Thomas Johnson on Lean thinking
May 27, 2009 | 7:59 pmToday I read an interesting article in the March issue of Systems Thinker. It is titled A Systemic Path to Lean Management by Thomas Johnson. He exposes the heart of Toyota’s Lean thinking and why so many have failed to follow their example. Businesses have achieved temporary improvements, but the long term average for most of them has not been satisfying. Toyota on the other hand has managed to continuously improve their performance over a long time.
Go deeper
What is the difference? The reason for failure is, according to Johnson, that the Lean practitioners do not go deep enough and change their underlying thinking. The followers emulate, but does not see the system change needed. Most managers believe that to increase output they can manipulate the separate parts of the business operation independently. The prevalent idea is that the financial results is an linear addition of the contribution of the parts. A company could almost be condensed to, expressed in and controlled by a spreadsheet of financial results. The company is viewed as a machine.
When the management try to improve financial results, they will probably destroy relationships; the core of true business. They might have short term improvements, but the results will be devastating in the long run. This way of thinking of a company is influenced by the old concepts of Physics about mechanical processes and has been erroneously transferred to social systems.
A living social system
This is not the Toyota way, according to Johnson. They build their business as a system that itself naturally produces results. Business is most of all a human living social system, a system of relationships and improvement lies in nurturing and reinforcing the system of relationships that produces the desired results, ultimately for the customers.
Accounting
Johnson challenges the usual management accounting practises, by saying that one-dimensional quantities can only describe a living system. They cannot successfully be used to explain what is going on or used to control multidimensional interactions going on in the business. Toyota dispenses with the usual production control and accounting control for daily operation. They do it differently. Johnson says:
The prevalence of management accounting control systems in American business probably contributes more than any single thing to the confusion of levels that causes managers to believe they can run operations mechanically by chasing financial targets, not by nurturing and improving the underlying system of human relationships from which such results emerge.
This is very interesting stuff, isn’t it? Lean thinking and systems thinking, hand in hand. It deserves a closer look, especially how Toyota implements it. Does Johnson have a too idealistic view of Toyota? He continues to discuss this subject in Profit beyond Measure. This book ended up in my wish list at Amazon immediately.
Thanks for the enlightening post. Yes, change needs to come from the inside and has to be holistic. A piece meal approach to fixing things does not necessarily solve the main issue. Some symptoms may be taken care of, but the root problem would still be present. I guess this is where Lean Management differs and deals with the foundation rather than just the apparent problem.
Good insight!
Joost Hoogstrate
By now I own the book and have skimmed a few pages. I was surprised to find a Swede as coauthor, Anders Broms from Scania, manufacturer of lorries. An interesting fact is that they seemed to have managed the financial crisis better than Volvo. Scania had a different approach.
/Anders
On this topic of lean thinking i’d like to add when it comes to lean manufacturing in a lean environment it is essential to have trust of the workforce so that they understand that productivity improvements would never cost them their jobs”
We know that one using Lean thinking principles will reduce costs but on the other hand when the workforce feel that feel of insecure job stability it will definitely affect their daily performance not helping production improvement.
Cheers,
Jo
Jo,
Yes, trust of the workforce is important. To view employees as factors of production, as resources, that can be moved around and optimized is limiting. That perception in itself sets a limit for the productivity and creativity of the workforce. We optimize something limited. Better to include them and look at them as co-workers, co-creators of the business idea. True strength and because of this also competitiveness in business lies in working together.
/Anders