Future of Lean with Dan Jones


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I had the pleasure of interviewing one of the noted experts in the Lean Community, Dan Jones. This is a transcription of our podcast, The Future of Lean with Dan Jones. We spent a fair amount of time discussing Lean outside the four walls of the enterprise and how Lean interacts with the customer.

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Future of Lean with Dan Jones

  1. 1. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsThe Future of Lean with Dan Jones Guest was Dan Jones Related Podcast: The Future of Lean with Dan Jones The Future of Lean with Dan Jones Copyright Business901
  2. 2. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsDaniel Jones is a management thought leader and advisor onapplying lean, process thinking to every type of business across the world. He is the founding Chairman of the Lean Enterprise Academy www.leanuk.org in the UK, dedicated to pushing forward the frontiers of lean thinking and helping others with its implementation. Dan is my guest on the Business901 podcast next week and this is an excerpt from the podcast. At the Shingo Prize Awards Conference in Salt Lake City, USA on 20 May 2010Daniel Jones was inducted into the Shingo Academy. The ShingoAcademy consists of individuals who have distinguishedthemselves through their lifetime commitment and achievementsin the area of Lean/Operational Excellence. Daniel has previouslywon four Shingo Awards for his books on lean.Daniel Jones is the author, with James P Womack, of theinfluential, best-selling management books:The Machine That Changed the World: The Story of Lean ProductionLean Thinking: Banish Waste and Create Wealth in Your Corporation,Revised and UpdatedLean Solutions: How Companies and Customers Can Create Value andWealth TogetherSeeing the Whole Value Stream. The Future of Lean with Dan Jones Copyright Business901
  3. 3. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJoe Dager: Welcome, everyone. This is Joe Dager, the host ofthe Business901 podcast. With me today is Dan Jones. Dan is amanagement thought leader and adviser in applying lean processthinking, pioneered by Toyota, to every type of business acrossthe world. He is the founding chairman of the Lean EnterpriseAcademy in the UK, and dedicated to pushing the frontiers of leanthinking and helping others with its implementation. His work isinspired that a successful implementation of lean by Tesco andmany other companies.Dan, I would like to thank you. Wed like to welcome you to thepodcast. Can you start out and just tell me a little about yourorganization in the UK?Dan Jones: Thanks for asking me to take part in this podcast.The Lean Enterprise Academy in the UK is one of 18 non-profitlean institutes that Jim Womack and I founded around the worldto be missionary centers for translating and teaching lean inevery sector in every country of the world. This is the UK branch,called the Lean Enterprise Academy. The Lean Enterprise Institutein the States was the mother organization, if you like, and wereall affiliated in something called the Lean Global Network.So basically, were thought leaders and we are dedicatedresearchers, really, trying out experiments. Just helping peopleuse lean to solve their business problems. Yes, we organizenetworks of practitioners -- very large networks around theworld. We organize summits and conferences. We publish booksand workbooks. We also conduct a lot of projects, with the ideathat these projects are probably projects that other consultantsare going to be a bit reluctant to tackle, because theyre into newareas in which the outcome is not necessarily guaranteed.Were looking very much to use our PDCA approach -- what I callan action learning approach -- to try to learn what ought to workin a new area or a new discipline, and then through learning The Future of Lean with Dan Jones Copyright Business901
  4. 4. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsexperiments, basically, figure out what does work. Doing that, Idraw on a global network of lean experts, many with a Toyotabackground, who we deploy on these projects as suits them.But the commitment is also that we will not only learn from theseexperiments, but we will digest the generic results and publishthem and share them, with the aim for the other people willfollow them and use them to champion lean themselves in theirown organizations.Joe: I think youve done a wonderful job. Lean is touching justabout every field now.Dan: Yes.Joe: When we first start talking -- whether its productdevelopment or sales and marketing or healthcare or financialservices -- what seems to attract people at the beginning to starttalking about lean in a field?Dan: Good question. Theres usually some oddball out there whoeither is in a company thats in desperate straits, tried everythingelse, and might as well give lean a go. Or theres somebody whosseen lean work in one sector and says, "Hey, I think this wouldwork in my sector as well. I need to get some help to try andfigure out how to do that." As in many, many sectors that Ivebeen involved in, from retailing through construction, through thepublic sector, through financial services, through healthcare, Ivepretty well done them all at one time or another.It starts just like that, a phone call saying, "How do I adapt theselean ideas or these Toyota ideas to my sector?" And Ive learnedover the years that you got to be a bit humble to start with, andget to know the sector and really walk the process, because everyprocess is a bit different -- a development process, anengineering process -- is different from a healthcare process isdifferent from a construction process. The Future of Lean with Dan Jones Copyright Business901
  5. 5. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsBut once you get to know the process, you begin to see that itsas gummed up as everybody elses processes. You begin to seethat theres a key place which will unlock this process, will unlockthe thinking, will begin the process of redesigning that process.The key is really the ability to diagnose the system causes thatare really creating instability in the whole process.The other thing I do is always look at the whole end to endprocess. Im looking at the entire work flow that creates the valuefor the customer, whether its a new design or whether its aretail supply chain going right back to raw materials, or whetherits caring a patient, right from the first time they go to the doctorthrough to the cure.I look at the whole process and try and see where the processhas gummed up most, try and see what the issues are thatprevent people from doing this, and then get to work on that,launch some experiments.Quite quickly you discover what does and doesnt work. Quiteoften you have to go back and scratch your head with maybesome Toyota experts who will often ask you a question that willprovoke you to realize that what you have been trying isabsolutely 180 degrees the opposite of what might work in thatsector.Thankfully, then you go back with that new insight and get goingagain. Well, it really is like that. Its really taking a walk, lookingat the situation. Having diagnosed many differentindustries -- you quite often see patterns, and you quite often seesimilarities that other people wont see. That gives you what Icall, if you like, the tipping points or the trigger points that openup a sector and get going.Joe: You get this aha moment where it just kind of falls in placethat this is it, at some point in time. The Future of Lean with Dan Jones Copyright Business901
  6. 6. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsDan: Yes. I think thats right. It doesnt always comeimmediately. Its not always in the obvious place. For instance,started working in health care I spent many, many days followingpatients through the health care process. Looking at the delaysand the queues and the rework and all the other things youtraditionally look at manufacturing. But it wasnt until you sit backand look at the hospital as a whole. If you like took the roof offand followed where patients actually flow through the hospitaland look to where they actually were waiting, that we began tosee hey, actually there appears to be a lot of people sitting inbeds at the back end of the hospital, ready to go but one reasonor other comes.Nobody could see that before because you cant distinguish whichpatient is ready to go and which isnt. But as soon as you startcollecting the data you realize that actually the key to unlockinghealth care is actually unblocking the discharge process to theback end of the process and freeing up the flow of patients thencoming through from the emergency department.In the retailing sector, we walked through endless warehousesand production facilities and stores, looking at piles of inventory.It wasnt until we looked at the whole process for a selectednumber of products and in particular started looking at theinformation process that we discovered that in fact the causes ofall those inventories and delays was actually the way in whichinformation was being manipulated and passed upstream, theclassic Forrester effect.That Forrester effect was a symptom of a forecast driven systemwith lots and lots of just in case inventories all the way back, thatgenerates noise and further noise as it goes back up stream. Soactually tackling the retail system was about trying to create apool system based upon signals from the store to replenish thestore and then replenish the warehouse and then replenishing The Future of Lean with Dan Jones Copyright Business901
  7. 7. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsfinished goods into the warehouse, to turn the logic upside down.We got to find that starting point.Joe: Now that takes time and when you are installing somethingnew or you have problems, patience isnt everybodys strongestvirtue sometimes.Dan: Thats true but on the other hand most processes are sogummed up that even if you just stand and look at it there issome low hanging fruit that is immediately obvious and you canget to work on straightaway. Where the diagnosis comes in isonce youve stripped away most of the obvious low hanging fruit,now what are you going to do, and the ability to continue to thenstart seriously redesigning the process, that needs that diagnosticmoment, the aha moment.Joe: The diagnosis is that a kind of a prescription of somethingor is everyone different?Dan: I think sectors are quite different. In fact different sectorsteach us different things. But actually if you look at all of thelessons from the different sectors, you can see bits and pieces ofthose lessons everywhere because in fact every business is acollection of processes, collection of design processes, productionprocesses, supply chain processes, maintenance processes, ordertransaction processing and policy formulation processes. Soactually each sector tells you a bit about how you would look atthose activities in many, many other businesses. Its being ableto see the business as a whole, as a collection of processes. Andto understand in the sense of diagnose whats wrong with thoseprocesses. Thats the value that a real lean thinker can offer.Joe: Now lean is turning to go outside the four walls. I think itwas initially inside the four walls. I personally think the wastereduction is a burden on lean when they go into the knowledgefields a little bit, because everybody starts to look at that firstrather than their collaborative learning the aspect of it. I think The Future of Lean with Dan Jones Copyright Business901
  8. 8. Business901 Podcast TranscriptionImplementing Lean Marketing Systemslean is very strong in collaborative learning. I think thats one ofthe secrets of lean and doing that is there a way to present thatto people, better maybe than what has happened in the past?Dan: There are some obstacles in that kind of environment thatmake it hard for people that want to grasp this. The first obstacleis that we are knowledge workers; we dont want to have peoplestandardize what we do. We are creative folks. We got away fromthat factory environment where we just do the same thing overand over. So the idea of standardization is an anathema.However if you look at any work, particularly design work ortransaction processing work, a lot of it actually is fairly similarand routine. And also thats where the problems are. And if youcan standardize those routine tasks actually what you end updoing is freeing up time for the creative tasks. So once peoplesee that, they switch their views and think, well thestandardization not of everything but of the routine and gettingthe hassles out of the routine that really makes my life better.Thats one obstacle. You cant tell people that standardizationleads to creativity but actually it does. And thats what peoplediscover. And in the end, you ask them after theyve done a bit ofthis, and improve their lives, where theyd like to go back andthey always tell you, no youre kidding. Now it is so much better.So thats one way in. The other way in, in that kind of work too isthat people are typically working on too many projects at onceand so there are lots and lots of changeovers going on.They are typically working ahead of the customer or the userspecifying what they actually want. So there is a tremendousamount of confusion as to what the actual task, the actualproblem that you are trying to solve is. That just generates atremendous amount of unnecessary work that people are happyto do but actually isnt creating any value for the customer andits not always easy to see which work is really work and which The Future of Lean with Dan Jones Copyright Business901
  9. 9. Business901 Podcast TranscriptionImplementing Lean Marketing Systemswork is actually going to lead to something tangible for thecustomer.The thing about the construction industry for instance, in theconstruction industry the business model is such that thecontractors actually make money on the changes. So they dontactually want the customer to really specify in detail exactly whatthe building is going to look like, because they are bidding low toget the business anyhow, and they want the customer to makechanges so that they can then charge a hell of a lot for thechanges, and thats where they make their money.There is a similar aspect in IT systems as well. Partly we aretrying to always sell prototypes that are not fully developed andget the customer to pay for the development part but alsobecause the customer is not knowledgeable at what thecapabilities might be, and because it takes too long to developthese systems and type of things needs change, this all adds atremendous amount of confusion. So in IT development I wouldsay you dont start until the very last moment when the customerhas done all the specifying they want, until they are really clearwhat they want.Then dont work on anything else until you finish it. So you haveall the information you need, work on it, completely,uninterruptedly, until its finished. That will end up with less workper project and much better customer satisfaction. So you justgot to start looking at the workflow and the type of work and theinfluences on that work in a slightly different way.Joe: What you just described to be there is really a kind of thatiterative cycle involving the customer and that learning cycle,then you create this small learning cycle with the customer sothat you could be delivering product to them or deliveringknowledge to them and closing that knowledge gap step by stepby step. The Future of Lean with Dan Jones Copyright Business901
  10. 10. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsDan: Yeah, absolutely. Look, I think the big lesson that Ivelearned from dabbling my toes in the IT industry -- and by theway, I am absolutely no IT expert at all, but got invited by SAP tolaunch their lean programs a couple of years ago, much to mysurprise, and Steve Bell has dragged me into these discussionsabout what Lean means for IT -- I think the lesson that I amlearning from the lean IT guys in these very early days and suchis that the key contribution they can make is to point us back tothis rapid experiment cycle, this rapid feedback cycle. I heard atremendous presentation from a guy from Google at the Lean ITConference in Paris last year, which impressed me a lot, wherethey had focused automating the testing process and wasspeeding up the release cycle so theyre actually able to do dailyreleases and get simultaneous feedback from different sets ofcustomers.I think thats going back to the incremental kaizen smaller steps,but well done with good feedback and more steps the next dayand endless iterative improvement rather than big bang, hugesystems that take years to introduce, and by the way, years tomake changes.I had a searing experience with one big multi-national where ittook over two years to make a change to the system, to the ITsystem, and the CEO was tearing his hair out because that waslonger than the typical length of time a person stayed in their job.It was just a big monster.Were learning from the web generation that little and often getsus right back to the original kaizen and continuous improvementcycle, and I think thats coming through loud and clear from theIT community.Joe: In that prescription, what stops us from maybe some of theother areas of entering into? And lets pick my favorite one, salesand marketing. What stops Lean from being applied to sales and The Future of Lean with Dan Jones Copyright Business901
  11. 11. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsmarketing when were looking at it from a collaborative learningprospect? I think thats what sales is, isnt it?Dan: Well, my view of sales, I learned what I know about salesand marketing from working with Tesco many years ago wherewe designed rapid response supply chains and then Tesco figuredout what they could do with those supply chains. What struck methere was their insights were that if I could rapidly replenisheverything the customer is wanting exactly when they wanted it,I needed to know exactly what the customer really wanted and Ineeded to have rapid feedback from the customer, from thecustomers behaviors in order to constantly adjust.What they did was they used the rapid replenishment supplychains we developed to develop convenience retailing and todevelop web shopping very, very successfully. And no theyreintegrating the two.Our supply chains can supply both the customer at home, theconvenience store down the road, and the big supermarket forthe same cost. Tesco did that because they had data on theircustomer purchases, the club card data, which they had analyzedinto 16 lifestyle classes. They were able to combine that withtheir home shopping data, which is not what people actuallybought but what they actually wanted, and they could see whatsubstitutes people were making were and they could customarrange their stores as a result.So I think what has held us back in sales and marketing are twothings. One is sales and marketing traditionally was there to getrid of stuff that was already made a long time ago in aforecast-driven, long lead time supply chain. So it was aboutgetting rid of stuff.The second was we didnt have good, precise abilities to get exactfeedback from real customers. We could only get polling data,focus groups and market research data. The Future of Lean with Dan Jones Copyright Business901
  12. 12. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsNow the web is actually I think empowering customers andmaking them equal players in the supply chain. The smart playerswill have a dialogue with customers and test out different optionsand different product categories and so on with customers andget very rapid feedback, just as Google is getting on its rapidrelease.I think now we are in an era in which customers are part of thesupply chain and we can really have a dialogue with customersnot just about what they think theyd like, but what they actuallywould put their money in.You can see this in all sectors. You can see it from intelligentproducts reporting to their makers. I mean, areo engines now aretypically sold powered by the hour. So Rolls Royce knows whenan engine is malfunctioning on the way to Singapore before theairline does because theyre responsible for being ready when theairliner lands to repair the faults of the engine.In many ways we are getting real use data back from customeras well as preference data. And the next step is of course to getplan ahead data with customers. Because customers can and dohave some knowledge of what they want in the future. But theyhave no incentive to share it with us in this adversarialconsumption mode.So I think there is a great deal happening at that interface. Ithink the web fundamentally is going to change every customerinterface in a very positive way, but one that empowerscustomers rather than empowers the providers.Joe: I think thats a brilliant synopsis of it because one of mycomplaints about Lean was that they always created theseinternal control points and called it a pull. From my perspectivethat was wrong. The control point needed to be with thecustomer if you wanted to call it a pull. But technology is allowingus to do that now, isnt it? The Future of Lean with Dan Jones Copyright Business901
  13. 13. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsDan: Yes. It is. And now actually we can see that the customeris not just buying our products and services but they are buyingthem to solve a problem or create value in their lives. We need tosee why they are buying them and how they are combining,selecting and combining the right products and services and theknowledge of how to use them to answer their needs of theirhousehold more precisely. We wrote a book a few years ago, JimWomack and I, called "Lean Solutions" where we began to sketchout that landscape, but in truth the web has moved on so muchfaster since then and many of those things that we dreamt aboutthen are now possible.I dont know if youre aware of the customer-centric datamovement that is developing in the UK and I think beginning inthe States, as well. Were trying to develop software to enablecustomers to be intelligent managers of their own data, instead ofcompanies holding data on me, I aggregate all the data on what Ido and what I like and where I am and so on.Im willing in the future to be able to share that data in return forsomething with selected providers. So thats another dimension inwhich I think the power is really going to shift to customers. Itsshifted from suppliers to retailers and now its shifting fromretailers to customers.Joe: I even go a step farther and I agree with you about someof the leading edge thinking in the UK. I go along with that typeof thinking. I may even go a step farther rather than withcustomer experience being the most important ingredientanymore in go to user experience.Dan: Yes. No, it is user experience, absolutely. Are you as aprovider able to help me create the value I need in my life. Andsolve my communications problem, my shelter problem, mylogistics problem, my healthcare problem. And how are you The Future of Lean with Dan Jones Copyright Business901
  14. 14. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsproposing to help me do that in a way that does it when I want itwhere I want it, etc., etc.Joe: How does Lean fit in with all this new thinking? I mean, wego back its all waste reduction, manufacturing itself but howdoes it fit in?Dan: Well, Lean obviously started, we attracted attention, letsbe completely clear, selling people the idea that we could helpthem eliminate waste. It was a great way of getting theirattention. Indeed, people thought this was an intelligent form ofcost cutting, so yes, well have some of that. Gradually, as theygot into it they realized that there was a lot more to it than that.What were really talking was, were taking all of the buffers outof the supply chain, all of the insulation between the differentsteps.In order to link those steps again, people had to be empoweredand given the knowledge to work together and to improve theway they work, they do their own work.So its actually, its based upon learning. Its based upon themanagement of the flow of work that has to be accomplished inorder to create value for the customer. The lean value streamanalysis is absolutely a powerful tool for looking at every aspectof value creation, including how a customer manages their ownconsumption processes at home.Joe: Where do you think the future of lean is? What is the futureof lean?Dan: A lot of people want to pull lean in the operationalexcellence box. And so OK, theres a bunch of tools for operationsfolks and I dont have to worry about them. If Im a seniormanager, or if Im in sales or if Im somewhere else, I dont haveto really worry about them. Well, I think thats not the true valueof lean at all. The future of lean is about building a different way, The Future of Lean with Dan Jones Copyright Business901
  15. 15. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsbuilding a management system to support the value creationprocess. Weve done a lot of work thinking about what a leanmanagement system looks like in many different sectors. It isactually a different way of managing collaborative work, bothwithin companies and between companies to create value forcustomers.On the one hand its about management. On the other hand itsalso about rethinking and redesigning new ways of creating valuethat are now possible given technology, etc. On the other hand,envisioning the design of completely new processes and newbusiness models that will in many cases replace the old ones.What were doing is were at the moment still living in the legacyof the assets of mass production, the massive great hub airports,the huge massive central warehouses, the big superstores, thebig district general hospitals and so on and so forth, the bigpostal sorting offices, the big back office headquarters ortransaction processing facilities of the banks.These are all legacies of mass production based upon routineoperations and scale. What were doing now is designing acompletely different business models that are not as assetintensive that are probably more technology intensive or ITintensive and I think open up a completely new ways.Were still living with those assets and until they’re depreciated orwritten off the new models struggle to survive. But I think it ishappening. I just think in healthcare we are seeing the beginningof the end of the big district general hospital. I think in retailingwere seeing the end of the big, big superstores as a wayforward. Even Wal-Mart, along with Tesco and many others arenow focusing on neighborhood stores and theyre integratingthose with home shopping. The Future of Lean with Dan Jones Copyright Business901
  16. 16. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsBusiness models changes, I think, ultimately will come from ourunderstanding or process view of the work, or how we organizethe work to solve customers problems.So I think those are two directions. I think the third direction isactually a learning dimension, which is that I think that wererealizing that the quality movement, and certainly integrate intothe lean movement, taught us not only about the statisticalanalysis of variance but he taught us also about the value ofPDCA -- plan, do, check, act -- or some scientific method insolving problems, the closed loop of problem solving method.I think there are people already beginning to start teaching thatin schools, even in primary schools. I think teaching people adifferent way of thinking about how to solve problems is actuallyprobably going to be one of the major lasting legacies of Lean.Joe: Is there anything that you would like to add to thisconversation that maybe I didnt ask?Dan: Each time Ive thought that Ive got it, that I understandeverything about a sector, about an activity or of an organization,and I know what the next step should be, then I stumble when itdoesnt work. I think the power of being able to reflect on whatdoesnt work in particular and, yes, what does work... The powerof reflecting and going back and using the scientific method tothink again about, if you like, about how Toyota would thinkabout this, I think thats probably the most significant gift that aLean thinker can have. Because we are typically good at plan, do.Were terrible at check and act and reflect.I think the power to reflect and learn from life and fromexperiments that didnt work, I think thats the key to learning.Joe: I think thats very well said. Wheres the best place forsomeone to contact you at? The Future of Lean with Dan Jones Copyright Business901
  17. 17. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsDan: Through my website: www.leanuk.org or through LinkedIn.Joe: Well, I would like to thank you very much Dan for thisconversation. It was very insightful. I enjoyed it very much.Dan: Good. Thank you, Joe. I look forward to hearing from youagain in the future. The Future of Lean with Dan Jones Copyright Business901
  18. 18. Business901 Podcast TranscriptionImplementing Lean Marketing Systems Joseph T. Dager Lean Marketing Systems Ph: 260-438-0411 Fax: 260-818-2022 Email: jtdager@business901.com Web/Blog: http://www.business901.com Twitter: @business901 What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joes ability to combine his expertise with "out of thebox" thinking is unsurpassed. He has always delivered quickly, costeffectively and with ingenuity. A brilliant mind that is always a pleasure towork with." James R.Joe Dager is President of Business901, a progressive company providingdirection in areas such as Lean Marketing, Product Marketing, ProductLaunches and Re-Launches. As a Lean Six Sigma Black Belt,Business901 provides and implements marketing, project and performanceplanning methodologies in small businesses. The simplicity of a singleflexible model will create clarity for your staff and as a result betterexecution. My goal is to allow you spend your time on the need versus theplan.An example of how we may work: Business901 could start with aconsulting style utilizing an individual from your organization or a virtualassistance that is well versed in our principles. We have capabilities toplug virtually any marketing function into your process immediately. Asproficiencies develop, Business901 moves into a coach’s role supporting theprocess as needed. The goal of implementing a system is that the processeswill become a habit and not an event. Business901 Podcast Opportunity Expert Status The Future of Lean with Dan Jones Copyright Business901