideas both inform and are supported by the five lean principles.
You’ve heard it before: “The customer is always right.” That phrase was coined in 1909 by Harry Gordon Selfridge, founder of Selfridges department store. Though this was a few years before Ford started developing his manufacturing system, the same idea applies to lean systems today.
Value is critical to lean organizations, and customers are the sole determiners of value. Therefore, what’s considered valuable, and the way it’s given to customers, affects every aspect of an organization.
What do customers need? How does the product or service fulfill that need? Why do they need it? How important is it? How much is this worth to them? These questions and more are the driving forces behind every worker’s activity.
Value stream mapping
In lean management, “value stream” is best understood as another name for workflow. Once they determine value, managers can visually map out the processes that will take raw material (or an idea), turn it into a product or service, and deliver it to the customer.
The value stream map encompasses all aspects of design, manufacturing, administration, marketing, delivery, and customer service — every step from beginning to end. During the mapping process, managers can even reverse engineer the process to ensure they don’t miss anything and perhaps discover other exciting possibilities along the way.
The point of visually mapping the value stream is to make it easy for many stakeholders to review and understand it. This way, they can easily spot excess processes and waste, and eliminate them before they become costly issues.
The goal of value stream mapping is to achieve a state of flow. As part of its emphasis on respecting people, lean management is about working smarter instead of harder. The goal is always to make things easier for workers but in a way that improves productivity and efficiency.
This means the workflow is free of delays and bottlenecks, no one is being overworked, and customers are receiving consistently high-value products and services. To create better flow, workers come out of their silos to see how their behaviors and processes impact the whole, allowing departments to become more cross-functional and create opportunities for even more streamlining.
The “just in time” manufacturing and service style associated with lean management means that work is never pushed just to meet a quota or some preset bar for accomplishment. Instead, work is “pulled” by the customers based on their service needs or the company’s need to replenish products as they’re selling.
In manufacturing, especially, avoiding overproduction is key to maintaining high profit margins. This pull system prevents companies from wasting too many resources making items that won’t sell. This effectively lowers company overhead, allowing businesses to deliver even greater value to customers in the form of lower prices.
The principle of perfection is the one most related to continuous improvement. The definition of perfection is always evolving. The moment perfection is achieved, it becomes status quo and opens the doors to higher standards.
The ultimate goal of lean management is to make continuous improvement the basis for company culture. Many experts agree that a process isn’t fully streamlined until its value stream map has been refined at least six to 12 times.
Lean management applied
Many types of industries, businesses, departments, and teams benefit from lean management. However, its application can create industry-specific principles without modifying the values of the two pillars. This is a testament to the versatility of lean thinking and why it has proven to be so enduring.
Here are a few examples of lean management in various industries.
Lean construction principles
When it comes to construction, customers want high-quality materials and labor for as little cost as possible — exactly what lean construction delivers. It combines lean manufacturing principles with practical design and a systematic approach to streamlining operations, maintenance, and even material recycling.
Managers map out every project’s value stream to look for opportunities to reduce waste and deliver greater value. Continuous improvement is also a cornerstone of lean construction. At the end of each project, managers analyze results and look for opportunities to improve in the future. Because construction is project-based rather than ongoing, managers may not be able to make any adjustments until the next project.
Lean software development principles
As mentioned, software development is one of the most common areas where lean management is applied. It’s part of the agile framework, which focuses on delivering a minimum viable product to consumers and then improving and refining it over time in ongoing updates.
This perfectly encapsulates the pillars of continuous improvement and respect for people. Each software update is designed to improve upon the last and deliver greater value to customers.
Lean design principles
Conventional design for mass production focuses more on reducing manufacturing costs and improving product functionality than anything else. However, applying lean principles challenges designers to look at all the factors that can determine a product’s value to customers and its success in the marketplace.
Apple’s iPhone is perhaps the best example of this. Previous smartphones emphasized functionality above all else. Take, for instance, BlackBerry’s famous keyboard. Apple changed the game by designing something both easy and intuitive to use in an incredibly aesthetically pleasing package.
Apple focused less on manufacturing costs, passing these prices down to consumers. However, because the product was so innovative and desirable, consumers were more than happy to pay extra.
The goal of lean engineering is to improve the efficiency and knowledge of engineering teams, allowing them to provide more value to their company or marketplace. One of the metrics used to determine this is the amount of valid data produced per dollar invested in engineering-specific assets. These assets are later benchmarked against standards and practices determined by the industry they’re created for.
However, since the primary metric is data generated per dollar, lean engineering emphasizes transparent teamwork, continuous learning, streamlining processes, eliminating waste, and iterative or cyclical asset development. The pillars and principles of lean management remain intact even in an incredibly knowledge-focused environment like engineering.
Training yourself to apply lean concepts
Lean isn’t just a strategy for manufacturing and working — it’s a way of thinking. When Ohno approached the development of the new Toyota Production Process this way, he broke down long-established mental constructs about work, productivity, and processes, replacing them with a new model more aligned with reality.
What’s more, he and the team at Toyota internalized this new way of thinking and converted everyone at the company to it as well. This transformed the Toyota Motor Company from a small, nearly bankrupt automaker to one of the most recognized brands in the world.
In this section, we’ll explore the power of lean thinking and how it can change your company culture.
How Toyota adopted lean thinking
Even though lean management emphasizes group contribution over hierarchy, in the beginning, leaders had to teach lean thinking from the top down. The company leadership formed a group of elders (called senseis) and coordinators who were well versed in lean philosophy and trained on how to get others to adopt it.
These senseis worked with managers, introducing more and more challenges and concepts each production cycle. Managers eventually applied lean thinking through the following methods.
Seeking direct experience
Many companies distribute valuable information through memos, reports, and meetings. Toyota was no different during the implementation of the Toyota Production Process.
However, managers were increasingly challenged to observe work conditions firsthand — to see how workers operated on the production line, to study where they struggled and excelled, and to ask questions. In addition to creating more informed managers, this improved relationships between leaders and employees, who often shared valuable insight due to the hands-on nature of their work.
Developing discipline for quality
The fast pace of production lines in high-volume operations makes it easy for workers to pass along defective work. They prioritize quantity at the expense of quality, knowing the process weeds out scraps eventually.
Toyota turned this type of thinking on its head by challenging employees to react immediately when they encountered defects. This ensured quality improvement immediately and discouraged workers from allowing subpar products to move past their station because the next person in line would announce their mistake.
Scheduling projects realistically
High-volume operations focus on getting as much done in as little time possible. Lean production and workflows optimize manageability so workers can focus on quality.
This shift in how managers calculate capacity means they have to be more conscious of lead times. They must understand the availability of production time compared to average customer demand and map out value streams accordingly.
Prioritizing flow over batch sizes
In traditional management models, companies settle on a way to work and then produce as quickly as possible to lower the cost per unit. On the other hand, lean thinking focuses on the steady flow of work to satisfy actual market demand instead of imaginary demand that may never come.
Toyota could not achieve unit costs as low as Ford’s Model T, but it did save massive amounts of money in other areas, such as warehouse storage for products awaiting purchase, transportation, and the use of subcontractors.
Traditional workflows, especially in manufacturing, present tasks as piles. You start with a pile of raw material or outstanding tasks, and then, through various production processes, you turn them into a pile of finished products or work.
In lean management, there are no piles — just demand and the work done or products made in response to it. To visualize this, Toyota created a kanban board system that signified in real time how much and what kind of work was in progress, what was done, and what still needed to be done.
This created a sense of urgency since workers were only allowed to have a certain number of tasks in process at any given time.
Seeking ever-evolving perfection
Toyota managers created a word to encapsulate their system’s goal of continuous improvement — kaizen, which translates to “change for the better.”
Ohno and other Toyota executives knew that it would be more beneficial to achieve kaizen through gradual improvement instead of striving for massive overhauls all at once. Kaizen is about getting one percent better at something every single day rather than trying to force complete transformation overnight.
How to achieve lean thinking
Changing existing belief systems is no easy feat, but the senseis at Toyota designed their challenges to gradually shift perceptions. There are three ways to facilitate this shift.
Inspire aha moments
Some people are audible learners, others visual, and some kinetic. Having a combination of direct experience, reading material, and conversations about processes is the best way to create breakthroughs. The senseis at Toyota knew this when they encouraged managers to get involved in production processes.
Join the lean community
In software development, an entire community has formed around practicing the lean process. Its members collaborate across industries to find new ways to identify waste and streamline processes. Kaizen has evolved into a mindfulness methodology that people practice even outside of work.
The best way to learn lean is to do it. Once you understand its principles, you can start to use them wherever they’re most needed. Then, slowly revamp your operations and workflows as you identify more waste and find inefficiencies.
Considering how substantially it can change an organization over time, lean is surprisingly noninvasive. Workers can implement it subtly for mild improvements or eventually transform an entire company.
Workers can follow specific frameworks to naturally promote lean thinking and management. Here are some of the most common ones.
The paper card system that tracks items through production formed the foundation of a full workflow system called kanban. This visual framework breaks production into stages, represented as columns on a board. Common names for stages include “to do,” “in progress,” and “finished.”
The system represents work items with colorful cards known as kanban cards. Where they’re placed on the board indicates what stage they’re in. Each stage can only have a certain number of items in it at each time, as dictated by the work in process limits discussed in previous sections.
Using a kanban board naturally promotes the execution of lean since it forces workers to follow lean principles.
Kanban boards are especially popular for software development. A great example is how software bug fixes or product updates are tracked.
Once managers determine what features they want to add in the next update, they create a kanban card for each feature and move them through the stages of the board as coders complete their work. Anyone looking at the board will understand exactly what everyone is working on and what stage they’re in.
Completing one item will also signal a coder to pull a new task into their queue to begin working.
Standardized work is a strategy for creating precise but simple-to-follow procedures to make products that are up to par with established quality standards and to generate work consistently, safely, and effectively.
Companies can apply standardized work procedures on their own or as part of their value stream map. Whichever they choose, having formalized standards is key to helping employees develop discipline for quality. It’s these procedures that determine whether or not a worker should stop the assembly line because they encounter a defective product.
Misused time and energy are the biggest forms of waste in the world, let alone in lean management. Fortunately, technology is helping us work more efficiently than ever.
Email was just the beginning of the evolution of work. Now, connecting with coworkers and colleagues is even more efficient with Slack and similar apps. Workflow software (as we’ll discuss in the next section) has simplified project management more than ever as well.
In the lean community, “autonomation” is the concept of teaching machines to perform more like humans. This way, they can self-monitor and perform even quicker since they won’t have to wait on human inputs.
We’re still far away from full autonomation, however. Though software platforms can drastically increase the speed at which we execute mundane tasks, they currently require human judgments and oversight to perform properly. No matter how much a machine can accomplish, a human still needs to monitor projects and make sure workflows are handled.
Using technology for lean
Now that we’ve covered what lean management is, how it was created, and its principles, we’re left with the most important question: How do we implement a lean management system in today’s high-tech business and manufacturing environments?
Software for lean management
The days of using spreadsheets and word processors to manage your operations are long over. Since the turn of the millennium, software developers have made major strides in creating programs that help teams work more efficiently.
Platform features help project managers with everything from breaking projects into individual tasks to automating notifications. As they’ve become more advanced, they’ve greatly impacted office life, even reducing the number of emails team members have to send each other.
The latest generation of project management software is cloud-based, so team members can use the system wherever they are. This is especially important with today’s emphasis on remote work. Many of these tools also integrate directly with employees’ mobile devices so they can perform advanced project management functions even when they’re away from their computers.
Your company might already use project management software that streamlines workflow and eases worker collaboration. But some programs are tailored specifically to lean methodologies, as we’ll explore later in this chapter.
Fortunately, many mainstream workflow management platforms are so versatile they can apply lean principles and thinking to your workflow, even if the creators never imagined it.
The benefits of lean management software
Cloud-based platforms provide many capabilities to amplify lean’s efficiency.
Think about how complex a single day of work is. Project feedback can come through emails, phone calls, and in-person meetings, all of which employees must convert into notes. Though workers can reference emails when needed, they can also easily lose them in a chaotic inbox.
Lean management software can serve as a “source of truth” for every aspect of a project, consolidating notes, spreadsheets, word processing files, and presentations in a single dashboard.
On the task level, project managers can add comments and links, or upload documents with important information, so users always have the resources to complete their work in one place. No more searching for specific client emails or trying to remember what was said in a meeting. Best of all, this information is stored in the cloud, which allows for access from anywhere.
Lean management software makes it easy for teammates to work together on projects thanks to streamlined communication features, such as nested comments. Chats occur in real time directly in individual task windows, so a record of each conversation is archived within the project itself.
Users can also tag coworkers — even from other departments — to solicit feedback or assign tasks. This breaks down silo barriers, so the workers with the most expertise and insight are engaged without too much distraction or extra effort.
In addition to nested comments, these programs allow users to assign tasks to other team members and to automate notifications. In the past, workers had to write an email to a coworker explaining what needed to be done and by when. With one-click task assignment features, the notification is sent automatically, and team members can read the details in the task window itself.
Many of these platforms offer tracking capabilities that help project managers measure cycle time, employee workload, production demand, and other metrics important for lean workflows. Like lean itself, these tools also visualize KPIs and workflows so users can better understand the data, making it easier to identify waste and further streamline processes.
Storage capacity is vast and growing, so work can be saved for many years without any issue. And while lean management software quickly organizes information, advanced search functions make it easy to find exactly what you’re looking for without clicking through hundreds of nested folders. Workers can pull up past information in moments for easy reference.
The best software platforms for lean management
Some of the best software for lean management might be the platforms you’re already using. Here are some examples.
For manufacturing: Katana
Manufacturers built Katana to help them overcome familiar challenges. Its features are specifically tailored to manufacturing pain points and even use industry lingo. The program integrates seamlessly with your inventory management system, so you’re always informed about when to place new material orders to meet upcoming production deadlines.
Katana can even alert you if you schedule a job without available inventory. Best of all, supply updates automatically thanks to batch traceability functions.
Another useful feature is the ability to set product recipes so Katana can automatically adjust inventory and calculate production costs. Once projects are created in the system, you can even drag and drop them on the timeline to customize their priority without manually typing in new dates or other information.
Above all else, Katana is a visual scheduler that cuts through the clutter of dates and deadlines, and maps out processes in a clear and easy-to-read format.
For software development: Planview LeanKit
LeanKit is a special offering from the popular Planview platform, based entirely on the kanban workflow system first created by Toyota.
This solution allows project managers to create drag-and-drop kanban boards that fully encompass projects from beginning to end, while automatically enforcing work-in-progress limits. Boards update in real time so all stakeholders can see the status of every task and what each team member is working on.
The platform also supports customized swim lanes for even more clarity about project status. Best of all, LeanKit makes it easy to identify bottlenecks and show them to your team members. This helps everyone get on the same page and resolve issues quickly.
For lean businesses: Wrike
Wrike is a versatile project management platform that excels at giving companies the tools they need to work more efficiently and more collaboratively.
It comes with dozens of workflow templates for projects like event management, recruitment, and new employee onboarding. Gantt chart features make it easy to set goals and visualize progress toward them. With built-in kanban board systems that have drag-and-drop functionality, teams can map out a path to success.
Best of all, the entire system is enhanced by artificial intelligence, which can help you identify opportunities for automation and set processes on autopilot.
Jotform is one of the most robust online form builders on the market, fully stocked with more than 10,000 templates. Jotform Approvals turns these forms into workflows to streamline data collection and its review.
This is great for lean companies because they can collect feedback, requests, and even payments from customers and employees alike, and then automatically notify the appropriate stakeholders to review a submission.
Jotform Approvals is specifically designed for complex approval workflows. The innovative product even offers process templates that help users build multilevel reviews, so those new to building workflows don’t have to guess how to do it.
Managers can add conditional logic to ensure forms are always routed to the correct employee. Once they complete their review, users can assign tasks to other team members or approve them with the click of a button.
Workflows and forms alike are fully customizable, all the way down to their branding.
The demands of modern business have pushed companies and workers to do more — but at what cost? The push to grow has arguably contributed to a massive rise in pollution and carbon emissions from manufacturing, as well as worker burnout in many other industries.
The constant push for expansion needed something to balance it, leading to the genesis of modern-day lean thinking. Focused on working smarter instead of harder, lean management prioritizes quality over quantity and an evenly paced, sustainable workflow over a mad dash to completion.
As the role business plays in climate change becomes increasingly scrutinized, lean thinking’s ability to create sustainable business processes will become increasingly important as well. With its goals to eliminate all forms of waste, lean management could be just what the doctor ordered for building a truly sustainable and circular economy.