The Value of Lean

The Baldrige model is not prescriptive—it doesn’t tell you how to do all of the things you need to do to run your organization effectively—but if it was prescriptive, it would prescribe lean.

Lean is a perfect fit for a management model that values process. While it is fundamentally about reducing cycle time by eliminating waste, the organizations that have implemented lean have also found that it improves quality, delights customers, engages employees, and lowers costs.

If you want to learn more about the potential of lean to help your organization, I suggest reading The Antidote by Anand Sharma and Gary Hourselt, who have built a stellar consulting practice on their ability to help organizations with lean. The book (click here to order it) uses real-life examples to describe the benefits of lean and how to implement it.

You can read about one company’s experience with lean in “What We Have Learned on Our Lean Journey” (IndustryWeek, Adrienne Selko, September 29, 2010). Correct Craft, which makes boats, started its lean journey in 2007 by making sure top management was on board with the initiative. The next step was to hold Kaizen events where teams of four floor employees took one day to redesign the problematic parts of a process. “These teams were without supervisors and were given complete freedom as to how to complete the event,” said Matt McGinnis, director of operations.

Like most companies that implement lean, Correct Craft quickly realized bottom-line benefits:…

The Lean/Baldrige Connection

Like the Baldrige model, lean started in the manufacturing world but has spread to all types of organizations. Several Baldrige Award winners have implemented lean because it helps them create more value for their customers with fewer resources. Like Baldrige, lean (1) is process-oriented, focusing, in lean’s case, on the value streams that produce products and services for customers; (2) improves quality and cycle time; and, (3) provides a competitive advantage for those organizations that institutionalize it.

In “Lean Confusion” (IndustryWeek, August 18, 2010), Jill Jusko traces the growth of lean in manufacturing, noting that 90 of the 100 IndustryWeek Best Plants from 2005 to 2009 demonstrated significant or complete implementation of lean. “Those same plants reported median 30% reductions in manufacturing cycle times over the past three years, median scrap reductions of 33%, and median productivity improvements of 24%,” according to Jusko.

But lean, like Baldrige, is about far more than quality and cycle time improvements: They are transformative systems, changing the cultures of the organizations that implement them. They help shape strategy, redefine measurement, and engage employees in the process.

Jusko describes an automotive industry supplier, Autoliv, as an example of the human side of lean. Last year at its Ogden, Utah, plant, “managers received 63 implemented ideas per person.” Most suggestion systems are lucky to garner one or two ideas per person per year, and not all of those are implemented. Imagine how good your processes could…

The Next Big Thing?

A couple years ago a consultant friend asked me what I thought the next big thing would be after Six Sigma and Lean. I didn’t have an answer, but BusinessWeek thinks it knows.

It’s called jugaad, and it’s “fast becoming the latest buzzword in academic and management consulting circles” (“From India, the Latest Management Fad,” Reena Jana, BusinessWeek, December 2, 2009).

Pronounced joo-gaardh, jugaad is a Hindi slang word that means innovation to meet a customer’s immediate needs using scarce resources. Literally translated, it means “put-together contraption that moves.” In India, it’s commonly used to describe vehicles made out of whatever materials are available, most notably water pump sets that are converted into engines. According to Wikipedia, “the brakes of these vehicles very often fail and one of the passengers jumps down and applies a wooden block as a brake.”

If you don’t think that’s much of a threat to replace Six Sigma, you’re not thinking big enough. McKinsey consultants have begun discussing jugaad principles with their clients. Even Best Buy and Oracle are using jugaad to create more economical products and services.

We’re probably lucky they don’t build cars.

Still, the idea behind jugaad—innovation that is affordable and scalable—sounds appealing. Distancing it from its shoddy reputation will require a new horde of experts who can create a methodology that incorporates Six Sigma standards, Lean efficiency, and jugaad innovation.

Umm, excuse me while I call my consultant friend about that next big thing.

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Reengineering Revisited

The reengineering revolution was poised to take off when Michael Hammer wrote a book with that title in 1995. It sputtered. Organizations had little time and even less desire to dump their processes and start over on blank sheets of paper.

The revolution was too daunting, but the ideas behind it remain valid. I was reminded of this as I was reading the book, Rethink: A Business Manifesto for Cutting Costs and Boosting Innovation, by Ric Merrifield (FT Press, 2009). He notes that seeking advice from people who actually do the work “tends to be more confusing than helpful. That’s because employees and managers…think of their jobs in terms of how they do them rather than what they are intended to accomplish.”

It’s always a good thing to involve the people working a process in improving that process, but you have to be careful not to lose sight of what that process is intended to accomplish. In Baldrige terms, that means being clear about whom the process serves and what the customers of that process require. It also means systematically evaluating key processes to identify opportunities for reengineering.

That’s one of the great benefits of a Lean kaizen event: Fresh eyes tear apart a process that has been running the same way for years and design a new process that is better and faster. And it takes less than a week.

The Baldrige Criteria ask: “How do you design…