THEPRINCIPLESOFTHELEANBUSINESSSYSTEM

ProfessorPeterHines1
Chairman,SAPartners
CoFounder&HonoraryProfessor,
LeanEnterpriseResearchCentreatCardiffUniversity

TheLeanPrinciples

ThebookLeanThinkingbyJamesP.WomackandDanielT.Jones(1996)providedtheworldwitha
visionofwhatLeanwasabout.Theauthorscommented:LeanThinkingcanbesummarizedinfive
principles: precisely specify value by specific product, identify the value stream for each product,
make value flow without interruptions, let the customer pull value from the producer, and pursue
perfection(page10).

Theydefinedeachoftheseprinciplesinmoredetailasfollows:

Value: The critical starting point for Lean Thinking is value. Value can only be defined by the
ultimatecustomer.Anditsonlymeaningfulwhenexpressedintermsofaspecificproduct(agood
or a service, and often both at once) which meets the customers needs at a specific price at a
specifictime(page16)

ValueStream:Thevaluestreamisthesetofallthespecificactionsrequiredtobringaspecific
product (whether a good, a service, or, increasingly, a combination of the two) through
the.problemsolving task from concept through detailed design and engineering to production
launch,theinformationmanagementtaskrunningfromordertakingthroughdetailedschedulingto
delivery,andthephysicaltransformationtaskproceedingfromrawmaterialstoafinishedproductin
2thehandsofthecustomer(page19).

Flow:Oncevaluehasbeenpreciselyspecified,thevaluestreamforaspecificproductfamilyfully
mappedbytheLeanenterprise,andobviouslywastefulstepseliminated,itstimeforthenextstepin
LeanThinking.maketheremaining,valuecreatingstepsflow(page21).

Pull:Pullinsimplesttermsmeansthatnooneupstreamshouldproduceagoodorserviceuntilthe
customerdownstreamasksforit(page67).

Perfection:Asorganisationsbegintoaccuratelyspecifyvalue,identifytheentirevaluestream,
makethevaluecreatingstepsforspecificproductsflowcontinuously,andletcustomerspullvalue
fromtheenterprise,somethingveryoddbeginstohappen.suddenlyperfection.doesntseemlike
acrazyidea(page25).
1

Iamgratefulforthedebate,inputandassistanceofthefollowingtothiswhitepaper:colleaguesatSAPartnersespecially
ChrisButterworth,KevinEyre,GaryGriffithsandJillWhinfrey;membersoftheLeanBusinessSystemandotherspecificLean
BusinessSystemLinkedIngroupsthatIrunandparticipantsatthe2009LERCannualconference.

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RethinkingtheLeanPrinciples

SinceLeanThinkingwaspublishedin1996,ourunderstandingofwhatLeanishasmovedon3.Lean
hasalsobeenappliedacrossawiderrangeofmanufacturingandserviceindustries4andtheissueof
sustaining change has become more central5. As a result I believe it is now time to revisit the
Womack&Jonesfiveprinciples.Inordertodothis,itwillbehelpfultounderstandwhatthemain
areasofconcernsmightbe.Theseincludethefacts:

Manyorganisationshavefailedtointerprettheoriginalprincipleswell

Inhindsight,therearegapsorweaknessesintheoriginalset

Theworldhasmovedon,and

OurunderstandingofhowLeanworkshasimproved.

These areas of concern lead to a number of specific problems (see Table 1). The first problem
revolves around how Lean works in different industries and the fact that classic Lean texts tend,
explicitly or implicitly, to assume that we all work in high volume, repetitive manufacturing
environmentssuchascarcomponentsorelectronicsindustries.

There appears to be little allowance for people in low volume or more variable manufacturing
industriesortheservicesector.WhatwehaveobservedisthatthefurtheryoutakeLeanfromitscar
makingorigins,themorestrainedsomeoftheclassicprinciplesbecome.Forinstance,inhighvariety
manufacturingorserviceindustriesmanystrugglewiththeconceptofkanbanstylepullsystems.As
a result, organisations such as Flinders Medical, an Australian hospital, have redefined their own
principles including: Focus on the Patient, Understand our Processes, Social & Technical Flows,
ResponsiveTeams&LearnandSpread.

Table1:ProblemswiththeOriginalLeanPrinciples
3

See:PeterHinesetal,LearningtoEvolve:AReviewofContemporaryLeanThinking,InternationalJournalofOperations&
ProductionManagement,24,10,pp.9941011,2004
4
See:PeterHines,MustDoBetter:ApplyingLeaninthePublicSector,PublicSectorExecutive,Sept/Oct,pp.3445,2009
5
See:PeterHines,PaulineFound,GaryGriffiths&RichardHarrison,StayingLean:Thriving,NotJustSurviving,Lean
EnterpriseResearchCentre,Cardiff,2008

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The next set of problems revolves around the fact that the original principles have been generally
interpreted at an operational level. Many firms use Lean as a focus for pointkaizen improvement
activities on the shop floor. Indeed, almost all the organisations we meet tend to look at physical
flowsonlyintheOrderFulfilmentprocess(customerordertodeliveryofproductorservice).

AsaresultLeanisoftenusedasashorttermcostcuttingorwastereductionmechanism.Indeed,
manyrefertoLeanasacostreductiontoolkit,aninitiativeoraprogramme.EvenWomack&Jones
open their book with: Muda. Its the one word of Japanese you really must knowmuda means
waste.IncontrastifyouseekouttheToyotacorporatewebsiteyouwillfindthatTaiichiOhnohas
adifferentperspective:Eliminatemuda,mura,muri.completely6.Whatappearstobemissingin
theLeanThinkingbookisthefocusonlevellingandmakinglifeeasyforpeople.

Linkedtothiswastereductionfocus,isanothersignificantgap,thelackofanappropriatefocuson
qualityandrisk.FundamentaltothecreationofacompleteLeanBusinessSystem7isachievingwhat
thecustomerwants,whentheywantit.Thisimpliesthepursuitof100%qualityaswellas100%on
timedelivery.Italsoimpliesthatriskisatanabsoluteminimum.

Rarely do we see Lean applied within the context of the business needs, wider environmental or
socialconcerns,strategyformationordeployment.Itisusuallyatacticalactivityrunbyfull,orpart
time,improvementagents.Thislackofseniormanagementinvolvementmeansthatthereisrarely
appropriateseniorlevelleadershipand,asaresult,insufficientattentiontoemployeeengagement.
Theresultofthisisthatthesustainabilityofchangeispoor.

ThereasonforthisisthattheclassicLeanPrinciplesalmosttotallymissedtheimportanceofpeople.
Specifically, little attention was drawn to the importance of communication, supportive human
resourcepolicies,stafftraininganddevelopment.Inaddition,inadequateattentionwaspaidtothe
importanceofresourcingthechangeprocessandindividualjobdesign.Itisinterestingtocontrast
thatwithsomekeyreasonswhyLeantransitionsfailasshowninTable2.

Table2:ReasonsWhyLeanTransitionsFail
Source:Lucey,Bateman&Hines,2005

Finally,theclassicLeanprinciplesappear(orhavebeeninterpretedasbeing)toofocusedinsidethe
organisation. As a result, few organisations outside of the automotive sector appear to take their

http://www.toyota.co.jp/en/vision/traditions/jul_aug_04.html
FormoredetailsoftheLeanBusinessSystem,pleaseseethewhitepaperCreatingaLeanBusinessSystemat
http://www.sapartners.com/content/blogsection/6/87/lang,/

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Lean activities into their supply chain. The result is again often pointkaizen activity where single
firmsarethefocusofimprovementratherthanthecompletesupplychain.

To summarise: the traditional Lean approach is too piecemeal, too short term in nature and with
littlefocusontheareasrequiredtomakeitsustainableinmostorganisations.Whatiscalledforisa
moresystemicapproach.

RedefiningtheLeanPrinciples

Takingalltheseconcernsandissuesintoaccountwehaveredefinedtheoriginalprinciplesintoanew
holisticframeworkthe8PsoftheLeanBusinessSystem.

Thisframeworkhelpscompaniesinanyindustry,andatanystageofLeanmaturity,toreflectonhow
theyaredeployingLeanintheirbusiness.Ithelpstotakethefocusawayfrompointkaizenactivity
towards a more contingent approach, a more aligned approach, a more human approach and
ultimately, a more sustainable approach. Indeed it is part of a move to Lean becoming a cultural
journey towards everyone in the organisation actively working towards a fully aligned tomorrow
betterthantodaysystem.

PURPOSE
Figure1:The8PsoftheLeanBusinessSystem

PERFECTION
PROCESS
Webelievethatthisnew8Psapproachwillalso,at
leasttosomedegree,overcometheshortcomingof
the classic Womack & Jones approach as shown in
The 8Ps
PLANET
PEOPLE
Table 3. In the table the darker the shading, the
of Lean Thinking
more impact the particular principle will have on
theexistingproblems.

PARTNERING
PULL

PREVENTION

Table3:CounteringProblemswiththe8PsofLeanThinking

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The8PrinciplesoftheLeanBusinessSystemadetailedlook

1.

Purpose
Before starting any activity it is important to understand the purpose and to align the
organisation.Askyourself,howmanypeopleinorganisations:

Reallyunderstandwhattheyaresupposedtoachieve?

FeeltheyhaveanappropriatesetofKPIs?

Areworkingontoomanythingsatonce?

Canpointtohowtheyaremakingtomorrowbetterthantoday?

Sowhatdoyouneedtotakeintoaccountindevelopingapurpose?Traditionalmanagement
hastaughtustofocusontheVoiceoftheOwner.TraditionalLeanThinkinghasextendingthat
toincludetheVoiceoftheCustomer(althoughwerarelyfindthatthisisthestartingpointfor
aLeantransformation).Eventhisdualfocusisnotenough,asweseeinFigure2.

Voice of the Owner

Effective and

Voice of the
Voice of

sustainable
Customer
Society

purpose

Voice of the Employee

Figure2:AchievinganEffectiveandSustainablePurpose

Focus on the Voice of the Owner and Voice of the Customer fails to focus on the muri the
frustrationsandproblemsthatindividualpeoplefaceintheirwork.Itfailsthereforetoaddress
thewhatsinitforme?objectiontochange.ItfailstofocusadequatelyontheVoiceofthe
Employee.ThisconcerniskeyandwewillreturntoitinthesectiononPeople.

Asourcollectivethinkinghasmovedon,wenowneedtofocusalsoontheVoiceofSociety.
Specifically our role as corporate citizens and in particular the environmental impacts of our
activities.WewillagainreturntothisareainthePlanetsectionbelow.
Codifyingthepurposeisakeyjoboftheseniormanagementteam.Itisawayofcapturingthe
WHAT, the direction, the focus and ideas about the destination. If done well it is also a
powerfultoolinestablishingtheWHY.Focusingonthesetwoareasisnotonlyessential,butit
will help senior managers start moving away from simply HOW based thinking. In my
experience, predefined solutions from senior managers, often without much thinking about
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WHATandWHY,oftenhaveonlyapoorchanceofbeingacceptedbythebusinessandaneven
poorerchanceofleadingtosustainablechange.

Notonlydoorganisationsneedtohaveapurpose,theyalsoneedtocommunicateitinaway
thatengagestheworkforce.Thisalmostcertainlyneedstobedoneinavisualwaytranslating
thepurposeintoalanguagethatisaccessibletopeopleattheirleveloftheorganisation.It
needs to be more than mere visual displays used to impress visitors, but a living, breathing
managementtoolthatisthefocusofhowtheorganisationisrun.Itneedstobeacomplete
visualmanagementapproach.AnexamplefromCogentPowerisdepictedinFigure3.

Figure3:Salesteamvisualmanagementat
CogentPower

Thekeyelementsrequiredinclude:
Apurposefortheteam
ArelevantsetofKPIs
Ateamselected(bottomup)setof
problemsolvingactionplans
Asetofteamselectedcelebrationsof
success

Indeedin herworkonsustainability, NicolaBatemanfoundthatthis typeofdeployedvisual

managementwasoneofthemostimportantelementsofachievingsustainablechange8.

2.

Process

Afternearly20yearsworkingwithLeanIfindthatthemajorityoffirmsstillonlyapplyLeanin
oneprocess:OrderFulfilment.OrderFulfilmentstartswiththecustomersneed,istranslated
intoaninformationflowintheorganisationandresultsinareverseflowtothecustomerof
theend productorservice.Thisistheprocessthatalmostall organisationsaddressin their
Lean journey, either in whole or in part 95% never get any further. In addition these 95%
tendtobeaddressingcostreductionhavingdonesomeValueStreamMapping.

So why is this a problem? Mainly because they are only scratching the surface of what is
possible with a Lean Business System. Businesses have many processes that they need to
manage, and manage well including ones that stretch across internal departments. In
generaltherearethreetypes(seeFigure4):

DirectionalProcesses
CoreProcessesand
EnablingProcesses

ThereisusuallyonlyoneDirectionalProcessinabusiness,oftencalledstrategicmanagement
anditisoftenonlyinthisprocessandatthislevelthatacrossfunctionalapproachistaken.
Thereareusually36CoreProcessesthatdeliverthemaintangibleoutputsandoutcomesfor
the business. These might include Innovation, Order Creation and Order Fulfilment. In
additiontothesethereare36EnablingProcessesthatsupporttheCoreProcessestodeliver
thekeybusinessresult.
8

See:NicolaBateman,Sustainability:AGuidetoProcessImprovement,LeanEnterpriseResearchCentre,2001

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Strategic Management

Enabling process

Innovation Process
Core Processes

Order Creation
Core Processes

Order Fulfilment

People Process

Continuous Improvement

Directional Process

Enabling process

Environmental Systems Management

Enabling Process

Figure4:GenericProcessFramework

Eachprocesshasitsownparttoplay,butitistheCoreProcessesthatarelikelytodeliveron
themajorityofthetoplevelstrategyandKPIset.However,acrossdifferentorganisations,this
maybeinradicallydifferentways.

Improvements in the Order Fulfilment process are likely to deliver an increase in capacity in
order to achieve a cost benefit. Many businesses go wrong here, however, because they
assume that is the goal of Lean. In many cases there is a dislocation between the business
strategy and this Lean cost reduction. Worse than this, many of the cost savings are often
illusory.Whatforinstanceisthecost savingofmerelyfreeingup20%ofafactoryoroffice
blockonitsown?Theremaybesome,butitusuallyfarfrom20%ofthetotalcosts.

If we instead think of Lean more holistically, as an approach to deliver improved customer

serviceandwastereduction,thentheoutcomeshouldbeanincreaseinprofitablegrowth9.In
other words lean should deliver an optimal balance between these two areas aligned to the
businessgoalsandpurpose.

However,howcanorganisationsdothisiftheyareusuallyonlyaddressingonesingleprocess
whoseimprovementislikelytobelargelyaboutreducingcost?Theansweris,ofcourse,that
theycant,notunlesstheyseektoimprovearangeofotherprocessessuchasOrderCreation
andInnovation.Theimprovementoftheseprocessesislesslikelytobeaboutreducingcost
and more about improving customer value. In other words they are about growing the
businessorfillingcapacity.

IcallthisXand2XthinkingasthislinkstotheprofitpotentialofLeaninanorganisation(see
Figure5).BycreatingcapacitythroughtheimprovementofprocesseslikeOrderFulfilmenta
businessmayachievesomecostreductionandhencedeliveronsomeprofitpotentialitmay
havehad.However,itisonlywhenthiscapacityisutilisedwhenprocessessuchasInnovation
andOrderCreationareaddressedthatthefullbenefitwillbereapedbythebusiness.Inmy
9

Inapublicsectorenvironmentthismightbeseenasimprovedvalueformoneywherevalue(inwhateverterms)to
customersisimprovedandcostsarereduced.

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experiencetheprofitpotentialbenefitoffillingthiscapacityisneverlessthantwiceaslargeas
thebenefitincreatingthecapacity.InsomecasestheratiocanbeasmuchasXto10X.

Profit
Potential

2X

Lean Enterprise
Fill Capacity
In e.g. Order Creation
= Wider Margins
= Increased Turnover

Figure5:Xand2XThinking

Classic Lean
Capacity Creation
In Order Fulfilment
= Cost Saving

X
Time

3.

People

The area of people is misunderstood by many organisations applying Lean. One of my

reflectionsonrereadingWomack&JonessLeanThinkingisthatthekeyissueinthesuccess
ofthecasestudyfirmswasnotthetools,shopfloorimprovementsorkaikakuevents.Itwas
intheleadershipoftheseniorexecutives.Thisreflectionhasbeenborneoutmanytimesin
thetimesthatIandmycolleagueshavewitnessedeffectiveandsustainablechange.

Linkedtoleadershipistheabilitytoengagepeopleinthebusiness.ToyotatalkaboutRespect
forPeople.Thismeansallowingthepeoplewhoknowtheworkbestthepeoplewhodothe
work to work out HOW we are going to improve. Developing a culture of Continuous
Improvementisnotsufficientwithoutthisfundamentalrespectforpeople(figure6)10.

Figure6:ContinuousImprovementandRespectforPeople

The People principle is without doubt fundamental to the success and sustainability of any
Leantransformation.Iwillhighlight8areasthatneedtobeaddressed.

i.Understandingthedifferencebetweenmanagementandleadership
Ingeneralmuchofourcareerprogression,HRpoliciesandeducationsystemaredesignedto
createhighqualitymanagers.Thisisessentialtodelivertodaysresultsandkeeporganisations
10

See:JeffreyLiker,TheToyotaWay,McGrawHill,NewYork,2004

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working. However, it is insufficient to create an effective tomorrow. It is not sufficient as

Bennisshows(Table4)toinnovate,develop,inspireorchallengeexistingbusinesses.Weneed
tomanageandlead.

Table4:TheRolesoftheManager&Leader
Source:Bennis2003

ThisdualrolehasmosteffectivelybeentranslatedbyHondawhousetheconceptofFutatsue
Shigotoortwojobs.BythistheytalkaboutToday'sJob(managingwhatIneedtodonowto
besuccessful)andTomorrow'sJob(leadingintermsofwhatIneedtodotobesuccessfulin
thefuture).Hondaemphasisesthateachoneofthemisequallyimportant.

ii.Creatinganddeployinganinspiringvision
Partoftheleadershiproleistoinspirepeopletowanttochange.Itisaboutcreatingavision,
a direction, something for everyone to be inspired by. This can either be the avoidance of
somethingbad,theburningplatform,orbetterstilladestinationpeoplewanttoachieve.In
the publication Staying Lean: Thriving not just Surviving (2008) we describe how Cogent
PowersCEO,MarcelSchaboscreatedjustsuchaninspiringvisionbyreignitingaprideinthe
businessrightacrosstheworkforce.

iii.Defining,demonstratingandencouragingcorrectbehaviours
Thethirdareaisaboutcreatingaculturewhereanappropriatebehavioursetisinstilledright
across the business. The starting point is to establish which behaviours are appropriate,
ensuretheyarelivedanddemonstratedbytheseniorteamandthenfindmechanismstodo
this across the workforce. At Cogent, the HR Director, Peter Rose used Doug Howardells 7
LeanSkillstoachievethis11.

Theseinvolve:

Customerconsciousness

Enterprisethinking

Adaptation

Takinginitiative

Innovation

Collaboration

Influence

11

Seehttp://www.theacagroup.com/leanarticle.htm

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iv.Aligningsupportpoliciesandprocedureswithpurpose
When trying to implement a Lean approach it is necessary to ensure that the various
supportingstructuresarealignedtothepurpose.WehavealreadytalkedabouttherightKPIs
andtheirdeployment.EquallyimportantisthealignmentofHRandaccountingpoliciesand
procedures. As shown in Figure 7 below, this is necessary as these policies and procedures
underpintherequiredworkforcecharacteristicswhichinthemselvesunderpinthecommercial
andculturaloutcomesofaleanprogramme.

The most important of these HR policies and procedures is how peoples performance is
managed, their reward and recognition defined, their training and development undertaken
andtheirsuccessionplanningrun.Wewillreturntothetraininganddevelopmentareainthe
nextsectiononPull.

Interpreting
Strategic
Purpose

Commercial
Performance
Outcomes

Continuous
Improvement
and change
outcomes

Measuring and

Workforce
Workforce
Workforce
Managing Key
Engagement
Skills
Continuity
Workforce

Characteristics

Designing

Career
and
Performance Reward and Training and
Management

Implementing
Management Recognition Development
and Succession
HR Policies

Procedures

Figure7:AligningHRPolicies

Toillustratetheotherareas,letsfollowCogentPowersuseofthe7LeanSkills.Thesewere
applied to the annual performance review. Each manager had onetoone discussions with
employee about how they had exhibited these skills. Decisions on reward, recognition and
promotion were equally weighted. As a result people were promoted who had the right
attitudes,notjustfirefightingskills.

v.Creatingadynamiccommunicationsystem
In my experience the best performing organisations have the best communications systems,
using a variety of methods to mirror different preferences that people have for absorbing
information and providing feedback. What is important is that the communications are
simple,wellthoughtthrough,inalanguageandmediumthatarelikelytobeunderstoodand
aretwoway.

Ihaveoftenfoundthattheuseofvisualcueswithappropriatedataworkswellaswesawin
theyellowboardsinFigure3.AsCogentPowersCEO,MarcelSchabos,oncesaidtomewhen
reflecting on the reasons for their success, it was all about three things: communication,
communicationandcommunication.

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vi.DevelopingSituationalLeadership
Another important area within the People principle is adopting the appropriate leadership
style at each stage of a Lean transformation. As we describe in detail in Staying Lean a
businessgoesthroughajourneywhenapplyingLean.Thisusuallystartswitharatheradhoc
orreactivemanagementsystemandprogressesovertimetoanautonomouswayoflifestyle
where there is no longer a need to give the work a title such as Lean or Continuous
Improvement.

At each stage of the journey a different leadership style is required (figure 8). Near the
beginningachampioningordrivingapproachisrequired.Thisinvolvesseniormanagersand
leancoachesgettingthingsgoing,makingprojectsworkandgettingearlyresults.Lateronthe
journey a more supportive or mentoring style is required to support the line in their lean
journey.WewillreturntothischangeinstyleinthePullsectionbelow.

Stage of Maturity
CHAMPION

Role of Leaders

DRIVER

FACILITATOR

SUPPORTER
MENTOR

Adhoc
Reactive
Early Stages

JOURNEY / TIME

Autonomous
CI way of life
Mature Stages

Figure8:SituationalLeadershipinaLeanJourney

vii.WorkingonJobDesign
Inordertomovethefocusawayfromjustdoingthedayjobtothinkingaboutcreatingabetter
tomorrow,itisalsonecessarytoconsiderjobdesignatalllevelsoftheorganisation.Consider
thetypicalsplitofworkingtimeforexecutives,middlemanagersandoperativesasshownin
Figure9.

Time

Executives

Middle Managers

Operatives

Improvement
Strategic

Fire Fighting
Day Job

Figure9:TypicalCurrentStateJobDesign

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What you typically find is that executives spend some time working on strategy, although
frequentlytoomuchonbigbangtopdownHOWfocusedprogrammesthatarethenhanded
tomiddlemanagerstoimplement.Thismeanstheyneedtoengageoperatives.However,the
operativeslinemanagersareoftenreluctanttofreethemupastheydonotwanttoseetime
wastedonwhattheyperceivetobenonproductiveactivity.

Theresultofthisisthatthedayjobpredominatesattheselevels.However,italsomeansthat
any change that is undertaken is likely to be quickhit with only a low chance of being
sustained. As a consequence fundamental problems and weaknesses dont get properly
addressedandmuchoftheexecutiveandmiddlemanagertimegetstakenupinfirefighting.
Doesthissoundfamiliar?

Incontrast,wecouldenvisageanidealstate(figure10)whereeveryoneinthebusinessspends
some time working on strategy. This is not to say that everyone will work on high level
strategy,butmoreonstrategyasitaffectsthem.Inotherwords,withintheirenvironment,
howcantheymaketomorrowbetterthantodaytoachievetheirpartofthepurpose?Tomake
theseimprovementstheywillalsoneedaformaltimebudgettoachievethesegains.Evenat
operativelevelsthesetwoelementsmaybeasmuchas15%oftheirworkingtime.However,
onlybymakingthisinvestmentwillthedayjobbeimprovedandacontinuousimprovement
mentalityestablished.

Executives

Middle Managers

Operatives

Time

Strategic

Impr

ovem

ent
Day Job

Figure10:IdealStateJobDesign

Clearly here we are looking at an ideal state that might take many years to achieve. Hence
eachbusinesswillneedtodefineitsownfuturestatesoversuccessiveLeanroadmapstowards
thisidealstate.

viii.Leadingbynotleading
The last area is leading by not leading, a paradox for the senior team. This relates to the
activities of the executives in figure 10 within the improvement segment. Lets say that a
businessinvests10%oftheformaltimeofallitsemployeesonimprovement.Withinthis,the
senior team should minimise the amount of time they spend on bigbang top down (often
disengaging)initiativesandmaximisetheamountoftimetheyinvestinsmall,localbottomup
projects.

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Anexamplemaybeaplantorofficemanagerspending23daysamonthtakingpartinlocal
projects.Thetrickisnottoleadtheprojects,norfacilitatethem,normanagethem.Itisto
justbeateammemberaskingpermissionoftheteamtojusttakepartandofferoutsidethe
box suggestions, as they are the least likely person in the team to understand the work in
detail. Thisnotleadingapproachhowevershowsagreatdealofleadershipandislikelyto
inspire many across the business to want to improve as they see just how seriously Lean is
being taken by the executive team. This may sound strange, but if applied well, certainly
works.

4.

Pull

There are three main areas of pull that are necessary to consider within a Lean Business
System.Thesewillbediscussedinturn:

i.PullBasedDelivery
WithinthetraditionalLeanapproachairtimeisrightlygiventothecreationofflowandpull12.
One of the problems here is that much of the Lean literature tends to be written by, or for,
peopleworkinginahighvolumemanufacturingenvironmentwheredemandvariabilityislow.
Exampleofthismightincludethecarorelectronicsindustry.Peoplewhodonotworkinthese
environments can find the concept of pull difficult to interpret and apply, a prime example
beingtheofficeenvironment.

Hence,itismybeliefthatalthoughpullbaseddeliveryisdesirable,inmanycasesitishard,if
notimpossibletoachieve.Inaddition,inatransitiontoafullLeanapproach,itmaynotbethe
first and most important focus for activity. I have seen too many manufacturing firms
attemptingtocreateapullsysteminanunstableprocessenvironmentleadingtodisaster.We
willreturntothisareainthePreventionsectionbelow.

Sowhymightpullbehardorimpossibletoachieve?Considerfigure11.Insomeindustriesthe
quantityofproductorserviceisveryhighandthevariabilityofdemandverylow.Typicalof
this might be industries producing components or products for mass markets such as bread,
toothpasteormilk.WecallsuchcasesRunnerproducts.

In other extreme cases we might find that volumes are very low and orders highly variable.
Industries such parts for classic cars or the space industry may be regarding as producing
Strangerproducts.

Figure11:Runner,Repeater&StrangerProducts
12

Seeforinstance:JamesWomack&DanielJones,LeanThinking,Simon&Schuster,NewYork,1996

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Inbetweentheseextremesarangeofproductsorserviceswithintermediarylevelsofdemand
andvariabilitymayberegardedasRepeaterproducts.ThemajorityofLeanliteratureassumes
weallliveandworkinarunnerworldwherewellconstructedkanbanbasedpullsystemscan
operate.Clearlythisisnottrue.

IdeallythefirstjobinaLeanenvironmentistounderstandthecustomerandtheirpullbased
demands.Beforeevendoingthisitmightbeusefultodifferentiatebetweenrealdemandand
createddemand13.Consider,forinstancebuyingacar.Onenteringthedealeryouseethecar
youwantbuttheshowroommodelisredinsteadofblue.Youenquireaboutgettingablue
oneandarequoteda6weekleadtime.Asanalternativeyouareofferedtheredcarwitha
10%discount.Youdecidetobuytheredcar.Isthisrealdemandorcreateddemand?

Inmostcompaniesthiswouldbetreatedasrealdemandandhenceunderakanbansystem,
particularly if replicated many times, could lead to major distortions of supply. In fact, we
wouldbedealingwithadistorteddemandratherthanthetrueVoiceoftheCustomer.Sothe
first step might be differentiating between real demand and the created demand resulting
fromafailureofthesystem.

The second task might then be to try to find ways to reduce the variability of demand (for
instancebyreducingtheleadtime)orincreasingtheeffectivevolumeofdemand(forinstance
bystandardisingormodularisingdifferentofferings).Thisisillustratedbythearrowsinfigure
11.The thirdtaskwouldthenbe toestablishthe appropriatetypeofsupplysystemforthe
resultingproductorservice.Hereakanbanbasedpullsystemmightbemostappropriatefora
runnerandamaketoorderflowsystemforarepeater.However,intherareoccasionswhere
it is not possible to move the product or service out of the stranger zone it may still be
necessarytooperateunderpushbasedconditions.

ii.PullBasedImprovement
InfartoomanyorganisationsthatIvisitIcannotfindalinkbetweentheimprovementactivity
thatisgoingonandtheneedsofthebusiness,thecustomers,theemployeesorwidersociety.
Inmanycaseswhatisimprovedseemtobemoreawhimofaparticular,usuallyseniorlevel,
person.Indeed,whenIlookindetailattheprogrammeofimprovementsetoutbymanyfirms
Icanseelittleornolinktotheirprofessedstrategy.Thequestionis,arewesolvingtheright
problems? If not, it seems almost inevitable that even a well delivered improvement
programmewillbeultimatelyconsideredtobeafailure.

I also observe in many organisations that projects or programmes are conceived by senior
management and, as we saw within the People principle area, are then imposed on local
people by full time change agents. If this situation is particularly severe or continues for a
protractedtimeIhearcomplaintsfrompeoplelowerdownintheorganisationalstructurethat
theyhavebeenLeaned.Thispushbasedmentalityrarelyhaslittletodowiththeneedsof
thebusiness,customer,(local)employeesorsociety.Itismoreoftendrivenbyflawedmetrics
such the need for somany kaizen events or black belt projects in a given time period. This
piecemeal approach is likely to lead to disengagement, frustration and poor sustainability.
UnfortunatelyIfindthesesymptomsfartoooftenwithinorganisationsemployingpushbased
improvement.

13

SeePeterHines,RiccardoSilvi&MonicaBartolini,LeanProfitPotential,LeanEnterpriseResearchCentre,Cardiff,2002

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TocreateaneffectiveLeanBusinessSystem,itisnecessarytomoveasquicklyaspossibletoa
pullbased improvement system. This does not necessarily mean immediately, as the speed
and priority of moving quickly to a pullbased approach will vary depending on the business
situation,theLeanmaturityofthebusinessandthecompetingneedsforrapiddevelopmentof
otherareasoftheLeanBusinessSystem(seethesectiononPerfectionbelow).However,in
general, I would say the transition should at least start within the first two years of any
transformation.

Sowhatarethekeyingredientsofapullbasedimprovementsystem?

First,thereneedstobeabsoluteclarityonwhatthebusinessistryingtoachieve(includinga
focusonthecustomer,employeesandsociety).Second,thisWHATneedstobecommunicated
in a highly effective way so that everyone in the organisation can understand what the
business is trying to achieve, what this means to them and their team (including their
contributiontoit)andaneffective,alignedandengagingsetofKPIs.Third,andperhapsmost
crucial,isthattheproblemsbeingsolvedandprojectstobeworkedonhavebeenselectedby
theteamatthatlevel.Inotherwordsthattheownershipresideslocallypulledbythelocal
needs for improvement rather than pushed by a senior management group who might be
quiteremotefromtheworkplace.

AnexampleofsuchanapproachcanbeseeninFigure3.

iii.PullBasedTraining
Closelylinkedtopullbasedimprovementistheconceptofpullbasedtraining.Thiscontrasts
with the classic pushbased training seen far too frequently in business. Within pushbased
training the topics, duration and timing of courses are pushed by the needs of some senior
managementgroup,typicallythetrainingmanager.

Incontrast,withinapullbasedapproach,trainingisundertakenaccordingtotheneedsofthe
local team and is decided by consultation of the team leader (at whichever) level and the
individual.Itisbasedonaskillsandcompetencyneedsthattheteamhaveinordertomake
theircontributiontothesuccessofthebusiness.

Itishenceimpossibletohavepulledbasedtrainingunlesspullbasedimprovementisinplace.
ThefirsttimeIobservedthiselementoftheLeanBusinessSystemwaswhenworkingwiththe
Toyota supply chain in Japan14. When I benchmarked their performance against a similar
supplychaininEuropeIfoundthatthegapswereenormous.Onesurprisewasthefactthat
the employees in the Japanese firms spent on average only half the amount of hours doing
trainingbutclearlyhugelyoutperformedtheirwesterncounterpartsintermsofresults.

Thereasonforthiswastwofold.First,theToyotasuppliers in Japanwereoperatingapull
basedtrainingapproachandsecond90%oftheirtrainingwasOnTheJob(orastheycalledit
OJT)ratherthanlessthanthe10%moretypicalinthewest.

14

PeterHines,BenchmarkingToyotasSupplyChain:JapanvsU.K.,LongRangePlanning,February,Volume31,Number6,
pp.911918,1998,ISSN00246301

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5. Prevention

One of the most serious errors I see in the use of Lean is an excessive focus on tools and
techniques.Notonlythis,butinmanycasesthisfocusishighlyskewedtowardsafewtools.
AmongtheonesImostfrequentlyencounterare:

BigPictureMapping(aspopularisedbyRother&Shook15underthetermValueStream
Mapping)
5S
Kanban&
QuickChangeovers(SMED)

These are all good tools. However, they are often applied in a slavish, A before B before C,
approach. Worse still, little allowance is made to whether they are the right tools or other
moreappropriatetoolsarerequired.

The most serious omission is usually tools within what in Figure 12 are described as the
Standardised and Stable Process & Quality boxes. These tools are focused on preventing
variation,problemsandsubsequentreworkorqualityfailuresforthecustomer.

Figure12:WorkingonPreventionwithintheToolHouseofLean

Theresultisthatorganisationsaretryingtoimprovetheflowofanunstablesystem.Thisis
veryunlikelytowork.ThisfailurewithinthetraditionalLeanapproach(asappliedbymany)
hasledmoreenlightenedorganisationstotrytofillthegapbycollectingaseriesoftoolsto
address the problem. The most prominent of these are the Six Sigma tools first collated by
Motorolainthe1980s.Althoughthiswasagoodreactiontotheproblemtheysawinmany
limited lean organisations, their mistake was to then not employ the other tools that were
beingused.Hence,therebecameanimbalancewithanoverfocusontheQualitypillarsideof
thetrueLeanBusinessSystem.

15

MikeRother&JohnShook,LearningtoSee,TheLeanEnterpriseInstitute,Brookline,1998

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What is required is a balance of tools from the Tool House of Lean. This balance should be
pulled by the needs for local improvement where there is a daily habit of continuous
improvement that uses simple, visual technologies, tools and techniques that have been
chosen and adapted for effective use. Hence, the specific tools to be used should be
contingentlyselectedaccordingtospecificneeds.

6. Partnering

No company or organisation is an island and to create a world class organisation usually

requires the creation of a world class supply chain. Indeed, the leading practitioners of Lean
worldwidesuchasToyotaandTescohavealsoheavilyfocusedoncreatingahighperforming
supplychain.

Indeed,whenIcomparedtherelativeperformanceofToyotasJapanesesupplychainwitha
comparativeoneintheUKIfoundthatthemanagementofthesupplychainwasToyotaskey
competitiveadvantage16.AscanbeseeninTable5,basedoncomparativeproductivityfigures
for the whole supply chain, the major competitive advantage did not lie at the car producer
butmoreatthe1stand2ndtiersuppliers.

Table5:TheCompetitiveGapWhenPartnering

Thequestionis,why?Afterthreemonthsofextensiveresearch Idiscovered that thereason

wasthatToyotainvestedahugeamountofeffortintopartneringwiththeirsuppliers.Indoing
so they made dramatic improvements to their performance. Not only that, but Toyota had
also taught their suppliers how to do the same using an approach they call Kyoryoku Kai or
SupplierAssociation17.

Unfortunately,althoughthisintercompanydevelopmentandcoordinationisattheheartofa
true Lean Business System there are few companies in the West outside of the automotive
industry that have got anywhere near achieving the type of results we see from Toyota in
Japan. One of the main reasons is that insufficient focus has been given to the Partnering
PrincipleintraditionalLeanbusinesses.

16

PeterHines,BenchmarkingToyotasSupplyChain:JapanvsU.K.,LongRangePlanning,February,Volume31,Number6,
pp.911918,1998,ISSN00246301
17
SeePeterHines,CreatingWorldClassSuppliers,Pitman,London,1994

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7. Planet

ItwasjustaftertheturnofthemillenniumthatJimWomackwrote:

Lean thinking must be green because it reduces the amount of energy and wasted by
products required to produce a given productIndeed, examples are often cited of reducing
humaneffort,space,andscrapby50percentormore,perproductproduced,throughapplying
leanprinciplesinanorganisation.thismeansthatleansroleistobegreenscriticalenabler
asthemassivewasteinourcurrentpracticesisreduce.

However, apart from a strong movement in the west coast of the United States, progress
seemstohavebeenslowonadoptingthePlanetaspartofawidersetofLeanBusinessSystem
Principles. This is in spite of the relentless march of Lean across industry sectors and the
heightenedawarenessoftheenvironment.

Respect for Profit

Figure13:ABalancedApproach

Oneofthefirsttoputthegreenagendaonthe
mapwasthethenNorwegianPrimeMinister,Dr
GroHarlemBruntlandwhensheintroducedthe
conceptofsustainabledevelopment,describing
Balance
Zone
itasbeingmadeupofthreeareas:economic,
socialandenvironmentalsustainability.

Respect for People

Respect for Environment
Foracompanywemighttranslatethisasafocus
onarespectforprofit(economic),respectfor
people(social)andrespectforenvironment(environmental).Tothinkinverysimpleterms:

AtraditionalLeanapproachmightbedescribedasunderstandingcustomersneedsand
values and then reviewing the system and processes that produces them so that the
traditionaleightwastescanbeminimised
Green might be described as understanding societys needs and values and then
reviewingthesystemandprocessesthatdeliversthemsothattheeightenvironmental
wastescanbeminimised
Over
Production
Lost People
Potential

Defects

Waste
(Muda)
Non value adding to the
product or service in the
eyes of the customer

Waiting

Lean

Unnecessary
Motion

Unnecessary
Inventory

Transporting
Inappropriate
Processing

Greenhouse
Gases
Poor Health &
Safety

Green

Eutrophication

Waste
(Muda)
Destruction of our
environment in the eyes
of society

Rubbish

Excessive
Resource
Usage

Excessive
Water Usage

Pollution
Excessive
Power Usage

Figure14:LeanandGreen

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Sowhatisthedifference?Wellapartfromthefactthatindividualcustomersaremultipliedto
become society and the environmental wastes have a slightly different character than the
traditionalleanwastes,notalot.

What is necessary is to include a set of diagnostic mapping tools and implementation tools
that addresses the wider Planet issues and the Voice of Society. In other words, as seen in
Figure15anextraEnvironmentalpillarhasbeenaddedtothetraditionalLeanHouse.

Figure15:PlanetfocusintheLeanToolHouse

8.

Perfection

PerfectionhasbeentheholygrailforLeanbusinessessinceWomackandJonesencapsulated
thisprincipleinthemid1990s.Thisfocuswastheresultofarevisioninthinkingafteragreat
dealofbenchmarkingwork.The1990sautomotiveresearchworkshowedusthattherewere
hugegapsbetweenthebestandothercompanies.Thegap,aswehaveseenabove,wasoften
betweenToyota(oritssupplychain)andwesternequivalents.

Thisbenchmarkinggavemanywesterncompaniesawakeupcall.However,ithadtwomajor
problems in terms of energising organisations. First, partly because the gaps were so big,
manyorganisations,particularlyoutsideoftheautomotivesector,foundithardtoacceptthe
data.Thisledtoreasonsforinactionsuchasthey haveadifferentculture,itisadifferent
industryandwearedifferent.

Second, even those who were compelled by the data, lacked a roadmap of how to move
forward.Asaresultmanyorganisations,oftenguidedbyexternalconsultants,simplyfollowed
the quick fix kaizen blitz route leading in many cases to a poorly sustained shortterm Lean
initiative.

To counter this piecemeal approach, we believe that organisations should create their own
LeanBusinessSystem.Thisrequiresthemtodevelopavisionoftheirspecificperfectionand
theirownbespokeroadmaponhowtomovetowardsit.Buthow?

Simplyput,theprocessissimilartobestpracticeValueStreamMapping,excepthereweare
workingatthebusiness,ratherthantheValueStreamorprocesslevel.AsseeninFigure16
youstartwithestablishingtheCurrentStateforthebusiness.YouthenenvisionPerfection,or
theIdealState(orwhatyouthinkisthebestpossiblepositionyoucouldpossiblyreach).You

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then back off from this to a point that your team believe is feasible in the long term. This
FeasibleFutureStatemightbe3to5yearsaway.

Figure16:MovingTowardsPerfection

Thenextstepisthentocreatearealisticpointthatcanbereachedwithinasensibleengaging
timescale(usuallyaround18months).ThisistheTargetedFutureStatethatthenrequiresa
Roadmap.OncethisTargetedFutureStatepositionisachieved,afurtherRoadmaptowards
theIdealStatemaythenbecreatedanddeployed.

Tohelp,wehavedevelopedtheLeanBusinessModel(Figure17)whichnotonlyprovidesa
framework for an organisations particular Lean Business System but also an associated
diagnostic tool that helps the organisation to see where they are in a journey and which
interventionsshouldbedoneearlyandwhichdonelater.

Figure17:TheLeanBusinessModel

Thinkofthe5elementsofthemodelas5piecesofa
jigsaw.Thebenefitofgettingallofthepiecesinthe
right place at the right time is that you are able to
seethewholepicture.ThesameistrueoftheLean
BusinessModel. Overthecourseofatransition to
developaLeanBusinessSystem,organisationsmust
systematically complete the whole of the jigsaw to
getallofthebenefitfromtheirinvestment.

To start creating the Lean Business System18 it is

necessary to follow the steps described above
(Figure 16) for each element of the Lean Business
Model. It is not just about taking each element a bit further in each Roadmap, but about
makingdiscriminatingchoicesofwhattodoatwhatpointintime.Indeed,themoredifficult
choiceiswhatnottodointhefirstRoadmap,astryingtodoeverythingatoncewillleadto
delays,frustrationandpoorsustainability.
18

FormoredetailsoftheLeanBusinessSystem,pleaseseethewhitepaperCreatingaLeanBusinessSystemat
http://www.sapartners.com/content/blogsection/6/87/lang,/

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TheMeasurementSystem(Figure18)associatedwiththisisbasedontheacademicallyproven
FiveKeyMilestonesofContinuousImprovement Maturityfrom adhocthroughtowayof
life. Each of the core elements of the Lean Business Model is assessed not only from a
quantitativeviewpointofsystemsandproceduresbutalsofromaqualitativeviewpointof
valuesandbehaviours.

f
so
one ITY
t
s
Mile TUR
The N MA
LEA

Stage 3
Deployed

Stage 2
Formal
Stage 1
Reactive

Stage 5
Way 0f Life
Stage 4
Autonomous

1 Autonomous Habit
2 Full Empowerment
3 External Learning

1 Driven Deployment
2 Majority Involvement
3 X-Process learning

1 Goal Orientated
2 Selected Teams
3 Value Stream Learning

1 Formal Structure
2 Only Specialists
3 Team Learning

1 Reactive Approach
2 Little/No involvement
3 Adhoc Learning

1.
2.
3.

Key Characteristics
Ways of Working
Associate Autonomy
Best Practice

Figure18:StagesofLeanMaturity

Inotherwordsweneedtomeasurenotjustwhatyoudobutalso(andmoreimportantly)the
waythatyoudoit.Thishelpstobuildalearningorganisationthatnotonlyhasthecapabilityto
maintainthegainsoftheimprovementbutisalsoselfpropelledcontinuouslytoimprovethe
continuousimprovementprocessuntilitbecomesadailyhabitforeveryone.

Figure19:TheRoadtoPerfection

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Summary&Conclusions

InthiswhitepaperIhavesoughttoreflectonthestateofLeanasitistoday,throughthelensofthe
traditional Lean Principles. These reflections have led me to conclude that some updating is
necessaryiforganisationsaretogetfurtherthantheoftentoolbasedapproachthatIsee.

I believe that the journey and the newly modified set of Principles I describe here are anessential
partincreatingforeachorganisationtheirownuniqueLeanBusinessSystem.Suchasystemcanbe
used to create an holistic, integrated and engaging journey that will lead to sustainable longterm
success.Iwishyougoodfortuneonyourownparticularjourney.

References

NicolaBateman,Sustainability:AGuidetoProcessImprovement,
http://www.leanenterprise.org.uk/component/option,com_docman/task,cat_view/gid,31/Itemid,68

WarrenBennis,OnBecomingaLeader,PerseusPublishing,Cambridge,2003

PeterHines,CreatingWorldClassSuppliers,Pitman,London,1994

PeterHines,BenchmarkingToyotasSupplyChain:JapanvsU.K.,LongRangePlanning,February,
Volume31,Number6,pp.911918,1998,ISSN00246301

PeterHines,MustDoBetter:ApplyingLeaninthePublicSector,PublicSectorExecutive,Sept/Oct,
pp.3445,2009

PeterHines,PaulineFound,GaryGriffiths&RichardHarrison,StayingLean:Thriving,NotJust
Surviving,LeanEnterpriseResearchCentre,Cardiff,2008,http://www.sapartners.com/[registeron
thesitetodownload]

PeterHines,MatthiasHolweg&NickRich,LearningtoEvolve:AReviewofContemporaryLean
Thinking,InternationalJournalofOperations&ProductionManagement,24,10,pp.9941011,2004

SeePeterHines,RiccardoSilvi&MonicaBartolini,LeanProfitPotential,LeanEnterpriseResearch
Centre,Cardiff,2002

DougHowardell,SevenLeanSkills,http://www.theacagroup.com/leanarticle.htm

JeffreyLiker,TheToyotaWay,McGrawHill,NewYork,2004

JohnLucey,NicolaBateman&PeterHines,WhyMajorLeanTransformationsHaveNotBeen
Sustained,ManagementServices:JournaloftheInstituteofManagementServices,49,2,pp.913,
2005

TaiichiOhno,AsquotedontheToyotaCorporateWebsite,
http://www.toyota.co.jp/en/vision/traditions/jul_aug_04.html

MikeRother&JohnShook,LearningtoSee,TheLeanEnterpriseInstitute,Brookline,1998

JamesWomack&DanielJones,LeanThinking,Simon&Schuster,NewYork,1996
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FurtherInformation

RelevantLinkedInGroupsledbyProfessorPeterHines:

LeanBusinessSystem
http://www.linkedin.com/groups?gid=1801885

LeanBusinessSystemAsiaPacific
http://www.linkedin.com/groups?gid=1819060

LeanBusinessSystemBenelux
http://www.linkedin.com/groups?gid=1842070

LeanBusinessSystemCanada
http://www.linkedin.com/groups?gid=2715139

LeanBusinessSystemCentral&EasternEurope
http://www.linkedin.com/groups?gid=1890400

LeanBusinessSystemFood&Drink
http://www.linkedin.com/groups?gid=1836371

LeanBusinessSystemIreland
http://www.linkedin.com/groups?gid=1826782

LeanBusinessSystemMediterranean
http://www.linkedin.com/groups?gid=1890317

LeanBusinessSystemNordic
http://www.linkedin.com/groups?gid=1816278

LeanBusinessSystemRetail
http://www.linkedin.com/groups?gid=1836660

Lean&Green
http://www.linkedin.com/groups?gid=1826144

ContactInformationforProfessorPeterHines

Email:peter.hines@sapartners.co.uk
Mobile:+44(0)7778840979
Web:http://uk.linkedin.com/in/professorpeterhines
SAPartners:www.sapartners.com

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