Over the decades, many people have tried to make the business case for Lean in an attempt to gain senior management support. They typically start with arguments based on removing waste or improving efficiency. But that, surprisingly, proved to be unconvincing to most executives. So they moved on to arguments such as improving productivity or operational excellence. Once again, that proved to be unconvincing to most executives. Then, they finally began to speak in the language of senior managers: money – specifically, increasing profits. Surprisingly, even that has proven to be largely unconvincing.
Throughout the history of progressive Lean management, its advocates have tried to do the same things over and over again to gain management’s interest in leading broad, fundamental change in leadership routines and business processes. When we fail, we keep doing the same things, only harder. This has been a losing proposition and illustrates how guessing at the causes of problems does not lead to answers.
This outcome suggests that we should utilize structured problem-solving processes. Yet doing so will be difficult because the problem is comprised of dozens of variables that intersect each other in both predictable and unpredictable ways. We simply may lack a problem-solving process with enough capability to identify the “zero-day” flaw(s) in human information processing that would, if corrected, lead many more senior leaders to embrace Lean management.
Despite such limitations, we can still make meaningful progress. For example, when I meet with executives I often ask these two questions:
- What are your two or three biggest headaches?
- How long have they been headaches?
There is no hesitation in answering these questions. Invariably, their answers are related to information flow problems that have long been in existence, almost always internally, and often for decades – far more so than material flow or even sales or financial problems. Their answers reflect pain that they experience every day, like a splinter stuck in their finger that they cannot remove. While managers typically seek control, they have an abundance of information flow problems that they are unable to control. It is a source of constant irritation. This points to a different approach that might make Lean management more appealing to leaders.
To my knowledge, the human case for Lean management has never been made. That is probably because people would immediately judge it to be a feeble argument. However, in my view the human case for Lean makes the business case for Lean.
Start by forgetting the common (and incorrect) conceptual foundation for Lean, which is to create customer value through the elimination of waste. Free of this limitation, let’s recognize the Lean management system as something different: a solution for information flow problems, and while we’re at it let’s turn all material into information. Now, instead of working mostly with money and discrete products or services, we work mostly with information and time. In this new framework, we would naturally become very concerned about the exchange of information in time. Let’s explore this idea using a debtor, creditor, and asset analogy that uses information instead of money.
The obligations owed by debtors to creditors is an asset called information. The slow exchange of information (batch-and-queue) results in higher levels of debt compared to the rapid exchange of information (flow). The slow settlement of debt means that obligations between parties linger and are thus less satisfying. It disrupts and damages social relations as people are forced to behave in zero-sum ways to get what they want. The rapid settlement of debt is more satisfying because risk is reduced, as are the motivations for zero-sum (win-lose) behaviors.
Assume that the board of directors acts as the creditor who grants to the debtor, the president, an information processing asset to manage – the company. The president, in turn, becomes the creditor who grants to debtors, vice presidents, information processing assets to manage – the major parts of the company. The vice presidents, in turn, become creditors who grant to debtors, general managers, information processing assets to manage – smaller parts of the company. The general managers, in turn, become creditors who grant to debtors, middle managers, information processing assets to manage – even smaller parts of the company. The middle managers, in turn, become creditors who grant to debtors, supervisors, information processing assets to manage – the smallest parts of the company. The supervisors, in turn, become creditors who grant to debtors, employees, information processing assets to manage – a machine, part of a process, etc.
Employees who accumulate information debts (by withholding information, for example) are unable to settle with their creditor supervisors when they demand payment. Debtor supervisors, in turn, are unable to settle with their creditor middle managers when they demand payment. Debtor middle managers, in turn, are unable to settle with their creditor general managers when they demand payment. Debtor general managers, in turn, are unable to settle with their creditor vice presidents when they demand payment. Debtor vice presidents, in turn, are unable to settle with their creditor president when he or she demands payment.
The immediate outcome is that managers at all levels are annoyed much of the time, even if they don’t realize it or act like it. The end results, predictably, are major problems in which capable managers are sacrificed for reasons unknown and likely unfair. But let’s go back to the intermediate result, because that is something that we can impact. Will managers, being annoyed most the time, carefully evaluate information and make good decisions? Will they interact mostly in positive ways with people? Also, who wants to be annoyed every day at work for decades? Is that good for managers’ health and the health of those around them? What can be done about this?
Think about why employees withhold information, which exists as a structural problem in nearly every organization regardless of type or size. They do it for many different reasons, including:
- Fear of being blamed for problems.
- Unaware or unsure of what information to share and when.
- Fear of appearing to not be in control or lacking competence.
- A belief that information is not to be shared (knowledge is power).
Each of these can be corrected, but only if managers recognize them as problems and correct them by using structured problem-solving routines in non-blaming and non-judgmental ways. If they do that, they will recognize Lean management as an effective solution for information flow problems.
The business case for Lean typically focuses on improving the bottom line (i.e. cost reduction) – an outcome that can be achieved many different ways – all of which are far easier to do than to practice Lean management. So let’s forget the business case for Lean; it is irrelevant to the primary interests of business leaders. The human case for Lean focuses on improving information flow, which can be achieved only one way. Hence, the importance of the “Respect for People” principle. The human case for Lean, therefore, is more compelling than any business case for Lean.
Lean, done right, reduces and eliminates information flow problems and their myriad undesirable knock-on effects – which no leader can afford to endure. And, as I am sure you have surmised, information flow problems generate costs and consume profits. Who needs that in a period of low macroeconomic growth, or at any time?