Future of Lean with Dan Jones

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Implementing Lean Marketing Systems

The Future of Lean with Dan Jones
Guest was Dan Jones

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Daniel Jones is a management thought leader and advisor on
applying lean, process thinking to every type of business across
the world. He is the founding Chairman
of the Lean Enterprise Academy
www.leanuk.org in the UK, dedicated to
pushing forward the frontiers of lean
thinking and helping others with its
implementation. Dan is my guest on the
Business901 podcast next week and this
is an excerpt from the podcast.
At the Shingo Prize Awards Conference in
Salt Lake City, USA on 20 May 2010
Daniel Jones was inducted into the Shingo Academy. The Shingo
Academy consists of individuals who have distinguished
themselves through their lifetime commitment and achievements
in the area of Lean/Operational Excellence. Daniel has previously
won four Shingo Awards for his books on lean.
Daniel Jones is the author, with James P Womack, of the
influential, best-selling management books:
The Machine That Changed the World: The Story of Lean Production

Lean Thinking: Banish Waste and Create Wealth in Your Corporation,
Revised and Updated

Lean Solutions: How Companies and Customers Can Create Value and
Wealth Together

Seeing the Whole Value Stream.


Joe Dager: Welcome, everyone. This is Joe Dager, the host of
the Business901 podcast. With me today is Dan Jones. Dan is a
management thought leader and adviser in applying lean process
thinking, pioneered by Toyota, to every type of business across
the world. He is the founding chairman of the Lean Enterprise
Academy in the UK, and dedicated to pushing the frontiers of lean
thinking and helping others with its implementation. His work is
inspired that a successful implementation of lean by Tesco and
many other companies.
Dan, I would like to thank you. We'd like to welcome you to the
podcast. Can you start out and just tell me a little about your
organization in the UK?
Dan Jones: Thanks for asking me to take part in this podcast.
The Lean Enterprise Academy in the UK is one of 18 non-profit
lean institutes that Jim Womack and I founded around the world
to be missionary centers for translating and teaching lean in
every sector in every country of the world. This is the UK branch,
called the Lean Enterprise Academy. The Lean Enterprise Institute
in the States was the mother organization, if you like, and we're
all affiliated in something called the Lean Global Network.
So basically, we're thought leaders and we are dedicated
researchers, really, trying out experiments. Just helping people
use lean to solve their business problems. Yes, we organize
networks of practitioners -- very large networks around the
world. We organize summits and conferences. We publish books
and workbooks. We also conduct a lot of projects, with the idea
that these projects are probably projects that other consultants
are going to be a bit reluctant to tackle, because they're into new
areas in which the outcome is not necessarily guaranteed.
We're looking very much to use our PDCA approach -- what I call
an action learning approach -- to try to learn what ought to work
in a new area or a new discipline, and then through learning


experiments, basically, figure out what does work. Doing that, I
draw on a global network of lean experts, many with a Toyota
background, who we deploy on these projects as suits them.
But the commitment is also that we will not only learn from these
experiments, but we will digest the generic results and publish
them and share them, with the aim for the other people will
follow them and use them to champion lean themselves in their
own organizations.
Joe: I think you've done a wonderful job. Lean is touching just
about every field now.
Dan: Yes.
Joe: When we first start talking -- whether it's product
development or sales and marketing or healthcare or financial
services -- what seems to attract people at the beginning to start
talking about lean in a field?

Dan: Good question. There's usually some oddball out there who
either is in a company that's in desperate straits, tried everything
else, and might as well give lean a go. Or there's somebody who's
seen lean work in one sector and says, "Hey, I think this would
work in my sector as well. I need to get some help to try and
figure out how to do that." As in many, many sectors that I've
been involved in, from retailing through construction, through the
public sector, through financial services, through healthcare, I've
pretty well done them all at one time or another.
It starts just like that, a phone call saying, "How do I adapt these
lean ideas or these Toyota ideas to my sector?" And I've learned
over the years that you got to be a bit humble to start with, and
get to know the sector and really walk the process, because every
process is a bit different -- a development process, an
engineering process -- is different from a healthcare process is
different from a construction process.

But once you get to know the process, you begin to see that it's
as gummed up as everybody else's processes. You begin to see
that there's a key place which will unlock this process, will unlock
the thinking, will begin the process of redesigning that process.
The key is really the ability to diagnose the system causes that
are really creating instability in the whole process.
The other thing I do is always look at the whole end to end
process. I'm looking at the entire work flow that creates the value
for the customer, whether it's a new design or whether it's a
retail supply chain going right back to raw materials, or whether
it's caring a patient, right from the first time they go to the doctor
through to the cure.
I look at the whole process and try and see where the process
has gummed up most, try and see what the issues are that
prevent people from doing this, and then get to work on that,
launch some experiments.
Quite quickly you discover what does and doesn't work. Quite
often you have to go back and scratch your head with maybe
some Toyota experts who will often ask you a question that will
provoke you to realize that what you have been trying is
absolutely 180 degrees the opposite of what might work in that
sector.
Thankfully, then you go back with that new insight and get going
again. Well, it really is like that. It's really taking a walk, looking
at the situation. Having diagnosed many different
industries -- you quite often see patterns, and you quite often see
similarities that other people won't see. That gives you what I
call, if you like, the tipping points or the trigger points that open
up a sector and get going.

Joe: You get this aha moment where it just kind of falls in place
that this is it, at some point in time.


Dan: Yes. I think that's right. It doesn't always come
immediately. It's not always in the obvious place. For instance,
started working in health care I spent many, many days following
patients through the health care process. Looking at the delays
and the queues and the rework and all the other things you
traditionally look at manufacturing. But it wasn't until you sit back
and look at the hospital as a whole. If you like took the roof off
and followed where patients actually flow through the hospital
and look to where they actually were waiting, that we began to
see hey, actually there appears to be a lot of people sitting in
beds at the back end of the hospital, ready to go but one reason
or other comes.
Nobody could see that before because you can't distinguish which
patient is ready to go and which isn't. But as soon as you start
collecting the data you realize that actually the key to unlocking
health care is actually unblocking the discharge process to the
back end of the process and freeing up the flow of patients then
coming through from the emergency department.
In the retailing sector, we walked through endless warehouses
and production facilities and stores, looking at piles of inventory.
It wasn't until we looked at the whole process for a selected
number of products and in particular started looking at the
information process that we discovered that in fact the causes of
all those inventories and delays was actually the way in which
information was being manipulated and passed upstream, the
classic Forrester effect.

That Forrester effect was a symptom of a forecast driven system
with lots and lots of just in case inventories all the way back, that
generates noise and further noise as it goes back up stream. So
actually tackling the retail system was about trying to create a
pool system based upon signals from the store to replenish the
store and then replenish the warehouse and then replenishing


finished goods into the warehouse, to turn the logic upside down.
We got to find that starting point.

Joe: Now that takes time and when you are installing something
new or you have problems, patience isn't everybody's strongest
virtue sometimes.
Dan: That's true but on the other hand most processes are so
gummed up that even if you just stand and look at it there is
some low hanging fruit that is immediately obvious and you can
get to work on straightaway. Where the diagnosis comes in is
once you've stripped away most of the obvious low hanging fruit,
now what are you going to do, and the ability to continue to then
start seriously redesigning the process, that needs that diagnostic
moment, the aha moment.
Joe: The diagnosis is that a kind of a prescription of something
or is everyone different?
Dan: I think sectors are quite different. In fact different sectors
teach us different things. But actually if you look at all of the
lessons from the different sectors, you can see bits and pieces of
those lessons everywhere because in fact every business is a
collection of processes, collection of design processes, production
processes, supply chain processes, maintenance processes, order
transaction processing and policy formulation processes. So
actually each sector tells you a bit about how you would look at
those activities in many, many other businesses. It's being able
to see the business as a whole, as a collection of processes. And
to understand in the sense of diagnose what's wrong with those
processes. That's the value that a real lean thinker can offer.
Joe: Now lean is turning to go outside the four walls. I think it
was initially inside the four walls. I personally think the waste
reduction is a burden on lean when they go into the knowledge
fields a little bit, because everybody starts to look at that first
rather than their collaborative learning the aspect of it. I think

lean is very strong in collaborative learning. I think that's one of
the secrets of lean and doing that is there a way to present that
to people, better maybe than what has happened in the past?
Dan: There are some obstacles in that kind of environment that
make it hard for people that want to grasp this. The first obstacle
is that we are knowledge workers; we don't want to have people
standardize what we do. We are creative folks. We got away from
that factory environment where we just do the same thing over
and over. So the idea of standardization is an anathema.
However if you look at any work, particularly design work or
transaction processing work, a lot of it actually is fairly similar
and routine. And also that's where the problems are. And if you
can standardize those routine tasks actually what you end up
doing is freeing up time for the creative tasks. So once people
see that, they switch their views and think, well the
standardization not of everything but of the routine and getting
the hassles out of the routine that really makes my life better.
That's one obstacle. You can't tell people that standardization
leads to creativity but actually it does. And that's what people
discover. And in the end, you ask them after they've done a bit of
this, and improve their lives, where they'd like to go back and
they always tell you, no you're kidding. Now it is so much better.
So that's one way in. The other way in, in that kind of work too is
that people are typically working on too many projects at once
and so there are lots and lots of changeovers going on.
They are typically working ahead of the customer or the user
specifying what they actually want. So there is a tremendous
amount of confusion as to what the actual task, the actual
problem that you are trying to solve is. That just generates a
tremendous amount of unnecessary work that people are happy
to do but actually isn't creating any value for the customer and
it's not always easy to see which work is really work and which


work is actually going to lead to something tangible for the
customer.

The thing about the construction industry for instance, in the
construction industry the business model is such that the
contractors actually make money on the changes. So they don't
actually want the customer to really specify in detail exactly what
the building is going to look like, because they are bidding low to
get the business anyhow, and they want the customer to make
changes so that they can then charge a hell of a lot for the
changes, and that's where they make their money.
There is a similar aspect in IT systems as well. Partly we are
trying to always sell prototypes that are not fully developed and
get the customer to pay for the development part but also
because the customer is not knowledgeable at what the
capabilities might be, and because it takes too long to develop
these systems and type of things needs change, this all adds a
tremendous amount of confusion. So in IT development I would
say you don't start until the very last moment when the customer
has done all the specifying they want, until they are really clear
what they want.
Then don't work on anything else until you finish it. So you have
all the information you need, work on it, completely,
uninterruptedly, until it's finished. That will end up with less work
per project and much better customer satisfaction. So you just
got to start looking at the workflow and the type of work and the
influences on that work in a slightly different way.

Joe: What you just described to be there is really a kind of that
iterative cycle involving the customer and that learning cycle,
then you create this small learning cycle with the customer so
that you could be delivering product to them or delivering
knowledge to them and closing that knowledge gap step by step
by step.


Dan: Yeah, absolutely. Look, I think the big lesson that I've
learned from dabbling my toes in the IT industry -- and by the
way, I am absolutely no IT expert at all, but got invited by SAP to
launch their lean programs a couple of years ago, much to my
surprise, and Steve Bell has dragged me into these discussions
about what Lean means for IT -- I think the lesson that I am
learning from the lean IT guys in these very early days and such
is that the key contribution they can make is to point us back to
this rapid experiment cycle, this rapid feedback cycle. I heard a
tremendous presentation from a guy from Google at the Lean IT
Conference in Paris last year, which impressed me a lot, where
they had focused automating the testing process and was
speeding up the release cycle so they're actually able to do daily
releases and get simultaneous feedback from different sets of
customers.
I think that's going back to the incremental kaizen smaller steps,
but well done with good feedback and more steps the next day
and endless iterative improvement rather than big bang, huge
systems that take years to introduce, and by the way, years to
make changes.

I had a searing experience with one big multi-national where it
took over two years to make a change to the system, to the IT
system, and the CEO was tearing his hair out because that was
longer than the typical length of time a person stayed in their job.
It was just a big monster.
We're learning from the web generation that little and often gets
us right back to the original kaizen and continuous improvement
cycle, and I think that's coming through loud and clear from the
IT community.
Joe: In that prescription, what stops us from maybe some of the
other areas of entering into? And let's pick my favorite one, sales
and marketing. What stops Lean from being applied to sales and


marketing when we're looking at it from a collaborative learning
prospect? I think that's what sales is, isn't it?

Dan: Well, my view of sales, I learned what I know about sales
and marketing from working with Tesco many years ago where
we designed rapid response supply chains and then Tesco figured
out what they could do with those supply chains. What struck me
there was their insights were that if I could rapidly replenish
everything the customer is wanting exactly when they wanted it,
I needed to know exactly what the customer really wanted and I
needed to have rapid feedback from the customer, from the
customer's behaviors in order to constantly adjust.
What they did was they used the rapid replenishment supply
chains we developed to develop convenience retailing and to
develop web shopping very, very successfully. And no they're
integrating the two.
Our supply chains can supply both the customer at home, the
convenience store down the road, and the big supermarket for
the same cost. Tesco did that because they had data on their
customer purchases, the club card data, which they had analyzed
into 16 lifestyle classes. They were able to combine that with
their home shopping data, which is not what people actually
bought but what they actually wanted, and they could see what
substitutes people were making were and they could custom
arrange their stores as a result.
So I think what has held us back in sales and marketing are two
things. One is sales and marketing traditionally was there to get
rid of stuff that was already made a long time ago in a
forecast-driven, long lead time supply chain. So it was about
getting rid of stuff.

The second was we didn't have good, precise abilities to get exact
feedback from real customers. We could only get polling data,
focus groups and market research data.

Now the web is actually I think empowering customers and
making them equal players in the supply chain. The smart players
will have a dialogue with customers and test out different options
and different product categories and so on with customers and
get very rapid feedback, just as Google is getting on its rapid
release.
I think now we are in an era in which customers are part of the
supply chain and we can really have a dialogue with customers
not just about what they think they'd like, but what they actually
would put their money in.
You can see this in all sectors. You can see it from intelligent
products reporting to their makers. I mean, areo engines now are
typically sold powered by the hour. So Rolls Royce knows when
an engine is malfunctioning on the way to Singapore before the
airline does because they're responsible for being ready when the
airliner lands to repair the faults of the engine.
In many ways we are getting real use data back from customer
as well as preference data. And the next step is of course to get
plan ahead data with customers. Because customers can and do
have some knowledge of what they want in the future. But they
have no incentive to share it with us in this adversarial
consumption mode.
So I think there is a great deal happening at that interface. I
think the web fundamentally is going to change every customer
interface in a very positive way, but one that empowers
customers rather than empowers the providers.
Joe: I think that's a brilliant synopsis of it because one of my
complaints about Lean was that they always created these
internal control points and called it a pull. From my perspective
that was wrong. The control point needed to be with the
customer if you wanted to call it a pull. But technology is allowing
us to do that now, isn't it?

Dan: Yes. It is. And now actually we can see that the customer
is not just buying our products and services but they are buying
them to solve a problem or create value in their lives. We need to
see why they are buying them and how they are combining,
selecting and combining the right products and services and the
knowledge of how to use them to answer their needs of their
household more precisely. We wrote a book a few years ago, Jim
Womack and I, called "Lean Solutions" where we began to sketch
out that landscape, but in truth the web has moved on so much
faster since then and many of those things that we dreamt about
then are now possible.
I don't know if you're aware of the customer-centric data
movement that is developing in the UK and I think beginning in
the States, as well. We're trying to develop software to enable
customers to be intelligent managers of their own data, instead of
companies holding data on me, I aggregate all the data on what I
do and what I like and where I am and so on.
I'm willing in the future to be able to share that data in return for
something with selected providers. So that's another dimension in
which I think the power is really going to shift to customers. It's
shifted from suppliers to retailers and now it's shifting from
retailers to customers.
Joe: I even go a step farther and I agree with you about some
of the leading edge thinking in the UK. I go along with that type
of thinking. I may even go a step farther rather than with
customer experience being the most important ingredient
anymore in go to user experience.
Dan: Yes. No, it is user experience, absolutely. Are you as a
provider able to help me create the value I need in my life. And
solve my communications problem, my shelter problem, my
logistics problem, my healthcare problem. And how are you


proposing to help me do that in a way that does it when I want it
where I want it, etc., etc.

Joe: How does Lean fit in with all this new thinking? I mean, we
go back it's all waste reduction, manufacturing itself but how
does it fit in?
Dan: Well, Lean obviously started, we attracted attention, let's
be completely clear, selling people the idea that we could help
them eliminate waste. It was a great way of getting their
attention. Indeed, people thought this was an intelligent form of
cost cutting, so yes, we'll have some of that. Gradually, as they
got into it they realized that there was a lot more to it than that.
What we're really talking was, we're taking all of the buffers out
of the supply chain, all of the insulation between the different
steps.
In order to link those steps again, people had to be empowered
and given the knowledge to work together and to improve the
way they work, they do their own work.
So it's actually, it's based upon learning. It's based upon the
management of the flow of work that has to be accomplished in
order to create value for the customer. The lean value stream
analysis is absolutely a powerful tool for looking at every aspect
of value creation, including how a customer manages their own
consumption processes at home.
Joe: Where do you think the future of lean is? What is the future
of lean?
Dan: A lot of people want to pull lean in the operational
excellence box. And so OK, there's a bunch of tools for operations
folks and I don't have to worry about them. If I'm a senior
manager, or if I'm in sales or if I'm somewhere else, I don't have
to really worry about them. Well, I think that's not the true value
of lean at all. The future of lean is about building a different way,

building a management system to support the value creation
process. We've done a lot of work thinking about what a lean
management system looks like in many different sectors. It is
actually a different way of managing collaborative work, both
within companies and between companies to create value for
customers.
On the one hand it's about management. On the other hand it's
also about rethinking and redesigning new ways of creating value
that are now possible given technology, etc. On the other hand,
envisioning the design of completely new processes and new
business models that will in many cases replace the old ones.
What we're doing is we're at the moment still living in the legacy
of the assets of mass production, the massive great hub airports,
the huge massive central warehouses, the big superstores, the
big district general hospitals and so on and so forth, the big
postal sorting offices, the big back office headquarters or
transaction processing facilities of the banks.

These are all legacies of mass production based upon routine
operations and scale. What we're doing now is designing a
completely different business models that are not as asset
intensive that are probably more technology intensive or IT
intensive and I think open up a completely new ways.
We're still living with those assets and until they’re depreciated or
written off the new models struggle to survive. But I think it is
happening. I just think in healthcare we are seeing the beginning
of the end of the big district general hospital. I think in retailing
we're seeing the end of the big, big superstores as a way
forward. Even Wal-Mart, along with Tesco and many others are
now focusing on neighborhood stores and they're integrating
those with home shopping.


Business models changes, I think, ultimately will come from our
understanding or process view of the work, or how we organize
the work to solve customers' problems.
So I think those are two directions. I think the third direction is
actually a learning dimension, which is that I think that we're
realizing that the quality movement, and certainly integrate into
the lean movement, taught us not only about the statistical
analysis of variance but he taught us also about the value of
PDCA -- plan, do, check, act -- or some scientific method in
solving problems, the closed loop of problem solving method.
I think there are people already beginning to start teaching that
in schools, even in primary schools. I think teaching people a
different way of thinking about how to solve problems is actually
probably going to be one of the major lasting legacies of Lean.
Joe: Is there anything that you would like to add to this
conversation that maybe I didn't ask?

Dan: Each time I've thought that I've got it, that I understand
everything about a sector, about an activity or of an organization,
and I know what the next step should be, then I stumble when it
doesn't work. I think the power of being able to reflect on what
doesn't work in particular and, yes, what does work... The power
of reflecting and going back and using the scientific method to
think again about, if you like, about how Toyota would think
about this, I think that's probably the most significant gift that a
Lean thinker can have. Because we are typically good at plan, do.
We're terrible at check and act and reflect.
I think the power to reflect and learn from life and from
experiments that didn't work, I think that's the key to learning.

Joe: I think that's very well said. Where's the best place for
someone to contact you at?


Dan: Through my website: www.leanuk.org or through LinkedIn.

Joe: Well, I would like to thank you very much Dan for this
conversation. It was very insightful. I enjoyed it very much.
Dan: Good. Thank you, Joe. I look forward to hearing from you
again in the future.



Joseph T. Dager
Lean Marketing Systems
Ph: 260-438-0411 Fax: 260-818-2022
Email: jtdager@business901.com
Web/Blog: http://www.business901.com
Twitter: @business901
What others say: In the past 20 years, Joe and I
have collaborated on many difficult issues. Joe's
ability to combine his expertise with "out of the
box" thinking is unsurpassed. He has always delivered quickly, cost
effectively and with ingenuity. A brilliant mind that is always a pleasure to
work with." James R.

Joe Dager is President of Business901, a progressive company providing
direction in areas such as Lean Marketing, Product Marketing, Product
Launches and Re-Launches. As a Lean Six Sigma Black Belt,
Business901 provides and implements marketing, project and performance
planning methodologies in small businesses. The simplicity of a single
flexible model will create clarity for your staff and as a result better
execution. My goal is to allow you spend your time on the need versus the
plan.

An example of how we may work: Business901 could start with a
consulting style utilizing an individual from your organization or a virtual
assistance that is well versed in our principles. We have capabilities to
plug virtually any marketing function into your process immediately. As
proficiencies develop, Business901 moves into a coach’s role supporting the
process as needed. The goal of implementing a system is that the processes
will become a habit and not an event.

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Future of Lean with Dan Jones

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