Hi, welcome to this lesson where we’re going to look at lean management.

What content is covered in this lesson?

We’ll talk about in the next few minutes:

• the difference between project and process management methods,
• the core idea and goal of lean management,
• the 2 views of the customer and the company,
• the results that the method gives us,
• we also deal again with the history of origins,
• get to know the design approaches and forms of application,
• we talk about principles and methods,
• and will look at implementation barriers in great detail.

But now to the content of this lesson:

So now Lean Management. This term should not be completely new to you from the last lessons. Especially in the SAFe lessons we have seen that components of lean management harmonize well with agile organization.

How is project management different from process management?

While we have been dealing with the basics of “project” management methods until the last lesson, we are dealing with “process” management methods in Lean Management and the subsequent Six Sigma. So what is the difference? Quite simply, project management is usually limited to a foreseeable period of time. The time period of a project. Process management, on the other hand, is concerned with the company’s processes on an ongoing basis. So much for this small but important distinction.

I would also like to keep this lesson as “lean” as possible, since lean management is a very broad topic, especially because of its many variations, and we only want to lay the foundations here for a good understanding of agile organization in large companies.

What are the areas of waste in lean management?

The core idea of lean management is to create value without waste. The 7 areas of waste in lean management are:

• Overproduction
• Warehousing
• Transportation
• Waiting Time
• Unnecessary Movement
• Process Overfulfillment
• and Errors (causing scrap or rework).

What is the goal of lean management?

The aim is to ideally coordinate existing workflows and consistently eliminate superfluous activities. To achieve this goal, the value creation process is viewed from 2 views:

• Once from the point of view of the customer, with his need for availability, individuality, quality and pricing
• And from the point of view of the company itself, with its need for profitability and competitive strength

What results does lean management deliver?

Results are

• clear interface descriptions and process definitions,
• firmly defined responsibilities,
• reacting as early as possible to errors and optimization potential,
• as well as the integration of organizational methods that are as simple as possible,

which lead to stable processes and thus also to high-quality products.

How did lean management come about?

What we now call Lean “Management” originated at Toyota in the mid-20th century with the name Lean “Production”. The approach is devoted less to process organization and more to streamlining the organization and consistently integrating economic aspects. Since Toyota became a global model for efficiency and quality with these practices in the 1990s, the term has been expanded in management consulting to include lean “management.” The design approaches, principles and methods of Lean Production have also been extended to other areas of the company up to top management (e.g. Lean Administration or Lean Maintenance) and made usable for other industries through specific forms of application.

What are the design approaches of lean management?

Now let’s look at the 10 design approaches of lean management. They are the starting point for optimization, which the lean manager constantly considers:

1. Customer orientation, i.e.: orientation of all activities to the customer
2. Focusing on your own strengths
3. The optimization of business processes
4. The continuous improvement of quality
5. An internal customer orientation as a corporate mission statement
6. Personal responsibility, the promotion of personal responsibility and teamwork
7. Decentralized, customer-oriented structures
8. Mutual understanding that employee management is a service to employees
9. And as a real contrast to the traditional Japanese leadership method: open information and feedback processes
10. And therefore also: a necessary change in attitude and culture in the company

These 10 design approaches in lean management are not entirely fixed. As the rollout to the entire enterprise has occurred across a range of management consultancies, several different lists have proliferated. The aforementioned list is exemplary from Graf-Götz and Glatz, because it follows the original idea quite well.

What are the application forms of lean management?

Depending on the focus for optimization in the company, Lean Management offers different forms of application with targeted content.

• Lean Thinking” conveys the basic principles of Lean Management. No more, but detailed and comprehensive.
• “Lean Leadership” has the strategic goal of specifically aligning management and leadership structures with lean management
• “Lean Development” focuses on product development and research
• The classic area of “Lean Production” is of course still focused on manufacturing
• “Lean Construction” is an extension for the construction industry, the construction planning and execution
• “Lean HealthCare” is concerned with hospital management and healthcare
• “Lean Supply Chain” is an extension for logistics with a special focus on value chain management. Just-in-time, outsourcing risks and expenses to the supply chain are a big issue here
• “Lean Administration” deals with order processing and all other administrative processes in the company
• “Lean & Green Management” deals with sustainability and resource efficiency
• And last but not least “Lean Laboratory”, an extension of Lean Management for the optimization of quality control, research and development laboratories

I do not want to go into detail about these forms of application here in any case. In my opinion, the only important thing to know at this point is that there are all these Lean Management areas and, of course, this list has no claim to completeness due to so many variations. The forms of application that are important for us are

• of course, Lean Thinking – the basic understanding of Lean Management.
• Lean Leadership
• Lean Development
• Lean Production
• perhaps also a part of Lean Administration and Lean Laboratory.

What are the principles of lean management?

We saw earlier what design approaches can be used to find a starting point for optimization. The 5 principles of Lean Management provide us with guidelines for reviewing these items:

1. Define the value from the customer’s point of view, which includes checking exactly what is produced and whether the result meets the customer’s expectations. The customer should always get
   • at the right time,
   • in the right place for him,
   • a product tailored to his needs
   • with the quality he expects
   • at the price he thought appropriate.
2. The company must always know the exact value stream in which all current processes are considered, recorded and described in detail. The value stream classically includes all activities from the raw material to the customer. In recent years, the scope has even expanded to include post-purchase service and recycling, as well as regulatory issues and raw material compliance prior to raw material acquisition. Only if the value stream in the company is known and up-to-date is there a basis for optimizing the value-adding processes. That’s why value stream mapping is such a common term in lean management – and hopefully a common activity. Well, hope dies last …
   • I know large companies that have even adopted lean management to the extent that the slogan is visible under every logo. But consistent implementation costs money and requires valuable personnel capacity. And with that … it looks bad … and with that the optimization potential is also not constantly exploited. To put it more clearly: the processes become obsolete despite the great slogan. Let’s move very quickly to the next point.
3. The most important task, however, is the implementation of the flow principle, in which all operational processes merge without interruption. This eliminates both maintenance situations and excessive storage. This is only possible if the smallest possible batch sizes are handled on an order-by-order basis, which automatically makes production more flexible.
4. In the classic production of products and services, the push principle is applied. The maximum capacity of a machine, a plant or even of manpower limits the volume to be delivered. Lean management restructures the organization according to the pull principle. All planning starts from the customer, who expects a delivery or service. And this expectation now continues throughout the value creation process all the way to the beginning. Each employee picks up his work when he is triggered to do so from the delivery direction. It only gets what it needs and thus requests the necessary basics from its preceding manufacturing stages. With this approach, 100% delivery reliability is feasible even without irregular overtime demands – because: irregular overtime costs money and frustrates employees. Incidentally, this principle reduces inventory and the manufacturing process is only as busy as necessary on an order-by-order basis. That’s lean. Maybe you are familiar with the pull principle from Scrum, e.g. when processes are pulled into the sprint? Once again, lean management and agile combine to make a pretty well-rounded whole.
5. The last principle is to strive for perfection. Lean thinking assumes that perfection can never be achieved, but can be strived for. Standing still means going backwards. Since the framework conditions are constantly changing and bad and comfortable habits tend to creep in with the perpetual change, it is important in lean management to constantly question everything. This so-called “Continuous Improvement Process” (also known as CIP or Kaizen) requires this mindset from every employee and therefore also expects regular improvement suggestions and ideas.

What methods are used in lean management?

Now that we have learned the principles for evaluating the starting points, all we really need are tools to help us achieve our goals in the overall system of a company – the methods of lean management:

• One would be the value stream mapping already mentioned. It is the core method on the result of which everything else is built. Without knowledge of the value stream, there is no starting point for optimization. Quite simple. The value stream mapping maps the current state.
• The methods for achieving the target state are flexible in lean management. This could also include Kanban. How the goal is achieved, however, is highly individual – hence no specification of which organizational methods are used to achieve it. In this way, lean management does not limit itself either, but only provides a framework that can be used by very many companies without conflicts with existing organizational structure.
• In lean management, key performance indicator systems inform not only managers, but also each individual employee, and thus also provide an indication of necessary adjustments in the workflow. Thus, these tools are an important component in promoting self-responsibility.
• And then, of course, a means without which all goals remain unattainable: Without employee involvement, the spirit in the company does not change. No change of mind means no achievement of goals. Involvement here also includes early involvement in the design and implementation of measures, as well as raising awareness of errors and waste. It is only through the early involvement of employees that their knowledge is also brought in – a circumstance that remained completely unused in the classic Japanese organizational model.

Perhaps you are beginning to realize how much Toyota has positively influenced Japanese culture and also efficiency worldwide.

What are the implementation barriers to lean management?

I have already let it be known that there are also so-called implementation barriers in lean management – in other words, management decides to optimize the company in this way, but there is not much left over other than words. What could be the reason for this?

• It is very difficult to change traditional ways of thinking and working. If we are completely honest with ourselves, we know that man is sluggish and comfortable. Regardless of the hierarchical level. And so it also happens that not even the top management, which has decided to implement and has a corresponding goal, adheres to the principles and methods. Lean management requires a willingness to change and an ability to learn. A common saying is that success destroys learning ability. Or that learning ability decreases proportionally to success. These statements are not entirely without merit due to the fact that they are often true. With a little self-reflection, I can hold my own nose at this. How do you feel about it? Openness to self-insight is the foundation for further development – and goal achievement.
• Typically, top management is persuaded to introduce lean management and is provided with comprehensive information on all aspects in return. The next step is to involve the next subordinate hierarchy that will be tasked with implementation – and they usually receive the necessary training to do so. Often only once. From this level on, the information is passed on orally in several stages, each time by people whose main field of work covers completely different topics. And so it happens that Lean Management information continues to fade as it moves down the line, or even changes entirely due to personal goals. What now arrives at the operational workforce? (Take a breath) – little to nothing. And this is exactly the obstacle to success: lack of professional training for each individual employee. Training and guidance by professionals would be the solution – at least until the system flies itself. And no, I’m not trying to sell anything here. This is so unfortunately obvious again and again.
• And then there would be the lack of support from management. What do you do when some employees just won’t go along, refuse to? What to do when necessary measures destroy employees’ interests? There are many quite valid counter-interests. And nevertheless or with a suitable solution finding the project goal must be reached. This requires the disciplinary, time and financial support of management. But if they no longer feel connected to the topic after the project has started and block everything, then the project almost inevitably goes down the drain.
• Now, the reality is that top management is usually firmly behind lean projects because they are financially relevant and top management’s focus is predominantly financial. Also because top management itself is financially controlled by the partners or shareholders. Almost universally, however, the challenge posed by blockers arises in middle management. In the breadth and depth of middle management in large companies, there are always employees who have their own interests and preferences – and consistently defend them when a project puts them at risk. In the best case, this has social causes, e.g. the supposed protection of subordinate employees from change. To get these predictable blockers to collaborate and also leverage the necessary expertise, these employees are often given leading and critical roles in projects. The best conditions, therefore, for derailing a project from the outset. They then refuse to cooperate until the project comes to a standstill. With the statement to the employees supposedly to be protected that he is in the position to avoid anything that goes against their interests. Socially intended, but fatal in the medium and long-term effects of the standstill. For the company as a whole, but also for the supposedly protected employees.
• Large companies tend to define guidelines for safeguarding processes that employees must adhere to. This also applies to the design of projects. At the same time, these templates are in no way able to focus on the customer benefit to be achieved, as this is different in every project. Work policies are usually always company-centric or even tailored to management interests. This also makes it clear that a template-like concept design in the form of guidelines contradicts the goal of lean management.
• During the project phase, it is not uncommon for budget and schedule targets to be missed due to more unforeseen obstacles and challenges. It is normal that the pressure increases in the final phase. However, it is also normal for the introduction to be pushed so hard that the employees can no longer be brought along and errors therefore accumulate, the project goal as a whole is called into question or is not accepted by the employees in the first place – the old processes and tools continue to be used. In large companies, we are lucky if we bring 20% of projects to such a successful conclusion that they are subsequently used operationally. Scary, isn’t it? That’s why we address it so openly here – to learn a lesson. To do better and to intervene in time on the obstacles mentioned here.
• Large companies are usually organized in a strict hierarchy, with many levels of hierarchy, the perks and responsibilities that come with it. There is a very strict top-down principle: from the top it is announced, from the bottom it is done. So how does this fit into teamwork, where representatives from different hierarchies are supposed to work together, each with their own tasks and delivery obligations? What to do if a higher-ranking team member simply refuses to complete his tasks, but their results are the basis for cooperation? And this happens more often than you think, also because managers have learned to delegate and have forgotten how to do it. What to do? Blaming at a higher level in the hierarchy? – No-Go. Criticize openly? Doesn’t do any good, or leads to its own dismantling in large companies. Silence? Has nothing to do with teamwork and the project goes down the drain. Yes, indeed, not an easy answer. But that is the success factor in the project: this obstacle must be solved. I wish you a lot of fun in the project.
• It is similar with role problems of managers: what to do when in the team the request for performance suddenly comes from the otherwise subordinate employee? What audacity, impudence, to address me in this way. What do you do as a team member with a harsh rejection, like: do it yourself? Or the otherwise subordinate team members do not dare to demand anything in the first place. Assertiveness in a team also depends to a large extent on the character of the team members and the team cohesion. The whole thing harbors considerable potential for conflict and frustration. To work in a team, a team member must be a team player. Team, team, team – these are not empty words. All experience and competence are of no help if this prerequisite is not met. A team member without team competence is absolutely useless – suitable at most as an occasional source of information, outside the team. In a team, such characters destroy the whole team and also the project. This obstacle is also a challenge relevant to success.
• We could extend this list further depending on experience. Without going into detail, these are of course also points such as a limited understanding of process thinking among team members, a lack of customer proximity, or an incorrect understanding of quality in which either too much or too little effort is invested in quality assurance.

Lean management addresses implementation barriers as the first of the methods and frameworks addressed to date. This may be due to the fact that lean management is a classic top management strategy and thus the obstacles to implementation are clearly identified. This is precisely what management must find solutions to and prepare for. Pure project management methods are more about organizational implementation. Disciplinary challenges and psychology are usually not addressed. Points that I will add to, especially in the last course of this series of courses. The barriers described in Lean Management apply equally to all projects, of course.

How does lean management fit with agility?

If I myself draw a conclusion from this lesson, it is the realization that Lean Thinking

1. has become firmly established in agile project methods, and
2. really fits very well with agility, and
3. makes the same demands on a modern employee as agile project methods do.

No wonder, then, that the concepts and goals harmonize so well with each other and are thus also easy to handle in practice.

Now let’s summarize what we have covered in this lesson:

• we now know the difference between project and process management,
• have recognized the core idea and goal of lean management,
• know about the 2 different views of the customer and the company,
• we discussed the results that lean management brings us,
• moreover, we learned something about the history of its creation,
• we have learned about the design approaches and forms of application,
• just as the principles and methods,
• and we have intensively dealt with the implementation barriers to be mastered.

In the lesson after next, we will cover Six Sigma, another process management method. But before that, we have another little surprise for you: The following lesson contains a short quiz in which you can check for yourself which content from this lesson has stuck with you. I wish you a lot of fun with it, see you again in the lesson after next!

*Source Data: 16, 17, 18, 19