Lean management

Lean or lean thinking is a hands-off approach to business that helps companies and organisations to remain competitive.

First conceived in Toyota’s factories in 1940s Japan and expanded over the years with new concepts and tools, today lean is a relatively well-known and widespread business management method in companies across the world. Lean aims to create added value within businesses by reducing waste (among other things) and optimising workflows.

Let’s have a more detailed look at what lean management involves!

What is lean management?

First of all, it is worth noting that lean, lean thinking, lean management and the lean approach are all synonyms referring to a specific, pared-back approach to business management.

The ultimate aim of lean is to improve the business by applying a few basic principles. Although it was originally designed as a way to improve upon the mass production model, today lean can be applied to any business or organisation, regardless of its size or sector.

What is the purpose of lean?

As we said above, lean is a pared-back approach to business management. Some companies and organisations use this approach to remain competitive on the market and to keep on improving, while others use it to optimise their workflows and reduce waste, and so also become more sustainable.

The lean approach can be used for many things, including:

• Mapping, analysing and understanding what is really happening within the company, or the place where the value is created (known as Gemba in lean jargon).
• Improving the business, particularly optimising the processes used to create and sell services and products.
• Minimising waste, i.e. everything that has zero value from a customer’s perspective.
• Developing people, empowering them and helping them keep on improving through new approaches to problem-solving, coaching and training.
• Creating a more efficient management system through the company’s people and leaders.

A metaphor that is often used when discussing the lean approach is sports coaches: managers are encouraged to act like coaches, helping people to constantly better themselves and take on the challenges of the outside world.

The history of lean thinking

Before we list the principles of lean, let’s first take a look at where and when this approach to management began and how it developed.

Lean management was first practised in the 1940s and has its origins in the Toyota Production System (TPS) developed in Japan in response to issues with the mass production model developed by Henry Ford, which at the time was applied in virtually all Western businesses.

While lean stems from the popularisation and spread of Toyota’s pared-back approach, the word itself did not appear until the 1980s, when a student at MIT used it in their dissertation.

Lean thinking really became popular and widespread and started to be introduced at businesses following the release of the book The Machine that Changed the World in 1990. In this volume, the three authors – James Womack, Daniel Jones and Daniel Roos – analysed Toyota’s approach to business for the first time, and identified its strong points compared to other methods.

To summarise: although lean thinking has distant origins, it only really became popular with businesses in the 1990s.

The five principles of lean management

The principles of lean can be summarised in five key words: value, value stream, flow, pull and perfection.

These principles were coined by Dan Jones and James Womack in their 1996 book and manifesto on lean management entitled Lean Thinking, which analysed and explained each one in turn.

Here is a brief summary of the five principles of lean:

• Value. Value should be defined based on how it is perceived by the customer. In other words, the first question to ask is: what is the customer really willing to pay for?
• Value stream. Map the value stream, i.e. identify all the actions that go into creating a product or service, while at the same time removing everything that does not help to create value (waste).
• Flow. Create flow, i.e. ensure operations flow smoothly. In other words, make sure that the company’s operations make services or products flow to the customer smoothly and without any major interruptions.
• Pull. Establish pull for production from the customer, or, more generally, only carry out an activity when the downstream process requires it. This is the opposite of a push mechanism.
• Perfection. Keep on improving, accepting external challenges and aiming for perfection in all the business’ efforts and operations.

Business transformation using a lean management approach

When someone refers to business transformation and lean thinking, they may therefore have very different concepts in mind:

• Lean as a toolbox: a series of methodologies and tools to use within a business
• Lean as a philosophy: applying lean thinking to business strategy
• Lean as an ongoing process: continuous change that seeks to improve the business and reach new goals
• Lean as a fixed target: for example improving workflows or reducing waste at the company

However, these are all connected by one key concept: managing a business using the lean approach involves a profound shift in the way the company thinks and operates at every level – from managers all the way down to regular employees.

Transforming a business using lean thinking therefore does not happen overnight: it often requires a considerable amount of time and assistance from experts and external consultants. The overall aim is to ensure that the company’s goals, the processes it uses to create services or products and the people that work on them are all fully aligned.