For those not already familiar with the term, "Lean" is a concept that started in manufacturing but is broadly applicable. It refers to a continuous improvement focus on waste reduction. Most notably, Toyota used Lean to attain world-class manufacturing status but the concept is an amalgamation of many schools of thought. For details, see an overview of lean manufacturing.
If I were to substitute Lean with an equivalent word, I would use “streamline” in verb form:
“modernize a : to put in order :
organize b : to make simpler or more efficient <a system that streamlines the process>”
However, to understand why Lean thinking is important I would use “streamline” in noun form:
"1 : the path of a particle in a fluid relative to a solid body past which the fluid is moving in smooth flow without turbulence."
(Source: Merriam-Webster online)
Businesses don’t move in the same way particles do, but the actions resulting from business create ripple effects through our social systems, our economic systems and our ecosystems. When we hire workers, they travel to and from work, they spend money to purchase things, they share and apply their knowledge to solve problems.
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Underlying all this activity is the notion of value. Traditionally, we have thought of value as anything that is sellable (what to people want to buy?). We would take our cost of production, subtract this from the market price and, voilà — we have our value. Left out of our definition was the concept of waste. Waste in its simplest form is anything that is excessive. However, let’s look at the notion of turbulence. Would you pay me to make a medicine that makes you well? Yes. Would you pay me to make a medicine that makes you sick? No, that would be wasteful, counterproductive and cause turbulence.
The notion of paying for waste is so counterintuitive that for a long time we never explicitly discussed it. We just assumed it is something that would not be done. Two excellent books that refute this are:
- Environmental debt: The hidden costs of a changing global economy by Amy Larkin
- Switch: How to change things when change is hard by Chip Heath and Dan Heath
What I like about both books is they put aside the concept of universal malice (or incompetence) and focus on solutions to the damage that occurs when the complexity of players and actors involved obscures our ability to quickly discern what is best in both the short term and the long term. We have an inherent ability to adjust to gradual turbulence (we like to blame frogs in boiling water for this but really, it's human nature to consciously avoid warning signs). The question becomes: If we truly are sentient beings with intact brains and the ability to alter our environment for self-preservation, why do we only become proactive when existential threat is imminent?
Lean philosophy teaches that it takes "5 Whys" before our brains activate and start searching for a root cause (root cause forces one to find a solution instead of just assigning blame or maligning frogs). We avoid the negative, so this approach sets things in a positive framework:
Value = anything that does not harm.
The amount we are willing to pay for value is a valuation. Risk, damages and liabilities have negative valuations because they cause harm.
Hence, even if we are making a profit on something, if it doesn’t help our customers, fulfill our employees and benefit the environment, it is wasteful and we must continuously redesign what we produce (or deliver) so that this waste is eliminated.