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Matthew E. May


Lean or Innovation? Wrong Question!

The only difference between lean and innovation is where you point your energy

Published: Wednesday, October 30, 2013 - 11:17

I get the question all the time, especially from organizations that have significant investment in some process improvement program—like a lean Six Sigma or lean kaizen initiative. (I hear the ghosts of Toyota engineers booing.) These companies have picked all the low-hanging fruit, squeezed as much inefficiency from their work as is humanly feasible, and are now realizing that their beloved program wasn’t all that market-focused. All that internal scrutiny left the customer without any new and useful value.

These organizations are realizing they must focus on what they should have been focusing on all along: companywide innovation.

The question comes in different forms. Often it sounds something like this:

“What’s the difference between lean and innovation?”

“Will an innovation effort clash with our lean program?”

These are the wrong kinds of question. They’re indicative of the wrong mindset. You hear it in the language, “We’re doing lean,” and “We’ve been doing lean for three years.” You don’t “do” lean. Do you “do” innovation? When was the last time you heard someone say, “We’ve been doing innovation for three years?” Geez, what did you do before?

Why do we view anything branded “lean” as a bolt-on, but innovation as a necessary, embedded competency every business must have?

Here’s the thing: lean thinking and innovation—any conscious, cognitive, creative problem-solving process for that matter—employs the human learning steps we come into the world with: curiosity. Curiosity makes us notice something, we ask a question, hypothesize an answer, test it out, and then reflect on whether the cause and effect we were anticipating came true.

It’s a learning loop. It’s at the heart of everything. The only difference between what many think of as lean and what they think of as innovation is where you point your energy.

Incremental, sustaining innovation and improvement efforts (kaizen) are focused on an existing process, product, service, or system. Think of it as a pie, in which about 25 percent is true value—stuff a customer cares about and pays for. The rest is stupid stuff: nonvalue-adding things like overload, inconsistency, and all flavors of waste. Your lean or kaizen efforts are aimed at increasing true value by decreasing those burdens and value-detractors.

Radical or disruptive innovation (kaikaku) is focused on creating an altogether new pie.

Lean and innovation are not at odds. Allow me to make my case. Let’s look at the seven basic mudas or forms of waste—typical lean targets. Except, let’s look at them through the lens of what the entire commercial word defines as innovation.

Overproduction. Anything done without regard to demand counts as overproduction. That includes something as simple as processing an order before it’s actually needed. Uber, a radically innovative, just-in-time limousine service that doesn’t take advance reservations, has successfully excised this waste.

Overprocessing. When there are too many nonvalue-added steps to achieve a given outcome, you’ve got overprocessing. Amazon banished overprocessing with its “1-Click” innovation.

Conveyance. The very best you can hope for when transporting goods, material, and information from one place to another is that nothing goes wrong. Conveyance is a necessary evil to be reduced wherever possible. The decline of the U.S. Postal Service began with one of the most radically innovative applications ever, now 20 years old: email.

Inventory. Any time inventory builds up, it creates unhelpful pressure to reduce or eliminate it. It’s a point of pain as close as your back pocket—your wallet, the traditional version of which promotes the “George Costanza” hulking mass of cards, cash, receipts, and sugar packets. Google Wallet aims to eliminate the wallet entirely as a physical storage device.

Motion. Needless repetition of any process (even a lean one) sucks time, productivity, and cost. Even the best companies struggle with this. Until Apple’s iOS 7, you couldn’t select all the emails in your iPhone/iPad inbox and mark them “read.” If you had 500 emails, you had to go through each one to remove the little red number on the app, a constant eyesore. It only took Apple six years to ease that burden.

Defects and rework. Everyone has experienced a defect of some kind: errors, inaccurate or incomplete information, flawed products. Ever try cutting a simple, error-free straight line with a pair scissors? Nearly impossible. Requires trimming or rework every time. Until, that is, Tamas Fekete invented the Vector Scissors.

Waiting. We’ve all experienced waiting and the accompanying sense of helplessness and lost productivity. Both MinuteClinic and WellnessMart, MD have eliminated the dreaded healthcare waiting room by minimizing procedures to those that are quick and easy to handle.

But—think about it—all of these innovations are in a sense simply leaner versions of what was there before. It’s just that the scope, scale, and magnitude of the improvements are so great that a new value pie has been baked, and while the general shape looks comfortably familiar, it tastes completely different.

First published Oct. 25, 2013, on the Edit Innovation blog.


About The Author

Matthew E. May’s picture

Matthew E. May

Matthew E. May counsels executives and teams through custom designed facilitation, coaching, and training using four basic ingredients: strategy, ideation, experimentation, and lean. He’s been counseling for 30 years, a third of it as a full-time advisor to Toyota. He is the author of four books, the latest The Laws of Subtraction (McGraw-Hill, 2013), and is working on his fifth book. His work has been appeared in The New York Times, The Wall Street Journal, Harvard Business Review, and many other publications. May holds an MBA from The Wharton School and a bachelor’s degree from Johns Hopkins University.


Systems Perspective

Dear Mr. May,

There was an excellent conversation between Dr. Russell L. Ackoff and Dr. W. Edwards Deming that addresses this topic from a systems perspective -- http://youtu.be/2MJ3lGJ4OFo. And, I think the reader needs a systems perspective to differentiate between improving quality and innovating solutions to new demands.

The existing system is geared to solve a particular problem. It may not function at optimal capability. That's where improvements to the system through improvement of its processes will boost its performance e.g. by removing waste; reducing variability. The productivity of the system will increase. It will do more with the same resources. But, it is basically still solving the same problem it was designed for. The system's aim hasn't changed.

It's important to note that the system itself resides within a larger environment: the market. And market demands change over time. The problem the system was designed to solve evaporates with the evolution of market demands to be replaced with new problems. So improving the performance of the existing system is a waste of resources. The manner in which this waste is eliminated is to change the aim of the system to solve the new problems it confronts.

Dr. Deming drew this system's view on a chalk board for the Japanese 50+ years ago. And, Dr. Ackoff added to it with his own ideas of systems thinking in the 1970s and 80s. Many of us are still struggling to fully comprehend the big picture they painted as we get mired in the weeds of lean and six sigma. We've lost sight of the system's aim and its place within the greater system it belongs to.

Hopefully this has added to the point you were trying to make.

All the best, Shrikant Kalegaonkar (Twitter: @shrikale, LinkedIn: http://www.linkedin.com/in/shrikale/)