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Section I. Philosophy of the long term.
Principle 1. Make management decisions from a long-term perspective, even if this is detrimental to short-term financial objectives.
It’s about focusing on long-term development, not operational performance. Additionally, unfortunately, it’s the one that’s most often ignored because it’s a psychological trap.
What do owners or shareholders usually want from top management? Right, beautiful revenue figures, operating margins, EBITDA, profitability.
As a result, all development projects, as a rule, are an attempt to sit on two chairs, to develop something, to rebuild, but not to hesitate at the moment. There’s nothing wrong with that, but, alas, it rarely works. Of course, if you move systematically and progressively, then it will be, but if you have already entered a crisis or have grown up by yourself, then this approach is unlikely to work.
Here it is important to remember the main postulate of lean production: your main task, as a person, as an employee, as a company – to create value for the consumer, society and economy. In evaluating any work, one should focus on whether it solves this problem.
Section II. The right process produces the right results.
Principle 2. A continuous flow process helps to identify problems.
Its essence is to organize the work and production process with minimal losses, stocks and unfinished production. This approach, combined with well-functioning communication, allows problems to be identified at an early stage before they become a danger or crisis. In my practice, this is generally the main rule, including in the implementation of projects – collect feedback and identify problems as early as possible.
Principle 3. Use the pull system to avoid overproduction.
Are you familiar with the situation where you are being squeezed into the work of another unit? I often see the principle when different units work on their own. As a result, there is stocking of raw materials warehouses or folders with incoming service / letters / tasks.
This is the most common problem for department heads in dealing with subordinates. Many such leaders, in fact, are «transferees» – they only throw tasks over to the executive. The employee accumulates 40—50 tasks, he tries to do everything, jumps from task to task, and in the end does nothing. Additionally, as practice shows, if you limit the number of work tasks to three, productivity rises to 50%. Firstly, a person does not jump from one task to another (the process of immersing the brain in the problem takes 20—40 minutes), secondly, he has at least some diversity and variability, this protects the psyche, and allows you not to hang on to one problem.
We need to get the domestic consumer who takes your job to get what they need at the right time and in the right amount. This is the basis of the tool «Exactly in time» – new products or tasks should come only as the previous. Additionally, here Kanban boards will help a lot. About them too, a little lower.
In general, it is necessary to minimize the unfinished production (current and for offices).
Principle 4. Distribute work evenly (heizunka): work like a turtle, not a hare.
Familiar is the situation of heroism and proverbs «sometimes empty, sometimes densely»? In Japanese philosophy it is called Mura. Additionally, one of the tasks of thrifty production is to make the load evenly, without talking at the end of the month and endless heroics. And the modern planning systems, including ERP, MES and APS, that we talked about in the first book, will help. Well, so are Kanban boards if we learn to look at the process and optimize it all the time.
Principle 5. Stop production to solve problems with part of the production culture, if so required by quality.
Why were so valued, and are Toyota cars appreciated? Right, for quality. If we want to work with clients who have money, we need to ensure quality.
Quality for the consumer determines your value proposition. Additionally, that’s where the smart machine with machine vision comes in, which is to watch the product and the process and see if everything works according to the technical process. You need a visual system that immediately notifies the leader of the problem. Therefore, in my projects, I make extensive use of color tags in task cards. For example, the green label means «Everything according to the plan», blue – coordination or waiting for information, red – «There is a problem, need help». Digital tools here in general give unlimited flexibility, the main thing – the leader daily to do a review and if problems arise, to turn on and eliminate the reasons.
If we are talking about production, the tool Dzidok (equipment with machine vision or complex automation) – the foundation for «embedding» quality.
As a result, the approach by stopping or slowing down the process and getting the required quality «from the first time» will increase the productivity of processes in the future: you will simply eliminate the causes of problems and deviations.
Principle 6. Standard objectives are the basis for continuous improvement and delegation of authority to staff.
Every time I hear the thesis «we do not have standard tasks», as a rule, it means that the team simply do not know or do not want to structure the work.
Stable and reproducible working methods – the key to process management. Additionally, his task is to create a more predictable result, improve the coherence of work, and make the output more uniform. It’s the basis of flow and pull.
Yes, if you have a very young company, then for a while it will be irrelevant, you need to run the whole system, give a result, but in the end there is nothing without it. Endless creativity always leads to crisis.
Knowledge should be captured, for example, by reviewing projects, identifying and standardizing best approaches and methods. At the same time, it is necessary to encourage the improvement of these standards. In general, continuous improvement – the main creed of thrifty production. But to improve something, it must first be described and fixed. Otherwise, there will be chaos with all the consequences. Additionally, this is also more than relevant for IT. Creative guys do not like to standardize their work, but alas, it is necessary through «I do not want».
Principle 7. Use visual control so no problem goes unnoticed.
This principle is actually part of the 5th principle. As mentioned, I use color labels. But it requires discipline, and it comes from a supervisor.
Where possible, reports should be reduced to one page, even if they were critical financial decisions. There is even an «A3 Report» tool for this.
Principle 8. Use only reliable, proven technology.
Technology should help people, not replace them. If we are talking about digitization and automation, it is often better to first do the whole process manually, and then implement the digit and automate.
First, you will see the most problematic places; secondly, avoid the illusion that everything can be automated. In addition, new technologies are often unreliable and difficult to standardize, threatening the flow. The same artificial intelligence, despite all its development, still admits sometimes quite stupid mistakes.
Therefore, instead of unverified technology, it is better to use a known, well-established process. At the same time, it is necessary to encourage the study of new technologies and ways. After all, everything worked out once was new. Additionally, it is necessary to quickly implement proven technologies that have been tested and make the flow better.
Help with this can be the selection of digital technologies and solutions taking into account TRL (ISO 16290:2013). The TRL is how mature the technology we want to introduce is. Therefore, the technology has 9 levels of readiness:
TRL 1: The basic principles of technology have been studied and published;
TRL 2: The concept of technology and its application is formulated;
TRL 3: Critical functions or characteristics are validated analytically and experimentally;
TRL 4: Component or layout tested under laboratory conditions;
TRL 5: Component or layout tested in conditions close to real;
TRL 6: System/subsystem or prototype model demonstrated in near real conditions;
TRL 7: Prototype system demonstrated in operation;
TRL 8: The real system is completed and qualified during tests and demonstration;
TRL 9: The real system is confirmed by a successful operation (goal achievement).
Accordingly, the more critical the impact of new technology, including digital technology, on the final product, and the higher the reliability requirements of the product, the higher the maturity level should be.
Section III. Add value to the organization by developing your employees and partners.
Principle 9. Educate leaders who know their business thoroughly, profess the company philosophy and can teach others this.
It is better to educate your leaders than to buy them outside the company. First, it is one of the key rules of motivation. When you constantly hire outsiders, you discourage your people. They begin to lose faith in the future. As a result, they focus on their goals and do not have to expect their full contribution. Second, leaders who know their business by default have high expert power and know all the pitfalls of your activities. Additionally, digitalization and automation are all about that.
Train staff in the basics of lean manufacturing, design management, digitalization, and collect feedback from the beginning.
In addition, a leader should not only perform his tasks and have the skills of communicating with people, he should also profess the philosophy of the company and set a personal example of attitude to the case.
Principle 10. Educate exceptional people and form teams that profess the company philosophy.
Principle 11. Respect your partners and suppliers, make them difficult and help them improve.
You can be as digital as you want, but if your partners live in paper, the effect will be limited. Here, as in systems constraint theory, chain strength is determined by the weakest link.
It is necessary to create conditions for partners to grow and help them to demonstrate their high efficiency.
Section IV. Permanent solution of fundamental problems stimulates continuous learning.
Principle 12. To understand the situation, you need to see everything with your own eyes (genti genbutsu).
How often have I seen stories where TOPs trusted their managers and reports on the computer? Here is a practical example. The founder of the company was from the production. Weekly he went to the production. And in the end, people understood that their work was important, motivated, and he had reliable information.
But his successor had a classical management education. He formed a team of managers, a system of reports. But what do employees want? To keep them safe and stable. That’s normal. However, with each step, from each leader the information becomes more distorted, and as a result, a distorted view of the situation is formed at the very top, which means that decisions are made based on the erroneous opinion. This is, for example, one of the main problems of public administration.
If this rule is combined with high-quality, automated data collection, transparent analytics, this problem can be avoided.
As a result, solving problems and improving processes, you need to see what is happening and personally check the data, rather than theorize, listening to other people or looking at the computer monitor. Thinking and reasoning must be based on data that are verified and sure. Even company executives and business executives must see the problem for themselves, only then will the understanding of the situation be genuine, not superficial.
Principle 13. Take your decision slowly, on the basis of consensus, weighing all possible options; when implementing it, do not delay (nemavasi).
It can also be called «think slowly, decide quickly». One of the basics of management is the need to evaluate alternatives. Making decisions based on one opinion is too dangerous and risky. If this is sometimes the only development option for young companies, the further, the more often it is necessary to use consensus, and this requires the development of the issue and several people with different opinions and psychotypes. On this, among other things, the concept of Adizes is based – one person cannot combine all the necessary competencies, you need a versatile team. To that end, it was necessary to learn to discuss views openly and to overcome conflicts.
As a result, one cannot make a clear decision on the way forward without weighing all the alternatives. In this case, there are less risks and the desire to go back and redo. And when a decision has already been made, you need to act. For example, when Toyota was developing her Prius, she worked very hard on possible variations of the hybrid approach. However, by assessing possible alternatives, they focused on one option and promoted it only, it became the de facto standard worldwide.
Nemavashi is a process of joint discussion of problems and potential solutions in which everyone participates. His job is to gather all the ideas and develop a consensus on where to go next. While such a process is time-consuming, it helps to broaden the search for solutions and to prepare the ground for rapid implementation.
Principle 14. Become a learning entity through tireless introspection (Hansei) and continuous improvement (Kaizen).
Do you think it’s possible to optimize everything? Right, in the beginning, we said that goals, objectives, technologies, products can change, and that means we need to constantly improve.
What are the approaches? You can hire consulting agencies, you can initiate regular modernization and restructuring. But with this approach, people will pretty quickly become disappointed in all this, and a culture of inert to any changes will begin to form: people will have in mind the idea that it will pass.
The Japanese prefer to follow the path of constant development in small steps, initiating changes from the performers. Additionally, for example, in digitalization – you can initiate a giant program of digital transformation, invest huge resources, and the output does not get effect.
It is better to start with the small stages of digitalization, and then, when the competencies and the conscious understanding of the need for global digitalization are formed, begin to implement global systems.
In the first book, I already gave examples of both cases: a failed implementation experience at once A total and expensive asset management system and a successful experience of using free Google tools to organize production. It’s not necessarily the right path, but I’m a proponent of that evolution.
To realize this principle, it is necessary to:
– once the process has stabilized, use tools for continuous improvement;
– create such a process that almost does not require reserves. This will immediately identify the loss of time and resources and do not start the «disease». When losses are obvious to all, they can be eliminated through continuous improvement (Kaizen);
– collect and preserve company knowledge, prevent staff turnover (i.e., understand the nature of motivation), monitor the progressive promotion of employees and preserve the accumulated experience;
– at the completion of projects, including implementation, carry out gap analysis (hansey) and openly talk about them. Following the analysis – implement changes in business processes;
– standardize the best techniques and techniques instead of inventing a wheel every time a manager changes, that is, describing business processes.
Muda, Mura, Muri and Loss Types
Mud, moody, moody are strange words, aren’t they? The essence is simple.
Let’s look at these basic concepts.
Muda is two kinds of loss:
1. Actions that do not create value but are unavoidable. For example, transportation, paperwork – it is impossible to remove them from the process, but it is necessary to strive to reduce, say, automation of preparation of mandatory reporting. In my experience, with the help of ordinary Exel, I was able to reduce the labor cost of a mandatory and unnecessary report from 8 hours per month to 30 minutes.
2. Actions that do not create value at all and should be excluded from the process completely. For example, waiting, stocks, marriage, etc.
Mura is uneven. If demand is uneven, queues are formed, execution time increases. Additional materials and supplies are required to meet peak demand. Working in emergency mode tires people and reduces their efficiency and quality of work.
All this also generates losses – marriage, waiting, excess supplies, the need to redo.
Moody is an overload of people or equipment.
We make machines or people work to the limit. Overloading people threatens their safety and causes quality problems. Overloading equipment leads to accidents and defects, which in the end also leads to losses.
These three «M» represent a single system.
Often the root of the problems – «Mura», as unevenness leads to overload «Muri», which in turn causes many other losses («Muda»).
3M: Muda, Mura and muri
Let me remind you that the goal of digitalization, automation and transformation is to reduce losses, mainly in working with information. Additionally, before we initiate any project, we need to understand what losses we want to eliminate.
1. Overproduction
The most common problem, which is the cause of most others. Remember the example in systems restriction theory where the sales department sold more than it could produce? Or when we make five copies of documents, when you only need one? All this is overproduction. This leads to overburdening of units, and high stocks of unfinished production or finished products in warehouses, which also increases the number of rejects.
Reasons – large batches production and unexplored demand, long retraining / restructuring.
Planning systems and deep market intelligence through big data collection can help.
2. Waiting
This is all the time during which people or equipment expect resources, technological operation, data, unnecessary coordination. The e-workflow projects are also designed to address these losses. It is only in such projects often forget to do rewrite processes, and then the electronic workflow begins to complicate the life of employees.
The reasons for the occurrence – a violation in the logistics system. For example, the boss left, and documents can only be signed manually. Or equipment failure, lack of guidance from management, lack of planning.
3. Inventories
Many buyers like to buy large batches to get a discount, even if they do not need so much material yet. Excessive stockpiles freeze money in themselves, plus all this must be stored somewhere, large warehouses are required. In addition, in the warehouse may be defective raw materials. In this type of losses hide the problems of production planning and uneven processes.
The reasons for the appearance – uneven production and poorly established relations with suppliers of materials, do not take into account the demand for products or raw materials.
Example: storage of large quantities of materials needed for production during six months, excluding warehouse maintenance costs, or production of New Year’s goods without seasonal demand.
