THIS IS

RES OLVINC THE

EFFICIEi\CY PARAD OX
NIKLAS MODIG & PÄR ÅHISTNÖII

lillrsorocrca
IsHING
-ápuBl

Stockholm zoró
Preface

Years ago, I learned the value of simplifying from a production

manager who had stepped into a new position as the head of
a large plant. He explained how it allowed him to understand
what was going on, as opposed to optimising something that
was too complex to understand fully.
This book illustrates the beauty of simplifying. The book
cuts through the cacophony of lean terms and methods to
the basic ideas and a working definition of lean: a strategy of
flow efficienc¡ with key principles of just-in-time and visual
menagement.
The clarity and simplicity of the concepts allow managers
to appiy them even in complex operations with many products
and many actors, where they easily get disracted by the fre-
quent demands and issues that bombard them. This is valuable
for those who do not know what lean is as well as for those who
have already studied many lean-associated methods.

Professor Ckrivopk H. Lock

Director, C ørnbridge Jwdge Bwsiness Sckool
 A,.cknowledgements

'When
\Me wrore the Swedish version of this book in the
summer of zottrour idea was simply to merge two previous-
ly publíshed book chaprers. Eight inrense weeks later, we had
a completely new book. When we had the book translated
into English, we decided, for some sffange reason, to rewrite
it. Perhaps we were adhering ro the basic lean principle of
continuous improvement. This dme, however, we did not
spend pleasant summer days in front of our compurers, bur
rather winter and spring evenings and weekends.
But just like lasr time, we have not done it ourselves.
Special thanks go to Sheelagh Gaw, who provided the first
translation of the book and all kinds of support in the pro-
cess of rewriting the rranslated book. Thanks also toJames
Morrison, our editoE who heþed us poiish the language and
make it flow. Any remaining oddities are entireþ our choice.
Thanks to Helen Bågeryd, whose hand-painted illustrations
add something extra to the book. Finall¡ our thanks are
owed to Helena Lundin, who had to sacrifrce evenings and
weekends a-way from her family to help us transform our
text into a proper book, andavery beautiful one at that.
Furthermore, the ideas expressed in this book would not
have existed if it weren't for all the organisarions we have

a
t
I'
xvll1 xlx
I
I

encountered over the years in our research and through our My warmest thanks go ro my family. you are the points
lectures. You have always opened your doors and met us with of departure and arrival for all my explorations. Thanks to
enthusiasm. TogecheE we have been able to develop and re- Sheelagh, for her patience, enthusiasm, and constant sup-
fine our ideas of what lean 'is'. Without you, the flow of our port. Thanks to Sebastian and Sophie for putting up with
knowledge production would be impossible. Many thanks! my absence: I and my book, well, we are finished now.
We owe our special graritude ro rhe enrities that provided FTNALLv: Both of us wish ro thank our friend, colleague,
scholarships enabling the study ar Toyora in Japan: the and mentor, Professor Christer Karlsson, who has not only
European Institute ofJapanese Studies, the Japanese Embassy been a phenomenal supervisor for both of us during our
in Sweden, the Japanese Governmenr (Monbukagakusho), PhD studies, bur has also conrributed ro rhe conceptuaL
Prince Carl Gustaf's Foundation, the Swedish Insrirure, development of lean at a global level.
the Sweden-Japan Foundation, and Doctor of Technology
Marcus Wallenberg's Foundation for Education in Inter-
national Business. Your foresight and generosity in sponsor- Stockholm, November zor5
ing explorarory research provided the foundation for this
book.
THANKS FRoM NTKLAS: I would personally like to thank
those people who made it possible to carry our my study of
Toyota. Thanks to Takahiro Fujimoto and TadashiTanaka,
who welcomed me into their research ream âr the University NikløsModig PärÅhlsnam
ofTokyo and who opened the doors to Toyota. Thanks to
Ryusuke Kosuge, who is both a close friend and has always
been my 'wingman' when researching Toyota. I would also
like to thank my famil¡ relarives, friends, and colleagues
for all their energ¡ love, and understanding.
THANKS FRoM pÄn: A large and collective thanks to
all those who have enabled and participated in my ,lean
exploration'. The explorarion srarred in January ry93 with
an opportunity to parricipare in and study the lean rrans-
formation of one company. Thank you all for opening your
doors to a newly minted PhD student. An imporranr srop
on my lean explorations was London Business School, where
Professor Christopher A. Voss taught me so much about
research and operational excellence.
 Contents

PROLOGUE 5oo times føster cøre 1

CHAPTER I Frorn resource focus to cwstomer þcus 7

CHAPTER 2 Processes øre centrøl to flow eficiency 17

CHAPTER 3 What møkes ø process f.ozl 31

CHAPTER 4 Tke fficiency pøradox 47

CHAPTER 5 Once wpon ø time . -. How Toyotø became

namber one throwgh. cwstomer focas 67

CHAPTER ó Wlcome to the Wild West . -. We call it lean 75

CHAPTER 7 What leøn is not 85

CHAPTER 8 The fficiency matrix 97

CHAPTER 9 This is leanl 717

CHAPTER IO Realising ø leøn operøtions stra.tegy 727

CHAPÎER I T Are yoa leøn? Learn tofsht 747

EPILOGUE Develop ø leøn owtfitl 155

NOTES 759
ì

ì.

t
¡:
¡ì.
a
å
 PROLO GU E

, 5oo times faster caÍe

Alison thinks she hqs concer

Alison has just discovered a lump in her left breast. A, pang of
anxiety hits her. She knows that one in ten \À¡omen develop
breast cancer. It is the most common form of cancer among
women. Her worry is overwhelming.
First thing Monday morning, Alison decides to frnd out
whether the lump is what she fears. She rings her local docror's
surgery and speaks to the nurse during telephone hours. The
nurse is kind and sympathetic and manages to find Alison an
appointment for later that day. Alison is relieved and accepts
the appointment, even though it isn't with her usual doctor.
She calls work and cancels all her meetings for that day.
The doctor ís very understanding but cannor ease Alison's
worry. FIe cannot rule out the possibility thar the lump could
be cancerous. He writes a referral letter that is sent directly
to the breast clinic at the local hospital, which will send
appointment details to Alison.
Every day that week, Alison checks the mail for the letter
from the breast clinic. When a whole week passes without
a letter, she starts to get worried. After ten days, she finally
rings the breast clinic. She waits in the telephone queue
and eventually gets to speak to a nurse. After a fi.ve-minuce
2 THIS IS LEAN PROLOGUE.- 5oo TrMES FÂSTER CARE
)

search, the nurse finds Alison's referral letter and promises through to anyone who can help her. Reluctantl¡ she leaves
that they will look into it that day. Four days later, Alison her number and waits for her call to be returned.
receives a letter from the clinic saying she has been given an Someone from the clinic returns Alison's call later that
appointment for the following week. morning and explains about her upcoming visit ro the
On the day of her mammogram and ultrasound, Alison cytologist and the fine-needle biopsy. The clinic has registered
allows herself plenty of dme to find parking and the right her details, and she has been given an appointment in two
clinic. Everything goes better than expected, and she is in the weeks'time. Alison had been hopingfor an appoinrment
waiting room forty-five minutes before her appointment time. within a few days, but the nurse explains that the cytologist is
She reports to the receptionist, who asks her to sit down and very busy and there are no earlier appointment times available:
wait her turn. When the unpleasant procedure does take place, it goes
Alison's appointment time comes and goes, but her name is relatively quickly. The doctor explains that the tissue sample
not called. After frve minures, she asks the receptionist, who will be sent to the laboratory for analysis and the test results
says that rhey are running late and that Alison should just sit will then be sent back to the breast surgeon Alison met at the
down and wait for her name to be called. Fifteen minutes or breast clinic two weeks earlier. This means that there will be
so after her scheduled appointment time, a nurse comes out another letter with a new time to meet with the breast surgeon.
and apologises to Alison for making her wait. She is asked to The nurse is unable to tell Alison how long she will have to
wait in an examinarion room while the doctor reads up on wait for the results.
her case. The examination goes smoothly enough, and Alison Six weeks to the day after her frrst visit to her local doctor's
is told thar she will be senr details of an appoinrmenr ro see a surgery, Alison frnally gets to meet the breast surgeon again
breast surgeon. and brings her husband along for moral support. Having read
Back ar home, Alison talks to her husband about her her case file and studied all the test results, the doctor delivers
growing fear. The worsr part is not knowing. Her worry even Alison's diagnosis.
causes her to take time off work.
Ten days after her hospital visit, Alison receives the letter
with details of her appointmenr ro see the breast surgeon. Soroh feels o lump in her breosl
Based on the test results, the surgeon cannot be certain that While taking a shower on a Tuesday morning, Sarah thinks
it is cancer, but cannot rule it out either. A second referral is her left breast feeis different, like it has a knot in it. She
sent, this time to a cytologist, who will take tissue samples for has a nagging fear for the rest of the morning and cannot
laboratory analysis. concentrate at work.
Having received such a yague answer from the breast At lunch, Sarah tells her close friend Susan about her
surgeon, Alison goes home anxious and distraught. She concern. Susan tells Sarah about an article she had read about
struggles ro remember what the surgeon said about the next a trial at the local hospital, the idea of which is to create a
step. She rings the clinic the nexr day, but she cannor ger 'one-srop breast clinic'. The clinic had been opened a couple
 THIS ]S LËAN PROLOGUE _ 5OO TIMES FASTER CARE
4 5

of years earlíer as a place where women could go without first This is leon
having to get a rcferralfrom their local doctor. Sarah finds out
that the clinic is open on Thursday afternoons. Tkis Is Leøn is a book about a new form of efficiency that we
For two days, Sarah is unable to think about anything other call'flow efficiency'. Flow efficiency focuses on the amount of
than this lump in her breast, which seems to have grown since time it takes from identifying a need to satisfying that need.
she first noticed ir. Everything she has read on the Inrerner Both Alison and Sarah had the same need: they wanted to frnd
seems to have made her even more anxious. out if they had cancer. They both went through various tests
Sarah arrives ar rhe clinic shortly before four o'clock on and were given diagnoses. The similarities end there.
Thursday afternoon. She is immediately greeted by a nurse, From Alison's frrst visit to her local doctor to the moment
who leads her into an examination room and gives her a she received her diagnosis, forty-two days elapsed, which is
preliminary examination. The nurse confirms rhat Sarah,s equivalent to roo8 hours. In Sarah's case, it only took two
lump needs further examination and sarah is told to sit in the hours between her first contact with the nurse at the one-stop
waiting room while the nurse confers wirh the breast surgeon.
,i, breast clinic until she received her diagnosis. Sarah's diagnosis
I Fifteen minutes later, the breast surgeon asks Sarah to process wâs more than five hundred times faster than Alison's.
I
follow her into the examinarion room. Sarah is asked to give It is an enormous difference.
Is that a big difference?
a brief explanation of why she is there and is then examined
The first part of this book (chapters r-4) defines flow
by the doctor. The surgeon determines thar Sarah will need to
efficienc¡ how it is created, and why various decisions improve
undergo a mammogram, ultrasound, and a fine-needle biopsy.
or worsen flow efficiency. In particular, this part explains the
sarah is sent back our ro the waiting room and notices that
efficiency paradox, how and why organisations arc actually
the other women there look just as worried as she feels. When
wasting resources when they think they are being very efficient.
her name is called out, Sarah follows a specialisr nurse into the
The second part of the book (chapters 5-rr) describes how
X-ray room, where the nurse takes pictures of Sarah's breast.
and why Toyota became one of the world's most successful
A doctor rhen uses ulrasound ro confirm what Sarah aheady
organisations by developing an efficient production flow of
knows: there is a lump in her left breast. 'Western
cars. Inspired by Toyota, the world developed the
The nurse takes Sarah to a cytologist, who performs the concept of 'lean'. Toda¡ although lean is one of the world's most
fine-needle biopsy. The doctor cannor say whether it is cancer,
widespread management concepts, definitions of the concept are
but the tissue sample analysis will tell them.
incredibly inconsistent. This inconsistency makes it difficult, if
Sarah again finds herself waiting in the waiting room ro see
not impossible, to create understanding and form a consensus
the breast surgeon. When she is called in again, she notices that
and, consequentl¡ to succeed with efforts to implement lean.
the time is nearly six o'clock. They sit down and. the surgeon
This book describes what lean is, how an organisation becomes
gives Sarah her diagnosis.
lean, and what a lean organisation looks like.
 I
i
s
i
'/

:,

'i
:.

:..
CHAPTER T

From resource focus

to customer focus

A lison's ond Soroh's stories illustrote two forms of

i|:
¡

i
lI * ï:å',', :'"ï':ïi:ï ï# * ::ïï':: :'r
resource efficiency. Alison's diognosiic process wos corried
out in o heohhcore system thot hos been orgonised to
i use resources efficiently. Resource efficiency focuses on
efficiently using the resources thot odd volue within on
orgonisotion. These ore the resources thoi were used
in boih women's diognostic process. However, Soroh's
diognostic process wos corried out in o heqlihcore system
thot {ocuses on flow efficiency. Flow efficiency focuses on
the unit thot is processed in the orgonisotion. ln both of
these coses, ihe unit is the potients, Alison ond Soroh. This
chopter exomines the two controsting diognostic processes
in order to illustrote the importont differences between
resource efficiency ond flow efficiency.
I-
8 THIS IS LEAN 1. FROM RESOURCE FOCUS TO CUSTOIVIER FOCUS
9

Alison experiences fhe resource-efficient

-l-
ffiffi ffi
t
heolthcore system

Alison's healthcare system is organised around a focus

on resources and the efficient use of these resources. FIer
Lor¿ldoctor'l'tiai;rinoqnphy 3re¡¡tdinic Cfclogy Bre¡stdinìr
turg€r/ & uiì.rasou¡d
diagnosric process involved numerous organisations and
functions - the local docror's surgery, the breast clinic, the
X-ray deparrment, and the cytology departmenr - each of
which focuses on a specific aÍea of competence (general
medicine, surgery, radiolog¡ and patholog¡ respectively). l- li'tjij,ri ¡' t- W¿iiint r t- j,!¿iijrìg
-t rr _q¿iiilg d
In order for Alison ro enrer the healthcare sysrem and.
4?
receive a diagnosis, she needed to inreracr wirh the hospiral
by letter, by telephone, and in person. Alison made a total of rr¡\t""Ull1dri DiaEnosis

five trips, four to the hospital and one to her local doctor's
surgery, and had to spend many days conracring the hospital Resource efficiency - utilising resources
seeking care. She arranged the logistics between these difrerent
contacts herself, ensuring that she arrived on rime for the Resource efficienc¡ the traditional form of efficienc¡ involves
appointments. While at these appointments, Alison had to utilising resources as much as possible. For more than two
take time offwork, with all the cosrs this entailed for her and hundred years, industrial deveiopment has been built around
her employer. increasing the utilisation of resources. A basic principle in
The time from the first visit ro rhe local doctor's surgery this industrial development is to divide an incoming job into
to diagnosis was exrremely long compared to the actual time smaller tasks, which are carried out by different individuals
spent conducting the tests of the diagnostic process. The long and organisational functions.
waiting rimes between visits created fear and anxiety for Another principle is to find economies of scale. Grouping
Alison. The differenr sreps in rhe diagnostic process added smaller tasks together so that individuals, parts of an
value for Alison, yet these sreps accounted for only a small parr organisation, or the whole organisation can perform the
of the six weeks between her frrst and last visits. This point same task many times over increases resource efficiency. The
can be seen in the figure on rhe nexr page, which illustrates increase in resource efficiency is often dramatic, with a marked

Alison's diagnostic process. effect on the product's unit cost.

Efficient use of resources has long been the most common
way of looking at efficiency. It continues to dominate the way
ln which organisations in different indusuies and sectors are
organised, controlled, and managed.
r iì
li 10 THIS iS LEAN 1. FROM RDSOURCE FOCUS TO CUSTOMER FOCUS
tt 11
ìt
I,l
Resource efficiency focuses on the resources an organisation From an economic perspective, it makes sense to strive for
needs in order to produce aproðuct or deliver a service, such the most efficient possible use of resources. The reason for
't
as staff, sites, equipment, tools, and information systems. The this is the opportunity cost. The following âre two examples
organisations rhar carried out,tlison's and Sarah's diagnostic of opportunity cost:
processes employed various physical resources, including
buildings, waiting rooms, examination rooms, and X-ray . If a hospital employs ren doctors, it
should make sure that
machines, as well as human resources, including nurses, breast they work as much as possible; otherwise, the hospital
surgeons, radiologists, cytologists, nursing assistants, and
I

ii could have employed nine doctors and used the money

¡
administrative staff. saved elsewhere.
I

Resource efficiency is a measurement of how much a resource . A hospital has invested tens of thousands of pounds on new
is udlised in relation to a specific time period. For example, the
il X-ray equipmenr. Consequentl¡ the equipment should be
measurement can show how much an MRI scanner is used
:j
over used as much as possible; otherwise, the hospiral could have
a twenty-four-hour period :
ì spent part of the money on something else.

Resource: MRI scanner

Opportunity cost is the loss made by nor urilising resources ro
Time resource is utilised: 6 hours
the fullest. If we have not utilised our resources to maximum
Time period: 24 hours
capacity, we could have at least used part of the money we
Resoune effciency: 6 houn/24 houn = 25 per cent
used on that resource towards something else. There are
many alternative uses for that money, such as paying off a
The resource efficiency in this example is twenty_five per
cenr, loan, lending money to others, and investing in securities. All
which means that the MRI scanner is used for only twenty_five
organisations face opportunity costs for the money they spend
per cenr of the actual dme period. The time period could
also on acquiring or payingfor resources, which makes it important
be defined as the X-ray department's open hours,
say g:oo a.m. for all organisations to use resources efficiently.
to 4:oo p.m. In this case, the resource efficiency would be
six In order to understand the importance of resource efficienc¡
out of eight hours, or seventy-five per cent.
we need only take a look at ourselves. For example, if we buy a
Of course, resource efficiency is not confined to a single
new television, it is natural to make sure rhe television is being
MRI scanner. ft can also be measured at a higher abstraction
used; we want value for money. Therefore, resource efficiency
level rhan individual machines or people. The udrisation
of a is a natural way of looking at things because it is in our narure
combination of resources can be measured, for example, for
to want value for money.
a department or an entire organisation. At an organisational
level, resource efficiency indicates how well an organisation
is utilising all of its resources and whether the resources are
adding value or 'standing still'.
r
it,
ir
I t2 THIS iS LEAN 1. FROM RESOURCE FOCUS TO CUSTOMER FOCUS 13
tl
i

Sqrqh experiences fhe flow-efficient Flow efficiency - sotisfying needs

heqlthcqre system
We define flow effi.ciency as a new form of efficiency. Flow
The healthcare system that carried out Sarah's tests consisted of efficiency is new in that it breaks with the historical and narural
one organisation that focused on a specific patient need: focus on the efficient utilisation of resources. Flowever, flow
diagnosing bre ast canceÍ. The organisation covered a combination efficiency is not an enrirely new phenomenon. In fact, the
of differenr competence areas. W-ithin the organisation, there was antecedents of a focus on efficient flows can be traced back to
a breast surgeon, a radiologist, a cytologist, a secretary, an X-ray the sixteenth century, more precisel¡ to the Venetian Arsenal
rìurse, andan assistant nurse, all within a multifunctional team. in Northern Ital¡ which was the mosr pov/erful and efficient
Creating an organisation thar is organised around a specific need shipbuilding enterprise in the world. The arsenal was capable of
requires all staff to work together. producing afuILy equipped merchanr or naval vessel in less than
As a resulr, Sarah only had ro make one visit, during which a day. Ilsewhere in Europe, it could take months to produce a
she met all the specialists in the same place. It rook just a few vessel of a similar size.
hours of her time, meaning she had to take considerably less Flow efficiency focuses on 'the unit' processed in an
time off work than did Alison. Sarah received her diagnosis organisation. In manufacturing, the unit is a product comprised
five hundred times faster rhan Alison did. The frgure below
of different types of componenrs that are processed in various
shows Sarah's diagnostic process.
stages to make the product. In services, the unit is often a
customer whose needs aÍe mer through different activities. Here,
we refer to this form of efficiency as flow efficiency because the
f focus is on the unit that'flows' through the organisation: the
l flow unit.
'{.lison
and Sarah are examples of rwo different flow
units that flowed through different healthcare systems.
Flow efficiency is a measurement of how much a flow unit
is processed during a specifi.c time period. The time period
ilir-5lop breasÌ riÌnìt is defined from the time a need is idendfied ro rhe time it is
satisfied. For example, flow efficiency could show how efficiently
a local health centre satisfi.es a patient's need:

Need: The patient has a sore throat

Value-adding time: Time with doctor and other staff (10 minutes)

Éirsi Time period: Time from the patient's anival to the patient leaving
|)iaqircsii
icnî¿{t
the health centre (30 minutes)
2h
Flow efficiency: 1 0 minutes/30 minutes = 33 per cent
?
ì

THIS IS LE¡.N 1. FROM RESOURCE FOCUS TO CUSTOMER FOCIJS

14 75

The flow eff.cíency in the table above is thirty-three Per cent) time she was seeing healthcare staff. This means that the total
which mearìs that the parienr feceives value during thirty-three value-adding time was eighty minures and, therefore, the flow
per cent of the time she is at the health centre' In this example, efficiency was sixty-seyen per cent.
it is assume d tbat the time the patient did not spend seeing a
FIow effrciency = 80 minutes / 20 minutes = 67 per cent
doctor or another member of staff (that is, waiting time) does
I

not add value. The table below summa¡ises the two examples. The most
Flow eficiency is defined from the perspective of the flow obvious difference is the úme it takes for diagnosis: forty-
unir, and the important factor is the time during which the two days versus two hours. As much as anything, this time
flow unir receives value. At an organisational level, flow difference increased the amount of worry one of the two'
efficiency indicates how well an organisation processes its flow \ /omen felt. The forty-rl¡¡o days of not knowing causes
units. Is the flow unit receiving value or is it ,standing still'? Alison's worry to escalate considerably. Even though Sarah
was worried, she spent considerably less time not knowing.

Comporing the flow efficiency

in two heslthcore systems Alison's healthcare system 5arah3 healthcare system

0rganisational focus Resources Needs

Alison's and Sarah's experiences illustrate the characteristics
Total number of contact Several contact points 0ne contact
and effects of resource efficiency and flow efficiency. The
points and their form in different forms through one visit
differences are mosr noticeable when looking ar the flow
Time from first <ontact 42days 2 hours
efficiency in the rwo sysrems.
with healthcare system
Alison's diagnostic process took forty-two days, or r,oog to diagnosis
hours. assuming that the time involved in the various procedures
Flow efficiency 0.2 per cent 67 per cent
was trvo hours, flow efficiency in Alison,s case was o.2 per cent.

FIow effrciency = 2 hours/1008 hours 0.2 per cent

=

Accordingl¡ only a small fraction of the enrire diagnostic Which roule to toke?
process actually added value for Alison. This shows that her
diagnostic process \Ã/as not flow-effi.cient. Which is best, resource effi.ciency or flow efficiencyl As we
Sarah received her diagnosis the same day she visited the have discussed, resource efficiency is the dominant form
clinic for the first rime, and the time she spent waiting was of efficiency. As a general rule, organisations are therefore
the actual time it took to analyse the tests. 'We can assume organised around specific functions and specialised around
that Sarah had to wait for a total of forty minures out of the resources. While it is important to use resources efficientl¡ it
two hours her diagnostic process took; the remainder of the is also important to meet customers'needs efficiently. In order

t
1l
I
L6 THIS IS LE.\N
I

to have both high utilisation and satisfied customers, resource

efficiency and flov¡ effi.ciency are both important-
So why would anyone not aim to achieve high resource
efficiency and high flow efficiency? The answer is that it is
very dificult, if not impossible, to score high on both forms CHAPTER 2
of eficiency. We will rerurn to how org:nisations can combine
high resource efficiency and high flow efficiency in the second
part of the book.
Processes are central
The best way to understand uky it is difficult ro score
high on both forms of efficiency and how ir can be done is
to flow efficiency
to understand how processes work. Flow efficiency is created
through processes. A process is a collection ofactivities rhat,
together, creare the path for and fulûl the need ofa flow unit- low efficiency ís creoted through on orgonisofion's
Ta
þ Rro."sses. ln order to understond flow elúcîency,
-l- ít is necessory to understond how processes wor*.
All orgonísotíons hove processes. There ore developmenl
processes/ purchosíng processes/ production processes/
delivery processes, servíce processes, ond so on. As
indivíduols, we oll go through mony processes every doy.
This chopter exploins whot processes ore ond describes
importonf elements of processes ond flow e{ficiency. These
elements ore importonf becouse they {orm the bssis for
under$onding whot flow efficiency is.
F--

18 TÉIS IS LEAN 2. PROCESSES ARE CENTRAL TO FLOW EFFICIENCY t9

Filming Alison's iourney towords o diognosis Processes ore defined from

the flow unit's perspect¡ve
example, Alison went through a diagnostic
In our initial
process that took her from discovering a lump in her breast Just as Alison's process was defrned based on the film shot
rhrough to a diagnosis. In order to define Alison's process, by the camera on her shoulder, any process must be deflned
we need to take her perspective, which we do by placing an from the perspective of the flow unit. Flow units are critical
imaginary film camera on her shoulder. This camera records in processes because they are the units being processed. In
Alison's perspective as she moves forward through the process: fact, the word process, which comes from the Latin words
from her first visit to the local doctor's surgery to her receiving prlcessas and procedere, means tto move forward'. In a process,
her diagnosis. something is moved forward; we call these flow units. A. flow
unit can be material, information, or people:

Møteriøl: Lt a car plant, material is moved forwards and

processed by machines and assembled in order to become
cars. In the breast cancer example, the tests the women take
are moved forward and analysed in order to become test
results.

Âlison's forty-two-day film can be divided into clips that Informøtioru: When you apply for planning permission to
cover the diagnosis and those that do nor cover the diagnosis. extend your house, you submit an application to the local
Examples of clips rhat cover the diagnosis include rhe nurse planning authority. The application goes through various
conducting the mammogram, Alison meeting the breast to different parties. In the breast cancer
stages and is sent

surgeon and the cytoiogist taking dssue samples. Examples of example, the referral letters are examples of information
as flow units.
clips that do nor cover rhe diagnosis include Alison,s waiting
at home or travelling to and from her various appointments. People: An example of people as flow units is customers in a
The forty-two-day film can also be divided based on whether theme park, who go through a sequence of activities from
the clips added value ro Alison. The clips covering activiries the dme they arrive at the park until they leave. In the breast
that did add value to A.lison would be labelled ,value-added cancer example, the patients, Alison and Sarah, are flow units.
clips', while those rhat did not add any value ro Alison would
be labelled'non-value-added clips,. Defining the process from the perspective of the flow unit is
Flow efficiencyis about deleting all the non-value-added clips important. Many organisations make the mistake of defrning a
then raking all the value-added clips and editing them into a process from the viewpoint of the organisadon and its various
short action movie. functions, whlch would mean that the camera would be on
 THIS IS LEÁ,N 2. PROCESSES ARE CENTRAL TO FLOW ETFICIENCY 27

the doctor's shoulder insread. Although the camera would be Resource efficiency focuses on the utilisation of specific
filming the same acriviries as if the cameta were on Alison's resources, while flow effi.ciency focuses on how a particvlar
shoulder, it is not the same thing.In order to understand flow flow unit moves through the process. The difference between
efficienc¡ it is important always to define the process from the these two forms of efficiency can be expressed as a difference
perspective of the flow unit. in the dependence between resources and flow units. Is the
patient adapting to the situation of the doctor (securing high
resource efficiency), or is the doctor adapting to the situation
The fwo forms of efficiency differ in terms of the patient (securing high flow efficiency)? The figure
of dependence ii below illustrates the difference in dependence for both forms
¡ of efficiency.
Taking the perspective of rhe flow unit enables us to under_ I

Resource efficiency
stand a subtle but important difference between resource (focus on one single tesource)
efilciency and flow efficiency. Aithough the difference is a i{

general one, ir can be explained by returning to the healrhcare

i
! Resource

example.
Any form of acúvity in which a healthcare sysrem fulfils
the needs of its patients involves a rransfer of value. The Maximising vaiue
add¡ng t¡me
value transfer takes place between rhe resources of which the
organisation consists and the flow unit being processed. The
, ; {
patient is the receiver of the value transmitted b¡ for insrance, Flow unit tlow unit Flow unit Flow unit

the healthcare staff.

A ralue transfer occurs when one side (the resources) adds
value and the other side (the flow unit) receives value. Conse_ Flow efficiency

quentl¡ we have the following relarionships: (forus on one single flow unit)

. High resource efficiency means ahigh percentage of value_

Resource Resource Resource Resoune

adding rime in relation to a specific time period. The

resources add as much value as possible. The movie from
Maximising value
the doctor's camera is full of acdon. receiving time
. High flow efficiency means a high percenrage of value_
1t 7'
receiving time in relation to the total dme. The flow unit
picks up as much value as possible. The movie from the Flow unit

patient's câmera is fuli of action.

 22 THiS IS LEAN 2. PROCESSES -{RE CENTRAL TO FLO'W EFFICIËNCY zt

The difference in the dependence is the key factor that it can lead to interesting effects and new innovations. For
differentiates the two forms of efficiency. In resource effciency example, if the throughput time for an airline passenger is
it is more important to 'attach work to people' to ensure defined âs starting at the moment the passenger leaves his
that each resource always has a flow unit to process. In flow or her home or office until the time he or she gets on the
efficiency, however, it is more important to tattach people to plane, the throughput time is quite long. For the purposes of
work' that is, to ensure that each flow unit is always being shortening this throughput time, the British airline Virgin
processed by a resource. Atlantic launched a service for busy executiyes. The service
included collecting passengers from their worþlace and taking
them on a motorbike through the heavy London traffic to
System boundqries define throughput time Heathrow, where they could take a so-called'fast track'through
l

the airport. Passengers could board the plane without having

l An important characteristic of a process is that you can define
to stand in queues and go directly to Upper Class. By seeing
ii
irs starr and end points however you wanr; you determine
the the customer's entire flow, Virgin Atlantic was able to offer a
I
I

ii sytem bownd.aries. The breast cancer process could be said

ti
to service that it could price at a premium level.
rl
have started when Alison arrived ar her rocar doctor,s
ofñce
.i, and finished when she left rhe docror,s offi.ce. Or it could
be
i said to have starred when she first started ro worry and
finished Clossifying octivities in the process
when she received her diagnosis. you always choose rhe
i sysrem
boundaries yourself.
r.l All processes consist of a sequence of activities in which the
i

j
It is important where the system boundaries are set, as flow unit is processed. As in Alison's case, these activities can be
this determines the critical measure of throughput time. A
I
divided into various clips or, more generally, difrerent categories.
I
flow unir's throughput time is one of the elemenrs needed to
ll
tl
Two underþing dimensions of these categories are Particularly
calculate flow efficiency. Throughput time is simply the
li time important for understanding flow efficiency: value and needs.
it takes for the flow unit ro move through the whole process,
as defined, from srarr to finish.
Vabt e- øddin g a.uiaiîi e s
It is importanr ro look at throughput rime from the flow The concept of value-adding activities is critical to under-
unit's perspective. Alison,s throughpur rime was forty_two
days, standing flow efficiency. It is crucial when defining value-
compared ro two hours for Sarah. In these examples, the process
adding activities to take the flow unit's perspective. From the
was defined as the time from the firsr conracr with the healthcare
perspective of the flow unit, activities add value when the flow
sysrem to the point at which the patient received a diagnosis.
unit receives value. Value is added when something happens to
Most organisations will find it challenging to define a the flow unit, or when it is moved forward (being processed).
process (and therefore the throughput time) as starting
when Examples of value-adding activities include:
a need arises and ending when the need is fulfilled.
Ffowever,

j
*.
 24
THIS iS LEAN 2. PROCESSES ARE CENTRAL TO FLOW EFFICIENCY
25
. \ü-hen materials for a car are processed
in a machine;
. When an employee ar rhe local D'irect ønd indirect r¿eeds
planning aurhoriry deals
w-irh a planning application; and When people are flow unirs, ir is important to be clear abour
. When Alison and Sa¡ah meer healrhcare the difference between direct need and indirect need. Alison
personnel.
and Sarah both needed ro find out whether they had cancer.
Thus, a value_addin g activity is Because this need was the reason the two women started the
one in which the flow unit
is
being processed.Using the same reasoning, an diagnostic process, we call it a direct need. ALison and Sarah
acriviry rhat does
not add value _ a wasteful activity
_ is one that also had indirect needs, sach as rhe need to feel safe, the need
does
the flow unit. some exampres "* O.*.r,
of wasrefur activities occur: to be met professionall¡ and the need ro undersrand and be
. When mare¡ials are waiúng informed. Direct needs are about creating a concrete outcome
in a
. When a planning applicatøn warehouse; (for example, reaching a diagnosis), while indirect needs are
sirs in a pile of papers about the experience.
someone's desk waiting on
to be dealt with; and
. When Alison is made Therefore, when people are flow unirs, ir is important to look
to wair rwo weeks for the
available mammogram first at direct and indirect needs, even though the main focus is often
appointment.
i
on direct needs. In a hospital accidenr and emergency deparrmenr,

,Ì
i t::.t:r, it is importanr ro nore that
even wairing rimes can
it is natural to focus on direct needs (saving a patient's life)
add value in certair because the patient can be unconscious or badly injured. On the
i

t:
are ex ample, * ;ö;i;,iä:iä:
waiting is a parr of the pro..rr.
J::î ï::î:å
J,:,:f :
other hand, if a doctor is giving a parienr rhe results of a cancer
test, there will naturaþ be a strong focus on indirect needs. The
ll
In rhese adds
il
value ro th. flo- unit (the doctor will want to ensure that despite having sometimes ro break
1Ì

ll
cheese,r;."ilirËi.storage
bad news, he or she does so sensitively and creates an experience
iii
rii The need defines uølue that is as positive as possible.
li

I
Value is always defined
from the cusromer,s perspecdve. In business, strategic choices determine what needs are
I
course, the concept of .customer, Of put in focus. Low-price airlines, for example, focus on direct
ii can be problematic. Who
the cusromer of rhe public is needs, namely'transporting individuals'. A customer who buys
lÌ
secror? Wfr. ir'rfr. cusromer
li
rji fire brigade? If it is dificultto of rhe a business-class plane ticket expects the flight to be a pleasant
tf identify r*.r0. cusromer,
I
the focus can shift towards " then experience. In that case, both the direct need (the transport)
rhe need th* ,Ä.org"nisadon
il

Instead, we could ask: ,What meers. and indirect need (the experience) are met.
need does ,fr. n* brigade
rl

Among other things, the meer?, Disney's theme parks are great examples of dealing with
fire brigade ,*.r"trr., in meeting
$ need to exdnguish fires.-Therefoi., the indirect needs. While we stand in the queue for the roller
,t. pro..ss courd be defined
lr
from the time at which the coaster, things are happening all the time. This makes us
iì
need is td."rrilir.meone
l1
discovers feel that we are experiencing value despite the fact we are
il
a fire) ro the point at which
'1lì the need;r;, (rhe fire brigade
li
successfully exdnguishes the fire). doing nothing other than waiting. How we perceive what
is happening is often more important than what is actually
ir
1t

i
l
I

I
t
&
r
26 THIS IS LEAN 2. PROCESSES ARE CTNTRAL TO FLO'W EFFICIENCY 27

happening (or not happeningin this case). The need we have door, you are into the practice. There is no waiting room. The
when visiting a Disney theme park is not just to be amused chair is already half reclined to save time. You sit down and
by the arrracrions (direct need), but also to be entertained the are recumbent straight away. The dentist is already prepared
entire time (indirect need)' and so is the drill, which is in your teeth within frve seconds of
Upplands Motor,a Stockholm car dealer,is another example sitting down. The whole procedure is over within five minutes.
of how a company can be good at dealing wirh cusromers, This is world-class flow efficiency! Or maybe not. Perhaps
indirect needs. Customers entering the dealership are met the customer has indirect needs. For someone who is afraid of
wirh the following notice : the dentist, this would not be a flow-efficient dentist visit. Such
a patient needs time to sit and relax in the waiting room and
,:
'\Ã/elcome! Please take a ticket and wait your turrì. If you wait
more than ten minutes from the time you took your ticket to perhaps go to the toilet. The patient wants the dentist to chat
t,'
the dme you receive help from the service cenrre, we will
give
and explain what is going to happen. More than anaesthesia,
you a free tank ofpetrol for the car you brought in.' the patient ü/ants reassurance. While all of these activities
il would add to the throughput time, they would also add value,
The wait is never boring at lJpplands Motor. They provide
:.
their so the process would be more flow-effi.cient.
customers with breakfast, lunch, free Internet access, beauty
The concept of indirect needs can also be used to analyse
treatmenrs, massages, or a lift to a nearþ drivlng range. Upplands
the initial breast cancer example. In Sarah's case, she may have
Motor continually focuses on the customer's experience.
received her diagnosis a little too quickly. To go from the first
meeting with a nurse to receiving a diagnosis two hours later
could be an emotionally tumultuous experience. Sarah may
Flow efficiency is vqlue-odding octivity have needed a little more cime between the various stages
in relotion to the throughput time to absorb everything that was happening to her. This is an
indirect need that arises from the direct need of a diagnosis.
Having defined throughpur time and value-adding activities,
The need always dictates what value-adding activities are and
we can provide a precise definition of flow eficiencv:
therefore what flow efficiency is.
tlow effrciency is the sun ofvalue-odding activities
in relotion to the throughput time.
Flow efficiency is the density of volue lronsfer
Throughput time in itself is often an indicator of value; that
is, the quicker it goes, the better it is. But it does not have
ro It is also important to clarify that our definition of flow
be, as the concepr ofindirect needs can explain. efficiency looks at the density of the value transfer from a
Imagine avery flow-effi.cient dentist. you arrive at the exact resource to a flow unit. More specifically, flow efficiency
time of your appoinrmenr. As soon as you get through the concerns the skøre of the value-adding activities in relation to

I
F

28 THIS IS LE,4.N 2. PROCESSES ARE CENTRAL TO FLOW IFFICIENCY 29

the throughput time. F{owever, it is also possible to improve Orgonisotions consisl of mony processes
cusromer value by increasing (or decreasing) the speed of the
value transfer. We will illusrate this with an example.
There are many misunderstandings about processes. Perhaps
It is summer, and you want a new look. you make a
the most salient one is that processes are restricted to
reseryation with your favourite hairdresser,
Jean_pierre at Toni formalised work routines.
& Guy. He cuts your hair in forty minures, and the total visit
Nothing could be further from the truth. In many organi-
takes fifty minures. Therefore, the value-adding time is forty
sations, the word prlcess is used to describe formalised work
minutes out of a total throughput time of frfty minures, which
routines. These work routines are documented in different
represenrs a flow effi.ciency of eighry per cenr.
systems and describe how a certain task, such as recruiting
Your friend is impressed with your new look and books an
a new staff member or buying work gloves, is to be carried
appointment with Stuart at rhe Vidal Sassoon studio, who
out. Even such information as who will perform each task
always delivers excellent haircuts. It takes Stuart only
rhirty and the order in which the tasks should be performed may be
minures to complete the haircut, out of a total time of forty
documented.
minures that your friend spenr ar the salon. Therefore, the
Viewing processes only as formalised work routines
flow eficiency of your friend's haircut is seventy_five per cenr.
misses the signifrcance of the term prlcess.It is important to
Stuart delivers the haircut ren minutes faster than
Jean_ understand that all organisations have processes, regardless
Pierre; the speed of value transfer was fasrer. However,
of whether or not they are formalised. Processes are the
comparing the two from a flow eficiency perspecrive would
cornerstorÌes of all organisations; these are where organisations
indicate that Jean-Pierre is more efficient than Stuart. This is
do what they do. It is through processes that flow efficiency
a misleading comparison, rhough, since the speeds of the value
is created.
transfer were different. 'We are comparing apples and pears.
So how many processes make up an organisation? Some
Flow efficiency is not about increasing the speed of
researchers have claimed that all organisations can be described
value-adding acrivities. It is about maximising the density of
with fewer than twenty main processes, such as from a
the value rransfer and eliminating non-value-adding activities.
customer order to delivery or from an idea to a product. That
Instead ofbeing abouc cutting hair faster, it is about reducing
is one extreme. The other extreme can be illustrated using
the waiting time for the client. 'When ir comes to the Volvo Car Corporation, which at one time had defined and
value-adding activities, flow efficiency emphasises identifying
documented thousands of processes. So which end of the
the 'right' speed. What is right for the cusromer? W-har is
spectrum is right? The answer is that it depends.
right for the employeel The intention is ro maximise cusromer
The number of processes in an organisation depends frrst
value by striking a good balance.
of all on how the system boundaries have been defined, where
the organisation sees the process starting and finishing. The
organisation can set the system boundaries wherever it wants,
which makes it difficult to specify the number of processes.

,
I
 THIS IS LEAN
3o

The numbe r of processes also depends on the level of

absraction. A process at a high level ofabstraction can involve
different companies thatpurchase, produce, and sell a product
in a supply chainfrom the raw materials to rhe final cusromer.
A process at aTow level of abstaction can be comprised of the CHAPTER, 3
different machines that are used in afactory to produce a single
component for a product.
Absuacdon levels mean that an organisation can be seen
What makes
as being made up of a few main processes, each of which is
made up of various sub-processes. Every sub-process, in turn,
a process flow
is made up of more sub-processes, and so on. Finall¡ we arriye
at the level of the sequences of individual activities, which
are
the smallest parts of a process.
J n order to understond whot prevents orgonisotions
Because processes can be deñned in differenr ways
and looked from hoving efficienl flows, it is importoni to reolise thot
at on different levels of abstraction, saying how meny I
make up an organisation
processes I processes operote occording to certoin lows. The
will always be a subjective evaluation.
word 'lows' is vitol here. These lows, which con be
mothemoticolly proven, ore universol; they opply regordless
of wh¡ch type of flow unit is being processed or how the
process is defined. This chopter exploins three lows, eoch
of wh¡ch illustrotes how processes work ond exploins why
it is difficult to ochieve high flow efficiency. The three lows
olso help us underslond why it is difficult to combine high
resource efficiency ond high flow efficiency. Whot mokes it
porficulorly difficult is thot oll processes, to vorying degrees,
ore sublect to voriotion.
F

THIS IS LEAN 3. \MHAT MAKES A PROCESS FLO,W ))

72

The process of boording o flight To your dismay, you quickly realise that this queue is
actually moving slower than the other one, very slowly in fact.
Youare late getting to the airport. It doesn't feel good, as you Your feeling ofcalm turns back to stÍess. The cause ofthe delay
Iike to allow yourself plenty of tim"ro browse in the shops and is an elderly gentleman. He has lots of things he needs to Put
perhaps choose a new perfum e or abottleof wine. Things have on the conveyor belt and was clearly not aware that he needs
gone v/rong toda¡ righr from the momenr you left. The taxi
to empty his pockets. He is also told to take off his shoes. He
was late due to traffi,c, which meant you missed the airport isn't happ¡ and neither is the security staff. You look across
train you had planned on carching. and notice thac the lady who was behind you in the previous
Luckily, check-in is usually not a problem. eueues have queue has now passed through security.
decreased dramatically since online check-in was introduced.
Fortunatel¡ you have checked in online and secured one of
èt
the much-sought-after emergency exit-row seats, which give
you some extraleg room.
I-Infortunatel¡ the queue to check- in has been replaced
by a queue for the baggage drop, and, as there is only one
counter open, you just have to join the queue. Waiting to
drop your baggage is more stressful than usual, as you know
the mosr difficult part, getting through security conrrol, is i.

sdll to come. ,A.fter all the rerror attacks that have taken place
all over the world in the last decade or so) security controls
and the associated queues have become the airport's greatest
stress factor.
Passing easily through the automated boarding card
check
point. you finally ger ro security control. As usual, there are think to yourself. You have abandoned
not my døy, you
Tkis i.s
long queues. You look ar youï watch and realise that time is the idea of being able to browse in the shops, and you are no\ry'
getting tight. Your stress levels srarr to rise, and the only thing
preparing to run to the gate.
you can rhink abour is getting through the security checks
as While running to the gâte' you vow that you will leave
quickly as possible. Once rhrough securit¡ it is quite a long home much earlier next time; it wouid be worth it to avoid all
walk to the gate. that stress. You console yourself with the fact that the sign for
You nodce that one ofthe queues is shorter than the others. your flight has just begun flashing, 'Go to Gate'. You know
Before anyone else has a chance ro make the same discover¡
that you are normally asked to go to the garc a while before
you move to the shorter line. you breathe out and immediatelv
boarding commences.
start to feel a little calmer.

¡
34 THIS IS LEAN 3. WHAT MÂKES A PROCESS FLOW ]5

You arrive at the gate just as the final call is announced. A.s defrned earlier, throughput time is dependent on the system
You b¡eeze through the boarding andidentity card check. Bur boundaries we have set, that is, where we have decided the
the queuing continues on board, while you wait for everyone process starts and frnishes. In this example, the process starts
to find places ro srore thei¡ hand luggage in all possible and when you join the queue and finishes once you have passed
impossible sizes and sit down. Finall¡ you are seated in your through security control. The system boundaries could also
exit-row window seat, and you can now stretch out your legs have been defined from the moment you stepped into the
and relax. airport until the time you stepped onto the plane. What is
Getting from the airport entrance to your seat on the important is that the laws apply regardless of where we set
plane can involve a great deal of stress, some of which can be the boundaries. We must adapt how we define flow units
explained with the laws that dictate how all processes work. in process, as well as cycle time, to how we have defined the
system boundaries of the process.
'Flow units in process' are all the flow units within the chosen
Little's Low system boundaries: all the flow units chat have begun the
process but have not yet exited it. In the airport example' the
The first law that helps us to undersrand how processes work flow units in process are the passengers who are standing in the
is Little's Law. The law is intuirively simple, and we can use security control queue but have not yet completed their checks.
the experience of choosing a queue at security control as an Cycle time is the average time between two flow units's
example. Little's Law explains why the new queue took longer completing the process and refers to the pace at which flow
than the one you frrst chose. units move through the process. In our example, the cycle time
is the average time it takes between one person)s finishing their
Lixle's Law at secwrity conrrol security checks and the next person's finishing their checks.
Your interesr lay in getting through security control as quickly The following example shows how you could have applied
as possible. In other words, you wanted a short throughput Little's Law when choosing a queue. Assume that there are
time) so you chose the shortesr queue. What you did not take fifteen people in the first queue and the queue you change to
into account was the average time it took the staff to check has ten people in it. In the flrst, quicker queue) one person
each person. This took longer in the queue you switched. to passes through security every minute. In the other, slower
than it did ln the queue you initially chose. Throughpur rime
çlueue) one person Passes through eYery two minutes.
The
is the producr of the total number of people in the queue and following would apply:
rhe average time ir takes to check one person.
The experience of choosing a queue at security control Throughputtimeinfrrst queue = 1 5 people x 1 minute = 15 minutes

illustrares Little's Law, which srares rhat: x =

Throughputtime in second queue = 10 people 2 minutes 20 minutes

Throughputtime = flow unitsin prlcess x cycletime

 36 THIS IS LEAN 3- WHAT MAKES A PROCESS FLOW 37

Linle 's Løw ønd throwglcpat time Sarah, on the other hand, experiences a healthcare system
Little's Law shows us that throughput time is affected by two focused on one need: the need to obtain a breast cancer
things: the number of flow units in process and the cycle time. diagnosis. There are fewer 'patients in process' at any given
A longer cycle time means a longer throughpur time. A long point in dme, which means that throughput time is shorter
cycle time occurs when it is not possible to work any quicker and flow efficiency is higher.
or when there is insufficienr capactty.
Little's Law also shows that throughput time increases if
the number of flow units in process is increased. The more The low of bottlenecks
people standing in front of us in the security control queue,
the longer it takes for everyone ro ger rhrough (given that the The second law that helps us to understand how processes
cycle time is constant). Therefore, having flow units in process work, as well as what prevents organisations from increasing
increases throughput time. flow efficienc¡ is the law of bottlenecks. As the example of
There is a paradox here. To ensure high resource eftcienc¡ getting from the doors ofthe airport to your coveted window
we must always utilise our resources to a maximum, preferably seat illustrated, you seldom move through the airport without
to one hundred per cenr. In order to do this, there must always encountering obstacles. There are many points on the way
be work to do; work can never be finished. This means that through the airport at which queues form. These points are
we need a buffer of flow units so that we do not risk having to called bottlenecks. They are stages in the process in the form
wait for work. Ir is betrer that the flow units wait for us to be of sub-processes or individual activities that, like the neck on
free than wait for them to come to us. a bottle, limit the flow. It is here that a person's flow through
We can illustrate this with a üained specialist in healthcare. the airport, from the time he or she arrives at the airport until
If the focus is on a high utilisation of resources) ir is beter he or she is seated on the plane' can be blocked.
.il
that patients wait for the specialist, rather than the specialist
wait for the patients. The paradox, rherefore, is that ensuring
iL.
a bufrer of flow units in order to ensure a maximum utilisation Securily control
l (heck-ìn Boarding
of resources serves to increase throughput time.
I

Returning to the example from the prologue, we can see the

efrect of Litde's Law. In Alison's case) rhe healthcare sysrem
ìlt
is organised to cope with various diagnoses and the focus is
I

l on resource efficiency. It is important ro utilise the various

"¡L
': specialist functions, so the queues ensure that specialists do not Hurry

run out of work. This means that Alison must wait between
the various srages in the process of getting a diagnosis. The
throughput time is long, and flow efficiency is low.

ir
,tì

I t
 THIS IS LETA.N 3. wHÂT M.A.KES A PROCESS FLOW
38 39

B ottlenecks lengtken tkroughpat time Bottlenecks lengthen the throughput time as a queue of flow
Basically, the law of bottlenecks states that throughput time in units form and wait to be processed. This can be understood
a process is primarily affecred by the stage of the process rhar using Little's Law. As there is a queue, there are flow units in
has the longest cycle time. It is relatively simple to grasp what process. Given that we do not change the cycle time (by adding
bomlenecks âre) as rhe airport example illustrates. Formall¡ extra resources or working faster), adding flow units in process
a bottleneck is the stagein rhe process that has the longest will increase throughput time.
cycle time. A bottleneck can also be seen as rhe stage in the Because bottlenecks cause delays, it is usually
non-value-
Process that has the slowest flow;it is the stage that ,limits' adding time that lengthens the throughput time. If we strive
the flow. Consequentl¡ bottlenecks will limit the flow in the for high flow effi.ciency, we will want to avoid bottlenecks
entire process. in our processes. So, if we strive so industriously to avoid
Processes with bottlenecks have two key characteristics: bottlenecks, why do they appear?
r. Immediately prior ¡o a bottleneck, there is always a queue,
regardless of whether it is material, information, or people Wky bonlenecks øppear
flowing through rhe process. It is often clear which stage There are tw'o reasons why bottlenecks appear in processes.
in the process is the bottleneck, particularly when the The first condition for bottlenecks is fulfilled if the stages in
florv units are marerial or people. It can be more difficult the process must be performed in a certain order. In the airport
to see the queue at the bottleneck when the flow unit is example, you must arrive atthe airport before you can drop your
information, but the queue is there. baggage.You need to have droppedyourbaggagebefore you can
pass through security control. You need to have passed through
z. The srages of activity after the bomleneck musr wair ro
security conmol before you can go to the gate, and you need to
be activated, which means they will nor be fully utilised.
have gone through the gate before you can board the plane.
Because the bomleneck is the stage of activity thar has ¡he
Of course , it is natural for this condition to be met'
slorvesr throughput, the stages after the bomleneck will
iili particularly if the system boundaries for the process are set
work at a slower pace rhan they could have.
I
relatively wide. The widest possible definition of system
i' boundaries defines the start of a process as the point at which
Iven if a bottleneck is eliminated, by adding exrra resources or a need has arisen and the end of the process as the point at
\l
working fasrer, for example, the bottleneck will appear again which the need is fulfrlled. Needs cannot usually be fulfilled
somer¡rhere else. It is like the arcade game ,Whac-A-Mole', in through activities that can be performed simultaneously in just
,l
il which moles pop up our of holes and you have to hit them wirh one place and by the same person. In fact, it is in the nature
a mallet to force rhem underground again.As soon as you hit
of an organisation to divide activities that must be performed
lt;
ili one (or even before), another one pops up. In the same wa¡ to fulfil a need into different steps.
litlt
process bottlenecks move and pop up in new places. The second reason why bottlenecks exist is variation. There
it
needs to be variation in the process. At the airport's security
ll
rü
id

ilt
]I :

lI it
H, ¡
 4o THIS IS LEAN 3. IMHAT MAKÊS .{ PROCESS FLOW 41

control, people take varying lengths of time ro pass through Flow wnits: Customers at ahair salon have different requests
the security control. Some have computers that must be for hair-cuts. Cars at a repair workshop have different types
removed from their hand luggage , others forget rhey have coins of problems. Some planning applications are incorrectly
in their pockets, and some forget they have perfume bottles filled out, which means they take longer to process.
larger rhan the allowed roo ml. All this leads to variation Eøternøl føctoß.' Patients' arrival times at the accident and
in service time. In principle, it is impossible ro eliminate emergency department are not evenly distributed. Sales of
variation, and it has been shown to have avery negative effect chocolate Easter eggs mainly take place at one time of year.
on processes and flow effi.ciency. This is explained by the law Two busloads ofhungry students arrive unannounced at a
ofthe effect ofvariation on processes. drive-through fast food restaurant.

Regardless of the source of the variation,it affects time: either

The low of the effect of voriotion on processes processing time or arrival time. There will be a variation in
the time it takes to process different flow units andlor thete
The third law that helps us ro undersrand how processes will be a variation in the time between different flow units
work concerns the connection between variation, resource arriving into the process. Some examples will help illustrate:
efficienc¡ and throughput time. The key here is variarion,
which has a profound impact on flow efficiency. It has a . In car manufacturing, quality problems can arise in
particularly negarive impact on an organisation,s ability to machines, and the company needs to rework a product,
combine high resource efficiency and high flow effi.ciency. For leadlng to variations in processing time.
this reason, understanding variation and its impact is central . Different applications for planning permission take
to understanding flow efiû.ciency. different lengths of time to process. Some people fill in
the application forms correcdy; others do not. Some have
Wkat i.s aøriøtion? simple requests, while others are more complicated' These
There will always be variation in processes. The reasons for differences lead to variations in processing time.
variation are porenrially endless bur can be divided into three . In the breast cancer example, patients may arrive late for
different sources: resources, flow units, and external factors. their mammogram appointment, leading to variations in
Resowrces: Machines may be prone to breakdown, which causes arrival times.
variation. Some operating systems are slow, others faster. . Demand for the fire brigade's services are seldom evenly
Difrerent docrors take different lengths of time ro examine a distributed over time. It is also difficult to predict when a
patient. Experienced staffare fast and work according to clear fire will start, leading to variations in arrival time.
routines, whereas new staffwork more slowly.
I

jìr

t,

t
I

Í
 THIS IS LEAN .WHAT
42 3. M.{KES A PROCESS FLOW
43

There is relationship between a variation in processing time

a The figure shows how throughput time (on the vertícal axis)
and variation in arrival time. In a process made up of different is dependent on utilisation (on the horizontal axis):
stages, variation in the processing time in one stage will lead
to variation in arrival time in the following stage. . Throughput time increases the higher \ry'e move up the
As these examples illustrate, it is impossible to imagine a vertical axis.
process without variation. Variation is particularþ difficult . Utilisation (which we call resource efficiency) on the
to avoid when the flow unit is a person, as all individuals are horizontal axis is a measure of how efñciently the resources
unique and have individual needs, especially indirect needs. are utilised. The closer to one hundred per cent, the higher
People introduce a naturaL variation that is very difficult the resource eficiency.
to avoid. It is not possible to standardise how we deal with
people in the same ü¡ay as we can standardise how we deal The relationship between throughput time and utilisation
with material or, to a certain degree, information. In fact, it is shown in the form of two curves: one for the case of low
is impossible to imagine a process without variation, although variation and the other for the case of high variation in the
the degrees of variation will differ. process.
The forms of the curves above show the first effect of
Reløti onship b etw ee n v øri øti o n, variation. The curves show that the closer \¡¡e get to one
resowrce fficiency, ønd throughpwt tirne hundred per cent utilisation, the longer the throughput time.
The major influence that variation has on flow efñciency can Increasing utilisation from ninety per cent to ninety-five
be explained by the relationship between variation, resource per cent increases throughput time to a gÍeatet degree than
efficiency, and throughput time. This relationship was increasing utilisation from eighty per cent to eighty-âve per
formalised in the r9óos by Sir John Kingman in his famous cent; this is despite the fact that the increase in both cases is frve
Kingman's Formula and is illustrated in the figure below. per cent. In other words, the connection between throughput
time and utilisation is exponential rather than linear. This
long
means that the closer we get to one hundred per cent utilisation,
the greater the effect an increase in utilisation will have on
Low v¿riation throughput time.
The other effect of variation can be seen by comparing the
ïhroughpu: time
two curves in the graph above. The curve showing the case of
High variation
high variation is moved to the left compared with the curve
showing the case of low variation. Assuming that utilisation
is constant, this relationship means that:
5hort
The greater the variation in the process is, the longer thethroughputtime.
0o/o Ufilisation 10070
 r
I

44 THIS IS LEAN I 3. wHÂT MÂKES A PROCESS FLOW 45

The significance of variation in processes is fundamental for negativeþ affect flow effi.ciency. However, the normal situation
understanding flow efficiency. By way of comparison, if all of is that, if the throughput time increases, flow efficiency will be
the cars on a motorway maintained exactly the same speed, reduced.
there would be no build-up of traffic. Queues form when, for In other words, the three laws help us understand that
lll
different reasons, cars do not all drive at the same speed. many factors afrect flow efficiency: the number of flow units
inprocess, cycle time, bottlenecks, variation, and resource
: efficiency.
I
Process lqws ond flow efficiency The laws also show that it is difficult, if not impossible, to
combine high resource eff.ciency with high flow efficiency.
.
In order to understand what prevents organisations from High resource efficienc¡ particularþ if there is variation in the
having high flow effi.cienc¡ it is necessary to understand the processes, requires flow units'waiting to be processed. The risk
I
three laws in this chapter. The laws provide reasons as to why of running out of work must be avoided. According to Little's
':

ll the throughput time in a process increases: Law, having flow units in process reduces flow efficiency.
Furthermore, for a process with high levels of variation, the
I
. Limle's Law states that throughput time increases when law of the effects of variation shows that it is impossible to
ll there is an increase in the number of flow units in process combine high resource efficiency and high flow efficiency.
t'
and when the cycle time increases. So how can flow efficiency be improvedì With the help of
li
'i . The law of bottlenecks states that throughput time the laws, it is essentially possible to do four things. Of course,
increases when there are bottlenecksin the process. doing all ofthese things is easier said than done, but atavery
. The law of the effect of variation states that throughput high level of abstraction, the following activities are what
time increases as variation in the process increases and improve flow efficiency:
the process gets closer to one hundred per cent utilisation.
llti . Reduce the total number of flow units in process by
what do the laws say about flow efficiencyP In chapter z, we eliminating the causes for the queues (of material, info-
ri
So
defined flow efficiency as the sum of value-adding âctivities in rmation, and people ). Naturall¡ the causes will be many
relation to the throughput time. If throughput time increases, and will vary between processes.
ir the general rule is that flow effi.ciency will decrease. This rule . Work faster, which reduces cycle time.
I
l
applies if the increase in throughput time is not met by an . Add more resources, which increases capacrty and reduces
; increase in value-adding time. cycle time.
For example, imagine that an increased throughput time can . Xliminate, reduce, and manage the different forms of
be compensated for by creating indirect value for the customer. variation in the process.
Adding value to the wait for an amusement ride, as Disney
has done, may avoid having the increase in throughput time
46 THIS IS LEAN

What makes these activiries particularþ difficuk is the fact

that ma:ry espects of organisations are designed to improve
resource efficiency. A.s noted in chapter r, it is very important
to improve resource efficiency. However, as the process laws
have illustrated, focusing on and improving resource eficiency CHAPTER 4
increases the chances that fl.ow efficiency will suffer.
Another problem with focusing too closely on resource
efûciency is that it risks creating multiple problems and extra
The efficiency paradox
work, which can somçtimes represenr alargeproportion of an
organisation's total work. Consequently, even if e particular
resource has high resource efficienc¡ the work that'keeps lf I ony orgonisofions ore more focused on
the resource busy'is not really adding value. We call this the
eficiency paradox. lVI t',',ï ::ï"r;' :ffi :.'l;;,: îåî ifl:ï î.
o good thing, íi ís often the moin gool. On this bqsis,
o verywell-monoged orgonisotion would hove no ovoiloble
copocity. Although this moy be beneficiol from the
orgonisotion's point of view, it con represent o problem
from o customer perspecfive. This chopter highlights
the negotive effects of {ocusing too much on resource
efficiency. These negotive effecÌs creote new needs thot
demond o loi of odd¡tionol resources, work, ond efforts
thot would not be necessory in o flow-efficient orgonisotion.
The porodox is thoi o greoter focus on utilising resources
efficiently tends to increose the omount of work there is
to do. This chopter exploins this efficiency porodox ond
highlights three sources of inefficiency.
 48
THIS IS -LEAN
4. THE EFFICiENCY PARADOX
49
The first source of inefficiency:
long throughput fimes work. This created another secondary need for her employer
to hire and train a replacement. Ffowever, despite the training,
Highly resource_effic. the replacement made a mistake, which created y.t
organisations experience
negative effects. a range of "rroth..
,h.'ttot secondary need to recover an unhappy customer. Therefore,
the failure to fuifil,{.lison's primary need. creared a chain
;:u:;*:Tï*ri::T:iü;T:ffi:ru;:#h: cause-and-ef.fect that generated numerous new secondary
of
'so.,ri.s"t,".m.r."#äï";r'rt:;ï:;ï:i:.::i:#ï needs. Although this scenario is hypothetical, the point
is that
the waiting time triggered new types of needs. TÀe following
:"'"'ff ;:::ifl ',tïdeaiwithrons'niiig"i')u',^,therorowing l
example further illusüares rhis chain of cause_and_effect.
;
i
t
I
t'
.4lison's wøiting time t Wøiting time importønt windows of oppurtuniry
generøfts new needs closes
I
In the example ar tÀe begin I Imagine an organisation in which everyone is really busy
book, .{lison had to at
wait forty_rwo davs "W"*-rn ¡
I
the end ofthe year. This busyness has caused several people
l ,;;;;;ï;",i#.ïïïî*.1ä::,äï: j,î,,ï,äi:: I be late for a meeting to decide the locaríon of the next
to
year,s
i most importantly, wofty. winter conference; consequentl¡ the meeting starts flfteen
Alison,s concern could
'rl

overwhelming, er'el have been

causing her to take minures late. Towards the end of the meeting, ir emerges
dme offwork,
'i
il
may have required
h., .mpioy., ;; il; ì ,.pr".._.nt. which that details about one of the potential conference venues are
.t replacement were nor If the missing because there had simply not been enough time to
as skilled as .Atison
at rhis particular
i¡
,li

;Ii
iob, it would neces frnd the information. This means thar the meeting needs to
ìt:

:tlr
therepracerne;;ri:i:i:T:r:Jlä:t":T;ï:;":î? be rescheduled. The atrendees pull out their calendars, and,
could make mistakes after frve minures of deliberation) an availabreslot is found for
;!1

ti ,h"t o.g"ri r.ü-"ä rhe cusromers and

employees of .A.lison,s two weeks later. The new meeting is eventually held, and the
;rd
il
,t .o*prly.
Ìt
I This story ^;;;;;;.
shows ,t * ,orr_iurnf_.*i, location for the winter conference is chosen.
$
new types ofneeds, a need can creare
which in turn create W'hen the chair emails the conference centre to confirm
r.* r..dr.
r1

words, there is a cha. In other the reseryation, he receives the following reply: ,We have not
it
:l and irus,¡a,. ,n,, älii?::il;_:;::å::,:n-"'n ,he s,ory heard from you for over rwo weeks. Unfortunatel¡ the date
:i
it
Alison initially wanred you have requested is no longer available'. A new meedng is
I primøry need because
a diagnosis. iiì,,, what we call the
i it is the ,oo, ."ur. li"t required to discuss whether the location or timing of the event
the diagnostic process._However, led her ro inidare
I should be changed.
t U..".rr. i, took so long
her to go through the for In this example, the primary need is ro decide on the
i)
diagnosrr.'or...lrìrh", ir,
,ii
prirnary need fulfi lled), ro have her
f
I vari ous.' rn r;; n;o n location of the winter conference. However, because people
e e ds d ev elop
I Her concern had ûme ro e d.
were delayed and drd not have the rime to find all the relevanr
rì
grow, which l.d ú,
I
to take time off
rl information, the decision had to be postponed. This led to a
i
l
.

,l
 5o
THIS IS TEAN
4. THE EFFICiENCY PARADOX
number of second¿ 57
,ocompare.",." j'#::i"ïTî:Ji.1iî_î,i:],,ï::ïïî Our inability ro deal with long throughput time is the first
new meering invita.don,
and ro fr"* ìi. source of inefficiency that geneïares many problems. It leads
subsequent unavailabilit; new meering. The
.r rd;;;* to boredom, worry, and frustration. We can lose our drive and
" l.* -..
ring.,ts in .{lison,s inspiration. We can start to forget or find we just don't care.
effect that generates
.
"r.,
;;; ;'J:.;:Ti., ;:::î:1
numerous secondary These effects can ofren generare challenges and problems
that
needs.
organisations must deal with, which requires ne.w resources
Long throwgÌryørr tim
and new activities.
,l:t.,*;;:^";;;::,:;":::;:':(::?._::,'*
raking a rong,i-..,r,.ì";;;;Jïr,:ïi:ï';:
and in choosing
the.conferen.. .Jrrrr.."r" H::l The second source of inefficiency:
examples illusrrate other words, rhe
the n.g"tio. ._*;; m<lny flow units
;or long
time, which, '1""
chapter 3' is a consequence
throughput
"';;r;;;"'i:::::
high resourc. .m.i.lï-rï of overly
The second source of inefficiency that appears in a highly
The core O-Ot.ï^rl,both,examples resource-efficient organisarion is related to people's ability
effefis caused by long is thar the negarive to
rhroughp.rt ,1_. .n* ltøndle møny tkings simultaneousl¡ which is closely related
i
generare ne\4/ to
secondary needs. It
is iike g;;.;;., the first source of inefficiency. For instance, rhe longer we
wait
ìl

Ìr
firsr domino is toppred,
knocks over rhe rhird
k"".î;;;;i::ä,i.lffi
i, " to ans\.ver our email, the more emails we will have to answer.
The longer we wait to take care of our travel receiprs, rhe more
""d ,;
il
one,
caused the ";.'*.
ll
Ir throughput time is-what receipts we will have to take care of. The following illusrates
I
;Ì
is a source of ineffciency
first o;:*:::tt" l.1t
ìl
¡l thatgene;r;;#:iïr:il?r: some of the negative effects of handling many things ar the

åîä?ï#T:*,'*. iJ-ìä'..." 1"u,.¿ by same time. Again, the core problem is that secondary need.s
ll

ri
Á.rison,s
are created.
ì

ì a
:-F In"enrlry reqwires ødditionøl resources
l c--ì==
Ä manufacturing company with low flow efficiency will face
a-_È_ ã >
¡
.i
IoùS - \
Å\qr
-À\,t
^ü.E'
>- - :ñ
¿' ñ-
€ increases in inventor¡ which creare several secondary needs.
-q'=
': S'^---"ë "Ë "õ, S Firstl¡ inventory requires srorage space, which is costly and
ì
leads to other costs, such as heating, administration, and
"l
security. Secondly, large volumes of invenrory and work_
i-
in-progress make it more difficult ro have a good overview.
,f
Without an overview, a lot of time and effort is spent looking
for materials. Thirdl¡ inventory and work-in-progress tends
to hide problems. Imagine a step in a manufacruring process
 52 THIS IS LEAN 4. THE EFFICIENCY PARADOX 53

that starts to produce a poor-qualiry componenr. With alarge in order to gain some
messages necessitates certain activities
number of products'being worked on, it is difficult ro find and kind of overview. Apart from creating unnecessary work'
eliminate the quality problems. These are examples of having handling alargenumber of emails at once can also be stressful'
i
Ì secondary needs generated because ofa large invenrory. The key
here is that the secondary needs would nor exist if rhere were
I Jøglingwitk t00 ma.ny tkings makes Pezple lzse control
I
I
less inventory. The negative effects ofinventory are illustrated When too many things are being handled at the same time,
.i
in the frgure below. The figure illustrates that much exffa work human limitations cause a number of secondary needs' For
:l
is created in an organisarion which has a large inventory. example, if a service company has to manage many customers at
i
the same dme, individual customers may feel like they are just
I
Heatinq 5ecurity one in the crowd. It is difficult for a restaurant to meet the needs
'"\ t" of each customer if there are thirty other customers waiting to
ì
j' Storage Movement Sea rch inq be served. Staff will not have a cleat overview and may treat
-.-
r space
I customers impersonally. How many times have you dealt with a
ì:
I
Administration r Bad
service organisation and found that the staffhardly acknowledged
I
I
I lnventory -... .l* 6yq¡yiglv you? The more customers there are inside the process, the harder
I
.lr
it is for each one to feel acknowledged and special, which can
l
ï Hidden create new secondary needs. Makíng neglected and frustrated
Tra nsportation
customers happy requires extra resources. Juggling is easier with
¡
problems
ill
ilì

r{ three balls than with thirty.

.:li Too møny emails triger stress
I
,J. Email is a wonderful invenrion, bur an inbox wirh two hundred
go
rli'I
unsorted emails can be somewhat overwhelming. Where do o
I you start¡ The primary need is to answer important emails. a ø9
'1r
t o
ir However, the large number of emails creates a secondary need oo
ti
I
for a strategy to sorr emails. One strategy could be to address
,I

il
the emails in date order, while anorher could be to start with
f
lr'

J
t¡ the most important people first. Or perhaps you could look
-o
ri

ì
for 'flagged' messages or discard those emails on which you
have only been copied.
.o &o ",&c
fil
'Whatever
i,
method you use, sorting, structuring, and In white-collar work, the impact of the human factor is
t 1
searching are activities that fulfrl the secondary need, which particularly pronounced when there are too many things to
is to handle the large amounr of email. The primary need handle at the same time, such as on-going projects and cases'
is to read, answer, and store email, but the large number of Advances in information technology have meant that storing

I
54 THIS IS LEAN 4. THT EFFICIENCY PARADOX 55

information in itself does not lead to significanr cosrs; however, The third source of inefficiency:
storage does rend to lead to a poor overview. It is easy to lose mqny reslorts per flow unit
sight of the big picture when work is piling up. The human
brain is believed to be able ro remember between five and nine The third source of inefficiency created in a highly resource-
things ar rhe same time. After this, we starr ro forget, which is effi.cient organisation is related to people's abiliry to deal with
when we make mistakes. In other words, we are not equipped maîy resta.rrs. The examples below illustrate what restarts
to handle a lot of things ar rhe same dme. are and why restarts have negative effects on individuals and
organisations.
Handlingmøny flow wnits generotes second.øry needs
Our inabiliry to deal wirh many things ar the same dme is the Størting oaer on the søme task generø\es meøtøl set-up time
second source of ineficiency which generates lots of problems. Restarts are created when you have to start over on the same
Regardless of whether it is inventor¡
emails, or tasks, the task. An example is managing alarge email inbox. There is a
above examples show how the need to handle roo many things high risk that you will need to read messages more than once.
at the same time leads to the creation of new secondary needs. Some messages are simply too complex to deal with at that
The need to handle many things at the same rime is fuelled by time, so you read them, file them, and return to them later.
a focus on resource efiñciency. Sometimes you have to come back to them more than once,
We saw in chapter 3 how a focus on resource effi.ciency means perhaps because you need further information.
that the number of flow unirs in process will increase. Regardless When work to be done just sits in a pile waiting, it is easy
of whether it is customers, projects, tasks, products, or materials to lose sight of the big picture. The time and energy we spend
that are processed in an organisarion, rhere will be many flow on categorising and structuring the work creates delays. The
units that are being worked on but are nor yet finished. This is delays and the different type of activities (such as searching,
because it is natural for a resource-effi.cient organisation to ensure identifying, categorising, and structuring) mean that we have to
there is always work to do and to avoid running out of work. re-familiarise ourselves repeatedly with the same information.
There are various negative effects that occur when an The challenges of starting over on the same task are also
organisation or individual has to handle many flow unirs at driven by mental set-up times. A person needs time to focus
the same time. We lose control, which makes us frustrated his or her mind on a task, and it is mentally challenging to
and stressed. It is difficult to get a good overview, which often deal with several tasks at the same time. It is particularly
means that problems are hidden wirhin the pile of work-in- challenging when we must repeatedly shift our focus from
progress. Handling many flow unirs ar rhe same time forces one task to another. The fewer tasks we have to deal with at
an organisation ro invesr in additional resources and develop the same time, the easier it is to focus' The more frequently
structures and routines. These all fulfil secondary needs that we have to switch between tasks, the longer the mental set-up
only exist because the organisation has to handle a large time becomes in relation to the total time.
number of flow units.
56 THIS IS LE.{N 4. THE EFFICIENCY PARADOX 57

Therefore, the limirations of the human mind mean that

lJelto. rnì,
a high number of restarrs will generate neï¡ secondary needs
útctleß ,
that would not have been created if the work had been finalised Heffqnry
broken... \ ltÊtt0, Ê"lY

phone is P[mf{f l9
the first time. hh-\
,
BRÛTT

Many køndoaers genera.te frwstrøtion

Restarts are also created when different people have to srart
over on the same rask, as the following illustrates- Imagine you
are having some problems with your newly purchased mobile
phone, so you call your mobile operaror. You are greeted by
an aucomated recording that gives you half a dozen options The number of handovers is partly driven by the way in which
from which to choose. You don't recognise your particular the process is designed. Processes in which each flow unit only
requirement emong the options, so you just press a button, meets one resource (machine or person) are possible, but quite
only to be given four new options. You press enother random rare. Processes are usually designed in such a wey that each
button and finally end up waiting for an operaror. flow unit has to pass many resources on its way through the
You listen to the voice announce, 'You are in a queue and process. It is uncommon to frnd processes in which all of the
we will help you as soon as possible', without telling you how necessary tasks can be completed in the same place by the same
soon. You wait for what seems like hours, but is most likeþ person or machine.
ten minutes. Eventuall¡ a real person comes on the line, but
he cannot heþ you and has ro transfer the call to a colleague. Møny høndoaers generrrte defects
Luckil¡ the wait for this new person is short as you have Handovers also risk the 'Chinese whispers' effect, whereby
bypassed the queue. You recount your problem once again, but, the information being passed on becomes more distorted
amazingLy, a third person is needed to deal with your query. as the number of handovers increases. Many handovers also
Your frustration increeses, and you vent this frustration on risk creating a mind-set of, 'Now I am finished with my bit,
the third person. you go ahead and do your bit'. In such cases, there is no real
This example illusrates e type of restart, or handover, which responsibiliry for the whole and there are often problems of sub-
is created when a cusromer is passed between stages. Your call optimisadon. This can lead to the creation of secondary needs in
was switched between different operators, and it took three the handover, or the interface between two stages in the process.
attempts before you found a person who could help with your
query. You had to explain your situation to each operâror, Møny re$arts generate secondøry needs
which became very frustrating. Our inability to deal with many restarts is the third source of
inefficiency which generates lots of problems. Regardless of
whether an employee starts over on the same task or tasks are
58 THIS IS LEAN 4. THE EFFICIENCY PARADOX
59

handed over berween different people in an organisation, the

Secondary
examples illustrate how restarts generate new secondary needs.
need
Underlying rhe problem of resrarts are the r\4/o consequences 5econdary

of focusing on resource effi.cíency that we dealt with previously:

need

\
\*' f /. I
Secondary
need
Secondary
need

long throughput time and many flow units in process. In a É

Long
throughput
\ i\ l.
5econdary
need 5econdary
Secondary
resource-effi.cient organisation, things take time and many need
I need
things need to be handled at the same time. These rwo facrors t 0n
mean that the number of restarts increases. 5econdary

As che task of processing a flow unit is disrupted by many

need \n res0urce
efficiency 5econdary
t
restarts, various secondary needs will occur. We forget, so we f Many
restarts
/, / reed

have to rework. We face mental ser-up time, which makes us

Secondary
need
\ \1
inefficient. Information can be lost, which leads to mistakes. f 5econdary
5econdary
need
Handovers are done inaccuratel¡ causing problems and need

duplicated work.
But what is the root cause of secondary needs? Essentiall¡ an
over-focus on resource efficiency creates low flow efficiency.
Secondory needs generc¡te superfluous work This creates'efficient islands'in which fulfilment of customer
needs is split up into several, smaller steps that are performed
A customer engages with an organisation to satisfy a primary by various individuals or parts of an organisation. No one
need. This primary need is the reason the customer makes island has a full overvie\Ã7' of the entire process; each island
contact with the organisation in the first place. As the sees only its own part.
discussion above illustrates, íf an organisation focuses too In such situations, it is easy to create an organisation in
much on resource efficienc¡ three types of inefficiency occur, which each part is sub-optimised. Although the individual
resulting in many problems. These problems, in rurn, creare sub-optimised parts are efficient, the flow efficiency of the
secondary needs the organisation then must satisfy. Secondary whole process will suffer, and there is a risk of creating a series
needs arise as a consequence of the organisations' failure to of secondary needs.
satisfy the primary need of the cusromer. Secondary needs are harmful for organisations since they
Secondary needs can often generate other secondary needs, generate what we call swperflwows work, or work devoted to
and a chain reacrion is started, as is illustrated in the f.gure on taking care of secondary needs. Superfluous work is a very
the next page. As a consequence of this domino effect, secondary sophisticated form of waste, since we often fail to realise that
needs can be harmful to organisations. Secondary needs it is waste. We think we are adding value, but we are not.
consume resources, even if no trealt customer value is created. Nevertheless, \ ¡e still have to take care of secondary needs.
6o THIS IS LEAN 4. THE EFFTCIENCY P.{RADOX 6t

When a busy nurse answers a call from Alison, who wants in the area of managing operations, we begin devising systems
to know her status in the queue, the nurse feels she is adding to create order.
value by answering the question. However, if A.lison had We buy colourful sorting trays and a label maker to create
received her diagnosis more quickl¡ she would not have to take labels (acts that, ironicall¡ generate even more paperwork).
up the nurse's time, which the nurse could have spent dealing We are then able to carry out the various activities that bring
with waiting patients. Thus, Alison's waiting time created order to our receipts. The first actiyity is to structure the
superfluous work for the healthcare system. receipts by date. The second acdvity is to take all the receipts
from a certain day and soft them by credit card. Once this is
done we can start to file each particular receipt. Unfortunatel¡
Monoging receipts: we often forget what the receipt referred to, which means the
the ort of being extremely inefficient third activity is to refer back to our calendars and find out what
actually generated the receipt. The fourth and final activity is
The authors of this book have gained a better understanding to file and document the receipt. By now, we start to feel pride
of the nature of superfluous work by reflecting on some of our in the systems we have created and the value we have added.
o\4/n practices. Neither of us particularly enjoys managing all
the financial paperwork that is generated during the course
of a normal month. There are taxi receipts that must be kept
for travel expense claims, credit card receipts that need to be
checked against the monthly credit card bill, and all kinds of
bills. There are receipts for private expenses and receipts for
work-related expenses and so on.
At irregular intervals during the month, we empty pockets
and wallets full of receipts into a 'receipt box'. As we both are
very busy (we try to utilise our capacity to the fullest), we
postpone dealing with the receipts and bills. We wait until it
is no longer possible to cope because the pile in the receipt box
is making us feel concerned. Perhaps we have missed paying But is all the work we have put into creating a system for our
an important bill? What happens if an important receipt is paperwork really adding value? No. The first three activities
missingl What happens to the money outstanding from not are superfluous work. Amidst all the action, superfluous work
having submitted the expense claims? is correctly perceived as adding a lot of vaiue; we have to take
So we dive into the pile and my to bring order to it, but the care of all the receipts whether we like it or not. Yet the core
pile is chaotic and receipts are difiñcult to find. As researchers ofsuperfluous work is that it addresses a need that has arisen
 6z THIS IS LËAN 4. THÊ EFFICIENCY PARADOX 63

i
due to failure to satisfy the primary need (flling the receipts).
a Furthermore, even with our 'gteat' system, many of the
The root cause of superfluous work is actually a failure. receipts are so old that we find it difficult to recall what
i
Why? Firstl¡ each receipt has a long throughput time. No they refer to, which means we have to spend time trying to
I value is added from the point at which we receive a receipt until remember the nature of different expenses. Sometimes we
we deal with it. The only thing we do is ro empry the receipts lose both the receipt and our memory of it. These are all
i
ü
in a box. This means that some receipts have to wait over a examples of superfluous work. The figure below illustrates the
month to be processed, by which rime we have forgotten what relationship between superfluous work and value-added work.
iI
I the receipt was for.
.t
î Secondl¡ because we waited so long, we had to take care of
{
d many receipts, which meant $,'e had to structure and sort them, Stru(tur¡ng
{ {5uperfluous work)
and search for information on the activity that generated the
ü Sorting
t receipt. W'e even had to invest in physical resources (the trays
Total tìme
(Superfluous work)

and the label maker) in order to be abie ro srrucure and sort (100%) 5earching
$ (Superfluous work)
the receipts.
Thirdl¡ the processing ofeach receipt involved at least four Filhq& ilhge
documentotlon ôo¡menaÍoo
restarts since it is the minimum number of times we had to (V¿lu+added wo¡t) Muo.addedwt)
look at each receipt:
0ur The fìow-efficient
approach approach
ü . Structure ) What date?
fi . Sort ) What typel Although this is only a simple example, it is a good illustration
. Searching ) What activity generared the receipt? of how organisations work. Much of the work we do in
$ . Filing and documentation organisations is also superfluous. The figure above shows that
only a very small proportion of the total time we spend on
t our receipts is 'real' value-added work. This often applies in
Many of the activities involved in sorting, structuring,
$ searching, and filing the receipts in our system would not have organisations as well. Answer the following question honestly:
been necessary if we had adopted a flow effi.ciency perspective.
How much of the t¡ne that you spend 0t wlrk is spent on fulfilling seclndary
with each receipt
Such a perspectiye would haye meant dealing
needs? ln lther words, how much of your total working time is dedicated to
and bill more or less as soon as it appeared, or at least much superfluous work?
more frequently than v¡e currently do. This would help remove
superfluous work. We would not need to structure and sort the For us, the answer is ta lott.
receipts because we would only have a few receipts to deal with. 'But I am really bus¡ so I must be efficient,'you might argue.
We would not need the colourful sorting trays. We would not Well, the question is whether you are actually creating reel
need to look several times at the same receipt. value (meeting primary needs) or fulfrlling secondary needs.
j 64 THIS IS LE¡IN 4. THË, EFFICIENCY PARADOX 65
;

i The efficienry porodox Resolving the efficiency pqrodox

: The efficiency paradox is explained by superfluous work. By The efficiency paradox means we are wasting resources at the
(
over-focusing on resource efficienc¡ process laws guarantee individual, organisationaL, and perhaps even societal levels.
that flow effi.ciency will suffer. If flow effi.ciency suffers, then This begs the question of how we can resolve the paradox?
several secondary needs will be generated. Activities ro meer At the core of resolving the paradox is a focus on flow
these secondary needs may seem like value-adding activities, but efficiency. By focusing on flow efficienc¡ an organisation
they would not be necessary if the primary need were already can eliminate many of the secondary needs that arise as a
fulfilled. The paradox is that we believe we are utilising our consequence of low flow efficiency. More specificall¡ any'
resources efficientl¡ but we are actually being inefficienr, since decision that decreases throughput time, the amount of flow
much of that utilisation comes from superfluous work and non- units in process, andlor the amount of restarts will eliminate
value-adding acriyiries, as illustrated in the figure below. superfluous work. Paradoxically, not focusing on utilising
resources makes it possible to free up resources.
The idea is that, by focusing on flow efficienc¡ flow units
Total c¡pac¡ty
should flow quickly through the organisation. In a flow-
(103%) effi.cient organisation, there is no need for numerous restarts
since there are few flow units in process. In an extreme case,
each flow unit will be dealt with as efficientiy as possible;
nothing will be'standing still'. Depending on how the process
has been designed, flow units may have to be handed over
between stages in the ptocess, but these handovers will be
smooth and fast. There is continuous flow, and eYeryone sees
a
Over-focus on Focus on
resource effciency flow efnciency and takes responsibility for the whole process.
The flow-efficient organisation is analogous to a relay race.
The efiñciency paradox exisrs ar an individual level, as illustrared In a good 4xLoo metres relay team, the handovers are smooth
in the example of our sorting receipts. The paradox also exists on and all four runners can see what is happening all the time. By
an organisational level, as your answer on the question ofhow the time the frrst runner has nearþ completed the first hundred
much dme you spend on superfluous work probably showed. But metres, the second runner has aiready started running in order
what if the effi.ciency paradox also exists ar rhe socieral levell to simplify the handover and speed up the race. When the baton
It may be that a lot of the work that keeps our organisations busy is handed over, no time is lost as both runners are at top speed.
is pure waste. People may think they are effi.cient because they are A case in point was Yohan Blake handing over the baton to
bus¡ when they are actually wasting a lot of resources. What does Usain Bolt in the final of the 4 x 1oo metres at the 2a7z London
this mean for how we manage resources on a societal level?
66 THIS IS LEAN

Olympics. The Jamaican ream ran the 4oo merres in 36.84

seconds, a world record for baton flow efficiency!
In
a resource-efficient organisation, however, the first
'runner' is carrying many batons at once. In fact, the more
batons the better. But after he has run the flrst hundred merres, CHAPTER 5
there is no one ro meet him. A phone call reveals that the
second runner is in Thailand for a meeting. k rakes several
more calls to frnd someone who is free to run the second leg.
Once upon a time ...
By the time the batons are handed over, nine days later, two
have been lost and one has been forgotten. This is not a gold
FIow Toyota became
medal-winning formula, but it is, unforrunatel¡ how many
organisations behave.
number one through
An interesting question then would be, 'FIow many resources
we could avoid wasting if we started to see the '(big picture,'
customer focus
and focus on flow eficiency on a societal level?'The world's
resources, such as food, energy, and water, ere in greeter demand
than at any other dme in human history. How much better A s we hove olreody seen, {ocusing too much on
could our society become at managing our natural resources if
A resource efficiency hos severql negotive effects.
we eliminated sub-optimisation and'island thinking, l L \ Focusing on flow efficiency is o woy of overcoming
One strategy for resolving rhe effi.ciency paradox is â concepr these negotive ef{ects. A compony thoi systemoticolly chose
called'lean', which involves focusing on flow and creating io {ocus on flow efficíency wos Toyofo Motor Corporoiion.
organisations that are more like an efficient relay race. It is
This choice loid the foundoiion for whot we now coll
about seeing the whole in order to avoid island thinking and
leon. This chopfer wiil toke you through the history of the
focusing on real customer needs. Lean has been extremely
compqny ond illustrote why Toyoto come to focus on flow
successful in eliminating wasre and superfluous work in many
efficiency ond whot effect this move hod on the evoluiion
industries, yet the concepr is poorþ defrned and poorþ under-
of Toyoto's production system.
stood. The second part of this book looks more closely ar lean.
First, however, we need to understand where the term 'lean'
comes from.
68 THIS iS LEAN 5. ONCE UPON A TIME ... HOW TOYOTA BECAME NUMBER ONE 69

The history of Toyoto Motor Corporotion in production

was based. Just-in-time is about creating flow
by eliminating all inventory and only producing what the
Kiichiro Toyoda founded Toyota Motor Corporation in ry37 customer wants. Every single product should 'flow' through
with the idea of producing cars for the localJapanese market. the production system.
After the Second \il-orld War, Japan needed to rebuild its
industries. Some representatives of Toyota Motor Corporation
travelled abroad, for instance to rhe United States, seeking Toyoto foces qn economy in crisis
ideas for how to ser up successful car production. Two things
in particular puzzled the Toyota representarives. The fi.rst was To understand why Toyota focused on flow efficiency, it
that there was so much stock and the second was that so many is important to understand the problems that faced Japan
products needed to be repaired at rhe end of the production immediately after the Second World \Mar. The country's scarce
line. These two facrors stood in srark contrast ro rhe Toyota resources at the dme had a huge influence on how the company
representatiyest own views. developed. Toyota faced what Professor Takahiro Fujimoto
Kiichiro's father, Sakichi Toyoda, had developed some basic at the (Jniversity of Tokyo calls 'economies of scarcity'. The
principles that would later prove very import ant for Toyota's following resources \¡¡ere particularþ scarce:
car producrion. In r89ó, Sakichi had launched an automared
loom that would revolutionise the textile industry. The loom - Land. Japan is a small nation in which land is a scarce
had a function rhar was unique at the time: texrile production resource.
stopped automatically when a thread broke. This made it . Technology ønd rnøchines. Japan's industrial development
immediately possible to identif¡ analyse, and eliminate the lagged behind that of the \Mestern world' particularly the
problem that had arisen. The concept was larer termed jidokø, United States.
whlch means, 'automation with a human touch'. Machines . Raw rnaleriø.ls. There was a shortage of. iron and steel due
developed 'human intelligence' in the sense thar they could to high üansport costs.
identify a problem automarically. Jidoka became rhe core of . Fina.ncialresoarces.Japanwas a country in crisis and remained
Sakichi's philosophy and later became one of the two pillars so for many years after the war. No financial institutions
upon which Toyota built its production sysrem. could frnance the expansion of the motor industry.
When Kiichiro established Toyota Motor Corporation,
he took his father's philosophy from the textile industry as a Faced with this lack of resources' Toyota had to develop a new
starting point, by 'finding the thread' throughout the entire way of thinking about effi.ciency. The answer was to focus on
production process. This led to the development of jast-in- flow efficiency. The development of Toyota's production system
rime,the second pillar upon which Toyota's production sysrem came to be characterised by several important factors.
 THIS IS LEAN 5. oNcE uPoN A TrME ... HOW TOYOTA BECAME NUMBËR ONE
77

Focus on doing the right fhings production system. The information answered the questions of
what, when, and how many the customer wanted.
The first effecr of rhe resource scarcity was that it increased The key to the pull system v¡as that Toyota saw the whole
the importance of 'doing the right things', which meanr production process âs one flow made up of difrerent production
providing rhe product that the cusromer wanted. Because steps. Every step had two roles: internal supplier and internal
Toyota lacked capkal, there was an intent focus on invesdng customer (see the figure below).
in the right technology and the righr materials. The company
could not risk making a bad investment and had to ensure
ii;Íçrrnaficn ìlc'¡r
that its product offering was what cusromers actually wanted. lleedl

Accordingl¡ Toyota used build-to-order production: norhing \,irììâll <l:*-* ú-,rhail <-:'-.-_* \'Vh¿rl .c-.-.*-* !1/h¿') .ri.- iùiìa¡7
was produced that had not been ordered. irihe¡l ç:'r-- .r:'.--
\¡lheni ,<:'...-. V\j¡e!r? t1"1
lenÌ *:¡-- ljl ierl
To produce only what had been ordered, Toyota learned rhe
Àfìt0rjrf? ...::--* tmCUnlT {."--* Àär.ounl? <l-_* An¡¡¡¡1'-1.: ¡i¡¡¡¡1¡¡¿
importance of really knowing customers, needs. Customer
needs were broken down into three questions:

. What (which produc) does the cusromer wanr?

'S+ ffi "/,t æ
4
. When does the customer want the product?
)rriili:ei Pi'rduet flurrr' ausi0iner
. What âmount does the customer \r¡ant?

The flrst quesrion dealt with wkøt potential car-buyers needed The figure shows a simplifred version of the production process
and desired. Establishing close customer conracr enabled comprising four steps, where the fourth step is closest to the
Toyota to undersrand fully whar cusromers needed, which customer. In step four, the customer order is taken and the
meant the company could develop products with the desired need is identified: what, when, and how many. The customer's
design and function. Once the product had been developed, need is then broken down by asking the following questions:
Toyota chose to invest in relatively simple machines with a
low level of functionality. The machines focused on producing . What (components/materials) do I (step four) need to
exactly what Japanese customers wanted. satisfy the needs of the external customer?
To avoid the risk of producing cars that \ /ere nor sold, it also . When I (step four) need these (components/materials)
do
became important toknow wken andkowmøny cars to produce. to be able to produce and deliver the finished product to
Toyota developed a so-called ,pull system,, which meanr rhar a the external customer at the promised dmeP
car was not produced until there was an actual customer order. . How many (components/materials) do I (step four) need
When a customer ordered a car, rhe relevant order information to be able to produce the productì
was senr upsrream in the production flow, through rhe entire

li
,7) THIS IS LEAN 5. oNcx uPoN A TIME ... IIO,W TOYOTA BECAME NUMBÈR ONE 73

According to the breakdown in the figure, step four becomes With this customer-orientated view, Toyota's goal was to
the internal customer of step three. Step three, in turn, becomes maximise flow through the process: a fast information flow
the internal customer of step two, which becomes the internal in one direction and a fast product flow in the other. Toyota
customer of step one. In this wa¡ the needs of the external wanted to avoid having work-in-progress between the steps
customer are broken down and the information concerning the in the production process and strived to eliminate anything
order is spread upsrream through the entire production process. that could inhibit the flow through the process. All forms of
Step one will then place an order for the requisite materials inefficiency or waste that did not add vaiue to the product were
with an external supplier. Production can then begin, which eliminated to improve flow.
is done by each step's delivering its parr to the next step in the Toyota identifred seven forms of waste that inhibited the
production process. production flow and did not add any value, either to the
In this example, it is not just the external customer's needs product or the customer:
that are clearþ defined and communicated. All parts of the
production process must defi.ne and communicate what, when, . Waste of oaerproduction.Each step in the production process
and how many units they need. In this wa¡ value is constantly should always produce only what the customer needs.
added to the product as it flows downsrream through the . Production should be
Wøste of time on hand (wøi.ting).
production process. Material is pulled through the production organised to avoid all unnecessary waiting, both for
process, from purchasing to delivery of the finished product. machines and workers.
This means that no inventory of the product is created. Everyone . Wøste in trønspzrra.ilon. Lvoid transporting material and
knows what ro do, everyone knows when it has to be done, and products, by changing the layout of the factory-
everyone knows the correct number of units required. . Wøste ofprocessingi.tself, Avoid doing more work on a part or a
product than the customer requires; this includes using tools
thataremore precise, complex, or expensive than necessary.
Focus on doing things right . Wøste of inaentory. Inventory represents capital that is tied
up in the process and hides problems; it should be avoided
The second effect of having scarce resources \l/es to 'do things by means such as reducing machines' set-up times (the time
right' by efficiently processing the produced goods to avoid it takes to change a machine from doing one thing to doing
having too much capital tied up in work-in-progress or finished another).
goods inventory. Toyota strived for a quick rransformarion of . Wøste ofmoaernent. Organise the workplace so that workers
the product, from the purchased raw marerials to the delivered do not need to move in order to do things such as gathering
and paid-for final product. material or fetching tools.
In order to achieve the pull system, Toyora mapped our rhe . Wøste ofmøking defectiae products. Every step in the production
entire production process. The needs of external customers process is responsible for producing only fault-free parts.
were the trigger in a long chain of value-adding activities.
74 THIS IS LEAN

Toyota's focus on doing things right meant that the company

avoided the risk of delivering an incorrect or faulty product
to the customer. Quality assurance and control became very
important. Every Toyota employee was made responsible for
quality to ensure that producrs were right from rhe srarr. CHAPTER ó
Jidoka was adapted to car production by running a cord along
the ceiling over rhe production line, which anyone could pull
to stop production when a problem occurred. Problems were
Welcome
seen as opportunities for development and improvemenr.
Problems were somerhing positive rhat should immediately
to the Wild West ...
be identified, analysed, and eliminared, never ro reoccur. A
mistake should never reach the customer.
W.e call it lean

The economies of scqrc¡ty creoted o slrong focus ,-ff oyoto's inlernol productíon philosophy, the Toyoto
on see¡ng the whole Production System {TPS), hos been developed over
I
-I- neorly o cenfury. Todoy, TPS ís o well-known
The most important point in the Toyota story is rhat the lack of
concept in lhe West ond o role model for monufocturing
resouÍces forced the company to develop a production sysrem
ond service orgonisotíons olike. TPS is even more fully
that focused on flow eff.ciency. The resource scarcity forced
estoblíshed in Jopon. Development in Jopon hos gone so
Toyota to focus on customers'needs. Toyota saw all steps in the
for thot viriuolly every bookshop in the couniry sells books
production process as internal customers and suppliers, which
such os TPS for Dummíes ond leti Sfudy IPS in English.
created an undersranding of the big picture. All parts of the
Towords The end of the 1980s, there wos o surge of interesT
production process were links in the same chain.
ín Toyoto omong Western reseorchers. They ossígned the
The company communicated customer orders upstream
in the flow through the entire process so rhat the requested lqbel 'leon' to fheir observotíons, thereby lounching o new
product couid be pulled downstream. The goal was ro concepf. Although the ierm 'leon'wos creoled wifi Toyoto
maximise flow efficiency so that value was added to the os o slorting point, leon ond TPS ore two different concepts.
product one hundred per cent of the throughput rime, from Although they hove been developed ond described ¡n

order through to delivery and paymenr. The production porollel, fhey ore two different concepfs.
process was flow-effi.cient. It was Toyota's production process
that Western observers termed tleant.
I
I
¿
76 THIS IS LEAN ó- wErcolr¡ To rHE wILD ìilEsr ... wE CALL rr LEAN
77
{

Ohno defines the Toyoto Production System Production System', published in Sloøn Mønøgement Reaiew.
The article compared productivity levels between different car
Taiichi Ohno started his career within the Toyoda family's manufacturers and identified two types of production systems:
group of companies in r93z and is often referred to as 'the a robust system and a fraglLe system. Krafcik destroyed the
Father of TPS'. Through common sense and total dedication myth that productivity \¡¡as created through economies of
to the company over nearly sixty years, Ohno continuously scale and advanced technology (robust producdon systems)
developed Toyota's production philosophy. Together with Eiii and proved instead that those factories (such as Toyota's) that
Toyoda, cousin of Kiichiro Toyoda, the founder of Toyota, had low inventor¡ low buffers, and simple technology (fragile
Ohno gave the philosophy the name 'Toyota Production production systems) were able to deliver high productivity
System'. In t978, Ohno published a book enrirled Toyota. and high qualit¡ Krafcik thought that the term 'fragile'had
Prodaction Sy stem : Beyond Large-Scale Pro dwcti.on. Ohno rejected negative connotations; instead, he used the term 'lean' to
economies of scale and large-scale production and maintained represent the efficient production system.
that productivity was created through flow:

looking at the time-line from the moment

'Al1 we are doing is
The book thot chonged lhe world
the customer gives us an order to the point when we collect
the cash. And we are reducing the time-line by reducing the
The ideas that Krafcik's article expressed were developed as part
non-value adding wastes.'
of the International Motor Vehicle Program, in which Krafcik
Initially, Ohno's book was published only in Japanese. participated. The research programme was housed at MIT in
It remains the most read book among Toyota's Japanese Cambridge, Massachusetts, and included leadlng researchers
employees and is referred to as the company's bible. Although from all over the world. In tggo, based on this research, the
the book is aimed at manufacturing, Toyota's managers claim international best-selling book Tke Møckine tkøt Ckønged tke
that everything that any leader needs to know about TPS can World was published. The authors, James P. Womack, Daniel
be read 'between the lines' of the book. T. Jones, and Daniel Roos, provided a comprehensive view of
Ohno's book was frrst published in English in 1988. Prior what lean production was about. The book \4/as the result of
to its publication, many Western authors had tried to explain many years of research and showed how Toyota successfully
TPS, but none had managed to do so in an easily accessible way. managed to achieve productivity and quality levels that none
of its competitors could. The book argued that lean is made up
of four core principles:
Leon sees lhe light of doy
1. Teamwork 3. Efficient use of resources and elimination ofwaste

The term'lean production'first appeared in 1988, when it 2. Communication 4. (ontinuousimprovement

was used by John Krafcik in his article 'Triumph of the Lean

78 THIS IS LEAN ó. wEr-col.t¡ To rHE wrrD w¡sr ... wE cALL IT LEAN 79

Womack and Jones have since contínued to develop the lean In particular, Fujimoto aÍgues that the key to Toyota's success
concept and have published many articles and books .In 1996, is the capability of always ensuring development, regardless of
their book Leøn Tkinking focused on what a company should what setbacks or obstacles the company encounters.
do in order to'be lean'. The book outlined flve new principles
with a clear focus on implementation:
1. Specifu value from the standpoint of the end customer. Decoding Toyofo's DNA
2. ldentilr the value stream and el¡minate all steps that do not add value.

3. Make the remaining value-creating steps flow, so that the product flows smoothly At the same time as Fujimoto launched his book, researchers
towards the customer. Steven Spear and H. Kent Bowen pubhshed an article in the
4. When the flow is established, let the customer pull value upstream from the next Høraørd Basiness Reuiew entitled, 'Decoding the DNA of the
upstream activity.
Toyota Production System'. This article again brought TPS
5. When steps 1 through 4 are complete, the process starts all over again and continues until
to the attention of the 'Western world. The article was based
a state of perfection is reached in which perfect value is created with no waste.
on a longer study of Toyota's production system in which the
By applying these principles, a company could start to'leanify' authors tried to decode the tacit knowledge absorbed within
its operations and improve the flow in its processes . Tke Møckine TPS. The results were presented as four rules for designing,
that Ckanged tke World and Leøn Tkinking have both been operating, and improving processes and the activities in the
worldwide best-sellers and have made the greatest contributions processes:
to developing and spreading the lean concept. 1. All work shall be highly specified in terms of content, sequence, timing. and outcome.

2. Every customer+upplier connection must be direct, and there must be an unambiguous

/es or no way to send requests and receive responses.

Fuiimoto ploces focus on Toyolo's copob¡l¡t¡es
3. The pathway for every product and service must be simple and direct.

4. Any improvement must be made in accordance with the scientific method, under the
Relatively few books about Toyota were published during the guidance ofa teacheç atthe lowest possible level in the organisation.

199os. A, notable exception is Takahiro Fujimoto, who in 1999

released Tke Eaolution of ø Manwføctøri.ng System øt Tlyotø, a This article has become one of the most frequently quoted
book that attracted a lot of attention in Japan. Fujimoto gave articles on the topic. It is one of the few sources that manage
a historical account of the evolution of Toyota's production to illustrate in a clear and simple way just how Toyota thinks
system and managed to capture many abstract phenomena. about its organisational improvements.
Fujimoto argues that Toyota has developed three different
levels of capabilities :

Level one - routinised manufacturing capability

Level two - routinised learning capability (Kaizen capability)

Level three - evolutionary capability (capability-building capability)

8o THIS IS LËAN ó. wEl-co¡r.t¡ To rHE wILD wnsr ... wE CALL tr LEAN 8r

The Toyoto Woy is encoded internolly by Toyoto this time, in zoo4, Jeffrey K. Liker published a book that
he also entided The Toyotø Wøy. This book has become very
In zoor, Toyota released an internal publication called, Tke popular, not only in the manufacturing industr¡ but also in the
Toyotø Wøy. This document, which outlined Toyota's core service industry. The book outlines Liker's own interpretation
values, was translated into various languages and distributed of Toyota's philosophy based on his many years of experience
throughout the Toyota Corporation to promote a consensus studying Toyota in the United States. He packages his version
view within the multinational company. The Toyotø Wøy of TkeTlylta.Wøy in the form of fourteen principles:
comprises flve basic values that are categorised within two key
areas: conlinaows imltroaemenr and respecr flr ?eople.
l. Long-termphilosophy

(ontinuous lmpÍovement: i. Base your management decisions on a long-term philosophy, even at the expense of

. Challenge - We form a longterm vision and meet challenges with courage and creativity
short-term fi nancial goals.

to realise our dreams.

ll. The right process will produce the right results
. Kaizen -Wecontinuously improve our business operations, always striving for innovation

and evolution.
2. (reate a continuous process flow to bring problems to the surface.

. 1enchi Genbutsu - We practice qen thi genbutsu; we go to the source to find the facts t0
3. Use'pull'systems t0 avoid overproduction.

make conect decisions, build consensus, and achieve goals at our best speed. 4. Level out the workload.

5. Stop the process if necesary to fix problems in order to get the quality right the first time.
Respect for people:
6.
. Resped - We respect others, make every effort t0 understand each other, take
Standardise tasks and processes for continuous ¡mprovement and for employee

empowerment.
responsibility. and do our best to build mutual trust.

. 7. Use visual control so that no problems are hidden.

Teamwork - We stimulate personal and profesional growth, share the opportunities of
development, and maximise individual and team performance. B. Use only reliable, thoroughly tested technology that serves your people and processes.

lll. Develop your people and your partners

Tke Toyotø Way is only sixteen pages long, and each value is
9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it t0
illustrated with a testimonial from a Toyota employee. The
others.
publication has never been made officially available outside
1 0. Develop exceptional people and teams that follow the company's philosophy.
of Toyota and is still only used internally as a manual for 'I
1. Respect your partnen and suppliers by challenging them and helping them improve.
Toyota's production philosophy. Tke Toy ot ø Wøy represents the
company's core values. lY. (ontinuously solve root problems to drive organisational learning
1 2. G0 and see with your own eyes in order to understand the situation thoroughly.

13. Make decisions slowly by consensus, and implement decisions rapidly.

Liker lounches The Toyoto Woy 14. Become a learning organisation through relentless reflection and continuous
improvement.
In the earþ zooos, books on Toyota and TPS ü'ere not high on
the best-seller lists in \Mestern countries. This changed when
Toyota became the world's largest car manufacturer. Around
8z THIS IS LIAN ó. wELcoÀ,{¡ To rHE wILD IMEsr... wE cALL IT LE-A.N 83

Leon explosion! one hundred different titles. A summary of the usages of the
term clean' in the subject matter of the books is found below:
Lean has continued to develop in parallel with the release A lean explosion just hit the world! Suddenly, it seems as
of the books on TPS. Both academics and practitioners have though everything has become lean. Suddenl¡ this is lean, that
developed lean into a concepr in its own righr that is separate is lean, and this is lean too! With so many books available, it is
from the writings on Toyota, even if it is still largely associated difficult to distinguish between what lean is andwhat lean zi
with the Japanese car giant. not. Some books deal with lean as an abstract concept' like an
Although lean originally developed within the manu- approach, a philosoph¡ a culture, or as principles. Other books
facturing industr¡ the concept has been adapted ro orher üeat lean as something more concrete: a way of working' a
functions, environmenrs, and industries, including such method, tools, and techniques. There is no single generally
functions as purchasing, product development, logisrics, accepted definition of lean. This fragmentation presents a
service, sales, and accounting. The concept has also been problem for practitioners and academics alike because this
adapted to other industries, such as banking and insurance, constantly developing concept refers to different things.
retail, consulting, media and entertainment, healthcare,
medicine, telecom, and IT.
The interest in Toyota and lean has led to hundreds ofbooks
and articles. A quick search on Amazon for business books
released ín zot4 with the word 'lean' in the title revealed over

Lean accounting Lean lT Lean revolution

Lean acres Lean labour Lean selling

Lean agile Lean leadership Lean service

Lean and green Lean library Lean six sigma

Lean banking Lean manufacturing Lean software

Lean busines schools Lean management Lean start-up

Lean culture Lean marketing Lean supply chain

Lean design Lean ministry Lean sustainability

Lean doctors Lean office Lean system engineers

Lean education Lean problem solving Lean transformation

Lean enterprise Lean product development Lean thinking company

Lean healthcare Lean publishing Lean training games

Lean hospitals Lean R&D

CHAPTER 7

What lean is not

f-ñ here ore os mony definitions of leon os there ore

I outhors to define it. Mony of these definitions hove
I developed lives of their own oufside of Toyoto.
Even the writings oboui Toyolo ore mony ond voried. While
there is o lot to leorn from oll th¡s literoture, it is remorkoble
thot there ore so mony inconsistent definitions of leon'
This chopter discusses three problems wiih the vorious
definitions o{ leon. Firstly, the defin¡tions ore mode of
different levels o{ obslroction- Secondly, Ieqn hos become
o meons insteod of on end- Thirdly, leon seems to hove
become oll thot is good, ond oll thot is good is leon'
8ó THIS IS LËAN 7. W}IAT LE.A.N rS NOT 87

Problem l: Leqn is defined confusion also occurs in practice, as illustrated in a questionnaire

ot different levels of obsfroction survey we conducted. The survey was answered by sixty-three
people, all with extensive experience working with lean in
Do you want a piece of fruit, a pear, or a green apple? fourteen different industries. The frrst question was, ''W'hat is
It is difficult to answer this question accurately because lean?' The answers could be divided into seventeen different
the three alternacive answers are not on the same level of categories, or definitions, of lean:
abstracdon. Fruit is at the highesr level of abstraction because
it encompasses all three possible answers. Because the pear Way of working Quality system System for understanding

is a fruit and can be defined by the type of fruir (pear), ir is Philosophy Way of life Mind set

on the second level of abstraction. The green apple is a level Approach to improvement Method Values

lower again, because it is defined not only by the type of fruit Approach Production system Management system

(apple), but also its colour (green). The higher the level of Systems thinking Strategy Toolbox

abstraction, the more general the definition. The lower the Culture Elimination of waste

absraction level, rhe more specific the defrnition. ,I wanr a

piece of fruit'is than ,I want a green
a more general starement
The fact that there are so many definitions is a clear sign that,
apple'. The figure below illustrates the problem of different
in practice, lean is defined at different levels of abstraction.
levels of abstraction.
firiir In order to sort these definitions into different levels of
abstraction, it is necessary to differentiate between:

. Fruit level (lean as a philosophy, culture, values, way of

living, way of thinking, etc.)

ffi
iligh ievel
$fabstrå$;on
. Pear level (lean as a way to improve, quality system'
{'/' production system, etc.)
. Green apple level (lean as a method, tool, elimination of
Å-.ppie

1æ-- waste, etc.)

'(^à
iTb*ie ?iett
Le+,,¡ei¡el
i¡f abstractic*
6
Green
ó
rÊ1;
Lean øs green øpples
Most of the writers who have defrned lean have done so at
the level ofgreen apples, that is, at a low level ofabstraction.
Leøn is eaerytking from frwit to green apples Of course, the underþing principles have been presented and
The literature on lean freely mixes the levels of abstraction described many times, but the overwhelming focus of most
and reats lean as everything from fruir ro green apples. Such authors is on the methods and tools Toyota developed. Because
88 THIS IS LEAN 7. WHAT LEAN IS NOT 89

what we observe is concrete and easy to understand, it is natural Many organisations start their lean journey using the
to describe the methods and tools. We can observe what Toyota methods and tools that Toyota developed. However, this
does and describe its methods. We can observe what Toyota has means that they risk losing the deeper thinking around lean
and describe the tools its employees use. and tend to ignore the wky behind the use of the tools. Fully
Some haye gone so far as to choose just one of the methods understanding the depth of lean takes a long time and is more
Toyota developed and equate that to lean: abstract than just methods and tools. It is much easier to start
with something concrete.
'Implement this method and your company will be lean!'
Many organisations are very good at adapting and modifying
Others have focused on identifying and describing all rhe the tools and methods to their specific service environments,
tools that Toyota has developed. They presenr an enrire lean in which there are high demands on flexibility and variation.
ttoolboxt:
Other organisations have abandoned lean because they found
it difficult to make these adaptations. When faced with these
'Use this package of tools and your company will be leanl'
difficulties, the organisation generally reacts sceptically to
The problem wirh defining lean simply as merhods and tools is lean. For example:
that lean tends to become specific to a certain type of context
'W'e work with people at a hospital, not with cars. \Me don't
or environment. Toyota developed its methods and tools
mass-produce patients.t
within the large-scale manufacturing of cars. This resulted in
the designing of tools and methods for that specific conrexr 'Our services are too customer-orientated and specific to
and environment and not necessarily for other contexts. certain situations for us to standardise our \Ãiay of working.'
This, in rurn, runs rhe risk of limiting the applicability of the
methods and tools. Reactions like these lead to organisations' concluding that lean
Iflean is defrned at a low level ofabstraction, an organisarion is not for them. They do not see how the methods and tools
risks misunderstanding what lean is about. This limits the can be useful in their environment.
concept's application areas. If lean has been presented to an organisation as 'green
apples'; that is, something that is specific to a manufacturing
iftkey were apples
Seraice industries grow peørs øs process, then such reactions are unsurPrising. The more
Defining lean at the level of green apples, or as the methods context-specifrcally a concept is defined, the narrower its area
and tools that Toyota has developed,limits the applicability of of use. Knowledge about how to grow a delicious and beautiful
lean when it is taken into other industries or sectors of society. green apple is not necessarily of value for growing a delicious
In the last ten years or so, service organisations have become and beautiful pear. Knowledge about how products are
interested in using lean to improve efficiency. As a result, the produced efficiently is not necessarily valuable for the efficient
concept is starting to be relatively widespread in both the delivery of services.
private and public sectors.
 THIS IS LEAN ,WHAT
9a 7. LEAN IS NOT
9t
In summar¡ there are a few important consequences of The means describes kow and the goal describes why. The
defining lean at different levels of absrracrion. The higher the problem with focusing on the means instead of the goal is
level of abstraction at which lean is defined, the more general that the connection between the means and the goal is not
the definition. The lower the level of abstraction at which the same for everyone; the same means do not necessarily
lean is defined, the more specific the definition. Furthermore, always lead to the same goal. Just because someone has the
it means that the higher the level of abstraction, rhe wider same equipment as Carolina Klüft and rains the same way,
the area of use, and the lower the level of abstraction, the this does not automatically mean they will necessarily have
narro\ver the area of use. By deflning lean at a low level of fun. The focus on the goal creates flexibilit¡ whereas a focus
abstraction, it is not necessary thar the methods and rools will on the means r,r.ay create limitations.
be suitable outside the particular environmenr in which they The same problem has arisen in the conceptual development
were developed. Defining lean at the wrong level of abstracrion of lean. The means and goal have become confused with one
creates a high risk that it will be abandoned. another. There has been a strong focus on kow Toyota works
by emphasising and defining its values, principles, methods,
and tools. They are different means for creating some sort of
Problem 2: Leon qs o meons insteod of qn end change, or means to achieve a goal. Unfortunatel¡ a problem
arises when the focus falls on'which means'Toyota uses) rather
When the Swedish athlere Carolina Klùft retired in zoo8, she than asking and understanding 'why' these means were used,
reigned supreme as the queen of the heptarhlon; she had never that is to say, the goal behind Toyota's philosophy.
been beaten as a senior heptathlete. Berween July zoor and If lean is defined as methods, the use of these methods tends
September zoo7, she won rhree World Championship titles, to become a goal in itself. For example, a method that is often
one Olympic gold medal and two European Championships. used at Toyota is standardisation. Problems arise when that
Klüft has often said that the reason behlnd her success is method becomes the goal and not a mearrs of achieving a goaL.
that she thinks competing is 'fun'. She has always emphasised One goal of standardisation is that it provides a foundation for
her continual enjoyment in competing. Klüft emphasises rhe continuous improvement. In order to improve, the company
state that she wants to reach - a goal - instead of focusing on must create a common ground from which it can improve;
the means she uses to achieve that goal. otherwise, there is nothing to improve.
In sport, it is common to direct focus on the means: Confusing means and goals often causes an organisation to
overlook wky itis going through a change process. Instead, the
'IJse this goif club and you will hit the ball as far as X .. .'
organisation places too much importance on the specifrc means
'Eat Y and you will be able to run fasrer .. .'
being used. When asked whether the organisation works with
'Rest as much as Z andyou will avoid injury ...' lean, the proud answer is:
92 THIS IS LEAN 7. wHAT LEAN rS NOT 93

tYes, of course! All our departments have no\Ã/ put up a Create continuous improvements lmprove customer satisfaction

visualisation board, and we gather around it every morning for Create effi cient collaboration lmprove delivery precision

a meeting.' Create respectfor the individual lmprove emplooyee satifact¡on

Create responsibility at the individual level lmprove flexibility

The means have become the goal. The organisation sees itself Create 5tability lmprove growth

as 'lean' just because it successfully implemented a specific tool Create stimulating work lmprove information tranfer
or specifi.c method. The goal behind the implementation of Create teamwork lmprove leadenhip

the tool or method is lost. Wh¡ then, is a visualisation board Create long-term strategy lmprove motivation

necessary? Decrease costs lmprove production

Unfortunately, the strong association between these Decease delivery times lmprove productivity

methods and Toyota has led to the goal of thinking and acting Deûease ¡nventory lmprove profitability

more like Toyota. It is importanr ro remember that what Deaease lead times lmprove quality

Toyota does is linked to its enyironmenr. Again, knowing how Deaeaæ mistakes and problems lmprove sales

to gro\M a delicious and beautiful green apple is not necessarily Decrease waste lmprove service

useful when you ì/r'ant to grow a delicious and beautiful pear. Develop employees lmprove work environment

Develop leaders

Problem 3: Leon is everything thot is good Which organisation would not want to achieve all of those
ond everything good is leon goals? The answers indicate every conceivable positive result,
regardless of the type of organisation. This response is not
If the means and the goal are confusedwith one another, what uncommon. Researchers and practitioners alike often see lean
goal do organisations then have in their work with lean? The as the solution to all problems. But if lean is the answer to all
questionneire survey mentioned earlier in this chapter asked: problems, then what is lean not? If lean is everything that is
'\il-hy dld your organisation implement lean?'The sixty-three good, and everything good is lean, what is the alternative? If
respondents provided as many as forty-five different reasons: lean solves all our problems, do we need anything else?
In order to add to knowledge, researchers develop theory.
Create a common approach Free up time Theory is an attempt to explain and predict the world around
Create a common way of working lmprove cash flow us. To be useful, however, theories must be constructed in
Create a culture lmprove cleanliness such a way that they can be proven v/rong. If there are no
Create a learning organisat¡on lmprove collaboration alternatives, the theory wili become trivial. The way lean is
Create a standardised way ofworkng lmprove commitment defined by both academics and practitioners Preyents it from
Create a universal solution lmprove competitiveness being falsifred. For example, who wouldn't subscribe to the list
Create commitment among managers lmprove control of benefrts stated above?
ì
å

j THIS IS I,EAN 7. WHÂT LEAN IS NOT

I 94 9s

The problem with cuÍrenr definitions of lean, as with . Our new operations strategy is to implement continuous
1
'i many of the conclusions we draw regarding how successful improvement.
organisations run their businesses, is that they are trivial. This . Respect for the individual is our core value.
implies that the knowledge does not add any value because it is . 'We are going to increase customer orientation.
obvious. For example, imagine if a detective was asked whether
she knew anything about a murderer and answered: From which crossroads did these strategic initiatives startl
Which road did they not choose?
''We have worked out that the murderer is a person. This person
To avoid being trivial, it is important to understand clearþ
has a head and a heart, and needs to ear and drink regularly to
what lean ís for and what it is not for. For which goals should'
survive.t
we aim with the help of lean and for which should we not aim?
These conclusions are trivial because chey are obvious. They Lean is not everything that is good, and everything good is
do not add any value to the investigarion, and they cannot not lean. Lean is a choice at a crossroads.
rule out any suspects. The conclusions are not falsifiable. The
chances of apprehending the suspecr ere nor increased. If the
answer changed, the value could also change:

'The murderer is a man. He has shoulder-length hair with a

centre parting and has a gold earring in his lefr ear. He has
a husky voice and is a regular at Cafê Whal in Greenwich
Village, New York.'

These conclusions are not trivial and contribute value to the

investigation. We know that the suspect is not a woman and
does not have short hair. And so on. A conclusion is valuable if
it has a logical opposite alternative. At every crossroads, there
must be at least trÀ/o ways you cân go. A conclusion is valuable
if it increases the chances of choosing the correct way. Man
or woman? Man. Long or short hairl Long. If there is no
crossroads, the conclusions are trivial and do not add value.
Consider also these statements, taken from the annual
reports of three multinational companies.
CHAPTER 8

The efficiency matrix

T T 7 hile the myriod books written on leon ond TPS

W *:il,î':, îIïJ 5" lj :l;:;: l:: ïi:J;

picture of whot leon octuolly is. ln on ottempt to clorify the
situotíon, this chopter loys the {oundotion for o definition
of leon by introducing o new fromework thot we coll the
efficiency malrix. This chopter exploins the motrix, os well
os whot determines the vorious positions orgonisoiions con
choose in this motrix ond whqt chorocterises orgonisofions'
movements in the motrix.
 98 THIS IS LE,{N 8. THE EFFTCIENCY MATRIX
99

The efficiency motrix Efficient islands

In the top left-hand corner of the matrix is a state we call
Many definidons of lean are made at a low level of abstraction; efficientislønls. In this state, resource effi.ciency is high and flow
I using the fruit metaphor from chapter 7, they are ar the level efficiency is low. The organisation consists of sub-optimised
i! of green apples. The fact that organisarions in many different parts that operate in isolation, where each part works towards
industries are now starting to work with lean makes it necessary maximising its resource utilisation. Through the efficient
to have a definition of lean that is on a suff.ciently high level of use of its own resources, each part contributes by lowering
abstraction to ensure its applicability outside of large-volume the costs for the goods or services being produced. However,
manufacturing. In other words, we need a definition at the fruit efficient utilisation of resources comes at the expense of
level. The first step in building such a definition is to introduce efficient flow. Flow effi.ciency for every individual flow unit is
a new framework: the effi.ciency matrix. low In manufacturing, this is represented by each component/
The efficiency matrix builds on the rwo forms of efficiency product's spending most of its time as inventory. In services,
that were presented in the frrst part of this book and illustrates this is often represented in the form of unwanted waiting time
how an organisation can be classified based on (a) low respective during which the customer does not receive any value.
high resource efficiency and (b) low respecrive high flow
efficiency. The matrix below depicts four different operational Tke fficient ocean
states in which an organisation can find itself. In the lower right-hand corner of the matrix is a state we call
the effi.cient ocean, where flow effciency is high but resource
Resoune eficiency
efficiency is low. The focus is on the customer and meeting
their needs as efficiently as possible. In order to maximise flow
efficienc¡ there needs to be free capacity in the organisation's
resources. Flow is efficient at the expense of an efficient use of
iligh Efficient islands The perfect state
resources. Resources are only used when there is an actual need
to satisfy. Creating an efficient ocean and creating flow require
a good understanding of the big picture, not just independent
and efficient islands.

Wøstelønd
Lor,v Wasteland Efficient ocean
In the lower left-hand corner of the matrix' the organisation is
unable to use its resources eficiently or create an efficient flow
Obviousl¡ this is not a desirable state to be in because it wastes
Flow eíiiriency resources and creates less value for the customeÍ. In this state,
Lou iliqh
100 THIS IS LEAN 8. THE ÈFFrcrENcY MATRIx 101

there are neither efficient islands nor an efficient ocean. It is

wøstelønd) that is, poor udlisation of resources ând poor flow. Resource effrriency

Þ
The perfect støte
In the top right-hand corner is the perfect støre. Organrsarions
that achieve this state have both high resource eficiency and HÍgh

high flow eftciency. It should be clear by now that it is difficulr

to reach the perfect state. The reasons why it is so diffi.cult were
explained in the discussion in chapter 3 concerning the laws
that explain how processes work. Chapter 4 also discussed the
difficulty by explaining the efficiency paradox. The key ro rhe
difficulty of reaching the perfect stare is variation. low

Vqriotion limils possible positions in the motrix tlow efflciency

Low
organisations can thus find themselves in different positions
within the efficiency matrix. In order to understand what
positions an organisation can achieve in the efficiency maffix,
capacíty, functionalit¡ and competence could be immediately
it is critical ro undersrand variation and its impact on the adjusted so that all types of needs could be met. Therefore, the
organisation. Variation affecrs the possibility of combining
key here is variation, both in demand (customer needs) and in
high resource efficiency and high flow efficiency. We can supply (the organisation's resources).
understand the effect of variation through looking ar rhe
extreme, an organisation that utilises its resources one hundred
Vøriøtion in dernønd preaents orgønisøtions from reøching the stør
per cent and, at the same time, meets customers, needs in an
The first prerequisite for being able to reach the star is perfect
optimal way. Such an organisation would be positioned at the predictability of demand. The organisation must be able to
'star', as can be seen in the figure on the next page. predict perfectly:
Unfortunately, rhe star is a theoretically perfect state, which
is worth striving for but impossible to achieve. In order to . Wkøt is demanded
reach the staq an organisation would need two things. Firstl¡ . it is demanded
Wken
it would require perfect access to all information regarding . Wkick a.moant is demanded
the customers' present and future needs. Secondl¡ it would
require perfectly flexible and reliable resources) where resources'
LO2
THIS IS LEÂN
8. THE EFFIcTENcy MATRIx
703
Unfortunarel¡ a demand pamern
is extremely difficult to
predict. An organisation can invest time, resources,
With perfectly flexible and reliable suppl¡ the organisation
and energy
in order to predict what irs cusromers can reach one hundred per cent resource efficiency. Regardless
í"rrr, *¡r.r, they want
it, and in which amounr, but it of wkøt product or service was demanded at any time and in
will be impossible ro make
perfect predictions. It is wharever amounr, the perfect flexibility and reliability of the
in the nature of customerdemand to
be variable. Can you perfectly organisation's resources would allow it to adapt to any situation.
predict _in, ,o., need, when
you are going to need it, Of course, it is impossible to have perfectly flexible and reliable
and how much? Sometimes,
perhaps,
but the further into the future suppl¡ especially when the resources are human beings.
*. loor., ,iáore dificult it is.

ìn suppþ preaents organisalionsfrom reøching Level ofuøriøtion establiskes the fficiency frontier
løriøtion rhe stør
Even if it were possibl. ,o
pr.di., a.^árra p.. fectly,reaching Therefore, it is the level of variation in demand and supply
the star would require p.rf..rty that determines which operational states an organisation can
n..rtf.l"a reliable supply.
Trese fiI/o Prerequisites concern achieve. Variation limits the possibilities of reaching for rhe
the organisation,s resources.
First of all, resources musr star. Variation creates 'an efñciency frontier'. The notion of an
be perfe.tiy flexible. It
possible to adjust the capacity,.f.rn.tion"lit must be efficiency frontier is illustrated in the frgure below.
y, andcomperence
of resources immediarely
,o ,h", ,yp.r".f customer needs
can be met. The organisation
,r..a,"ffp.rå.Jy flexible resources Rerource effiriency
in terms of:

. Wkat is supplied
. Wken it is supplied
. Wtrtick ømount is supplied High

Howeveq it is not enough

ro have perfectly flexible
Supply musr also be perfectly
resources. Possib{e operaTional staies I
always be able ro predict
ri. org"rrrrarion musr
r.li"bl..
what is ,"r"*-a happen when
product is produced a
or a seryice is delivered. Machines Low
never break down. Employees can
can never make mistakes,
a bad day and deliver bad have
service, o, U. ,i.L. Suppliers
always deliver one hundred must
p., ..rt
must ne.'er faiI, and a computer n"Jr,
The IT sysrem Fiow effrcienry

*,r1, .r.rr., freeze at an i.tw High

awkward momenr. All forms
,rrr..ti"UitiÇ*ur, be removed.
"f

*)
104 THIS IS LEAN 8. THE EFFTCIENCY M.{TRix 105

The figure on the previous page shows that the existence of

Resource effitienq
variation limits the possible operarional srares an organisation
can achieve. If demand is not perfecdy predictable and/or
resources are rìor perfectly flexible and reliable, there will be %..
a limit to how much an organisation can improve irs resource
I
efficiency and combine it with high flow eficiency. The main Èìigir

point to understand here is that ir is impossible ro reach an

operational state beyond the eficiency frontier.
Of course, it is possible for an organisation to end up in g, 2a
?¿ l¿
different positions within the limitation posed by the effi.ciency
frontier. This depends on whether the organisarion prioritises "è
la
Low
resource efficiency or flow efficiency. This is illustrated in the
figure on the previous page through the two poinrs, A and B.

. The organisation positioned at A has prioritised to keep irs Flow efficiency

L¡x
resources busy at the expense of an efficient flow.
. The organisation positioned at B has prioritised an efficient
flow at the expense of having less efficient use of resources. In a sense, the effi.ciency frontier is pushed 'inwards' as the
level of variation increases. Being pushed inwards means that
These are t\ry'o extreme positions. An organisation can be an organisation facing high variation will find it harder to
positioned anywhere between A and B along the efficiency combine high resource effi.ciency with high flow efficiency
frontier. This will happen if the organisation prioritises a than an organisation facinglow variation.
combination of resource efficiency and flow efficiency. It is very important to understand that the efficiency
However, it is even more likely that the organisation frontier is pushed inwards as variation increases. Which of the
will be positioned somewhere else within rhe shaded area. two examples below would you expect to have an easier time
Being positioned within the eficiency frontier indicares an combining high resource effi.ciency with high flow efficiency?
improvement opportunity.
Not only variation in itself, but also the level of variarion, A. A manufacturing company producing large volumes of
has an important effect on the effi.ciency matrix. The more similar products.
variation there is (in demand and supply), the harder ir is ro B. The accident and emergency ward of a hospital.
combine high resource efficiency with high flow eficienc¡ or
'teach for the star', as the figure on the nexr page shows. The answer should be fairly evident (the correct answer is A),
as these are two extreme cases. Howevert the key point here is
7a6 THIS IS LEAN 8. rn¡ ¡pplcrENcy MA,TRIx 707

that some organisations will find it inherently more difficult defines what type of customer need the organisation wishes
than others to combine high resource efficiency with high flow to satisfy. An operations srraregy defrnes how the organisation
efficiency. Examples of organisations facing high variation will meet this need.
are those in which the main flow unit is people. Many service
organisations will fall into this category. People inmoduce an ,4 bwsiness strøtegy defines whøt
element of variation that is very hard, if not impossible, to avoid. The business strategy defines the value rhe company will
We cannot standardise or control people in the same way \¡¡e offer the customer; thar is, the value the customer will
can material or information. FIowever, regardless of the type of experience when a good or service is consumed. At the
organisation, it is often possible to become berrer ar eliminating, highest level of absraction (the 'fruit' level), an organisation
reducing, and managing variation. can either focus on differentiation or cost. In this context,
The better an organisation is at developing capabilities to differentiation includes arange of rhings, such as delivering a
handle the two conditions, p re dictability of demønd andfleøibility better experience, better food, faster service, or a wide range of
ønd reliøbility of swpply, the further our rhe organisation will products from which to choose. In other words, differentiarion
move towards the srar in the perfect srate. The ability to is anything that a customer considers valuable. The cost is the
handle variation is critical. Still, it is very important ro nore sacrifrce, in terms of mone¡ time, or energy)that the customer
that although the level of variation decides possible positions must make in order to satisfy his or her need.
in the efficiency matrix, an organisation can and should choose A fundamental idea in the literature on business strategy is
where to position itself. This is the rask of strategy. the importance of choosing between differentiation and cost.
There is often a trade-offbetween rhese two strategic objectives
and an organisation must prioritise one over the other or it
Strotegy decides posil¡on in the molrix will be stuck in the middle. Therefore, an imporrant decision
when devising a business strategy is the level of differentiation
Many definitions of lean define it as a means rather than a that will be offered to the customer at what cost.
goal. This disregards the importanr question of wky cerrain Business strategy choices concern the type of need the
activities are undertaken. To lay the foundation for a definition organisation will satisfy. Business strategies are about
of lean that emphasises the goal, it is critical to understand the understanding and choosing which objective to prioritise.
importance of strategic choice. Organisations have a choice Things that must be considered here are what the cusromers
regarding the position in the effi.ciency marrix rhey want to value, what competitors do, and what the organisation is good at
achieve. One position is not necessarily better than another. doing. 'We shall offer the best customer servíce in our industry'
In order to understand the importance of strategy, we must is a concrete example of an objective in a business strategy.
first be clear about the difference between a business srraregy
and an operations strategy. Simply pur, â business srraregy

I
 108 THIS IS LE.{N 8. THE EFFrcrENcy MATRTX 7a9

An operøtions strøtegj defines hoza At the other end of the specrrum is the perfecr srare, in
!
An operations strategy helps realise a business strategy and whlch any organisation would like to find itself. As we have
defines kow value is to be produced. All organisations have just seen, however, the level of variation and the organisation's
an operations strategy, whether it is explicit or not. The ability to deal with it will dictate the organisation's chances of
i
1
operations strategy answers the question, 'FIow shall we being in the perfect state.
'We
produce value?' are assuming here that we have akeady Thus, strategy will help explain why an organisation either
1j

I defrned the type ofneed the organisation is trying to satisfy has effi.cient islands or is an eff.cient ocean. The examples
and the terget market. There should be a clear link between below illustrate the importance of sffaregy for explaining an
ti
the business strategy and the operations strategy. Given that organisation's choice of operational state.
I

Ìi we haye defined the organisation's business strategy, we can Ryan Air's business idea is to offer low-cosr flights, and its
j
now develop an operations strategy. business strategy involves prioritising cosr above ail other
I
An operations strategy enables an organisation to address strategic goals. The business srraregy is broken down into
important questions such as, 'How will we produce a product an operations straregy that prioritises resource efficiency.
or service given our business strategy?', 'How will the Resources are to be used to maximum capacity. For example,
organisarion deliver quality?' and, 'ÉIow will the organisation Ryan Air uses its airplanes to a greatü extent than other
deliver low cost?'An operations strategy can be broken down airlines by 'keeping them in the air'. Customers take off and
into operational objectives. Resource efficiency and flow land at airports in remore locations and are forced to spend
effi.ciency are two operational objectives defined at the highest a lot of time waiting, which means a lot of non-value-adding
level of abstraction, the 'fruit level'. These objectives can be time. Instead of prioritising flow efficienc¡ Ryan Air cLearly
broken down into several underlying objectives. focuses on the operational objective of ensuring resource
efficiency. The company has been very successful at this and
Strøtegy ønd operøti.onøl støtes has created an organisation that is always trying to improve
Strategy is an important explanation for an organisation's its resource efficiency.
position in the efficiency matrix. Before illustrating the Luxury hotels follow a strategy of increasing flow effi.ciency
effect of strategic choice, \47e must first return to two of the and ending up in the efficient ocean. By constantly focusing
operational states: wasteland and the perfect state. on customer needs and trying to maximise customer value,
As the name suggests, being in the wasteland is not a the flow effi.ciency of these companies is high. There is always
desirable state. After all, an organisation in such a state is available capacity in value-adding resources in a luxury hotel.
wasting ïesources and making customers unhappy. Having The same is true for organisations fulfilling a need that is
said thac, this state is not uncommon. Organisations that urgent or pressing or has to be prioritised. An example could be
end up here usually lack routines, standards, struclure, and afrrebrigade extinguishingafrre. To mobilise itself as quickly
coordination and Itave a very reactive behaviour, always as possible, the brigade must have available capacity,including

handling unexpected problems. having resources on standby.

.i;¡l*
 110 THIS iS LÉ,{N 8. tnr errrcrENcY MATRTx 111

Moving in the motrix

I Rescurce effciency

As we saw in chapter 7, a problem with many definitions of

i

lean is that they are trivial; they provide no logical opposites.

ji
In order to lay the foundation for a non-trivial defrnition
of lean, it is important to understand the importance and
:.j

High
il

I meaning of organisations' movements in the efficiency matrix.

I Many organisations say that they want to implement
continuous improvement. Based on the discussion in chapter
1

I 7, this is a trivial statement. The efficiency matrix enables us

i
to be much more concrete and require those organisations that
1

claim to have a strategy of continuous improvement to define Low

I
,l
the direction in which they intend to improve. Movement in
i

I
l
the matrix can occur in two dimensions:
I

I tlow effitíency
. Resource efficiency can be increased or decreased. lorv
i
i . Flow efficiency can be increased or decreased.
l
I
I

'l To illustrate the nature of movement in these two dimensions, regularþ Despite lots of duplicated work, many issues were
four frctitious stories are provided below. The movements
,t

being overlooked.
f described in these stories can be found in the figure on the .t well-known venture capital company bought a stake in
I

il
next page. the compan¡ bringing both capital and knowledge. Structure
i
and order were brought into the company. Routines were
I Tke størt-up c7qnpøny developed, systems \ry'ere created, and standard operating
I
'4.
i The start-up company sold women's clothing over the Internet. procedures were implemented. As a result, customer service
The company had grown quickly but was ûnding it more and
I
improved dramatically and stress levels dropped among
(
more difficult to provide customer service. The company had employees who no longer had to spend most of cheir time
i

I no developed routines and no standard operating procedures. flghting fires.

Every ne\ry'customer need forced the company to 'reinvent the Point,A. in the frgure above shows the matrix movement the
wheel'. There was no organisation to speak of. Consequentl¡ start-up company made. The company initially scored low on
customers started to complain. Deliveries were delayed, stock- flow efficiency, as customers were not haying their needs met.
outs became increasingly frequent, and quality issues surfaced The company also scored low on resource efficienc¡ since a lot
 112 THIS IS LEAN 8. THE ÊFFIcIÊNcy MATRTX
1t3

of time was spent on superfluous work. By creating roudnes and was busy, but customer service \¡/as poor. Srandardising tasks,
{
standard operating procedures, the work that was performed having better coordination, and freeing up capacity caused
added more value, increasing resource efficiency. But there was the company to lower irs resource efficiency but enabled it to
i
.1i
also a positive effect on flow efficiency: customers were srarring increase its flow efficiency. The result was happier cusromers,
'I

I
to receive timely deliveries with fewer quality problems. faster projects, and the ability to charge higher prices.
I
i
.i
B. Tke bøtkroom refwrbishing compa.ny C. Tke mønwfactwring com?øny
I
i The bathroom refurbishing company was quite traditional The manufacturing company was a leader in its industry
I
in its methods. A refurbishment would begin with builders but was very traditional. The journey for a product from
¡l

i tearing out the old bathroom. When they were finished, it took raw material to finished product would typically start with
processing in one part of one factory. Due to long machine
1
afew days before the electrician, who was busy somewhere else,
I

could come to prepare for new electric installations. After the set-up times, more than two months' worth of items were
j
electrician had frnished, there was a wair of afew more days for produced in one batch, which resuked in high amounts of
I
i
the builders to complete the nexr step. There was another wair work-in-progress. Items r¡/ere rhen shipped ro rhe company's
when it time for the plumber, and so on. The total time
rvr¡as second factoty, where they were processed in two steps before
I
1
from start to finish was rarely less than two months, during being returned to the fi.rst factor¡ where they were assembled.
I
which dme cusromers had to frnd different ways of taking care The company responded to market changes by embarking
ì¡
I of their personal hygiene. on a large-scale manufacturing transformation. The f.actory
il
¡
All of a sudden, however, the owner had a brainwave: layouts were changed so that groups of products were finalised
:
customers might actually be willing ro pay a premium for at the same place. The company adopted srarisrical process
I
rl
faster refurbishments. The changes ar rhe company started by control, and employees \ilere trained in standard operating
I increasing the coordination between the various professions, procedures and quality work. The hierarchical organisation,
i such as builders, electricians, and plumbers. Tasks were also in which one person did one job, was changed into a team-
i
standardised to a larger extent to make planning easier. based work organisation in which each person was trained
i
Changes were initially difficult, but everyone involved soon to perform several jobs. Teams were also tasked with simpler
realised that the new organisation made their lives easier, as forms of production planning, purchasing, and maintenance.
they did not have to rush between jobs as often as before. As a The changes had several positive effects. Quality improved,
i
result ofthe changes, a bathroom could be refurbished in a few manufacturing lead times were cut from three months to one
weeks, and this enabled the company to charge higher prices. week, and total productiyity increased. Most importanúyj
I

Point B in the figure above illustrates the matrix movement profitability increased.
: that the bathroom refurbishing company made. Initiall¡ Point C in the figure above illustrates the manufacturing
resource efficiency was high, but flow efficiency was low. company's matrix movement. Initiall¡ the company scored
Everyone involved in refurbishing a bathroom worked hard and quite high on resource efficienc¡ but customers had to wait
 rt4 THIS IS LEAN 8. THÊ EFFICIÉNCY MATRIX 115

a long time to have products delivered (low flow efficiency). Leon 2.0
The change involved trying to eliminate and reduce different
forms of variation in order to improve both resource efficiency The efficiency matrix serves as a foundation for understanding
and flow efficiency. what lean is at the 'fruit level'. In order to avoid falling into
the rap of making lean highly context-dependent, we want to
'
define lean at a sufficiently high level of abstraction for it to
:

D. Tke laxarl kotel

i
ì, This five-star hotel had always prided itself on its excellent apply to all kinds of organisations. This is important, given the
,l

l
t service. The hotel ofrered all kinds of luxurious amenities, interest in lean in various industries, including public sector
lÏ exquisite food, and service that was second to none. Staffwere service organisations.
ii
always available to fulfil their discerning guests' every wish. The matrix highlights the importance of strategic choice.
;lr
ï The intention was to create the perfect experience for the Organisations have a choice regarding where to position
ii
iì customer. The problem rÀ¡as that the hotel was losing money themselves and how to move within the matrix. An organisation
r due to low average room occupancy and high staffcosts. can move both up and down in the matrix and to the right and
to the left. Resource effi.ciency can be increased or decreased,
li

rli
,I
A new owner brought widespread changes. The hotel was
ì! repositioned to target business customers and was changed to a and flow efficiency can be increased or decreased. There
,i
four-star rating. Room prices were reduced, as was the number is no 'best' solution; it all depends on the organisation, its
i competitive environment, its customer needs and, particularl¡
T
of staff, and many services were removed. The outcome was a
iI rise in occupancy rates and higher profitability. its business strategy - what value does the organisation want
t to provide?
rl The hotel's matrix movement is illustrated by point D in
I
l
the figure above. Initiall¡ the hotel scored very high on flow
t
i efficiency but had relatively low resource efficiency. In order
Íj
to improve profitabilit¡ it was necessary to increase resource
,lÍ
,ti
¡
utilisation. The decision had a negative effect on customer
,$
¡
service (flow efficiency decreased). However, the overall effect
f' on profitability was positive, as the decrease in customer
$
service and revenue was more than offset by the increase in
{
{ resource efficiency and consequendy lower costs.
iì
J

1
r{

Lfl

r
I
'i
I
J¡

I
i
,l

,ì
)
CHAPTER 9

Thi s is lean!

T Jovíng on understonding of the efficiency molrix

l-'1 :[m:J: i;: :: ;ï,,"iÏff;:'-il. il

illustrote how Toyoto hos implemented TPS within the cor
deoler operotions in Jopon. We then use lhe motrix qs o
conceptuol lens through which we fiher the exomple; ihis
helps us develop o working definition of leon. ln brief, leon
is on operotions strotegy thot prioriiises flow efficiency over
resource ef{iciency. ln other words, leon is o strotegy for
moving 'to the right ond up' in the efficiency motrix'
118 THIS IS LEAN g. THrS rS LLI.N! 179

The super-quick cor inspection lots. Cars had to be moved back and forth all the time, and
vehicles \¡r'ere sometimes dirtied, scratched, or even damaged.
To;'ota's dealer network in Japan consists of approximately A single technician would conduct the actual car inspection;
three hundred different car dealer companies. Together, these even if the actual inspection took three hours, it usually took
companies control approximately five thousand car dealerships, a few days before the inspection was completed because the
which usually have a one-stop-skop øpproøck, offering their technician would often work with different vehicles at the same
customer both sales and service at the same location. time. The actual content of the inspection was standardised by
Since r996, Toyota has conrinuously developed a TpS-based law, but the procedure had no exact sequence or routine. Ivery
service concepr called Toyota Sales Logistics (TSL). Toyota technician had his own unique approach. The lack of standards
owns only a small proportion of the car dealer companies. meant that the inspection process was difficult to manage
Therefore, the aim of the TSL concepr is to assist and support and predict, which led to planning difficulties. Furthermore)
all indivldual companies in their improvemenr activiries the quality of the inspection varied greatly between different
through the developmenr, spread, and implemenrarion of TSL. technicians. Still, the technicians were all working hard since
The TSL concepr covers all processes within a car dealership, they always had something to do.
including sales, distriburion, and service. One of the service The traditional car inspection also involved problems
processes is rhe car inspection. related to a lack of information, unnecessary work, erÍors and
A car inspection is conducted three years after the purchase mistakes, waiting time for facilities or equipment' movements
of a new car and every second year thereafter. The purpose of of technicians within the inspection area, as well as excessive
the car inspection is to check whether the car meets the currenr and unnecessary inventory of parts. Finally, the pick-up and
national security standards. A car inspection in Japan is very drop-off process required a loc of time and effort on the part
thorough and requires nearþ three hours of work. Depending of the stafr at the dealership. Consequentl¡ customers usually
on the outcome of the inspecrion, necessary ot recommended had to wait up to a week for their cars.
preventive adiusrmenrs are suggesred, which may require parts
to be adjusted or exchanged. Tke aint oftke new øpproøck: flozu efficiency
The new process aimed to offer a car inspection whereby
T k e trøditi on ø1, res owrc e -efficien t appro øck customers could come to the car dealer and wait in the
Traditionall¡ car inspections would involve a dealer employee's showroom while the service was conducted- The result was a
picking up and dropping off the car at the cusromer's home. forty-frve-minute-long inspection Process.
Ffowever, since the technicians who carried out the car A standardised process was developed in which the sequence
inspection were ofren very bus¡ it could sometimes take and duration for every activity and task were fixed' All
several days before the inspection srarted. This led to crowded necessary tasks were identified and standarclised. Standard
parking lots. Because land is a scarce resoluce in Japan, there scripts and charts were developed for every task, and everyone
were many problems associated wirh over-crowded parking was thoroughly trained in order to master the new team
720 THIS IS LEÁ.N 9. THIS rs LEAN! 72L

approach. The knowledge and capabilities of each worker were was being inspected. The customer could receive accurate and
measured in a competence matrix. instant information regarding the various activities and their
Instead of having one technician conduct the entire outcomes. This also allowed sales staffto chat with customers
inspection, the new approach involveda team of one inspector and further develop their relationship with them. Flexibility
and two technicians. Two technicians worked together on the also increased due to increased planning ability; customers
vehicle, with one responsible for the left-hand side and the were offered flexible pick-up times and fl.exible scheduling for
other for the rightåand side, while the inspector controlled rhe the car inspections. Customers could plan for and cancel their
progress of the whole process. A new layout was developed to car inspection with shorter notice.
eliminate the need for movements within the inspection area.
New specialised equipmenr - for example, a tool for
changing oil - was developed to eliminate the most severe Super-quick cor inspeclion in the efficiency molr¡x
bottlenecks within the process. Various visualisation boards
and sheets were also used, showing the current status of The following section describes the improvement of the
different activities and their outcomes. inspection process using the efficiency matrix. The effects are
The standardisation and visualisation meanr that everyone illustrated in the matrix below.
would always know what ro do. They also ailowed everyone
involved to identify easily when things were nor conducted in Resource efidenry
a timeþ or correct manner.
The new car inspection process had several benefits. From
en operetional perspective, the throughput time was much
faster. The number of parked cers ar the shop decreased, as
High Efficient The perfect state
did the inventory level of parts. Since the length of the car islands
inspection was fixed at forty-five minures, capacity planning of
the whole workshop became much easier. The shop was able to D
achieve agood balance between utilising capacity and securing
free capacity in order ro rerain irs flexibility. This provided a r*wr f, r

more stable workload and less stress for technicians, and it

increased the manager's ability to control the operations. Low Wasteland Eficient ocean

From a customer perspective, the new approach offered a

faster and much more dependable process that now took only
forty-five minutes, as opposed to approximately one week. Flow efficiency

The new inspection process also offered customers the ability

to observe firsthand what was happening to the car while it
 r
722 THIS IS LEÂN
9. THis rs LEAN! 123

A - Perceiaed størting position continuous attention from the salespeople while at the workshop.
The traditional car inspection process was initially not flow- Customers got what they wanted, on rime, in less time, all of
efficient. Even if the effective toral value-added time were no which indicates good flow eficiency.
more than three hours, the customers would commonly have
to wait a week for their car. This represenrs a very low flow D - Increa.sing resource fficiency
efficiency level. Path D indicates how the car dealer increased irs resource
The staff were busy working with various vehicles and efficiency. The standardisation of tasks and creation of routines
picking up and dropping off cars at the cusromers' homes. helped remove superfluous work, while the development of a
The actual workshop was occupied by work-in-progress. The new layout and new specialised equipment increased the resource
perception was that the technicians were resource-efficient. efficiency. Resource efficiency was also improved since the
.{.fter all, the equipmenr \ry'as being utilised and everyone \47as creation of a common standard made capaciry planning easier.
working really hard, with lots of overrime logged. The starting The 45-minute long routines could now be used as "building
position, as perceived by the dealer, is found ar poinr A in the blocks" to filleach technician's day. Thus high flow eflñciency
flgure above: low flow efficiency and high resource efficiency. was built into the routine, whereas high resource efficiency was
created by combining different rourines.
B - Actøøl størting position
The actual srarring position is found at poinr B. Resources E -Finøl position
were not being used as efficiently as initially believed; a lot The frnal position is found at point E. An interesting feature
of the work being performed was superfluous. For example, of the final position is that resource efficiency is less rhan one
technicians performed unnecessary work and staffwere busy hundred per cent. Toyota's strategy involves having free capacity
moving the cars in the parking lot. Ext¡a planning efforts on hand in order to be able to deal with unexpected events.
were required because the inspection times varied so greatly.
A U+kaped impro?ernent panern
C - Increøsing flou eficiency Toyota's improvement within car dealer operations follows
Path C indicates the initial movemenr the car dealer
made a U-shaped pattern. The improvement journey started at an
in the matrix. The essence of the movement represents the eff.cient island in the northwest. It moved south and passed
improvement in flow efficiency. The main driving forces through the darkest valleys in wasteland, before cruising east
behind the dramatic increase in flow effi.ciency were reamwork, towards the eficient ocean. It finally ended up in the northeast,
specialised equipment, standardisarion, and visualisation. The where the sun is shining and the weather is beautiful. This
speed of the value-adding acrivities was increased, and non- improvement pattern, we believe, shows some key traits of
value adding activities were eliminated. Consequentl¡ the lean. After all, Toyota and its TPS provided the basis for what
car inspection process became faster and customers received originally lay behind the term 'lean'.

..{¡
L24 THIS IS LEAN 9. THrs rs LEAN! 725

The leon operotions strolegy from the moment the customer gives us an order to the point
when we collect the cash'.
We see lean as an operations strategy, as it concerns how an By focusing on flow efficiency, an organisation can also
organisation produces value. An important point here is that reduce a lot of superfluous work and waste. Focusing on flow
this strategy could be called anything: lean is just a word.IMhat eficiency helps resolve the effi.ciency paradox from chapter 4.
we call the strategy does not matrer in the slightest. What Removing waste and superfluous work can improve resource
matters is that the strategy involves a) aiming for the star and efficienc¡ which helps an organisation move up in the matrix.
b) moving towards the star through moving to the right and A focus on flow efficiency therefore fosters an improvement of
up in the efficiency rnatrix, as illustrated in the figure below. resource efficiency.
It is crucial to note that a lean operations strategy involves
Resuune efñcÌenqf
focusing on flow effi.ciency before resource efficienc¡ nor the
other way round. Focusing on resource efficiency first tends
to create efficient but sub-optimised islands. Superfluous work
and waste often occur between the islands. A focus on flow
È{rgh
efficiency means an integration of the separate islands to one
integrated system. This integrated system serr'es as the basis for
increasing resource efficiency. Resource efficiency is improved
at a system level, not at the level of individual lslands.
By noq it is hopefully clear that what prevents organisations
Starlir'E from reaching the perfect state is variation. Therefore, it is
p'*in¡
Lcw vital in a lean operations strategy to eliminate, reduce, and
manage variation. The knowledge that it is not possible to
reach the theoretical state of perfection (the star) means that
a lean operations strategy implies always striving to get closer
FIolv efficienry

'.:;;, 5lrìl
to that stare through continuous improvement.

The figure illustrates that a lean operations strategy involves

moving the organisation to the right in the matrix by Awoy from the Wild Wesl
increasing flow efficiency. In the choice between flow effi.ciency
and resource efficienc¡ the first priority is clearþ to focus on Chapter 7 defrnedthree problems with the numerous different
flow efficiency. The importance of flow effi.ciency is exemplified definitions of lean. First, lean is defined at difrerent levels of
by the founding father of Toyota Production System, Taiichi abstraction. Second, lean is seen as a means instead of an end.
Ohno, who said: 'All we are doing is looking at the dme line
 726 THiS IS LEAN

Third, lean is everyrhing that is good, and everyrhing good is

lean. We have dealt with those problems by defining lean as
, an opefations strategy:

i' a. The definition is ar the frai.tleael, which is a high level of

1
CHAPTER 1O
abstraction. Increasing the level of abstraction helps make
Ìi
ì lean applicable in different environments. Everything can be
l linked to a goal. Realising a lean
I
b. The definition focuses on the goøl of flow efficiency, nor rh€
-¡

f
means. The point is not to copy what Toyota does or copy TPS. operations strategy
Instead,it is importanr to undersrand wky Toyota and other
I organisations that focus on flow eficienry do what they do.
Only then can your organisation do the same.
eon ís on operotions strotegy, o sirotegy Io ochieve
T
I

c. The definiaonis non-triuiøl and makes it possible to define what

li
leøn is and whøt leøn is not. Thedefinition dearþ shows that flow I on obieciive. ln porticulor, the obiective ís To
j
efficiency is prioritised above the eficient use of resources.
t-l prioritise high flow efficiency over resource
l

i
ef{icíency. Hoving soid thot, by eliminoting, reducing, ond
ll Our goal in attempting to deal with these three problems is ro monoging voriotion, the oim is continuolly to increose bolh
i
avoid a context-specific definition of lean. 'Lean'is jusr a term flow effíciency ond resource efficiency. But how does on
¡

:l
that was created by Western researchers who obseryed Toyota's orgonisotion become leon? This is o legifimote question,
efficiency. It is important to emphasise that the means Toyota
iìì
but is il lhe right quesfion?
i

i
has used to increase flow efficiency m y not be applicable in
ti every environment. How a lean operations strategy will be
realised will depend on the context. A solution that suits one
organisation or environment will not necessarily be suitable
li

in another organisation or environment.

lr

By defining lean as an operations strateg¡ we aim to show that

lean is a strategic choice for all organisations. Organisations in
l

all environments can benefit from better flow effi.ciency and, in

the longer term, also increase their resource efficiency. To work
out whether this is something your organisation should strive
for, it is important to look first at your business strategy and ask,
'What value do we want to create, and how should we competel'

I
I
I

J.
 728 THIS IS LÈAN 10. REALiSING A LE¡\N OPERATIONS STRATËGY 129

The noiVe foreigner The foreigner ans\À7ers nervously in broken Japanese:

'I am from Sweden, and I carry out research in lean service. I

It is a warm morning in Nagoya. Three researchers from the
am researching how service organisations apply lean in their
University of Tokyo walk across the poiished marble floor of a businesses. You have developed many tools and methods that
frfty-storey building, enter the lifr, and press the button for the have made your production process one of the most effi.cient in
twenty-second floor: 'Toyota Motor Corporation - Reception'. the world. Can you tell me how you impiement them in your
The researchers register at reception, are each given a name service business? For example, how have you adapted the tools
badge, and are then polirely pointed in rhe direction ofanorher and methods for your sales and service processesl'
lift, which willtake them to the forty-second floor. They are
soon to meet Nishida-san, senior manager for the internal Nishida-san looks blankly down at the table, then síghs and
special unit that Toyota started in ry95 to develop conceprs looks up again. His expression is reminiscent of a Samurai
for increasing efficiency in sales, distribution, and service of warrior about to attack, but he sounds calm when he replies:
Toyota cars.
'Yet another foreigner who does not understand anything.'
Nishida-san is one of the younger senior managers at Toyora.
l Despite having worked in various roles within the company After a momentts silence, he continues:
for over thirty-seven years, he still has a lot to learn about
'You have just asked a question that shows you do not
the Toyota Production System. Toyota's internal training
l understand what TPS is about. Foreigners created the concept
programme takes twenry-frve years to complete; as Nishida-san of iean, which was a summary of what they saw in our factori.es,
l
himself admitted, he knows little more than rhe basics. of our tools and methods. They completely missed what they
I
Nishida-san wears a classically cur green-grey Armani suit. didnot see. Our philosophy. They missed the soft and invisible
His manner makes it clear thar he is the one who calls the that explains why we use the tools and methods that we do.'
shots, definitely ahead of the three other managers who follow
'If you are going to be here for two years, I recommend that
him into the meeting room. Nobody interruprs Nishida-san,
you try to focus on and try to understand our core philosophy.
nobody disagrees with him, and nobody walks in front of him. Our values and our principles guide us in everything we do. If
The Toyota men greet their visirors in a calm and orderly you understand them, then you will aiso understand how we
manner and exchange business cards with the pride and improve the effciency in our service processes.'
reverence that you would associare with a wedding gift to
the emperor. After a short presentation by each participant, Nishida-san stood up, walked over to the whiteboard, and drew
Nishida-san asks a quescion that is specifically aimed at rhe a circle at the top of what would become a pyramid-like frgure.

one non-Japanese researcher: Beside the circle he wrote the word'values'.

'Let me use a metaphor to help you understand. \Mhen we

'You are the first foreign researcher to visit us. IMhy are you here?' establishecl Toyota Motor Corporation, we saw our comPany
as a newly planted tree. At that time we had no knowledge of
130 THIS IS LEAN 10- REALISING A LEAN OPERATIONS STRATEGY 131

Nishida-san continued to develop the figure on the whiteboard.

V/,/tet He drew two more circles beneath the first one, and from the
first circle he drew tw'o arrows pointing down to the other two
circles. Beside these new circles he wrote the word'principles'
and then continued talking:

Vø{"ø6

Þrk*;+h',

how to take care of and look after a tree. Our lack of knowledge
lA.s our tree continued to grow, \47e continued to look after it
led us to be very careful. We never made a hasty decision. \Me
according to our values. To ensure that we really did look after
asked ourselves questions such as:
it, we asked ourselves questions such as:
. What do we consider a beautiful treel
. What do we not consider a beautiful treel' . \Mhat decisions have we made today that made the tree
t\Mhen we had a consensus around those questions, we more beautiful?
. What decisions have we made today that did not make the
summarised our thoughts into our values. Those values defrned
tree more beautiful?
how we should always be towards our tree.' . What can \ry'e learn from this to ensure that the mee will be
even more beautiful tomorrowì'
'The most important value was always to focus on the customer.
To satisfy our customers' needs. Satisfying our customers'
needs was the same thing as a beautiful tree. Customer needs 'By asking ourselves these questions every day, principles
gradually started to develop regarding how we made decisions.
were placed above all else. By satisfying our customers) we
\Me started to see e pattern around how we looked after our tree
could get our tree to gror¡¡. The customer was most important
so that its beauty was always growing. The principles guided us
and should be prioritised above all else.'
in terms of how and what we should prioritise in our business.
'Our values became a source from which all of our co-workers The principles developed due to our attention's always being
could seek guidance. In those values, you can frnd all the on our values. You could say that our principles realised our
arrswers to how we should act in every situation. Those values values as they guided us in lookingafter our tree' but also in
show us how we should always be. They became the core of how øot to look after our tree.'
our culture.t

"I
 132 THIS IS LEAN 10. R¡ALISING A LEAN OPERATIONS STR.{TEGY 133

Under the lower left circle, Nishida-san \À/rore: Just-in-time'.

'Good playing racticsl Great kicksl'
i 'After a long development ptocess, we understood that our 'strength and speedl'
thoughts could be summarised into rwo principles, which were 'Teamwork and passing ability!'
l
two sides of the same coin.'
l Nishida-san gave a satisfred smile and said:
l
'The firsr principle is just-in-time and is about creating flow.
i

.rì
Imagine.a football match. Flow is when the ream passes the ball 'You answered exactly how I expected you to ans'rver' and you
from one end ofthe pirch ro rhe other and finally kicks the ball are all wrong. You focus too much on the conditions that need
ll
J
into the opponenrs'goal. The ball is moving all the time. All the to exist to create a good f1ow. Jidoka is much simpler than that.
i: players help to find rhe perfect path for the ball. The ball flows In football, the answer is so obvious that we do not think about
across rhe pitch and into the goal. In principle, scoring a goal it as a condition.'
l
in football is the same as delivering exactly what the cusromer
ìl \ry'ants, when the customer wants it, and in the quantity that 'In addition to all the players being able to understand the rules
the customer wants. Customer service is about scoring a goal., and their own team's strategy, all the players, from all positions
on the pitch, must always be able to:
!

Nishida-san wenr quier again and rurned back to the whiteboard. . See the pitch, the bail, and the goal
Under the lower right circle he wrote anorhet word:
Jidoka'.
. See all players on the pitch
. See the score
. See how much playing time is left
I
Vøl^u 6 . Hear the whistle
.i
. llear their team members and the crowd'
Þ";r*;,1^1.t"
ti V444'4-+ç6¿
il

Jidoka is the other side of rhe same coin. It complements jusr-

I
in-time. Jidoka is a somewhar abstracr principle, but let me
ask a question rhat will hopefuily help you ro grasp it. What
'Every player can see and hear and is aware of everything that
is happening all the time. Based on this clear picture they can
underlying condirions must exist in order for a foorball team
make decisions about how, together, they can score a goal- If
to score a lot ofgoalsl'
any player makes a mistake, or if one of the teams scores a goal,
the referee blows his whistle. Al1 players hear this whistle, and
The researchers looked at each other and wondered if Nishida-
the game stops. These conditions are the same in most team
san was winding them up. Nonetheless, they started ro offer
sports. Everyone can see everything all the time and the referee
some answels: can stop the game within a second.'
 734 THIS IS LEAN 1O. REALISING A LEAN OPERATIONS STRATEGY L35

It went quier in the room and ir was

apparent that everyone
was rhinking abour what Nishida-san had just said.
Valr^u 6
/\
'In an organisation, ir is much more difflcult to create
i
rl
these fundamental underlying conditions. W-e all sit in
Þt-4!-di-:Õ

i /\\
different places, and we do different things at different rimes, J"¿¿-;^-t;^" J:lal.a

/t
I

1 independently of each other. Today's organisations are built

il
like a football pitch covered in hundreds of small renrs, where
I

l
matches are played with many differenr balls at the same time.
14Qfl"/4 ÕÕ Õ ÕõÕ
il
The players are rewarded for kicking the ball as many rimes
l

I as rhey can and rhink rhey score a goal when they succeed in 'As we developed our business, by allowing the principles to
I

lì
I
kicking the ball out of their own renr. They play at different direct all that we did we started to see patterns.'
L

l times and barely know the names of the other players. No one
.l tThis time, it not about patterns of how we were or how
was
sees rhe big picture. No one hears the whistle.'
ri
we made decisions, but patterns of what we did and how we
,l
.t carried out different tasks. Regardless of what we did, we always
ì

il
I
concentrated on realising just-in-time and ¡idoka. As time went
I
orì, we started to identify how we should carry out different
ì
iì tasks. Some methods emerged as being better than others.
I
Therefore, we tried to identif¡ standardise, and spread the best
i
ri
way of doing different tasks. That resulted in many standardised
a/
I "4. methods; the collation of our jointly devised best thoughts
iI
about how different tasks should be performed. These methods
i Nishida-san drew another arro\^/ on rhe figure, between just- standardised how we could realise our principles in different
l
lr
in-time and ¡ldokø. FIe wenr on ro say: situations in the best way possible.'

ì 'Methods were our best way of looking after our tree every day
Just-in-time is about crearing flow, while jidoka is about
I so that it could be as beautiful as possible. Let me give you an
crearing a visible and clear picture so rhar anything that
! example. To realise just-in-time, we developed many different
happens to, hinders or disturbs the flow can be identified
l methods that helped us continually ensure that we delivered
I
immediately. The principles are two sides of rhe same coin
what the customers want, when they want it, and in just the
,t and together they drive our organisation to ,,score goals',
amount that they wanted.t
rù continually through srrong cusromer focus.,
:l
ì

I Nishida-san again turned ro rhe whiteboard and drew another 'standardisation itself is an example of one of our most
important methods. It is actually a method of developing other
I
level of circles. He connecred the six new circles ro rhe trr/o
rl methods. In order to create and - most importantly - maintain
above with some more arrows. Everything hung rogether.
an efficient floq the flow must be standardised at some point so
Beside the new circles he wrote ,methods'. that everyone can have the same understanding of how a task
i

l
tì

I
1 -i¡L
86 THIS IS LEAN 1O. REALISING A LEAN OPERATIONS STRATÈGY L37

should be carried our. Bur how do you srandardise somethingì We can see that the situation is abnormal. \Me see deviations
How do you establish one best way of workingl The challenge from the normal state.'
here is the same as it is in football. How is it possible for a
football manager to esrablish a standardised artack merhod? 'Do you understandl It is the visualisation that allows us to
Standardisation is a standard for establishing standards. ,4. see the whole football pitch all the time. It is impossible to
meta-standard!' control a whole organisation. But it is possible to standardise
and visualise everything we do. Through visualisation, we
Nishida-san grinned ar the foreigner. can control the whole organisati.on by just controlling the
deviations from the standards. It is the deviations that trigger
''We have been able to develop several methods that help realise improvement of the normal state.'
just-in-time and ¡ldoka. Visual planning is an example of a
method needed to realise jidoka. As I said, the intenrion of The room was quiet.
jidoka is to create a transparent organisation so that everyone
Nishida-san continued to add to the pyramid on the
can see everything all the time. That is made possible through
whiteboard. He drew afrnallayer of circles, this time twelve
visualising and continually updating all of the relevanr
information concerning the business on our walls. Everyone of them, and connected them to the others in the same way
can see what is happening in our company in just one look. as he had done earlier. Again, he wrote something beside the

As soon as something unexpected happens, the first one who circles, but quickly rubbed it out and turned to the researchers.
sees it blows rhe whisde. Everyone stops, we find the roor cause
of the problem, we improve, and then we continue. Visual 'Whar is this herel'
planning is a merhod that helped realise jidoka. One could say
that jidoka "is" rhe whistle.' He turned back to the whiteboard and hit it with his hand.

'WHAT is this here?'

The researchers didn'r really appear ro ger the point Nishida-
san was making. The Toyota manager continued in a slightly
Nishida-san hit the whiteboard several times more and then
louder voice.
stared at the researchers. No one had any idea what answer he
'It is importanr rhar you really understand the rcasons wky was looking for. Finally the hitting stopped and Nishida-san
we visualise. Think about jidokal \Me want to see the whole spoke to the researchers slowly and clearþ:
picture all the time. If all employees visualise the progress they
are making, two parricular things are made possible. First, if 'It is a wkiteboørà, and I am kittingit.It constitutes e method
the progress is going according to plan, we know rhar we are I developed a minute ago, which is called tke rnetkod tkat zlill
on track. The visualised information allows us ro see that the stzp tke researckers from følling øsleep.'

situation is normal. \Me are doing what we are supposed to

be doing. Secondl¡ if the progress is not going according to Nishida-san laughed in away that indicated he was satisfred.
plan, the visualised information enables us to reacr instantly.
138 THIS IS LEAN 10. REALISING A LEAN OPERATIONS STRATECY TJ9

FIe went back to his pyramid. Next to the lowest level of rings 'The methods de6.ne how we should perform different tasks.
he wrote the words tools and øcrioities. Methods are the motors that propel us in rhe right direction.'

'Tools are what we need to kaae andactivities are what we need

Va!.ua 6 to do to realise a speciflc method.'
tEverything is connected in a system that, continuously and in
Þ,r;"*4&"
J"¿¿-*-l;æ J:/.|/d small steps, develops our business into a very beautiful tree.'

\ /\\ Nishida-san went back to his seat and sat down. He looked
ö ÕÕÕ back towards the whiteboard and then turned to the foreigner:

T"kV i\ \\ 'So there. Now you have just had a crash course in the Toyota
r'</h41'l^2/t æ Production System. Pay special attention to the word "system".
It is a system in which everything is connected. I hope that you
'The whiteboard is a tool. The hitting is an activity. Tools and managed to grasp what I have said.'
activiries are how methods are realised. A method is built up
of activities (what we do) and tools (what we have).' The Swedish researcher nodded nervously and expressed
'To carry our rhe method of standardisarion, we have developed his gratitude by bowing in his seat. Nishida-san smiled
an A3 templare rhar is divided into different boxes. It is used mischievously and posed a final question:
to documenr a standard. The template is a tool that we need
in order to standardise. \Me have also defined the sequence of 'I will give you one last chance. Rephrase your question so that
I have the chance to think, ''Wow! Finally a foreigner who really
activities that an employee goes through to fill in the template.
understands what TPS is!"
Tools and activiries are rhe componenrs of the methods.,

Nishida-san took a step back from the whiteboard and looked Nishida-san leaned back in his chair with a look of hopeful
proudly at his creation. He turned to the researchers and anticipation, and he turned his gaze once more on the foreigner.
explained.

'Our values defrne how we should be, regardless of the situation

or context. Values are the basis for our very existence and the Meons for reqlising o leon operot¡ons strqtegy
state towards which \Ãi e conrinually strive.'
The story that Nishida-san told the naïve foreigner illustrates
'Our principles define how we should make decisions and that the question, 'How does an organisation adapt the lean
what we should prioritise. Just-in-time and;idoka define the
tools and methods for sales and service processes?'is somewhat
direction in which our operarions should develop. Towards the
misleading because it assumes that lean is a collection of
customer! Towards that beautiful tree!'

.. -t-
74a THIS IS LEAN 1O. REALISING A LEAN OPERATIONS STRATEGY 141

methods and tools. Lean is nor merhods and tools and nor is existing literature. But it is important to emphasise that all those
it principles, conrrary to popular belief. As we have mentioned values, principles, methods, and tools that you find in the books
earlier, we lean as an operations strategy, as a strategy with
see are not in themselves 'lean'. They are means for realising a lean
which to achieve a goal- Therefore, the question should really operations strategy. To see them as means does not make them
be, 'FIow do we realise
a lean operations strategy?, The answer any less valuable; infact,just the opposite is true.
to tkøt quesrion is that rhere are various means wirh which to By seeing all these values, principles, methods, and tools as
realise a lean operations strategy. means, we can begin to see how everything fits together. This
further to, ,'W'hat means can we
W'e can refrne the question helps us sort through the disparate and sometimes opposing
use ro realise a lean operations strategy?' and ,IMhich means advice \ry'e get from studying other peoples'lessons. It helps us
will increase flow efficiency without compromising and will to see how everything fits together.
preferably increase resource efficiency?' As the Nishida-san Anything that helps us eliminate, reduce, and manage the
story shows, there are many different means, which can be variation in an organisation is a good means with which to realise
divided into the four differenr groups rhat Nishida-san v/rore a lean operations sffategy. Integrating values reduces variation
on the whiteboard: in how we are. Applying principles reduces the variation related
to how we prioritise and make decisions. Standardising methods
. Values defrne how an organisation should bekøae.
decreases the variation regarding what we do. Implementing tools
. Principles define how an organisation should tkink.
reduces the variation in what we have.
. Methods define whar an organisation should d.o. It is important to understand that all organisations have
. Tools define what an organisation should køae. values, principles, methods, and tools, whether they want to
or not. The questions are what they consist of, how explicit
Nishida-san's pyramid shows how rhe different means are they are, and how widely accepted they are in the organisation.
defined on different levels of abstraction. Values are ar the
highest level of abstraction and tools ar rhe lowest. A lean
operations srraregy can be realised in different ways, from How different meons resl¡se o leon strotegy
a more abstract change, where values are integrated and
principles applied, ro a more concrere change, where methods In order for to realise a lean operations strategy,
means
and tools are implemented. Some organisations that work with the intention must be to eliminate, reduce, and manage
lean choose to focus on one or a few of the above levels, while variation, primarily in order to increase flow efficiency; that is
others choose to focus on all of them. a condition. F{ere are a few examples of what we mean, using
The various means for realising a lean operations strategy tie Toyota as an example.
in well with the existing literature. Most of the books on TpS
or lean are full of excellent suggestions of means to realise a
lean operations strategy. Obviously we can learn a lot from the
742
THIS IS LEAN 10. RE,q,LISING A LEAN oPERATIoNs sTRATEGY
74J
Vølwes øs meøns: reducing aøriørion in kow employees
øre These are rhe two principles that guide
Values define how an organisatio.,
,houid behave. Which
values does an organisation need
to integrate in order to
at rhe core or the company,s way or.;.;;Jilîl;iiîr_.
improve flow eficiency?,{s we an organisarion can choose to apply just these
mendoned in chapte r 6,Toyota rwo princioles
when developing its operations, bur it could
codified fi.ve core values in The Toyota
Way. Two of these, .n";ñ;'ä"ï.
ro apply other flow-improving principles. In orã.r
respect and teamwork, are clear conditions
for the creation of a lean operations süaregy, it is nor important
;";.]Iî;
an efficient flow. ltow theil,;
improved, simply that it is improved.
. Respect is about doing everything
Many observers have considered the globar rruck
ro be able to understand comoanv
Scania to be a role model for lean. Inspired by Toyota,
each other. Take responsibllity
and do your best ro creare S;""i;
started to deveþ its own version of lean, the scania production
mutual úust-
. Teamwork is about stimulating personal system (sPS)' in the earþ r98os. Instead of just-in-time
and
and professional jidoka, the core of sPS consisrs of four principles, the
development, sharing opportunities objectives
for developmenr, and of which are almosr identical to;'ust-in-time and jidoka, excepr
maximising individual and group achievement.
that they are conceptualised differently. scania and Toyota both
By training employees ro respecr each have operations strategies that focus on flow eficiency, except
other and work as a that Scania realises its strategy through SpS, while Toyota .rs"s
team, these values become integrated
in an organisation. TPS. They use difrerenr means but have the same goal.
This creates the conditions for effi.ient
flow throughout the
entire organisation. Respecr and teamwork
are preiequisites Metkods øs meørcs: redacingaøriøtion in wkøt employees do
for achieving high flow efficiency since
everyone is dependent
on each other and has to work together. Methods define whar an organisation should do in order to
improve flow efficiency. Among the many different methods
to choose from is value stream mapping. Toyota has deveþed
Principles øs meøns: redacing aøriation in hou employees
tkink this method to analyse the existing flow in a process, with a
Principles define how people in an organisation
should think view to identifying value-adding activities and non-value-
in order ro increase flow eficiency. .Which
principles should adding activities (waste). Orher organisations can copy and
you apply in order to eliminate, red.uce,
and manage the standardise value stream mapping as a method of analysing
variation that exists in your organisation?
flow in their existing processes.
The Nishida-san srory discusses the two
principles that Another common method that is often seen as part of
Toyota consider to be the core of TpS: just_in_time
and jidoka. lean is 5s (sorting, structuring, shining, standardising, and
Just-in-time means creating an eficient flow through the
whole sustaining). Simply put, 5s is about having the right thing in
organisation. Jidoka means creating an
owøre organisation, the right place. Many organisarions srarr ro use 5s as a method
which prevenrs) identifies, and eliminates
everything that
inhibits, disrupts, or slows down the flow.
444 THIS IS LEAN 10. REALISING .A. LEAN oPERATIONS STRATEGy
r45
to creare a u/ell-organised and
functioning workplace. Well_ operations srraregy, developed in a particul
organised workplaces reduce the variation that
when you have to spend time looking for what
can easiry arise
you need.
ne ;,;
c e s s arity apptic able in ano the r .
;i: JÏlllïl'ålii
that lean is not appropriare, just that the tool
is not.
It is important to bear in mind that Toyota,s
Tools øs meøns: redwcing aøriøtion
in akøt employees ase means
were developed withinmanufacruring industr¡
a.
Finall¡ tools define what an organisation has. So what - which is
tools characrerised by high volumes and rerativery
need to be implemented in order to realise little'variarion
a lean operarions in the product's basic design. Most organisations
strategy? visual planning boards are one of could draw
the most common inspiration from Toyota's means and learn about
tools associated with Toyora. The intention is what ror*
to make the has done. FIowever, not all organisations, particularly
progress of the process visible through visualising rhose
process_ operating in different environments from Toyota,s,
oriented and result-oriented merrics. Is the flow can or
normal or should copy all the methods and tools thar Toyora
does it deviate from the normall By implemendng d.*top.d.
and using a This is in line with Toyota's own view that methodslnd
visual planning board, an organisation can
see and control the tools are tcountermeasures'; they are solutions to problems
status of the flow through the process. As
soon as a d.eviation is that the company has faced during its work to improve frow
identified, it can be deak with.
efficiency. Toda¡ these are the best solutions ro Toyora)s
problems, but romorrow's solurions may look difrerent. This
view explains why Toyota is happy to let other organisations
Meqns ore not universql learn more about the methods and tools it works with and uses.
For many organisations, realising a lean operations srategy
\ü'hen means for realising a lean operations süaregy are seen is about developing solurions, methods, and tools to help them
as being on differenr levels of abstraction, ir is possible to eliminate, reduce, and manage the variation that exists in the
understand better that means are context dependent:
-contexr in which they work. This development work should be
inspired by others, but should not indiscriminately copy what
. The higher the level of abstraction, the less
contexr- others have done.
dependent the means.
By really understanding what lean is, organisations can find
. The lower rhe level of abstraction, rhe more conrext_ their own solutions to the problems they encounter when trying
dependent the means.
to improve flow efficiency and strive towards the perfect state.

In this case, conrext is determined by rhe type of organisation

in which rhe means have been developed. Tools as means
are
at the lowest level of absraction, which means
that they are
the most dependent on conrexr. Tools for realising
a lean

i
".t
 CHAPTER I T

Are you lean?

Learn to fishl

,Tl here ore mony different meons with wh¡ch to reolise

I o leon operotions strolegy. Orgonisotions con
.I- lntegrole volues to help improve flow efficiency-
Principles con be opplied fo help employees
constontþ
moke decislons thof improve flow efficiency. Methods
con
be stondordised ond fools implemented, oll with
o view
fo elirninoting, reducing, ond monoging voriotion in the
orgonisofion_ This improves flow efficiency ond,
of the
sorne time, ollows o more efficienf use o{ resources.
Buf
with oll this work, how con we tell fhot on orgonisotion
hos
become leon?

J
148 THIS IS LËAN 11. ARE Yov l,¡¡N? LEARN To FrsH! 749

We ore leon, oren't we? the work of the business as a whole and how their work
contributed to the final product delivered to the customer. The
The European engineering company was very proud of its operators explained with genuine enthusiasm the improvement
work on lean, and justifiably so. Within its industr¡ it was work with which they were involved.
considered the company that had come rhe furrhest in its work 'This just has to be lean, doesn't it?' asked the company's
on lean. Many study visits took place at the compan¡ and managers. Again, Ooba-san simply responded by saying,
many other organisations were eager to learn from this great tlnteresting'.
company and its experiences with lean. After the guided tour' everyone who had accompanied
The employees .were very proud of their company but were Ooba-san congregated in the conference room where the
still eager to know if there were somerhing more they could discussions continued. The company's representatives were
develop. What should they do in order to take the company eager to obtain some confirmation from Ooba-san about how
to the next level? W'as there a next level or was the company lean their compâny was. However, no answer was forthcoming,
perfectly lean? and the frustration in the room began to increase. Finall¡ the
In order to confilm just how good ir was, the company invited chairman said:
Ooba-san, a legendary Toyora manager. Ooba-san had served
as the right-hand man ro the even more legendary Ohno-san, 'Ooba-san, we have now shown you the whole factory and told
you about our work on lean, which we are very proud of' We
considered to be the father of the Toyota Production System.
are wondering now if you consider this to be world-class lean?'
Ooba-san was flown in to assess the engineering company's
work on lean. He arrived and was given a guided tour of Ooba-san's answer was short and to the point.
the factory. The company's represenratives proudly showed
'It is impossible for me to say. I wasn't here yesterday''
off their work. They showed their clean work places, where
everything was in its right place. They showed their visual
planning boards, where all aspects of how the business was
working were shown in real time. They talked proudly of When is o leqn oPerot¡ons strolegy reolised?
their low levels of inventory in the factory. They showed the
different tools they used to raise rhe level ofquality. The story about Ooba-san illustrates a central aspect of lean:
tW'e are lean, arentt we?'
asked one of the company's namel¡ that lean is not a static state to reach. It is not something
r€presentatives rheroricall¡ but the Japanese visitor simply you complete. It is a dynamic state characterised by constant
said, 'Interestingt. improvement.
Ooba-san even had rhe chance to speak with operators If we see lean as an oPerations süategy' the question, '\Mhen
working in the factory. Iveryone he spoke to had the same are we lean?' is actually the wrong one. Instead, the question
understanding of the company's yisions and goals. Everyone should be, 'When is a lean operations strategy realised?'
could provide answers about how their work fitted in with The goal of a lean oPerations strãtegy is to improve the flow
 15O
THIS IS ¿EAN
11. ARE You LEAN? LEARN To FrsH!
151
efficienc¡ without sacrificing
resource efficienc¡ and
improving it. The sffaregy ideally As the story about Ooba-san illustrates, the static view is not
would be realised when the
is achieved. There are t\ryo goal the right one. The fact that many organisations see lean as
extreme ways of defining
sraric or dynamic. go"l' something thar can be implemenred, ar which point they can
"
sa¡ ''We've done it now', is alegacy of the often unarticulated
.4n operations stuøîegy witk tool-based and methods-focused definition of lean. Of course, a
ø static goøl
From a static perspective, lean journey can comprise of and be broken down into smaller
the d.r,äop*.rt of a lean
srraregy involves setting operations projects that can have clear milestones. FIowever, it is crucial
a definire goal for flo_
Improvement is the .ffi.i.n.¡ to understand that the realisation ofa lean operations srrategy
one or more proces,:,
substandal improvement
i:ä1i: åffiï j;iii.îiïå"j is a journey that never ends. Let us expand on this.

of flow effciency. W_hen

project has a definite goal,flow a change An operøtions strøtegy zaitk a dynømic goøl
eficien.f r, _."r.rr.d before
and after the change. The From a dynamic perspective, the focus is not on the absolute
degree ,, *ir.f, rhe flow
has improved can then eficiency improvement in the level of flow efficiency; instead, the point
b. ,rrãd ,o ¿.r.._rrre the success
specific projecr' The measuremenr of a is that flow effi.ciency always continues to improve oyer time.
can also be used for inrernal
and external comparison, Taking the dynamic view means that an organisation sees
through q.r.rrørrr r.r.h ,Where
when is rhe flow mosr eficienti and the realisation of a lean operations strategy as a constantly
"r,
Th. d;r;;elow illusuates an
operations sffaregy with a static goal. changing state, not as something static. In this case, a
lean operations strategy is realised when an organisation
continuously improves its flow effi.ciency. The frgure below
imP'"cïÊmeii*r StaticGoal
illustrates the dynamic view.

Absolute goal
1- Dynamic Goal
¡
¡
lmprovement
I
I
I
I
I
¡

sta11¡ng point J- Learning capability

Itme {
i-----l
5tarTing po¡nt slarting point - -
The figure illusftares ¿

improvedrheabsorute'fi:i:i;:i.iLi:;îfj;ä:.r,ï:T; Time

the change from one static ¡

Starïinq poinr
scate to another.
752 THIS IS LËAN 11. ARE YOU LEAN¡ LEARN TO FISH!
753

The figure shows that the goal is nor on the vertical axis. It Cotching the big fish or leorning to fish?
is not the absolure level that is most important. The upswing
of the curve illustrares rhe dynamic state, \¡¡hich is all about This discussion around a sraric or dynamic goal raises a key
continuous improvement. quesrion: 'How should we think about improvemenr?,
The classic view of improvement is in line with the static
view. An organisation feels that it has a problem; we can liken
The conlinuously improving orgonisotion this problem to 'a big fish'. The organisation invests lots of
resources into catching this big fish. Therefore, the goal of the
The story about Ooba-san illustrates Toyora,s view on improvement project is ro 'carch the fish,. Regardless of whether
realising a lean operations strateg¡ which is about creating an it is external consultants, internal consultants, or employees
organisation that continuously improves flow. The only way of that carry our the improvement work, the project is frnished
determining whether an organisation is lean is by comparing when'the frsh is caught'. There is a beginning and an end.
how an organisation operates at two seperate points in time. Toyota's view of improvement is in line with the dynamic
The organisation is in a dynamic state if it can show consranr view. Toyota's basic view is that there are always going to be
improvement. problems. The key is to ensure that all employees know how
Realising a lean operations suategy is not just about improv- to fish and Toyota's improvement projects are geared towards
ing the actual flow; it is also about condnuousþ improving in 'teaching employees to fish'. Everyone can always improve
different ways. The condnuousþ flow-improving organisation their fishing abilit¡ as there will always be new frsh. Large and
will always be developing new knowledge, new undersranding, small. Fast and slow. Easily caught and not so easily caught.
and new experiences and learning new things about its customers' What is central is the organisation's ability to fish. So if there
needs and how to meet those needs as efficientþ as possible. is to be a beginning and an end in an improvement project,
'What have we done during rhis projecr?, is the question the focus would be on the abllity to fish, not on the frsh itself.
that would be asked from a sratic perspective. An organisation Before embarking on a change process, it is important for
taking a dynamic perspective would ask, ,Ffow do we ensure an organisation to ask itself what view it has of improvement.
that we learn something new every day?' 'How should v¡e think about improvement? Shall we catch the
This view of realising a lean operations sffategy is about as big fish or shall we learn to fish?' Anyone can catch the big
far as you can get from the view that lean consists of a series flsh. Learning how to become a'self-fishing' organisation is
of cools to be implemented. something completely different.
 EPILOGUE

Develop a lean outfrt!

Imagine you have a huge pile of clothes on the floor. There are
trousers and skirts, shirts and blouses, socks and underwear.
Different types of clothes for different occasions and different
purposes. Clothes for everyday use, for parties, for jogging,
and for work.
The pile of clothes is a mess and gets bigger as you buy more
clothes. Eventually, the pile grows so high that it becomes
dificult to find the right garment for the right occasion. It
takes a long time to find the right piece of clothing, and you
really have to search for it. You have simply lost the overview
of your clothes. It is nearþ impossible to find the perfect outfit
for the party on Friday. You need a system for sorting.
Clothes are a metaphor for all the knowledge published
on lean and Toyota. \Me have never intended to criticise this
knowledge; in fact, this knowledge is incredibly important.
llowever, the knowledge has grown increasingly quickly in
recent years. The stock of knowledge has become enormous
and overgrown. Just as it is hard to find the right garment in
the huge pile of clothes, it is difficult to find the right know-
ledge for your organisation.
Tkis Is Leøn is an attempt to creace a sorting system. We
hope that the book serves as a wardrobe to help you sort out

','. i'
756 THiS iS LËAN EPILOGUE _ DEvELoP A LEAN oUTFITI
157

your pile of clothes. -We wanr it to help you quickly frnd rhe item of clothing for the right occasion, we hope this book has
blouse for the meedng, your sandals for the beach, and your made it easier to frnd what is right and what isn't right for an
hat for the first cold winter day. The right garment for the individual organisation. Our role as researchers is to create
right occasion. structure (which we call 'theories') to make sense of the world
Continuing with the clothes metaphor, by remaining at a around us.
high level of abstraction rhis book has attempted to define This book has sought to create clarity and make it easier to
what a certain type of clothing is and what it isn't. These are realise a lean operations strategy. Claúty is a good srarr, bur
trousers, and those are not trousers. This is a lean operations it is still a huge challenge to realise a lean operations smategy.
strategy, and that is not a lean operarions strategy. We Changing a resource-efficient organisation into a flow-efficient
have argued that a lean operations straregy focuses on flow organisation requires change on many different levels, such as
effi.ciency. This means that an operations srraregy that focuses the organisational structure) conúol systems, incentive systems,
on resource efûciency is not lean. career structures, and recruitment processes. There is no quick
Our intention has not been to recommend a specific and simple solution. Getting an entire organisation to change
operations strategy. It is important to be aware that resource its focus from resource effi.ciency to flow efficiency and to get
effi.ciency and flow efficiency both have their own advantages all employees to think constantly about how the flow can be
and disadvantages. We do nor wanr to suggest a particular improved places huge demands on leadership.
garment, but we do want to suggesr you make an informed Toyota employees willingly share their tools and methods
choice. \Me are unable ro answer the question of which and are h"ppy to talk about their principles and values.
operations strategy is the best one for your organisation. Nonetheless, it is difficult to understand how and why Toyora
The choice of operations srraregy must always be linked to has repeatedly succeeded in creating self-fishing organisations
the choice of business srrategy. The more an organisation all around the world, where the flow improves over time, all
understands what these differenr choices mean, the higher the the time. This knowledge is difficult to decode and has taken
likelihood that the choice will be the right one. nearþ a hundred years to develop. Toyota's wardrobe is never
Therefore, we have tried to creare an undersranding of how full, complete, or ready. But Toyota's employees are the best
to sort the clothes so thar they are easier ro find. Some clothes in the world at asking the following question:
are for erreryone, while others are only for some people. We
'Is there any little adjustment that can make us a little bit more
have described different means for realising a lean operations
beautiful than we were yesterday?'
strategy. Values and principles, methods and tools, abstract and
concrete, general and specific: no two operations sûategies can
be realised in exactly the same way.
The aim of this book is to help organisations sorr and creare
better order out of everything rhar has been writren on lean
and TPS. Just as a wardrobe makes it easier to find the right
 I{otes

To allow the book to flow, we have opted to pur the references

at the end. \Me have also provided suggestions for further
reading for readers who are particularþ interested in certain
topics. There is a lot ofvery good literarure on lean, and this
book has only been able to coyer rhe basics.

Prologue

Although the stories about Alison and Sarah are fictitious, all
of the statistical data in them, such as the forty-rwo days and
the two hours, are based on real-life cases. The stories are based
on secondary data and have been thoroughly checked by five
people within the Swedish healthcare industry.
Alison's diagnostic process represents a traditional process.
It is importanr ro point out that there are differences in the
exact order between sreps and exactly how the information
flows in the process. There are differences within countries, but
also between countries. To the best of our knowledge, however,
the descrþtion reasonably matches a generic diagnostic process
for breast cancer in many countries. The intention is not to
be exact, bur ro point to a partictlar way of organising a
t6o THIS IS LE,q.N NOTES
t6t
diagnosdc process that is commonly used in many
healthcare The importance of effi.ciently utilising resources received a lot
sysrems around the world for various medical
condidons. of attention in the early t9oos. One of the main conrriburors
There are several examples of similarities between
what to this was Frederick Winslow Taylor, rhe founding father of
we have described in the story of sarah and various
clinics in the extremely influential scientifrc managemenr movemenr,
different count¡ies. However, Sarah's diagnostic
process is taken whlch affects organisations ro rhis day. While Taylor made
directþ from the one-stop Breasr clinic trial that
wâs run ar many imporranr contributions, in one particular study he
skåne university Hospital in sourhern sweden.
The triar srarted experimented with variously sized shovels to determine the
in April zoo4but was disband ed in zoo9. For more
details on optimum shovel load for workers. A common denominator in
this trial, \¡/e can recommend the following publications
(both all his work was rhe focus on utilising resources in the form of
of which are only available in Swedish, unfortunateiy),
individual workers and machines.
Niklas Kállberg, Helena Bengtsson and ,Tid eller
Jon Rognes (zorr), Frederick Winslow Taylor (t9r9) , Tke Principles of Scientifc Manøge-
pengar: Vad fokuseras det på vid styrning av vârd,
(Time or Money: menrrHarper Brothers, New York.
Whar is rhe Focus when Controlling Healthcare?),
LFIC Reporî rzott.
Accessible online at wwwleadinghealthcare.se.
Chopler 2
Ingrid Ainalem, Birgitta Behrens, Lena Björkgren,
Susanne Ffolm
and Gun Tranström (zoo9), For an excellent but slightly technical description ofprocesses
Fr,ån fwnktion till process till patientprocess
- Bröstmoîtagningen, eïr exempal (From Function to process to patient in organisations and their characteristics, please see:
Process - rhe One-Stop Breast Clinic Example), Lunds
Tekniska
Högskola, Lund. Ravi.tnupindi, Sunil Chopra, Sudhakar D. Deshmukh, Jan A. Van
Mieghem and Eiran Zemel (zotz), Manøging Business process Flows
(3rd edition), Prentice Hall, Upper Saddle River, New
Jersey.
Chopfer 1

An example of an author who argues rhere are a finite and small

There is an almost unlimited source of references
pointing to number of processes in an organisation is:
the importance of efficient utilisation of resources
for economic
development. As earþ as r776,Adam Smirh pointed Thomas H. Davenport (t9%), Process Innovøtion: Reengi.neering
out how
division of labour could drastically increase the number Work through Inforrnørion Tecknology, Harvard Business School press,

of pins produced per person. Smith showed that dividing Boston, Massachusetts.
the
tasks that go into making pins inro eighteen diff.r.rrt
,t.p, For a detailed explanation of the difference berween value-
and having workers specialise on single subtasks could
result
in a drastic increase in producrivity. adding time and value-receiving time as well as an excellenr
discussion on the difference between density and speed in value
Âdam Smith (q76/ry), An Inqairy into rke Nørure ønd Causes of tke transmission, please see:
Weøbh ofNøtions, ModernLibrary, New york.
t6z THIS IS LEAN NOTES
t63
Takahiro Fujimoto ( r 999 ), T h e Ezt o luti o n of a Manafaøaring
Sy st em øt Kasra Ferdows, Michael A. Lewis and Jose A.D. Machuca (zoo4),
Toyota, Oxford Universiry press, Oxford.
'Rapid-Fire Fulfrlment', Haroørd Business Reoiew, Vol. 82, No. rr,
pp. 104-11o.
This chaprer is a development of a texr published in:

Per Åhlström (zoro), ,Om processers berydeise This chapter is a developmenr of a text published in:
för verksamhet_
suweckling i världsklass, (The Role of processes
when Developing Pär ,4.hlström (zoro), 'Om processers betydelse för verksamhets-
W-orld-class Operations) in pâr.4hlström (Ed.),
WrkwmkusaøecklÇ; utveckling i världsklass' (The Role of Processes when Developing
Vtirldsklass (Deaeloping ,Tortd_cløss Operøtioøs),
Srudentlitter"trr., Looã. World-class Operations) in Pär Åhlström (Ed.), Verksømhersutzteckling i
Vtirldskløss (DeaelopingWorld-class Operøtions), Srudentlitterarur, Lund.
Chopfer 3

Mathematically minded readers may be inrerested in Chopter 4

the
following technical description of rhe laws that govern
how What we describe in the chaprer as being superfluous work
processes work:
is similar to what John Seddon calls 'failure demand', a
Wallace J. Hopp and Mark L. Spearman (zooo), Factory physics: phenomenon occurring in services. Failure demand is defined as
Fowndations of Manwføcturing Management, kwin/McGraw_Hill, 'demand caused by a failure to do something or do something
Boston, Massachusefts. right for the customer'. By using the term 'superfluous work),
we \¡/ant to highlight the narure of the work being put in, not
For a classical introduction to the phenomenon of the demand. For a full discussion of failure demand, see:
bo*lenecks
in processes, please refer to:
John Seddon (zo o 5), Freedom from Command and Control : Rethinking
Eliyahu M. Goldratt and Jef Cox Manageruent for Lean Sewice, Productivity Press, New York.
e986), Tke Goal:.A process of On-
goinglntprouemeør, North River press, Crotonon_Hudson,
New york.
For a classic treatment of the narure of the human brain and
The original formulation of the relarionship between its limited ability to process information, please see :
variarion,
resource efficienc¡ and throughput time can be found
in
Kingman Qg66). For a more easily accessible treatment of rhe George A. Miller (t956), 'The Magical Number Seven, Plus or Minus

relationship, Two: Some Limits on Our Capacity for Processing Informarion',

well as how the strategy of the Spanish clothing
as
P sy ckological Reaiew, Yol. ó3, No. z, pp. 8 t- g 7.
retailer Inditex, with its Zarabrand,can be undersrood
usin!
the relationship, we recommend Ferdows et al. (zoo4):

SirJohn Frank Charies Kingman

þ966),,On che Algebra of eueues,,
Journøl ofApplied probability, Vol. 3, No. z, pp. 285_326.
úq THIS IS LEAN NOTES 765
767

Chopter 5 This chapter is a develoPment of a text published in: n

Although Toyota ìÀ/as nor necessarily the first company to Niklas Modig (zoro), 'Vad är lean?' (What is Lean?) in Pär '{hlström
develop many of the pracrices used in flow production, it is the (Ed.),verksømketswtaecklingi'Vtjrldskløss(Deoelopi'ngWorld-cløss
company that has become mosr associated with flow-efficient Operations),Studentlitteratur' Lund'
manufacturing. For an excellent historical account of some of û
the antecedents to flow production, please see: t
Chopter ó
Frank G. Woollard and Bob Emiliani (zoo9), principles ofMass and.
This chapter only touches on a fraction of all the literature
Flou Prodaction, Centet for Lean Business Management, W'ethersfield, to
there is on lean and Toyota. The chapter makes references
Connecdcut.
the following, in the order they appear in the text:

The history of rhe Toyota Producdon System has intentionally Taiichi Ohno (1988) , Toyota Prodøction Systern: Beyond Lørge-Scøle

been kept short. There are many detailed accounrs of the Prod,wction,Productivity Press, New York'
history for those who are interested. For a description of the System' Sloan
John Krafcik )' 'Triumph of the Lean Production
( 19 8 8
'
Toyota Production System, directly from the ,source', we Mønagement Reaiew, Yol. lo 1 pP. 4L- 52'
strongly recommend Ohno (r98S). We have also taken the
'Womack,
Daniel T' Jones and Daniel Roos (r99o)' The
definitions of the seven forms of wasre from his book: James P.
Mackine tkat Ckanged. tke World',Ra'wson Associates'
New York'
Taiichi Ohno (r9S8), Toyota Prodacîion Syîern: Beyond Lørge-Scale 'Womack
James P. and Daniel T' Jones (r996),LeønThinki'ng: Banisk
Prodaction, Productivity Press, New York.
Waste and. Creøte Weølth in yoar Corporøtion,
Simon and Schuster'
New York.
The following arricle presents a gïear.historical account of the
Sy ste m at
development of the Toyota Production System: Takahiro Fuiimoto (t g g ù, Tke Eo oløti o n of a Mønwfactaring
Toyotø, OxÍord University Press, Oxford'
Matthias Holweg (zoo7), 'The Genealogy of Lean producrion,,
J oarn al of Op erøti ons M anagern en t, Y ol. z 5, No. z, pp. 42 o - 41.¡7 . Steven Spear and H. Kent Bowen ('ggg), 'Decoding the DNA of
the Toyota Production System', Harttard Basi'ness Reaiew'YoL 77'
For an excellent analysis of the evolution of the Toyota pro- No.5,PP. 96-ta6.
duction System, we warmly recommend:
o4 ), The Toy otø Way : t 4 M øn øgement Principles from
Jeffrey K. Liker ( z o
Takahiro Fujimoto (1999), The Eaolation ofaManaføctwringSysrem at the World''s Greate$ Mønøfa'cîarer, McGtaw
Hill' New York'
Toyota, Oxford University Press, Oxford.
The survey was conducted in November zoto by
Eric A'
Master's thesis
Forsman and Dan Spinelli Scala as part of their
at the Stockholm School of Economics'
166 THIS IS LEá.N NOTES t67

Chopter 7 Nigel Slack and Michael Lewis (zor5), Operations Stralegy, pearson
Education, London.
For a more detailed explanation of level of abstraction,
falsifiability, uriliry, and other building blocks of theory
This chapter is a development of a text published in:
development, please see the following arricles:
Niklas Modig (zoro), 'Vad dr lean?' (What is Lean?) in Pär Åhlström
Samuel B. Bacharach þS8g),,Organisarional Theories: Some (Ed.), Verksørnhetsuraeckling i Vtirldsklass (Deaeloping World-class
Criteria for Evaluation', ,4cademy of -klanagernent Reaieu, Vol. r4, Operøtions ),studentlitteratur, Lund.
No.4, pp. 496-515.

Chimezie A. B. Osigweh, Yg. (rp8q), ,Concept Fallibiliry in Organi- Chopter 9

zatíonal Science', Acødemy ofManagernent Reaiew rVol. r4, No. 4, pp.
579-594.
All data rcgatdingToyota Motor Corporation and the Toyota
car dealer network were collected by Niklas Modig between
David A. Whetten (rq8p), ,W-hat Constirutes a Theoretical
April zooó andMarch zoo8 within the scope of alargertesearch
Contribution?' Academy of Mønagemenr Reuiew, yol. :r4, No. 4, pp.
programme at the Manufacturing Management Research
49a-495.
Center at the lJniversity of Tokyo.
For an explanâtion of Toyota Sales Logistics (in Japanese),
This chapter is a developmenr of a rexr published in:
see http://to yota.ip / af.ter-service/syaken/sonoba/index'html
Niklas Modig (zoro), ,Vad är lean?' (What is Lean?) in pär.4.hlström (accessed on May rc, zot5)-
(Ed.), Verksømhetswtaeckling i Vtirldsklass (Deaeloping World.-cløss
Operations),Studentlitteratur, Lund.
Chopter 10
Chopter 8 All Motor Corporation and the Toyota
data regarding Toyota
car dealer network were collected by Niklas Modig between
For an easily âccessible discussion of business strategies and
AprilzooíandMatch zooS within the scope of alarger research
the choices that companies face, please see:
program at the Manufacturing Management Research Center
Michael E. Porter (r98o)) Competiti?e Strøteg!, Free press, New york. at the UniversitY of TokYo.
Nishida-san is a made-up character, but the content of the
Michael E. Porter (rgg6),'W'hat is Srrategy?,, Haraard Basiness
Reaiew,Yol.74, No. ó, pp. ór-78.
story (explanations' illustrations' metaphors) etc') comes from
numerous interviews, discussions, and informal chats that Niklas
To gain a befter undersranding ofoperations srraregies, please see: Modig had with managers and employees from Toyota Motor
Corporations and various Toyota car dealerships in Japan'
Hill, Alex and Hiil, Terry (zorr), Essential Operations Managementl
Palgrave Macmillan, London.
1ó8 THIS IS LEAN

This chaprer is a developmenr of a text published

in:
Niklas Modþ (zoro), ,Vad árleanl, (What is Leanl) pär.{hlström
in
(E d'), ve rk samh e tsøt, e c kri n g i vàrrd.s
kr as s (D e zt e r oping wo il d.- c r øss
Operøtions ), Studendimeratur, Lund.

Chopter 11

The story about Ooba-san is most probably

mue, even if it
has become an urban legend. One oirhe aurhors
was told the
story by Professor Jeffrey K. Liker ar a conference
in sweden
in NovembeÍ 2oLo.

This chaprer is a development of a texr published

in:
Niklas Modig (zoro), ,Vad ár leanì, (W.hat is Lean?)
in pãr.{hlström
(E d'), lze r ksarn h e tsutzt e c kri n g i vãrlds kra
s s ( D e a e r oping wo rr d. - c r øss
Operations),Studendicteratur, Lund.

r*