Lean Principles - A Short Guide to Operations Excellence
Lean is a business methodology, born of a manufacturing practice, that is transforming the world of knowledge work. Unlike many business methodologies, Lean is not a prescriptive practice that comes with hard-and-fast rules, tools, and practices. Lean encourages a practice of evolutionary change, called continuous improvement, rooted in a fundamental respect for people. It is a way of thinking, shaped by the Lean principles outlined in this article.
These Lean principles can be applied to any team, in any organization, in any industry. Practicing Lean effectively hinges on knowing how to apply Lean principles effectively in your business environment. The main thing to remember: Lean management principles focus teams on driving continuous improvement. When Lean is implemented effectively, teams and the processes they use to deliver value to customers grow stronger over time.
Often, continuous improvement means examining existing business processes in an effort to simplify and accelerate the path to providing value to customers. Lean thinking often leads to incremental process improvements that collectively translate to big improvements in terms of efficiency and product quality. Input from customers informs iterative progress. Team members share insights from the knowledge work with each other, further strengthening processes.
When implemented effectively, Lean management principles create a self-reinforcing feedback loop between team members and customers alike.
Creating feedback loops that enable more effective team members to deliver higher quality products to customers faster is at the core of Lean thinking.
It is why Lean devotes as much focus on process improvement efforts as it does to work output itself. And it is also why Lean principles lend themselves to building those effective feedback loops.
Besides process improvement, another goal is properly identifying barriers to progress; for example, recognizing that planning a piece of work months in advance should be considered waste in a Lean sense – a topic outlined in more detail below.
But it’s more than identifying and reducing waste. It’s about staying focused on removing barriers that slow your path to providing value to customers. When you identify something that is does not conform to Lean principles, use it as an opportunity to grow. Share it with your team. Share successes, but more importantly, discuss failures, too. This is how you practice continuous improvement in Lean – by sharing what worked well or what didn’t work at all – you’re learning with your team and also demonstrating the Lean principle of create knowledge.
Let’s examine the basics of the Lean principles. Reference this page when you’re facing a challenging decision and you’re not sure of the “Lean thing” to do. Over time, you’ll begin to see how Lean thinking can guide you toward a healthier, more productive, more sustainable work environment.
The Seven Lean Principles
Optimize the whole
Every business represents a value stream, the sequence of activities required to design, produce, and deliver a product or service to customers. If your goal is to deliver as much value to your customers as quickly as possible, then you must optimize your value streams to be able to do just that. To understand how to optimize your value streams, first you must properly identify them.
Toyota pioneered Lean thinking in the 1940s with the goal of improving output efficiency and quality across their production lines. They used value stream mapping to get there, and they revolutionized the manufacturing industry in the process.
“Visualizing” or “mapping” processes is the current form of visual stream mapping that many of today’s businesses use to incrementally improve processes in an effort to provide value to customers faster and more efficiently. When done effectively, visual stream mapping encourages systems thinking, which usually pays dividends beyond efficiency, including improved team communication and collaboration. Here are some simple steps you can follow to get started with value stream mapping:
Identify the value stream to implement new levels of efficiency
Leverage a digital enterprise Kanban board to visualize workflow
Map your process at current state
Map your process at future state
Design your board to capture the right metrics for improvement
Develop a detailed action plan that addresses inefficiencies
Address challenges such as wait time or hidden work
Don’t forget, this is an iterative process. It doesn’t have to be perfect – value stream mapping is iterative and continuous.
It helps to understand Lean thinking through the lens of this definition of waste: If your customer wouldn’t benefit from it or pay for it, it’s waste. In the context of business, waste comes in many forms:
Context switching – While this concept originated in the computer science realm, it is applicable to workstreams in business. To eliminate waste, you must focus teams on the work items that matter. Tackling too many things at once and context switching will slow or derail progress. Are your Agile teams working on the right priorities?
Inefficient information systems – This also traces its roots back to Toyota’s work to streamline its manufacturing processes decades ago. In production environments, especially ones focused on just-in-time manufacturing, it is critical that all employees have access to timely information. This is increasingly true as businesses wrestle with how to communicate with increasingly diverse global workforces with different levels of access to technology.
Overproduction / sitting inventory – Producing too much of something is inefficient. A car manufacturer may choose to address this problem by using sales data from dealers to better forecast necessary ongoing production volumes. A retailer may work to integrate real-time sales and inventory systems with the goal of optimizing the purchasing process for greater accuracy.
Build quality in
As businesses grow, the limitations of homegrown systems expose themselves. Lean companies set themselves up for sustainable growth by practicing the Lean principle of building quality in.
The concept is simple: Automate and standardize any tedious, repeatable process, or any process that is prone to human error. This allows Lean companies to error-proof significant portions of their value streams, so they can focus their energy on creating value for their customers.
Toyota led the way all those decades ago as it found ways to automate parts of the manufacturing process. In the 1990s, Dell implemented ways to make manufacturing PCs and servers by delivering only the parts required to fulfill orders for any given day. Most recently, Amazon has proved masterful at automating processes required to ship a growing number of orders to customers within two days or less.
When a piece of work reaches your customer, it’s valuable. Until then, it isn’t.
The Lean principle of deliver fast by managing flow is based on the idea that the faster you can deliver elements of value to your customers, the sooner you can begin to learn from customer feedback. The more you learn from your customers, the better you are able to give them exactly what they want.
In order to deliver fast, organizations must manage flow by limiting work in process (WIP) and maintaining a relentless focus on value delivery. The Agile software development model was created to help companies deliver value fast. Delivering ongoing security fixes quickly and at regular intervals for PC and server operating systems or mobile operating systems is an example.
But this also applies to companies that make products. PC vendors often aim to design and ship products built around the latest microprocessor or graphics processing technology as soon as those products become available.
The Lean principle of create knowledge is related to the concept of optimizing the whole. A Lean organization is a learning organization; it grows and develops through analyzing the results of small, incremental batches / experiments of a given process over time. Even small process improvements can have a major impact on production, delivery, or overall quality – especially when implemented in high-volume processes.
Additionally, those small process improvements can come from any team member, from individual employees on the manufacturing floor to a product owner or a Scrum Master. That’s why autonomy is such an important concept for Agile teams and in Lean thinking.
While autonomy allows for improvements to come from the team level, it is also important to capture information from feedback loops in a systematic way. At the organizational level, this allows for learning to be retained and shared. That is why the Lean principle of create knowledge says that Lean organizations must provide the infrastructure to properly document and retain valuable learnings.
Lean thinking is derived from the manufacturing philosophy of Toyota, which emphasized a just-in-time system of inventory management. For a lot of businesses, it’s instinctual to feel pressure to plan and sometimes complete work well ahead of deadlines, especially when there’s much at stake.
But doing so can lead to a lack of flexibility that could impact a company’s ability to continuously deliver value to customers. Starting too early often results in waste in the form of excessive planning or context switching where teams focus their resources on the wrong priorities.
The Lean principle of defer commitment says that Lean organizations should also function as just-in-time systems, waiting until the last responsible moment to make decisions. This allows Lean organizations to have the agility to make informed decisions, with the most relevant, up-to-date information available.
The success of any Lean initiative hinges upon one Lean principle: Respect people. Businesses design and deliver products that serve customers. If we look at things from a process perspective, the journey to customers goes from an idea to planning, design, production, and ultimately to delivery.
Effective product development depends on strong teams collaborating across departments, strengthened both by the work stream experience and by the knowledge obtained through ongoing customer feedback.
Doing it right means a company respects people at multiple levels, resulting in a win-win for all:
Out of respect for the customer, we make decisions that will bring them the most value with minimal waste
Out of respect for our employees, we create environments that allow everyone to do their best work
Out of respect for our coworkers, we continuously strive to optimize our processes to allow everyone to deliver the most value they can provide
Creating Lean Teams
The process of creating Lean teams involves forming teams around current processes: Defining those processes, analyzing those processes, then creating teams focused on improving those processes. The roles and responsibilities of each team, as well as the methodology for improving processes, must be clearly identified. Each team must be responsible for making reasonable changes without being required to move through a traditional hierarchical business structure.
Benefits of forming Lean teams include:
Improving communication among team members and teams themselves
Empowering teams to make decisions and effect change
Creating cross-functional teams instead of silos based on skillsets
Improving the quality of your company’s products and services
Shortening the time it takes to deliver value to customers
When it comes to using Lean principles in your organization, let Lean management principles guide you. Embrace the Lean mindset. Consider your options carefully – even if it means making organizational changes to fully support your initiatives. This will lay the foundation for a successful Lean experience.