Why do some organizations endure when others fade away?
The defining factor between organizations that swim instead of sink is their commitment to constant improvement. From macro to micro levels, an organization that makes improvements where others don’t is best suited to adapt to whatever the future has in store.
Enter lean methodology; it’s not just an organizational philosophy grounded in constant improvement but an active discipline that organizations apply at every structural level.
Learn the value of lean methodology, its guiding principles, benefits, and real-world examples that illustrate how to implement it in your organizational strategy.
What is lean methodology?
Lean methodology describes business strategies employed to pursue one core goal: structural efficiency. As such, lean methodology is not one single approach but several. Furthermore, they are not specific to any industry but have applications in several sectors.
Generally speaking, these methods aren’t defined by their actual formulations but by their goals: a leaner, more effective organizational structure. In other words, lean methodology is less about what you’re doing than identifying the root cause of how and why improvement is necessary.
The aims of a lean methodology are twofold: empower value creation and eliminate waste. Organizations trim fat in the workforce, their workflows, processes, and other structural features to create a lean business machine.
What are the 5 lean principles?
The principles behind lean methodology began with its origins in mid-20th century Japan.
Its first proponent, Haiichi Ohno, developed a streamlined production mode guided by a core principle: continuous improvement. As lean manufacturing proved its potential, this auto business practice cohered into a bona fide business discipline; variations like Total Quality Management, Just-in-Time, Lean Six Sigma, and other approaches to lean methodology fleshed out its underlying principles.
In the 1980s, Jim Womack and Dan Jones were the first to dub the operational practices started in corporate Japan “lean methodology” in their books, The Machine that Changed the World and Lean Thinking. From then on, underlying principles that drive lean methodology crystallized into the ones we know today.
There are five principles to lean methodology that inform how these processes are implemented within an organizational structure:
1. Value
Lean methodology depends on identifying value within an organization: how it generates value, where the value lies within it, and beyond. Identifying value within an organization—meaning the products or services produced—throws waste into stark relief; waste is whatever holds back value. For example, lean methodology in healthcare doesn’t focus on saving money. Instead, it prioritizes sustaining high-quality care, safety, and morale.
When value is identified, organizations have a basis to bolster value creation and trim away to create a lean organizational structure.
2. Value Stream
With a better understanding of how an organization creates value, organizations must clarify how they create it. Charting a value stream—the organizational processes that create value—helps organizations visualize their value. Tools like Kanban boards reveal value streams in a clear, coherent visual format.
3. Flow
Value streams are the channels that value follows; workflow describes the efficacy of value streams. Streamlining workflow is a matter of removing waste and strengthening processes that foster value generation. A steady, efficient workflow is essential to pursuing lean methodology within an organization.
4. Pull
The pull system is a unique procedural innovation that empowers lean methodologies. Similarly to just-in-time production, a pull system aims only to pursue new work when demand necessitates it. Because lean methodology is so focused on waste reduction, pull systems are a key feature of a streamlined organization; a pull system reduces frivolous usage of time or resources.
5. Continuous improvement
Continuous improvement was lean methodology’s founding principle, returning to its Japanese origins in the mid-20th century. The principle of continuous improvement is the heart of lean methodology; it emphasizes constant, consistent process improvement. Organizations that use every opportunity to improve their organizational structure, processes, workflow, and workforce abide by lean methodology’s thrust: removing waste and empowering value creation.
The role of waste in lean methodology
Waste plays a central role in lean methodology because waste removal is the goal of every stage in lean methodology. Framing lean methodology regarding waste reduction gives a new dimension to growth strategies.
Inefficient practices, workflow obstructions, and other hindrances to value creation are difficult to identify. Typically, organizations have an indirect relationship with waste; they aren’t looking for waste; they’re looking for growth. Waste is incidental to this process.
A lean process puts greater emphasis on waste, putting it front and center. By actively looking for waste, organizations have a clearer path to growth by determining what’s holding them back and removing it. Lean methodologies look for waste in several areas; here are several to consider:
Motion
Waste is removed when you complete a task in fewer steps. Lean organizations go so far as to create work environments that reduce the motion of the workforce. Commonly found on factory floors where every physical step is key, eliminating movement waste has wider applications in both physical and digital space.
Over-processing
Just as wasteful, physical steps hinder efficiency, so do extraneous steps in a task process. Over-processing refers to many unnecessary steps in a given task or process. By streamlining tasks themselves, lean organizations reduce large amounts of waste.
Extra-processing
Whereas over-processing refers to an overabundance of steps in the workflow, extra-processing dials in on the levels of exertion required to see them through. Reducing burdensome tasks that lead to more work than is necessary is a common way to make workflows leaner and better reach customer demand.
Defects
Defects in the final product or service are types of waste that create detrimental non-value for an organization. Defective products and services are products of defects in the workflow. Identifying problem areas that lead to defects saves lost value further along the value stream.
Transports
While motion refers to the physical steps the workforce takes in the value stream, transport refers to the movement of tools, inventory, and other elements that facilitate workflow or deliver the final product or service. Streamlining transport ensures that the value stream’s surrounding infrastructure doesn’t get in the way of value generation.
Human potential
Missed opportunities constitute waste in a lean methodology. Failing to develop talent properly neglects the highly value-creating potential of an organization’s human assets. Effective employee management and a robust human resources department ensure an organization maximizes its human potential.
Waiting
In a lean methodology, time is valuable. Work stoppages due to waiting indicate that the workflow isn’t functioning efficiently. Reducing wait times along the value stream creates a synchronized workflow that delivers more value.
Inventory
The state of an organization’s inventory indicates waste in several ways. For one, overstock constitutes a waste of space. A deeper assessment of inventory backup lets organizations know they are over-producing, wasting time generating products that go unsold. Managing inventory is a key way to identify customer needs and remove waste.
Lean methodology vs. agile: What’s the difference?
Lean methodology has become a universal discipline in many different industries. But it’s not the only way organizations seek to optimize their capability. Agile methodology is a similar organizational improvement discipline often conflated with lean methodology.
The two are very similar and aren’t necessarily mutually exclusive. However, they do have distinct differences, primarily in how they aim to optimize organizational performance. Agile methodology was first developed to respond to the rapid pace of technological changes that make products or services irrelevant when they hit the market.
With that in mind, let’s examine a few key areas that illustrate the differences between lean and agile methodology.
- Speed: Agile methodology aims to speed up production to deliver customer value faster. Lean methodology focuses on removing waste and creating value; speed might be incidental to improving workflow, but waste removal is the primary goal.
- Customer relationship: Agile methodology achieves customer satisfaction by getting a quality product out the door as fast as possible, with additional services rendered after a point of sale to update as necessary. Lean methodology endeavors to create a watertight product that customers trust is defect-free from the moment they purchase it.
- Discipline: Agile methodology retains a more structured, top-down work system to ensure speed does not come at the cost of product quality. Because lean methodology emphasizes removing waste at every level, the organization dispenses more autonomy throughout. Workers know best when and where waste arises in their roles
Lean roles and responsibilities
To ensure they apply lean methodologies properly, organizations develop qualified staff to do. As lean methodology has become commonplace, so have lean roles organizations use to implement lean methods within their structure.
Here are some examples of lean management system roles and their responsibilities:
- Lean masters: Lean implementers at an organizational scale; requires in-depth certification
- Lean leaders: Point people who affect lean methodology at the team level; requires adequate lean management training
- Lean practitioners: Team members with basic lean methodology education; typically acquired training through rudimentary courses
- Process owners: Organizers of lean methodologies throughout workflows and tasks; requires Lean Sigma Six training certifications
- Scrum masters: Coordinators who implement work schedules for an expedited, Lean-Agile process; requires lean and/or agile certification
Applications of lean methodologies
Lean methodologies apply to almost any organizational context. Provided that there is a knowledge-based work process, lean methodology interfaces with it for continuous improvements.
Lean methodology has become a feature in several industries; here are some examples of industries that have benefitted and how:
Manufacturing: From reducing waste on the production floor and in transport to empowering the potential of human assets, manufacturing was amongst the first industries to embrace lean methodology in the production process.
Software: Software development is a rapidly changing industry; providers employ lean methodology to streamline workflow and get their products to market faster.
Sales and marketing: Customer-facing sales and marketing firms reduce waste by tailoring their workflow to customer value and demands. Data collection on consumer habits promotes waste elimination by reducing over-production and inventory build-up.
Healthcare: From fewer movements of patients between rooms to minimizing inventory, hospitals maximize patient satisfaction while reducing overhead costs by implementing lean methods.
Project management: Project managers always seek ways to effect process improvement. Applying lean methods from a project management standpoint helps management streamline value streams from the front office to the frontlines.
6 benefits of implementing lean methodology
1. Improved efficiency and productivity
Reducing waste and empowering value creation is a dynamic that makes an organization more efficient and productive. Organizations turn to a lean approach for their benefits in these metrics alone.
2. Increased customer satisfaction
Lean techniques create higher-quality products faster. When customers get the quality product they want at a competitive price, it boosts satisfaction.
3. Enhanced collaboration and teamwork
To function properly, lean methodologies depend on teams collaborating as one. Employing lean methodology gets an organization on the same page at every scale.
4. Lower costs and waste reduction
Lean methodologies hinge on waste reduction. Reducing organization waste saves time and lowers costs while creating a leaner operation.
5. Creates smarter processes
Lean methodologies work because they find the optimal processes of a value stream. Removing waste results in smarter processes that make it easier to create value.
6. Enhances focus
When organizations agree on waste reduction practices, they have a singular focus that empowers productivity. Lean initiatives are a great way to get everyone in an organization on the same page.
Lean methodology real-life examples
Toyota Production System: Lean methodology’s potential was sealed by its massive success on Toyota’s production line. As an auto manufacturer, Toyota had many opportunities to implement lean methods: motion on the manufacturing floor, talent development, and efficient transport. As one of the first companies to implement lean methodology, Toyota demonstrated its impact by dominating auto manufacturing for decades.
Lean Sigma Six in the Service Industry: The applications of Lean Sigma Six in the service industry indicate how lean methodologies succeed outside of manufacturing. Service sector metrics like customer satisfaction are amongst the first to jump up from the optimizing effects of lean methods. Services maintain a higher quality when lean methods ensure that waste doesn’t hinder the customer experience.
How to adopt lean methodology in your organization
Engage employees along the journey
The lean methodology applies to every level of the value stream. To properly implement lean methods, ensure your entire workforce is engaged and on board. Lean management and other processes don’t appear overnight—think of it as lean continuous improvement.
Offer employee trainings
Because lean methodology applies at every scale, employees don’t only need to be engaged; they need to be trained. Lean methods work at their best when everyone is fully trained and equipped to implement them.
Create value stream mapping
Lean methods aim to reduce waste and empower value along the value stream. Mapping value streams gives lean management a clear idea of where to reduce waste and empower value. Kanban boards are one of the most common tools to visualize the entire lifestyle of a product or project, making them a helpful addition to any organization attempting to embrace lean methodology.
Communicate with teams regularly
Considering continuous improvement is a core principle in lean methodology, lean methods
are constantly reimplemented for better results. To ensure continuous improvement is achieved, touch base with teams regularly to keep everyone on the same page.
Embracing lean methodology for enhanced efficiency
Lean methodology has become a mainstay in countless industries for one simple
reason: it works. Organizations benefit from leaner structures that do more with less, especially profit-driven models.
Innovations like smart tech continue to transform how organizations optimize their operations; learn more with Payscale today.
