Lean thinking: It represents a series of systems and values that can be implemented within any business context to promote efficiency and minimize waste. Originally an engineering concept, the idea of lean thinking goes back to the early days of automobile production. Lean thinking continues to provide a helpful way for engineers to think about process improvement.
The lean concept is most closely associated with Toyota. In the years after World War II, the company’s engineers developed a new way of thinking, one that shifted their focus from individual machines to the overall process flow. By making some minor workflow improvements, they created an assembly line that would turn out a wider variety of products more efficiently, and with no reduction in quality. This “Toyota Production System” remains one of the beacons of lean thinking.
The principles of lean thinking have been distilled in a number of influential books, notably Lean Thinking: Banish Waste and Create Wealth in Your Corporation, by Daniel T. Jones and James P. Womack. In this seminal work, the authors pinpointed five central concepts within the lean framework.
- Value stream
Together, these principles serve as a type of road map for maximizing value while minimizing waste. They apply to many industries. In this article, we’ll take a closer look at each of these five lean thinking principles.
Lean Thinking Principle 1: Value
The first step in the lean process is identifying value. Value can be defined very simply as that which the customer is willing to pay for.
Identifying value means pinpointing the needs of the product’s end user. These needs may be actual or latent, and in some cases the customer may not even know what their needs are. This is particularly true when it comes to novel or cutting-edge technologies, which sometimes provide a service or address a pain point that customers didn’t realize they had.
A number of tools can be used to help determine value, and gain a better understanding of what customers are or aren’t willing to pay for. Some examples of these tools include the following.
- Consumer surveys
- Demographic research
- Focus groups
- Web analytics (used to determine what customers are searching for online, for example)
- Buyer personas (used to consolidate the information gleaned from these other tools and create a profile of the “typical” customer)
By using these qualitative and quantitative research methods, businesses gain key insights. They can determine what kinds of products and features a customer is looking for, how the customer wants those products or features delivered, and how much customers are willing to pay.
Additional Resources About Value
Several resources provide additional insight into the lean thinking principle of value.
- Industry Week, “Serving Your Customer: Going Beyond Lean Thinking to Define Value (Part 1).” Discover insights about how identifying value can help a company fine tune its processes.
- HubSpot, “16 Types of Customer Needs (And How to Solve For Them).” This article provides a comprehensive survey of various types of customer needs.
- HubSpot, “How to Do Market Research: A 6-Step Guide.” This information provides step-by-step guidance on learning more about customers and what they value.
Lean Thinking Principle 2: Value Stream
The lean thinking principle of value stream is best understood in relation to the principle of value. After identifying what customers or end users value, practitioners of lean thinking identify the activities that can lead to that value. They look closely at all the steps within a company or process. They then take an inventory and determine which of those steps contribute to the value that customers want.
During this process of critical inventory, lean thinking practitioners may identify activities within a company that don’t contribute to value or provide customers with anything they would be willing to pay for. These activities are understood as waste. Eliminating these activities helps create a process that’s more streamlined and efficient.
Note that there can be exceptions to this rule. Sometimes, an activity may not directly add value to the final product, but it may still be necessary to a company’s overall workflow. For example, in a manufacturing setting you may sometimes need to transport materials over long distances, or spend time fixing defects that shouldn’t have existed in the first place.
These activities can’t simply be eliminated from the production process, but since they don’t directly add value, companies should look for ways to minimize them. For example, by implementing tighter quality control protocols, companies can reduce the time spent reworking defects.
Note that value streams can be charted in virtually all areas of a business.
- Research and development
Additional Resources About Value Stream
As you think about mapping the value stream, here are some additional resources that may prove helpful.
- CIO, “What is Value Stream Mapping? A Lean Technique for Improving Business Processes.” Gain a helpful overview of the benefits of value stream mapping.
- Plainview, “What is Value Stream Mapping?” This article lists the opportunities and challenges associated with value stream mapping.
Lean Thinking Principle 3: Flow
To achieve flow, managers seek to eliminate the waste they identified in the value stream and create processes that work as smoothly and as efficiently as possible.
The ultimate goal of this step is to add value. There are several ways in which this can be pursued.
- Breaking down complex processes into small steps, and analyzing each step individually
- Reordering or restructuring those steps for a more streamlined process
- Cross training team members
- Creating cross-functional departments that work more nimbly and more productively
One way to think about this principle is to consider some of the potential barriers to flow, and how they might be reduced or eliminated.
- If you waste time and money by transporting goods over long distances, maybe you can reconfigure your logistics to transport everything at once as opposed to transporting items individually.
- If you lose production time to equipment upkeep or failure, the answer might be simply to invest in more robust or cross-functional equipment.
- If projects are delayed because you have employees waiting to receive approvals, it might mean you need to optimize your internal approval process.
Additional Resources About Flow
In thinking about flow, here are some additional resources to consider.
- Houston Chronicle, “What are the Causes of a Lack of Flow in Manufacturing?” Learn some of the most common impediments to production workflow.
- Upgrade, “6 Ways You Can Improve Workflow Efficiency in Your Business.” In this article, you can see what flow looks like in a traditional office setting.
Lean Thinking Principle 4: Pull
The principle of pull relates mainly to inventory, which is widely considered to be one of the biggest sources of business waste. After all, if you produce too many products and end up with a warehouse full of surplus goods that nobody wants, that represents a sizable waste of labor and materials.
The goal of a pull-based system is to limit inventory and work-in-process while ensuring there are enough materials and information to optimize the flow of work. Two common examples of this include just-in-time delivery and on-demand production. Both of these models enable a company to invest time and resources in direct relation to product demand.
One of the risks of a pull-based system is that you wind up with too little product inventory to meet consumer demand. That’s why it’s important to develop a pull-based system by working back through the value stream, ensuring you have a clear idea of how to guarantee just the right level of consumer value.
Additional Resources About Pull
To learn more about the principle of pull, consider the following resources.
- Houston Chronicle, “Push System Vs. Pull System Inventory Control.” This article defines a pull-based inventory control system in relation to its opposite, a push-based system.
- com, “Push vs. Pull Inventory Management.” Learn the pros and cons of both pull- and push-based systems.
Lean Thinking Principle 5: Perfection
Lean thinking is often associated with the idea that managers should always be in pursuit of a more perfect process. By incorporating the previous four principles, managers can continuously seek more efficient and productive processes.
In other words, lean thinking calls for “learning organizations” — companies that are marked by a willingness to persistently audit and critique their own processes and develop a greater understanding of how to serve their customers.
According to Lean.org, the ultimate goal of lean thinking should be to “[m]anage toward perfection so that the number of steps and the amount of time and information needed to serve the customer continually falls.”
Additional Resources About Perfection
These resources address the pursuit of perfection and continuous improvement.
- McKinsey, “How Continuous Improvement Can Build a Competitive Edge.” This article looks at some of the advantages to be gained by the pursuit of perfection.
- Harvard Business Review, “Creating a Culture of Continuous Improvement.” See some of the ways to create a continuous improvement mindset within your team.
- Houston Chronicle, “Continuous Improvement Process Definition.” Here you’ll find a brief synopsis of what continuous improvement means in a work setting.
Master the Principles of Lean Thinking
Lean principles can lead to process improvements in a number of settings, ranging from engineering, to sales, to marketing, and far beyond. Consider how applying a lean approach can help you better identify value, eliminate waste, strive for perfection — and become more valuable to business and industry.