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ts 1982, the year of the Wheres the Beef? in 1983 and reopen the Fremont line, naming it New
campaign and Jordache jeans. The General United Motor Manufacturing Inc. (NUMMI). Same
Motors (GM) plant in Fremont, CA, is plagued workers, same union, same facilities.
by multiple strikes and sickouts by the United Auto Operations begin in 1984, and within two years,
Workers, absenteeism topping 20%, rampant sub- NUMMI has the highest quality and productivity
stance abuse and four drug related murders. Its of any GM plant, and absenteeism is down to 3%.
GMs worst plant in terms of quality and produc- Worker satisfaction and engagement reach record
tivity. Eventually, the factory closes. levels. Operational improvement and innovation are
Enter Toyota, looking to test its production system on the rise.1 By the early 1990s, the Toyota Production
on U.S. soil. Toyota and GM form a joint partnership System (TPS) is being heralded as the world-class
standard for manufacturing operations.2
For Toyota Motor Sales USA Inc., the domestic
marketing arm of Toyota, the journey had just
In 50 Words begun. Knowing the real opportunity for break-
Or Less
through productivity gains was on the distribution
side of the equation, the company needed to figure
Service sector productivity trails manufacturing out how to decode and apply TPS principles to
by a wide margin. nonproduction environmentsto knowledge work.
The Dilemma
Does the vaunted Toyota Production System
Peter Drucker coined the term knowledge
have applications beyond manufacturing? Can work in the 1960s when describing management
lean thinking be transferred to knowledge challenges of what he called the emerging knowl-
edge society, in which a significant percentage of
work?
the workforce would be engaged in the primary
task of managing information.3 Today, most in the
The short answer is yes, but the translation may corporate world are knowledge workers. We dont
surprise you. really make anything; we simply create information
from data and reconfigure it to yield knowledge had to do more with less, and this has become the
that allows our businesses to advance. Unfortunately, guiding spirit and overarching philosophy behind
were not very good at it. In fact, service sector pro- lean thinking the Toyota way.6
ductivity trails manufacturing by a wide margin.4 Lean thinking at Toyota looks nothing like most
Toyota was facing these same challenges and oversimplified, rule centered and expert driven
looked to apply its production system to nonproduc- corporate improvement programs. There is no one
tion work. The project initially backfired in the cor- best way, no 10-step model, no sensei (teacher or
porate environment due to a were not the factory master) and no multiphase implementation plan.
mind-set. Thats when the University of Toyota Instead, lean thinking conveys a higher viewpoint
stepped in and used lean thinking, a term popular- that empowers knowledge workers to become
ized by James Womack and Daniel Jones in their book independent goal seekers who leverage deeper
of the same name, to convey the essence of TPS.5 problem solving skills and critical thinking capa-
After nearly a decade, the approach has proved bilities in service to customers.
successful. The key lies in understanding that So, what does lean thinking mean in the context
leveraging lean thinking principles does not entail of knowledge work? Lets start with the word
thinking. For our purposes, thinking is defined as
going beyond the given information. This new
view requires a constant effort to push beyond obvi-
ous symptoms and quick solutions to accurately
The less intuitive lean assess underlying causes and fight the workaday
tendency to employ guesswork as a strategy. Too
term refers to a basic often we focus on the surface issues that grab our
immediate attention (the faucet is leaking) and fail
absence of waste. to solve the root cause (the high water pressure is
not being regulated). Thinking also suggests an
active state of mindfulness in which we remain
open to new information and willing to look at the
a literal application, but rather a conceptual one. world from a different point of view.
Knowledge work is different from manufacturing The less intuitive lean term refers to a basic
work. Its more like chess than checkerswhile absence of waste. This remains a central theme in
both are played on the same board with the same TPS, in which the ultimate goal is to achieve the
number of pieces, chess demands strategic think- highest quality at the lowest cost. Waste increases
ing and deeper problem solving. Knowledge work cost without adding value, so it becomes the key
is dynamic and complex. It requires things like target. Forms of waste include delays, needless
multitasking, collaboration, innovation and cross activity, overprocessing, storage and rework.7
functional relationships. Its messy. Waste is just as present in knowledge work, so
These differences become irrelevant if we keep its elimination remains an important consideration,
two things in mind. First, attempting to go lean by but its not the direct target. Because waste is large-
employing neat algorithms and toolbox techniques ly invisible in knowledge work, the focus shifts to
just doesnt work. A much more human centered adding value (see The Value-to-Waste Ratio).
approach is required. Second, information is the Value added thinking leads us to lean knowledge
primary basis of value in knowledge work, and it work. In addition to adding value, two other fun-
must flow to the right person in the right form at damental goals are associated with lean knowledge
the right time at the lowest cost with the highest work: creating flow and achieving mastery.
quality possible. Adding value. This is the defining concept of
lean knowledge work. It moves the conventional,
Less Is More economic view of value that focuses primarily on
TPS principles were born out of severe resource the tangible, transactional deliverables of a cus-
constraints in postwar Japan. The founders of TPS tomer experience to a much broader perspective.
2. Strategy focus: Organizational purpose and um flight membership, in-flight offerings and carri-
strategy achieve higher levels of focus due to er replacement.
central positioning of the customer. At ValuFlite, the customer defines value. ValuFlite
3. Process design: Business processes better knows its customers well. Understanding the ease
align to the strategy and become more effec- and convenience of travel is its number one concern.
tive and efficient. ValuFlite understands the value proposition for its
4. Problem solving: A problem solving ethic customers is unique: They are all fairly sensitive to
pervades the organization, creating purpose- price and convenience and dont need all the fancy
ful and high energy interactions. bells and whistles, such as in-seat DVD viewing,
5. People development: People see themselves gourmet meals or designer shops in the terminal.
as central to the organizations success, mak- They want a low priced, no hassle way to get from
ing it easier to subordinate individual gain to point A to point B.
the overall good of the organization. At JumboJet, the customer service department
Table 1 shows the broader framework against monitors satisfaction through regular measure-
which the lean knowledge work principles are ment and offers financial incentives to improve
applied. To help you better understand these ideas customer satisfaction survey scores. For example,
and see how they might work in an organization, JumboJet introduces a new customer satisfaction
imagine two fictional airline companies called goal each quarter, supported by a new incentive
JumboJet and ValuFlite. JumboJet is a traditional, program.
nonlean company, and ValuFlite is a lean thinking ValuFlite does whatever it takes to ensure its
company. customers dont suffer inconvenience. For exam-
ple, it offers a turnkey online reservation system
Adding Value that provides customized options such as schedul-
Value proposition: At JumboJet, the key business ing front-door shuttle service, no check in auto
departments and functional experts, such as market- rental and reservations with partner hotel chains.
ing, strategic planning and customer service, meet Customers can configure their entire itinerary on
regularly to decide which products, services and the ValuFlite website.
routes will be offered to customers, based on histori- Business strategy: In response to pressure to
cal data and market research. Terminal expansion show growth in revenue and profit, senior executive
plans figure centrally, as do aircraft amenities and meetings at JumboJet focus predominantly on cor-
technological features. Key agenda items include porate financial goals for the immediate fiscal quar-
retail floor planning in terminals, upgraded premi- ter. Topics on the agenda include current revenue,
Continuously improving and What are the goals and expectations What is the overall strategy for What disciplines exist for improving
innovating for individuals and teams? leveraging individual strengths? things on a continuous basis?
and handled and packed in a rental car at their ume pricing, reduce maintenance costs and nearly
destination. ValuFlite piloted this program to over- eliminate high pilot and mechanic training costs.
whelmingly positive response and now offers it to Full engagement: JumboJet administers yearly
all passengers. ValuFlite has also developed a uni- in-depth employee attitude surveys to monitor
fied electronic itinerary, accompanied by a single employee satisfaction. Results are tabulated and
bill for all travel arrangements, if desired. reported by key departments, which then review
JumboJet uses its strategic planning and forecast- the numbers with key staff members. Action is
ing department to determine the optimal fleet portfo- taken on the lowest scoring factors, usually through
lio based on budget parameters. Recommendations a new company program. The HR department has
for aircraft acquisition and retirement are approved instituted a number of benefits programs for
by the executive committee. Once capacity in a fiscal employees and their families, such as tuition reim-
year is determined, the marketing department con- bursement and counseling services. Believing man-
structs promotional ticket programs, new luxury agement talent is a key competitive advantage,
JumboJet prides itself on hiring the best and bright-
est at the highest salaries, recruiting heavily at top
business schools.
Believing management talent ValuFlite is one of Fortune magazines Top 10
Companies To Work For. Its not uncommon to
is a key competitive advantage, find the CEO serving ice water on a crowded flight,
participate in impromptu in-flight contests or hear
JumboJet prides itself on employees recognized over the intercom during a
flight. ValuFlites culture is one of hard work, high
hiring the best and brightest energy, fun, local autonomy and creativity.
ValuFlite hires for attitude and aptitude, using
at the highest salaries, peer hiringpilots hire pilots, and gate agents hire
gate agents. It initiated the industrys first profit
recruiting heavily at top sharing plan, offering more than 10% of salary in
profits each year, tax deferred.
business schools. Achieving Mastery
Accountability: JumboJet rotates key managers
through all functional departments to build a broad
base of knowledge and skill in all critical opera-
amenities and special rate reductions to fill seats. This tional areas. Frontline personnel start as reservation-
is done largely through competitive pricing schemes, ists, progress to ticketing agents and eventually move
with JumboJet marketing experts undercutting com- into supervisory roles. With additional education,
petitors prices for limited times on the most prof- supervisors can advance to management staff posi-
itable routes. tions.
ValuFlite conducts weekly cross functional meet- ValuFlite will only hire people it believes have
ings to review current market conditions and key talents and abilities that are well matched to the
leading performance indicators. It figures the lowest job, preferring to build deep bench strength in key
possible price and drives out costly waste. On any positions. Horizontal advancement is the mecha-
given day, ValuFlite executives know exactly what nism by which employees develop toward mastery.
their customers are willing to pay for a ticket. For example, reservationists remain reservationists
Promotional programs center on value adding ideas and are compensated based on work output, not
such as friends fly free and take along a compan- seniority. As expertise is gained, more responsibili-
ion. ValuFlite purchases new aircraft only when on- ty is granted.
board occupancy reaches predetermined need levels. People development: JumboJet regularly sends
It buys only one type of aircraft to enable lower vol- potential managers to executive education programs
a number of customer comments to gate agents, 1. Paul S. Adler, Time and Motion Regained, Harvard
eventually leading to a pilot study and trial run. Business Review, Vol. 71, No. 1, 1993, pp. 97-108.
2. James P. Womack, Daniel T. Jones and Daniel Roos, The
The Bottom Line Machine That Changed the World: The Story of Lean Production,
While the names have been changed and creative HarperPerennial, 1991.
license taken, our two imaginary companies repre- 3. Peter F. Drucker, The Age of Discontinuity, HarperCollins,
sent actual airline industry dynamics characterized 1969.
4. U.S. Department of Labor, Bureau of Labor Statistics,
by large but troubled airlines in one corner and
www.bls.gov.
secondary but flourishing airlines in the other. The
5. James P. Womack and Daniel T. Jones, Lean Thinking:
JumboJets struggle to stay in the air, relying on Banish Waste and Create Wealth in Your Corporation, Simon &
governmental bailouts and merger activity to keep Schuster, 1996.
them going. Escalating costs, inefficient operations, 6. Taiichi Ohno, Toyota Production System: Beyond Large
strained labor relations and plummeting customer Scale Production, Productivity Press, 1988.
BIBLIOGRAPHY