4/15/2019

Dear Gemba Coach,

I’m new to lean, and I find it fascinating. Is there something I’m not being told? Is there an elephant in the room I should be aware of in my exploration of lean?

That’s easy, there is: lean is a product-driven strategy. Lean is the study of Toyota’s scale-up model and its applications out of Toyota. The book that introduced the word “lean” to the world, The Machine That Changed The World did point out that engineering was at least as important as production, but this point somehow disappeared from the conversation about “lean.” (indeed, lean is often reduced to “lean production”)

With the notable exception of Jeff Liker and Jim Morgan’s splendid books The Toyota Product Development System and, more recently, Designing The Future, most people look at the delivery aspect of lean, lean production, and not its strategic dimension as a product driven path to sustainable success.

The basic assumption of lean is that customer satisfaction is the key to long-term success – an assumption that is so far verified every time it’s tested, either by exemplar companies (the 2% companies) or by statistical studies. Customer satisfaction comes from a feeling of value – customers feel they’re solving their problem quite nicely at a reasonable cost. This, of course is a feeling, subjective, contextual, and hard to grasp in figures and metrics.

Products are objects that customers us to solve their problems autonomously. Products have teething problems, with major issues to start with, and then if well managed become mature – customers know what they’re getting. Then products become boring and need to recapture the spirit of the times.

Services are quite different because their about staffing a human that will do a job for you or help you do a job. In a product the relationship is with a thing, in service, with a person, which makes the two rather different.

Of course, any product has some service dimension, but customer satisfaction is achieved by minimizing the service part. Whereas any service staff uses products, but the key to great service is to maximize the human dimension.

Which is why, when conducting gemba walks, the place to start is customer service: this is where you find out how your product falls short of its ambition to make people autonomous and where customers ask for the help of a human. Every service call is the opportunity to make the product better by solving the problem it has created for its owner. Or, conversely, to understand the business service one can develop in order to help customers with their larger problem and see if they are willing to pay for it – which they often are.

Now, of course the Internet has blurred these distinctions in turning services into products. When you use the amazon app, you’re treating a service – sales – as a product – click and deliver. Amazon understands it needs to excel at both and that when you want to talk to a human, you should feel welcome. Many Internet companies try their hardest to take away completely the human part of the interaction (to reduce costs) and miss the point.

Toyota excels at the art of understanding the quality they need to build in every product – what customers expect from a Toyota: no hassle, low service, good mileage and high resell price. But Toyota also understands new products need to be exciting, feel good to drive and look stylish.

Toyota’s unique skill is in seeing a product, such as the corolla, as a flow of value that evolves through many generations and matures into something that both has heritage features (that customers nlook for) and is not too boring (in tune with the spirit of the time). The secret, I believe, lies in understanding the interdependencies between:

Performance: designing a product that brings the right value to customers by understanding the hierarchy of importance of value and so which concrete features to invest in to deliver this performance – a car with great style that is visibly unsafe will not sell. Quality: understanding the production process well enough to make sure that the performance is actually delivered by knowing how to build the essential features at the right level of quality. Total cost: managing the production process so that every single product has all its features at the right level of quality so that, in effect, every single product in a mass market corresponds to what the engineer had in mind when she designed it for her customers – which means avoiding the cost of disappointment for customers and the cost of correction for the delivery process.

Toyota’s trick is to use production as the test device for design. By conducting vigorous value analysis and continuously solving issues in production both through kaizen in production as well as problem solving in engineering, engineers learn to clean up the “information model” they deliver to production: the information needed to produce a quality product.

This leads to value engineering – learning to improve features or develop new features safely. The challenge is the product, but the production process is the best testing device we have – bar the market itself. Letting customers be the beta testers of your product is a risky strategy, as many have found – just before dying.

Not surprisingly, observers are easily fascinated by Toyota’s effort in constantly creating a waste-free flexible production process. They feel that if they learn the box of tricks, they too can come home and fix the issues in their own production operations.

It never happens that way.

The reason Toyota plants are run the way they are is that the company leaders are aware that the plants need to be faithful to the excitement and passion of engineers in producing products that will convince customers. Customers, in essence, vote for your product by choosing it over competing offers.

An excellent delivery process is the only way to make sure one makes the right choices in the design of future products. Understanding the delivery process inside out makes you face two critical design issues:

How to design features that are easy and cost-effective to produce

When adding a new feature, making sure that the production process can handle the change by training, testing and developing the new tech, materials, processes, etc.

In short, lean is all about design – but does start at the “gemba,” the workplace of production. We don’t obsess on production to have the best production process. We need the best production process to better understand engineering choices.

This is the elephant in the room as many lean “experts” focus on the production process for its own sake, ignoring engineering. It’s not that surprising to think that the real competitive game lies in designing better products – but most people are so siloed (in their jobs and in their minds) that they insist in solving engineering problems in engineering and production problems in production, not realizing that product outcomes are born from using production to fix engineering, and engineering to make production easier.

To learn to think lean, go to the gemba, start with customer service, pursue issues into production (and learn to “clean the window” to make production easier to read) in order to follow those issues back to engineering. Then from engineering, track in which features value is invested, how they are going to be delivered to the customer in the first product made, and then how they will continue to be delivered in every product made. Listen to all the people you meet in your path and try to figure out which issues they master and which they don’t. Get them to talk to each other. Don’t miss this part of lean – it’s the heart of lean thinking.

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