Lean systems are widely misunderstood. Although the term was introduced many years ago to describe an operations philosophy, it has since been summarized, misused, and generalized. It’s become a ubiquitous buzzword — one that Fortune 100 companies and small independent entrepreneurs alike gravitate toward when they feel the need to talk about boosting company performance.
“We need to embrace a model that’s Lean,” well-meaning change-seekers might say. “Just cut all of the unnecessary stuff out, eliminate waste, and drive greater efficiency.”
While such buzzword-packed phrases may sound inspiring during meetings and presentations, they don’t have any real or actionable meaning.
“Lean” operations follow a well-defined underlying theory and set of principles, but many people are so used to hearing the term used as a buzzword that they don’t realize it refers to an actual philosophy.
As Michael Browning, director of MOBI and Bluefish Wireless, told Forbes, “Nobody really loves any buzzwords. In my opinion, commonly used terms graduate into buzzwords because they’re used so often in business that they lose all meaning.”
The common understanding of Lean thinking is incomplete — and as a result, the term has unjustly faced dismissal and criticism for being shallow. When properly understood, implemented, and executed, the philosophy that underlies the principle can be of enormous value.
When researchers partnered with Boeing in 2008 to conduct a study on the capability of the approach, they found that Lean initiatives led to a 28% reduction in labor costs, a 45% reduction in production cycle time, and a 24% decrease in non-conformances.
By its actual definition, “Lean” commonly refers to any operations system that can minimize waste without compromising productivity or quality. However, it’s easy to misconstrue critical aspects of the philosophy when you only know the buzzword, or even the definition above. Below, I discuss a few of the greatest misconceptions those in business often have about Lean thinking.
There is no exclusive tie between Lean and manufacturing; however, you could be forgiven for thinking there was. This particular misunderstanding stems from confusion around the term’s origins in the industry.
People often conflate Lean — a non-industry-specific and more adaptable phrase coined by researcher Jim Womack — with the Toyota Production System (TPS), which was specific to the auto manufacturer.
TPS was an integrated, socio-technical approach that sought to smooth out inconsistencies, remove waste, and eliminate stresses in both the manufacturing process and the business’ day-to-day interactions with consumers and suppliers. The idea behind TPS was to create an approach that was flexible and efficient, but not burdened by its productivity goals.
Womack drew heavily on TPS’s approach when he conceptualized the Lean philosophy. However, the two are not synonymous. Lean is more generic, comprehensive, and adaptable to interests outside of manufacturing. Womack’s approach teaches businesses to continually investigate what their companies’ and customers value, and then provide that value efficiently and effectively.
Leaders who implement a lean approach must continuously work to improve their quality measures, minimize waste, and change their set processes to improve efficiency throughout the organization.
The manufacturing industry may have been the first field to benefit from Lean thinking, but it certainly won’t be the last. One recent research brief from McKinsey points to financial services, retail banking, healthcare, airlines, and restaurants as sectors that could and already have benefited from its implementation. The researchers further explain that improved technology will be a critical factor in the proliferation of Lean approaches across all sectors.
They write, “New analytical tools and new ways of looking at customers are making it possible, with greater precision than ever before, to learn what they truly value. The implications are profound because one of the primary constraints on the ability to design a perfect lean system in any operating environment has always been the challenge of understanding customer value, lean’s ultimate ‘North Star.’ ”
Real-world trials, too, have demonstrated that Lean thinking can have a significant and positive impact on fields beyond manufacturing. One 2010 study conducted by researchers at the University of Wisconsin-Madison found that when hospitals adopted a Lean approach to emergency room management, they tended to see an improvement in patient care quality, decreases in length of stay and wait times, and a significant drop in the number of patients who left the waiting room without being seen.
The philosophy’s preliminary achievements in the medical make it clear that it should not be limited to the manufacturing sector.
Phrases like “we need to Lean out that process!” might sound appealing during a corporate address, but they undersell the time and effort that implementing the philosophy requires.
Lean is not a program or a short-term cost-reduction effort, but a way of life. If companies want to incorporate the philosophy into their day-to-day operations, they will need to dedicate themselves to engineering a wholly new business system that can meet the philosophy’s principles in a way that works for the specific business. There is no one-size-fits-all approach.
Moreover, leaders cannot simply announce the switch to a Lean approach and expect employees to follow along as if the change were a corporate initiative. The transition is a cultural shift; it requires employees to buy in and actively search for areas of improvement within their purview.
Such a change takes time and demands a vision. Otherwise, leaders’ efforts will inevitably fall flat. As one writer for the Harvard Business Review describes it, “To harness people’s full, lasting commitment, they must feel a deep desire, and even responsibility, to change.”
It’s essential to keep in mind, too, that a Lean transformation is not something that can be accomplished in a one-, two-, or even three-year period. Instead, it’s a never-ending journey that strives for both continuous improvement and the continual elimination of non-value-added activities and waste. The change will require full buy-in from everyone at every level of the business.
Lean and Six Sigma are not synonymous terms. In fact, Six Sigma is just one of the tools in the Lean toolbox. Where Lean is a broad philosophy, Six Sigma is a structured methodology that guides businesses through process improvements and helps them make the most of their current resources. It’s an efficiency tool, but not a guiding philosophy.
Lean is more than a buzzword. So, before you dismiss it as just another management fad, take the time to understand the philosophy and gain a sense of why it earned its popularity in the first place.
You may find that the effort pays off.
Robert Logemann is CEO of the Tyden Group, a manufacturer of track and trace systems. He has built his career by optimizing business and management processes and has helped struggling companies in fields spanning the gamut from medical technology to consumer goods find success.