Digital Transformation & Lean Transformation

dt lt1In the previous blog post, “Digital Transformation vs. Lean Transformation,” I described the drift away from Lean transformation currently underway as digital transformation and data analytics increasingly gains the attention of CEOs. They are now on a path of seeing digital transformation and Lean transformation as either-or. The former is more difficult than the latter, and integrating the two will be seen as either unnecessary or too difficult to achieve. Remember, managers prefer other people to change. Digital transformation is a good excuse for them to quietly move away from Lean, which they clearly have struggled with.

But, must the two drift apart? Is digital transformation really separate from Lean transformation? What if they are closely aligned and even complimentary to one another? Could CEOs be making a mistake to allow Lean efforts to wane or disappear in favor of digital transformation?  

Taiichi Ohno lived in a time that spanned the analog-to-digital era. Ohno knew that change was inevitable and that TPS could adapt to a future in which computers played a more prominent role in business processes. He thought that the Toyota production system and computer information systems could work together in harmony. In his book Toyota Production System (1988), Ohno said (p. xv):

“The Toyota production system, however, is not just a production system. I am confident it will reveal its strength as a management system adapted to today’s era of global markets and high-level computerized information systems.”

However, Ohno was wary of the potential for people to become subservient to machines, when instead machines should serve people’s needs.  In the section, “Provide Necessary Information When Needed” (page 47), he said:

“While we intend humans to control them, computers have become so speedy that now it looks as if humans are controlled by the machine. Is it really economical to provide more information than we need – more quickly than we need it?”

And on page 48:

“We use the computer freely, as a tool, and try not to be pushed around by it. But we reject the dehumanization caused by computers and the way they can lead to higher costs… we want information only when we need it… An industrial mind must be very realistic – and realism is what the Toyota production system is based on.”

Are CEOs quest for digital transformation based on realism, or it is based on the hope that technology will outperform employees? I’m sure it is the latter.

Ohno saw TPS as an information processing system – a human-based information processing system for flow production. TPS is the production method, while kanban is the operating method to achieve just-in-time. Toyota, therefore, has two information processing system: one human, and one computer – both aimed at improving material and information flow, to better satisfy individual customer’s wants and needs.

Ohno’s vision of the complimentary nature of human information system (TPS) and computer information systems is expressed more fully in the book Just-In-Time for Today and Tomorrow (1988). You should read it because it is an indispensable guide for combining digital transformation and Lean transformation. Kaizen, no doubt, will be a great help in that process.

• • • • •

There is a tremendously important aspect of the human information system that people don’t think about, and which is directly related to both “Continuous Improvement” and “Respect for People.” It is the ways in which management can quickly and easily trash the human information system that companies will always need and must rely upon, even after digital transformation becomes ubiquitous. In REAL LEAN: Learning the Craft of Lean Management (Volume Four, 2008), I wrote a chapter titled, “The Other Information System.” In it, I said (pp. 68-69): 

But what is the role of the executive team when it comes to managing the human information system? Is it their responsibility to facilitate information flows between people? If so, how should they do that? Should they seek to retain human information long-term, or should they freely let it go?

Senior managers are the leaders of an organization. What they do as leaders is normally described in terms of generalized skills and personality characteristics, which are inputs. However, let’s describe leadership differently in terms of outputs: information flow. That is, a key role of leadership is to be enablers of human information system flow, and not to constrict, distort, or block information flows.

Describing leadership in terms of information flow re-contextualizes leadership; how they must think, how they must behave, and what they must know and do. This will help clarify their role and provide clearer direction and specific, practical actions they must take. This proves to be much easier to do than trying to emulate hard-to-define personality characteristics such as charisma.

Executives have two roles with respect to the human information system. They are both information system administrators and software engineers. In either role they can do things that facilitate information flow – which is what they should be doing – or they can make it difficult, or nearly impossible for information to flow. Why would executives make it difficult or nearly impossible for information to flow? Often it is for selfish reasons, such as to preserve self-image or self-interest.

Recall that the previous chapter described the worst waste of all: the eighth waste, behavioral waste. Executives can knowingly or unknowingly disrupt information flows to achieve local, department-level objectives. Or, they could disrupt information flows simply because they accept the existence of behavioral waste and assume nothing can be done to eliminate it. In both cases, they are introducing malicious software (malware) into the human information system, which disrupts information flows and leads to many recurring errors.

How do executives do this? One way is to introduce a virus, which is a leadership behavior that can copy itself and infect other persons without their knowledge. Examples of viruses that infect human information systems include: distrust, blame, arrogance, selfishness, and bullying. Leaders who exhibit these behaviors, which create no value for any customer, corrupt or modify other people’s behaviors. They become like their boss, warts and all.”

This is a snapshot of what has been the focus of my work for about a decade: To re-define the role of leaders in terms of critically important outputs such as information flow, rather than inputs such as behaviors.

Business leaders spend a lot of time of time and money to ensure that the company’s computer systems do not get hacked, thereby disrupting the flow of information. They need to do the same for the human information system. All it takes to hack the human information system and stop the flow information is one psychopath senior manager. Now you know why “Respect for People” is so important.

I hope you read Volume Four of REAL LEAN, and the works that followed, Practical Lean Leadership (2008) and especially Speed Leadership (2015). Understanding leadership in terms of information flow is the future of Lean as well as the future of leadership in digitized corporations.

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