Lean management methods have been in the business world since the early 1900s or sooner, although former Toyota executives are credited with crystallizing and popularizing them in the 1980s.
The core concept, according to the Lean Enterprise Institute, is to create the most value for customers while wasting as little as possible. Think: efficiency.
However, there is a component of lean management that gets short shifted, according to Bob Emiliani. A professor of lean management since 1999, Emiliani teaches courses on lean leadership and lean supply chain, and has done research focusing on lean leadership and written extensively about lean concepts. (He also provides teaching and training services to businesses and organizations that want to learn lean management; see his website at www.bobemiliani.com.) Before embarking into academia, he worked for 15 years in consumer products and aerospace industries in engineering, manufacturing and supply chain management.
The traditional way that businesses process material and information is referred to as batch and queue production, noted Emiliani. In a manufacturing or assembly process, for example, one stage may be completed, and the unfinished goods wait in a queue until the next stop in the process. After the next step is completed, the unfinished goods wait in a queue again until the next stop in the process, and so on.
Lean management “tries to create a flow,” explained Emiliani, to connect immediately the steps in the manufacturing or assembly process. “The reason why you want flow is it is the lowest-cost, highest-productivity, highest-quality, shortest-lead time way of processing material and information.”
If problems are detected related to quality or construction, those problems can be caught immediately instead of after the completion of a batch of 100 pallets. “The principal of continuous improvement…means we need to move forward from the traditional way of doing things…to flow,” said Emiliani. Improvements are sought on a continuous basis in order to help reach the goal of the business.
There is a second principal of lean that too often is ignored, Emiliani contends. The second principle is respect for people. This includes employees, suppliers, customers, investors, and communities where a business operates.
Respect for people is required, said Emiliani, “because if you want people to continuously improve, it has to result in benefits to workers.”
“In other words, workers will not engage in continuous improvement if it costs them their job. No one wants to put themselves out of a job.”
A sign of a business not adhering to the principle of respect for people would be – in the case of employees – layoffs. Traditional management “says it’s okay to improve a business at the expense of employees,” said Emiliani. Or perhaps an improvement is good for a business but bad for suppliers, he said. “That’s okay,” according to traditional management. He characterized these scenarios as “win-lose outcomes” — a business benefits or wins but some person or persons is adversely impacted and loses. They are denounced by lean management “because they disrespect people.”
Managers who want continuous improvement must employ both principals of lean management, he suggested.
“An improvement is only considered an improvement if it is win-win,” respecting all parties involved and not negatively affecting them. “Otherwise, it’s not an improvement.”
Emilinani even coined a phrase for managers who adopt the principle of continuous improvement but ignore the principle of respect for people; he calls it “fake lean.” He incorporated the terms “fake lean” and “real lean” into his university course about 15 years ago. He also is the author of a six-volume book series, published in 2007 and titled “Real Lean,” that explores lean management and leadership and draws heavily on the contrast between “real lean” and “fake lean.”
Interestingly, even the principles of lean described by the Lean Enterprise Institute on its website (www.lean.org) do not include any mention of the principle of respect for people. To its credit, another section of the website notes that “lean must never be seen as a tool for headcount reduction or mindless cost-cutting. This fundamentally misses the purpose of lean, which is to create value through eliminating waste. As companies improve their processes they should be able to reallocate their productive resources to new value-creating work.”
Emiliani coined the expression to draw a distinction “between the correct way of doing things and incorrect ways.”
“There are right ways” of doing things “and there are wrong ways,” he argued.
“It matters whether you do things right or wrong,” he added, even if it’s something as mundane as making a hamburger. If you burn a hamburger, for example, “it tastes bad.”
“If you do lean wrong…humans suffer.” Emiliani offered examples. Workers are laid off. Suppliers, forced to cut prices in order to do business, go bankrupt. Customers may be hurt by products of poor quality. “So these things matter.”
Within the framework of a right and wrong of doing things, he said, “there is still room to adapt.” Continuing with the analogy of making a hamburger, it may be prepared with onions, curry powder or other spices, cheese or other ingredients. “But fundamentally, there is a way to make it taste good and doesn’t make you sick,” a correct way, but the freedom for a lot of adaptation within the framework.
Lean is a “growth strategy,” said Emiliani, “to grow business and improve….Lean was never developed as a cost-cutting strategy.”
“People who use it for negative, win-lose cost cutting are not doing it correctly. They do not understand what they are doing. They are harming their business, not helping it. They just don’t know it.”
Most managers think of business “like a football game or war,” explained Emiliani, and figure there is a winner and a loser. They are committed to win and have no regard for who loses. The concept is “deeply, deeply embedded into how leaders of organizations think,” said Emiliani. “It’s really difficult for them to think of how to lead in a win-win way.”
Businesses obviously want to improve efficiency and reduce costs, noted Emiliani, “and there’s a way to do it with good outcomes and bad outcomes.” The distinguishing characteristic of lean practitioners is “does management understand how to do this in a win-lose or a win-win way.”
Some academics and consultants pay little attention to the respect for people principle and don’t teach it. Academics might not understand or appreciate it, said Emiliani. “Consultants will talk about it if they have a receptive client…It varies.”
Lean management is a system of “progressive management,” said Emiliani, meaning it’s different than the status quo or normal way of conducting business.
Lean management has its roots in the Toyota automobile company. Former Toyota managers who retired in the mid-1980s started a consulting business to teach kaizen, the Japanese word that translates to “good change,” synonymous with the continuous improvement principle. Their teachings — the principles of kaizen originally were introduced in Japan after World War II by American Edward Deming and are credited with helping Japan’s dramatic post-war recovery — were rooted in industrial engineering practices. “They teach people how to do kaizen and do it in a way that does no harm,” said Emiliani. As practiced at Toyota, kaizen “has to benefit one party and be at least neutral to another,” he said.
The concepts of kaizen actually have been around since the late 1800s or early 1900s, said Emiliani, and have evolved since then through the efforts of various pioneers and organizations, although he credited Toyota with doing “the most to create a coherent system of management.”
Lean management is nothing more than the application of the scientific method to management practices, observed Emiliani. Most businesses, when they experience a problem, “The boss says, ‘Fix it. I don’t care how,’ “ said Emiliani. The business puts a band-aid on the problem and moves on. A practitioner of lean management will engage in the scientific method or derivatives, like kaizen or other problem-solving methods, in which problems trigger rapid scientific investigation.
“This is really different compared to traditional management,” said Emiliani, “which just blames people for problems, which disrespects people and has a superficial view of problems.” Problems may recur, but in lean management they will be eliminated over time.
As an example, Emiliani pointed to the Wiremold Company, a Connecticut business that was transformed by lean management from 1991-2001. The company integrated both the continuous improvement and respect for people principles, and their story is told in Emiliani’s 2007 book, “Better Thinking, Better Results.”
Lean “replaces how you do everything. It’s comprehensive in that way.” Most businesses owners or managers are not interested in undertaking comprehensive change, he suggested.
The “real challenge” to managers, he said, is whether they want to process information and materials the traditional batch and queue way, which requires the longest lead time, is the most costly, and produces products of the lowest quality, or if they want to be proactive in leading their business. Unwillingness to embrace the concepts puts a business at risk, he said — now or in the future.
“Most leaders of organizations only understand win-lose propositions,” said Emiliani. “Lean changes everything… That’s a big thing for someone to swallow that has 30 years of business experience.” Those business leaders have been promoted over the years, achieved a measure of financial success and prestige, he observed.
“Now they have to confront the fact they don’t know it all.” It is a “big challenge,” he noted, to persuade people who are set in their ways to do something differently. In fact, in the history of progressive management, it has been a struggle to win the support of leaders who have two or three decades of experience of “doing things the old way.”
Emiliani used another illustration. Imagine someone who has been playing the trumpet for 30 years and can perform well, improvise with other musicians, and so on. “Now someone says it’s time to learn to play the drums or piano.”
How to Spot Fake Lean
Fake Lean
• Has winners and losers
• Pits different parties against each other
• Seeks to place blame
• Looks at parts of a process
• Ignores some people
• Focuses on cost cutting only
Real Lean
• Benefits at least one key party and doesn’t harm others
• Works together for the common good
• Seeks to create a collaborative culture
• Analyzes the flow of the process particularly stopping points
• Seeks to be inclusive, looking for widespread input
• Focuses on process improvement
