Lean Thinking is a management philosophy focused on minimizing waste and maximizing value to achieve efficiency and effectiveness. It involves applying key principles such as value stream mapping, continuous flow, pull systems, and perfection. Utilizing tools like the Kanban system, 5S, Just-In-Time, and Jidoka can lead to benefits such as waste reduction, improved quality, and faster lead times. However, challenges may include cultural resistance, lack of resources, and measurement difficulties.
Value Stream Mapping: The journey of lean thinking commences with visualizing the flow of value through a process. This meticulous examination unveils areas ripe for improvement, providing a roadmap for optimization. By identifying value-adding steps and eliminating non-value-adding ones, organizations can streamline their operations and allocate resources more efficiently.
Continuous Flow: Interruptions and delays are adversaries in the quest for efficiency. Lean thinking advocates for their elimination, promoting a seamless and uninterrupted flow of work. This principle emphasizes that work should move steadily through the process without bottlenecks or stoppages. In doing so, it reduces lead times, minimizes waste, and enhances productivity.
Pull System: The pull system, a cornerstone of lean thinking, revolves around producing precisely what is needed, precisely when it is needed—aligning production with customer demand. This “just-in-time” approach reduces excess inventory and minimizes the costs associated with overproduction. Instead of pushing products onto the market, organizations respond directly to customer pull.
Perfection: Perfection is the North Star of lean thinking. It’s not merely about achieving excellence; it’s about relentlessly striving for continuous improvement in processes and products. The pursuit of perfection drives organizations to challenge the status quo, experiment with new ideas, and adapt to changing circumstances. It’s an ongoing commitment to excellence.
Tools of the Lean Trade
Kanban System: A visual management method, the Kanban system enables the control of work in progress and the enhancement of workflow. It’s the compass that guides teams toward optimized efficiency. By using visual cues like cards or boards, teams can see at a glance what work is in progress, what’s pending, and what’s completed. This transparency improves communication, reduces overproduction, and facilitates smoother workflows.
5S: A methodology for workplace organization and cleanliness, 5S paves the way for enhanced efficiency. It instills discipline in workspaces, minimizing waste and boosting productivity. The five S’s stand for Sort, Set in order, Shine, Standardize, and Sustain. This approach not only keeps work environments organized but also fosters a culture of continuous improvement.
Just-In-Time: The “just-in-time” approach to production is about crafting items precisely when customers demand them. This minimizes inventory, reduces waste, and optimizes the use of resources. By synchronizing production with customer demand, organizations can avoid overproduction, excess carrying costs, and the risk of obsolete inventory.
Jidoka: Jidoka empowers both machines and workers to halt production when defects are detected. It’s a safeguard against subpar quality and waste, aligning with the lean thinking commitment to excellence. In essence, it places the responsibility for quality directly with those involved in the process, preventing the production of defective items and the costs associated with rework.
Benefits of Lean Thinking
Waste Reduction: Lean thinking is a formidable opponent of waste. By eliminating unnecessary steps, streamlining processes, and optimizing resources, organizations experience heightened efficiency and significant cost savings. The various forms of waste addressed by lean thinking include overproduction, waiting, unnecessary transport, excess inventory, overprocessing, unnecessary motion, and defects (often referred to as the “8 Wastes”).
Improved Quality: Lean thinking places a premium on quality. The relentless focus on perfection translates into fewer defects, increased customer satisfaction, and enhanced brand reputation. By reducing defects and errors, organizations save the time and resources spent on rework and rectifications while delivering superior products and services to customers.
Faster Lead Times: Streamlined processes mean faster delivery of products or services. Lean organizations respond nimbly to customer demand, minimizing waiting times and maximizing customer value. Shorter lead times not only enhance customer satisfaction but also reduce carrying costs and free up resources for other activities.
Challenges in the Lean Journey
Cultural Resistance: One of the most formidable challenges in embracing lean thinking is overcoming cultural resistance. Change is met with skepticism and reluctance, necessitating robust change management strategies. Organizations must invest in education, communication, and employee engagement to foster a culture that embraces lean principles.
Lack of Resources: To fuel the lean initiative, organizations must allocate adequate resources, including time, talent, and technology. Addressing resource constraints is pivotal to success. Lean thinking requires investments in training, technology, and process improvements, which can strain budgets if not carefully managed.
Measurement Difficulties: Measuring the impact and effectiveness of lean efforts can be elusive. Traditional metrics may fall short in capturing the transformation, requiring organizations to devise innovative measurement frameworks. The challenge lies in finding meaningful KPIs that reflect the true benefits of lean thinking, including improved quality, reduced waste, and enhanced customer satisfaction.
Case Studies
Healthcare Process Improvement:
Example: A hospital applies Lean Thinking to improve its emergency room (ER) operations. They use value stream mapping to visualize the patient journey from admission to discharge. By identifying bottlenecks, unnecessary paperwork, and delays, they redesign the ER workflow. This includes implementing a pull system where patients are admitted based on demand, rather than fixed schedules. The hospital also employs Just-In-Time principles to optimize medication inventory, reducing waste and costs.
Benefit: The hospital experiences reduced patient wait times, improved staff efficiency, and cost savings due to minimized waste.
Manufacturing Efficiency:
Example: A manufacturing company embraces Lean Thinking to enhance its production process. They employ continuous flow principles to streamline assembly line operations, minimize work-in-progress inventory, and eliminate bottlenecks. The company implements the 5S methodology to organize workstations, tools, and materials, reducing the time spent searching for items. By using Jidoka, machines are equipped with sensors to detect defects early in the manufacturing process, preventing the production of defective products.
Benefit: The company achieves higher production efficiency, reduced defects, and improved product quality.
Software Development:
Example: A software development team adopts Lean Thinking principles to optimize their development process. They use Kanban boards to visualize tasks and work in progress, limiting the number of active tasks to maintain a smooth flow. Continuous flow is achieved by minimizing context switching and reducing multitasking among developers. The team applies the principle of perfection by holding regular retrospectives to identify areas for process improvement and make incremental adjustments.
Benefit: The team experiences faster development cycles, higher code quality, and greater predictability in project delivery.
Retail Inventory Management:
Example: A retail chain employs Lean Thinking to manage its inventory and supply chain. They implement a pull system by closely monitoring customer demand and adjusting inventory levels accordingly. This reduces overstocking and minimizes holding costs. By using data analytics, the retailer identifies slow-moving items and discontinues them, optimizing their product offerings. The company also applies value stream mapping to streamline the order fulfillment process, reducing lead times.
Benefit: The retailer achieves significant cost savings through reduced inventory, improved product assortment, and faster order processing.
Lean Thinking Highlights
Management Philosophy: Lean Thinking aims to minimize waste and maximize value for efficiency and effectiveness.
Principles: Encompasses Value Stream Mapping, Continuous Flow, Pull System, and Perfection.
Tools: Involves Kanban System, 5S, Just-In-Time, and Jidoka for waste reduction and efficiency.
Benefits: Yields Waste Reduction, Improved Quality, and Faster Lead Times.
Challenges: Faces Cultural Resistance, Lack of Resources, and Measurement Difficulties challenges.
Related Frameworks
Description
When to Apply
Toyota Production System (TPS)
– Originating from Toyota, TPS is a lean manufacturing philosophy that emphasizes continuous improvement, waste reduction, and respect for people. Toyota Production System (TPS) comprises principles such as just-in-time production, Jidoka (autonomation), and Kaizen (continuous improvement).
– When optimizing manufacturing processes or operations. – Applying TPS principles to eliminate waste, improve efficiency, and enhance quality in production systems and supply chains.
Kaizen
– Refers to continuous improvement through small, incremental changes made by all employees at all levels of an organization. Kaizen focuses on eliminating waste, standardizing processes, and empowering employees to contribute to ongoing improvement efforts.
– When cultivating a culture of continuous improvement and innovation. – Engaging employees in identifying and implementing small, incremental changes to streamline processes, enhance quality, and drive organizational excellence.
Value Stream Mapping (VSM)
– Visualizes the flow of materials and information through a process or value stream to identify waste, bottlenecks, and opportunities for improvement. Value Stream Mapping (VSM) helps organizations streamline processes and enhance value delivery.
– When analyzing and optimizing process workflows. – Creating visual representations of value streams to identify inefficiencies, prioritize improvement opportunities, and design future state processes.
5S Methodology
– A workplace organization methodology focused on creating a clean, organized, and efficient work environment through five principles: Sort, Set in Order, Shine, Standardize, and Sustain. 5S Methodology promotes safety, efficiency, and productivity.
– When organizing and standardizing workspaces. – Implementing 5S practices to improve workplace organization, cleanliness, and efficiency, leading to safer and more productive work environments.
Kanban System
– A visual scheduling system that regulates the flow of work and materials through a process based on customer demand. Kanban System helps balance capacity and demand, reduce inventory, and improve throughput.
– When managing production or project workflows. – Implementing Kanban boards to visualize work, limit work-in-progress, and optimize resource utilization, enabling teams to deliver value more predictably and efficiently.
Poka-Yoke (Error Proofing)
– Refers to designing processes or systems to prevent errors or defects from occurring or catching them before they result in defects. Poka-Yoke techniques reduce the likelihood of human error and improve product quality.
– When designing or improving processes to minimize errors. – Incorporating Poka-Yoke mechanisms and controls to detect and prevent errors, defects, or deviations from standard procedures, enhancing product or service reliability.
Total Productive Maintenance (TPM)
– A holistic approach to equipment maintenance that involves operators taking responsibility for routine maintenance tasks, preventive maintenance, and continuous improvement. Total Productive Maintenance (TPM) aims to maximize equipment effectiveness and minimize downtime.
– When managing equipment maintenance and reliability. – Implementing TPM practices to engage operators in equipment care, optimize maintenance schedules, and improve overall equipment effectiveness (OEE).
Gemba Walk
– Involves going to the “gemba” or the actual place where work is done to observe processes, identify inefficiencies, and engage with frontline employees. The Gemba Walk fosters understanding, collaboration, and continuous improvement.
– When seeking to understand and improve work processes and operations. – Going to the gemba to observe firsthand how work is performed, identify opportunities for improvement, and collaborate with employees to implement changes.
Heijunka (Production Leveling)
– Aims to smooth production and reduce variability by balancing and leveling production across different products or time periods to match customer demand. Heijunka (Production Leveling) helps minimize waste and improve flow efficiency.
– When managing production schedules and resources. – Implementing Heijunka principles to stabilize production, reduce lead times, and improve responsiveness to customer demand while minimizing overproduction and inventory.
Lean Startup Methodology
– Advocates for rapid experimentation, iterative product development, and validated learning to minimize waste and maximize the chances of building successful and sustainable businesses. The Lean Startup Methodology emphasizes agility, customer feedback, and continuous improvement.
– When launching new ventures or products in uncertain markets. – Applying lean principles and agile practices to validate business ideas, iterate product designs, and adapt strategies based on customer insights and market feedback.
AIOps is the application of artificial intelligence to IT operations. It has become particularly useful for modern IT management in hybridized, distributed, and dynamic environments. AIOps has become a key operational component of modern digital-based organizations, built around software and algorithms.
Agile started as a lightweight development method compared to heavyweight software development, which is the core paradigm of the previous decades of software development. By 2001 the Manifesto for Agile Software Development was born as a set of principles that defined the new paradigm for software development as a continuous iteration. This would also influence the way of doing business.
Agile Program Management is a means of managing, planning, and coordinating interrelated work in such a way that value delivery is emphasized for all key stakeholders. Agile Program Management (AgilePgM) is a disciplined yet flexible agile approach to managing transformational change within an organization.
Agile project management (APM) is a strategy that breaks large projects into smaller, more manageable tasks. In the APM methodology, each project is completed in small sections – often referred to as iterations. Each iteration is completed according to its project life cycle, beginning with the initial design and progressing to testing and then quality assurance.
Agile Modeling (AM) is a methodology for modeling and documenting software-based systems. Agile Modeling is critical to the rapid and continuous delivery of software. It is a collection of values, principles, and practices that guide effective, lightweight software modeling.
Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.
Agile leadership is the embodiment of agile manifesto principles by a manager or management team. Agile leadership impacts two important levels of a business. The structural level defines the roles, responsibilities, and key performance indicators. The behavioral level describes the actions leaders exhibit to others based on agile principles.
The andon system alerts managerial, maintenance, or other staff of a production process problem. The alert itself can be activated manually with a button or pull cord, but it can also be activated automatically by production equipment. Most Andon boards utilize three colored lights similar to a traffic signal: green (no errors), yellow or amber (problem identified, or quality check needed), and red (production stopped due to unidentified issue).
Bimodal Portfolio Management (BimodalPfM) helps an organization manage both agile and traditional portfolios concurrently. Bimodal Portfolio Management – sometimes referred to as bimodal development – was coined by research and advisory company Gartner. The firm argued that many agile organizations still needed to run some aspects of their operations using traditional delivery models.
Business innovation is about creating new opportunities for an organization to reinvent its core offerings, revenue streams, and enhance the value proposition for existing or new customers, thus renewing its whole business model. Business innovation springs by understanding the structure of the market, thus adapting or anticipating those changes.
Business modelinnovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.
A consumer brand company like Procter & Gamble (P&G) defines “Constructive Disruption” as: a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. According to P&G, it moves around four pillars: lean innovation, brand building, supply chain, and digitalization & data analytics.
That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.
A design sprint is a proven five-day process where critical business questions are answered through speedy design and prototyping, focusing on the end-user. A design sprint starts with a weekly challenge that should finish with a prototype, test at the end, and therefore a lesson learned to be iterated.
Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.
DevOps refers to a series of practices performed to perform automated software development processes. It is a conjugation of the term “development” and “operations” to emphasize how functions integrate across IT teams. DevOps strategies promote seamless building, testing, and deployment of products. It aims to bridge a gap between development and operations teams to streamline the development altogether.
Product discovery is a critical part of agile methodologies, as its aim is to ensure that products customers love are built. Product discovery involves learning through a raft of methods, including design thinking, lean start-up, and A/B testing to name a few. Dual Track Agile is an agile methodology containing two separate tracks: the “discovery” track and the “delivery” track.
eXtreme Programming was developed in the late 1990s by Ken Beck, Ron Jeffries, and Ward Cunningham. During this time, the trio was working on the Chrysler Comprehensive Compensation System (C3) to help manage the company payroll system. eXtreme Programming (XP) is a software development methodology. It is designed to improve software quality and the ability of software to adapt to changing customer needs.
Feature-Driven Development is a pragmatic software process that is client and architecture-centric. Feature-Driven Development (FDD) is an agile software development model that organizes workflow according to which features need to be developed next.
A Gemba Walk is a fundamental component of lean management. It describes the personal observation of work to learn more about it. Gemba is a Japanese word that loosely translates as “the real place”, or in business, “the place where value is created”. The Gemba Walk as a concept was created by Taiichi Ohno, the father of the Toyota Production System of lean manufacturing. Ohno wanted to encourage management executives to leave their offices and see where the real work happened. This, he hoped, would build relationships between employees with vastly different skillsets and build trust.
GIST Planning is a relatively easy and lightweight agile approach to product planning that favors autonomous working. GIST Planning is a lean and agile methodology that was created by former Google product manager Itamar Gilad. GIST Planning seeks to address this situation by creating lightweight plans that are responsive and adaptable to change. GIST Planning also improves team velocity, autonomy, and alignment by reducing the pervasive influence of management. It consists of four blocks: goals, ideas, step-projects, and tasks.
The ICE Scoring Model is an agile methodology that prioritizes features using data according to three components: impact, confidence, and ease of implementation. The ICE Scoring Model was initially created by author and growth expert Sean Ellis to help companies expand. Today, the model is broadly used to prioritize projects, features, initiatives, and rollouts. It is ideally suited for early-stage product development where there is a continuous flow of ideas and momentum must be maintained.
An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.
According to how well defined is the problem and how well defined the domain, we have four main types of innovations: basic research (problem and domain or not well defined); breakthrough innovation (domain is not well defined, the problem is well defined); sustaining innovation (both problem and domain are well defined); and disruptive innovation (domain is well defined, the problem is not well defined).
The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovation management model based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.
The Agile methodology has been primarily thought of for software development (and other business disciplines have also adopted it). Lean thinking is a process improvement technique where teams prioritize the value streams to improve it continuously. Both methodologies look at the customer as the key driver to improvement and waste reduction. Both methodologies look at improvement as something continuous.
A startup company is a high-tech business that tries to build a scalable business model in tech-driven industries. A startup company usually follows a lean methodology, where continuous innovation, driven by built-in viral loops is the rule. Thus, driving growth and building network effects as a consequence of this strategy.
As pointed out by Eric Ries, a minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort through a cycle of build, measure, learn; that is the foundation of the lean startup methodology.
Kanban is a lean manufacturing framework first developed by Toyota in the late 1940s. The Kanban framework is a means of visualizing work as it moves through identifying potential bottlenecks. It does that through a process called just-in-time (JIT) manufacturing to optimize engineering processes, speed up manufacturing products, and improve the go-to-market strategy.
Jidoka was first used in 1896 by Sakichi Toyoda, who invented a textile loom that would stop automatically when it encountered a defective thread. Jidoka is a Japanese term used in lean manufacturing. The term describes a scenario where machines cease operating without human intervention when a problem or defect is discovered.
The PDCA (Plan-Do-Check-Act) cycle was first proposed by American physicist and engineer Walter A. Shewhart in the 1920s. The PDCA cycle is a continuous process and product improvement method and an essential component of the lean manufacturing philosophy.
RAD was first introduced by author and consultant James Martin in 1991. Martin recognized and then took advantage of the endless malleability of software in designing development models. Rapid Application Development (RAD) is a methodology focusing on delivering rapidly through continuous feedback and frequent iterations.
Retrospective analyses are held after a project to determine what worked well and what did not. They are also conducted at the end of an iteration in Agile project management. Agile practitioners call these meetings retrospectives or retros. They are an effective way to check the pulse of a project team, reflect on the work performed to date, and reach a consensus on how to tackle the next sprint cycle. These are the five stages of a retrospective analysis for effective Agile project management: set the stage, gather the data, generate insights, decide on the next steps, and close the retrospective.
Scaled Agile Lean Development (ScALeD) helps businesses discover a balanced approach to agile transition and scaling questions. The ScALed approach helps businesses successfully respond to change. Inspired by a combination of lean and agile values, ScALed is practitioner-based and can be completed through various agile frameworks and practices.
The SMED (single minute exchange of die) method is a lean production framework to reduce waste and increase production efficiency. The SMED method is a framework for reducing the time associated with completing an equipment changeover.
The Spotify Model is an autonomous approach to scaling agile, focusing on culture communication, accountability, and quality. The Spotify model was first recognized in 2012 after Henrik Kniberg, and Anders Ivarsson released a white paper detailing how streaming company Spotify approached agility. Therefore, the Spotify model represents an evolution of agile.
As the name suggests, TDD is a test-driven technique for delivering high-quality software rapidly and sustainably. It is an iterative approach based on the idea that a failing test should be written before any code for a feature or function is written. Test-Driven Development (TDD) is an approach to software development that relies on very short development cycles.
Timeboxing is a simple yet powerful time-management technique for improving productivity. Timeboxing describes the process of proactively scheduling a block of time to spend on a task in the future. It was first described by author James Martin in a book about agile software development.
Scrum is a methodology co-created by Ken Schwaber and Jeff Sutherland for effective team collaboration on complex products. Scrum was primarily thought for software development projects to deliver new software capability every 2-4 weeks. It is a sub-group of agile also used in project management to improve startups’ productivity.
Scrumban is a project management framework that is a hybrid of two popular agile methodologies: Scrum and Kanban. Scrumban is a popular approach to helping businesses focus on the right strategic tasks while simultaneously strengthening their processes.
Scrum anti-patterns describe any attractive, easy-to-implement solution that ultimately makes a problem worse. Therefore, these are the practice not to follow to prevent issues from emerging. Some classic examples of scrum anti-patterns comprise absent product owners, pre-assigned tickets (making individuals work in isolation), and discounting retrospectives (where review meetings are not useful to really make improvements).
Scrum at Scale (Scrum@Scale) is a framework that Scrum teams use to address complex problems and deliver high-value products. Scrum at Scale was created through a joint venture between the Scrum Alliance and Scrum Inc. The joint venture was overseen by Jeff Sutherland, a co-creator of Scrum and one of the principal authors of the Agile Manifesto.
Six Sigma is a data-driven approach and methodology for eliminating errors or defects in a product, service, or process. Six Sigma was developed by Motorola as a management approach based on quality fundamentals in the early 1980s. A decade later, it was popularized by General Electric who estimated that the methodology saved them $12 billion in the first five years of operation.
Stretch objectives describe any task an agile team plans to complete without expressly committing to do so. Teams incorporate stretch objectives during a Sprint or Program Increment (PI) as part of Scaled Agile. They are used when the agile team is unsure of its capacity to attain an objective. Therefore, stretch objectives are instead outcomes that, while extremely desirable, are not the difference between the success or failure of each sprint.
The Toyota Production System (TPS) is an early form of lean manufacturing created by auto-manufacturer Toyota. Created by the Toyota Motor Corporation in the 1940s and 50s, the Toyota Production System seeks to manufacture vehicles ordered by customers most quickly and efficiently possible.
The Total Quality Management (TQM) framework is a technique based on the premise that employees continuously work on their ability to provide value to customers. Importantly, the word “total” means that all employees are involved in the process – regardless of whether they work in development, production, or fulfillment.
The waterfall model was first described by Herbert D. Benington in 1956 during a presentation about the software used in radar imaging during the Cold War. Since there were no knowledge-based, creative software development strategies at the time, the waterfall method became standard practice. The waterfall model is a linear and sequential project management framework.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
