For many years, certain people have proclaimed that Lean is a corporate strategy. In support of that claim, a book titled The Lean Strategy: Using Lean to Create Competitive Advantage, Unleash Innovation, and Deliver Sustainable Growth was recently published (click here to read my book review). But there are two things to consider:
- In business, all strategies share a common end-point: Winning in marketplace, where winning is defined as obtaining the largest net gain in terms of profit, or perhaps some combination of favorable outcomes with respect to sales, profits, growth, market share, stock price, etc.
- Strategy is almost always more about winning battles than winning wars. Therefore business is mainly a tactical unit whose main goal is to survive another day, and any corporate strategy must — first and foremost — satisfy short-term needs to win battles in the marketplace.
The big question is this: Which methods should a business use to realize the strategy of winning battles in the marketplace? Tactics to achieve the strategy invariably revolve around the three Ps:
- Pricing to achieve maximum profits
- Purchasing the competition; companies, product lines, or both, to reduce competition
- Product (or service) that is salable
Leaders familiar with Classical management use methods that are different than what Lean leaders use. The image below shows how Classical management leaders and Lean leaders generally go about winning battles in the marketplace.
It should be obvious that the methods used in Classical Management are the line of least resistance, and therefore widely used. The methods used in Lean management, on the other hand, constitute the line of most resistance, and is therefore sparsely used. To the extent that Lean management could be considered a strategy, it has proven itself over time to be non-competitive. Non-competitiveness arises from leaders’ perception, real or imagined, that Lean management is an inferior method for winning battles in the marketplace.
Lean management seeks to better satisfy human needs, whether it is customers, employees, supplier, investors, or communities. Classical management, on the other hand, seeks to obtain the largest net gain as quickly and for as long as it can using the line of least resistance. Unlike Classical management, Lean management makes leaders work very hard to obtain the largest net gain.
All of this is another way of saying something very simple: In Classical management, business needs (money-making) come before human needs. Balance, obviously, is lacking.
For Lean to replace Classical management, it seems a tipping point is going to be required, one that forces the emergence of a business (vs. intellectual) “Age of Enlightenment” or “Age of Reason” that places service to humanity (and therefore, earth) one step above winning in the marketplace.
Finally, it is worth noting that Taiichi Ohno (TPS, p. xiv) blamed Henry Ford’s successors for not realizing Ford’s vision of automobile production. That is because Ford’s successor’s strategy was not to improve the production system by creating flow in processes upstream from final assembly, as Toyota did. Instead, it was to pursue the largest net gain. And to this day, the business (pecuniary) mindset has yet to discover Enlightenment.