First, some history
In the 1980’s two researchers went to Japan to try to understand why Japanese industry was doing so well in the global marketplace. When James Womack and Daniel Jones looked at Toyota, they realized that it was doing many things differently from companies in the U.S., Europe, and even Japan.
According to Womack and Jones:
“Toyota’s success lay in brilliant management of its core processes: the series of actions conducted properly in the correct sequence at the right time to create value for customers.”
“It’s not brilliant product innovations or culture or a weak currency or strong government support that makes this company stand out in global competition. It’s the brilliant focus on core processes.”
They documented Toyota’s methods in The Machine that Changed the World. The book explained that it was the combination of processes in product development, supplier management, customer support and manufacturing that collectively comprised the Toyota “machine” that made the company successful.
In a later book, Lean Thinking, Womack and Jones extracted the general principles of lean production so that other companies could apply them to their own processes. Applying these principles is how lean organizations constantly look for ways to remove wasteful practices from their processes. What is waste (muda) in lean thinking? Anything that doesn’t produce value for the customer.
Five principles of lean thinking
The principles of lean are value, the value stream, flow, pull, and perfection.
Specify value - The starting point of lean thinking is to understand how the organization creates value. Not value as defined by the producer, but value from the point of view of the customer.
Value is expressed as a “specific product (a good or a service, and often both at once) which meets the customer’s needs at a specific price at a specific time.”
The way to define value is through dialogue with specific customers about what they need and are willing to pay for.
Identify the value stream - The value stream is the sequence of events that are necessary for the company to put a finished product in the hands of the customer.
Mapping the value stream from raw materials to finished product is the next step in lean thinking. This mapping process usually reveals large amounts of waste in the value stream - work-in-process inventory, long setup times, rework - waste that wasn’t visible until each step in the entire process was mapped.
Flow - Once you have defined value and mapped the value stream (and removed obvious wasteful steps in the value stream), the next step in lean thinking is to make the series of actions in the value stream flow.
Flow is the opposite of our intuition that the best way to organize work is with using a “batch and queue” method. With batch and queue you make each stage in the process as efficient as possible. Make many units of a part, setup the machine for a different part, repeat. Each batch produces many more parts than are needed at the time (waste) and makes the machine unavailable to produce anything else until the batch is done.
Pull - When you convert from a batch and queue method to flow, it significantly reduces the time to deliver products into the hands of the customer.
This reduction in time let’s you shift from scheduling and producing in advance of customer demand to letting the customer pull from you. It’s made-to-order in the extreme.
Instead of forecasting demand, making lots of product that you may not be able to sell, and then using pricing discounts to get rid of it, you throw out the forecast and let the customer pull product from the enterprise.
Perfection - Once you have defined value, mapped the value stream, made the steps in the value stream flow continuously, and have let customers pull value from your organization, then companies begin to see that these four principle interact in a virtuous circle.
“Getting value to flow faster always exposes hidden muda (waste) in the value stream. And the harder you pull, the more the impediments to flow are revealed so they can be removed. Dedicated product teams in direct dialogue with customers always find ways to specify value more accurately and often learn of ways to enhance flow and pull as well.”
This virtuous circle leads to the final principle in lean thinking, perfection. Each process improvement not only improves productivity for the company and value for the customer, it reveals new sources of waste that could be removed from the process.
Marketing and Sales is a process
Womack and Jones have documented in company after company that lean thinking made it possible to significantly reduce the time to make and deliver a product (or service), lower costs, and increase the quality and value of what these companies deliver to their customers.
In fact, Womack and Jones confidently state that “if you can’t quickly take throughput times down by half in product development, 75 percent in order processing , and 90 percent in physical production, your are doing something wrong.”
Can Lean Thinking be applied to marketing and sales? After all, marketing and sales is a process too.
And more importantly, can marketing and sales see the same kind of process improvement that Womack and Jones have documented in production environments?
That will be the subject of my next post.
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