Lean Management and the Public Good

Long ago, you did not have to possess a Ph.D. or be affiliated with a university to be a scientist. And the work of scientists was mainly conducted as a public good, in search of truths that benefit humanity. With respect to Lean management, there is a small cadre of people world-wide who do serious research and study (and some also practice) Lean in the context of a management science. That means, they use the Scientific Method to study Lean management in order to better understand it so that it can be useful to many more people. As most scientists do, we do this mainly for the public good, to inform and nudge people into a better tomorrow, and are thankful to the patrons who support us in our work.

While it is true that many people seek to cash in on Lean (the same is true in science), the public can have confidence that most of the really good work pertaining to Lean has been done with a strong, if not primary focus on helping people. The people who have done good work through their research and writing, over decades, include myself as well as others such as Norman Bodek, Takahiro Fujimoto, Mark Graban, Masaaki Imai, Dan Jones, Jeff Liker, Brian Maskell, Yasuhiro Monden, Mike Rother, Art Smalley, Jim Womack, and so on. While all research is incomplete and subject to criticism (and thus can make enemies of colleagues with shared interests), the overall effort aims to help people understand the shortcoming of conventional management and escape its confines based on the data, our observations, and our experiences.

Perhaps without knowing it, we serve in a role that is called the “public scientist,” and we engage the public by various means to help shape public opinion. Unfortunately, it seems we have not been successful in reaching the widest possible audience. The audience we have been able to reach thus far is narrow yet enthusiastic and engaged. Our challenge of to reach a wider audience so that we can do the most good. The question is, how do we do it?

Recessions indicated by gray vertical lines.

Over the last 65 years, the U.S. economy has been in recession 15 percent of the time. That means we live in a 2.5 sigma quality economy. That’s not good. One of the results of recessions and other economic shocks is, sadly, is layoffs (and, relatedly, reduction in retirement savings). Employees’ cash flow goes to zero in one day, and soon thereafter begins to impart great costs onto society at-large for years to come. It is surprising that the various executive branch government agencies (e.g. Labor, Commerce, Treasury, Health and Human Services, Education) do not view a 2.5 sigma economy as bad quality economic performance. We accept what we are told, that such problems are temporary and that those most affected will soon recover. The people most “in the know” downplay the magnitude and duration of the harm despite the fact that their purpose is to serve the citizenry. The result is a loss of confidence in government as well as in science because the facts that it uncovers fail to influence executive decision-making. The public trust is shaken if not broken.

When quality is bad 15 percent of the time, an injustice has occurred among those affected, through no fault of her own. How can economic quality be improved so that less harm is done to fewer people less often? One of the aspects of Lean management that we need to promote is how it allows businesses more closely match supply with demand (note that the total business inventories to sales ratio continues to climb post-2012, indicating a greater mismatch between supply and demand). This has two favorable consequences: 1) it reduces an organization’s contribution to the creation of economic recessions, and 2) it enables an organization to survive recessions with fewer losses. But how does one learn to more closely match supply with demand? It requires education, both in school and on-the-job.

However, a shortcoming of school, specifically business school education, is that it focuses on how to sail the ship of commerce in good weather. It is easy to sail a boat when the weather is good. The true test of seamanship is in stormy weather. The conventional management that business schools teach inform students how to sail in good weather and assumes bad weather will never come. When a sudden storm arises, people taught conventional management always respond is the same way – panic. They lay people off, close plants, and squeeze suppliers (and, lately, buy back shares). That is an uneducated response to a common recurring problem (recession), made by people who make millions of dollars per year. The public must demand better. And we should shape public opinion towards that view.

Lean management teaches how to sail in both good weather and stormy weather – through all phases of the business cycle. Business schools, in particular, share a responsibility to teach future leaders how to productively prepare for and intelligently respond to stormy weather, rather than ignore the possibility and panic when it happens. It would be difficult for business schools to do that within the context of conventional management. They would have to make Lean management the pedagogical basis for business school education – especially business schools within public institutions of higher education, whose mission it is to educate the public.

This is an aspect of “respect for humanity” that we must put a lot more effort into, as well as our role as public (management) scientists.

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