While Lean can be beneficially applied to any process within an organization, its greatest benefit comes when it is applied across the enterprise. In The Machine That Changed the World in 1990, Jim Womack, etc al., emphasized “that Lean thinking can be applied by any company anywhere in the world but that the full power of the system is only realized when it is applied to all elements of the enterprise.”
Over time, it can be said that an organization that implements Lean becomes a Lean Enterprise. While there is no precise definition of a Lean Enterprise, I believe those organizations share common characteristics.
A Lean Enterprise can be defined by these 15 characteristics:
- Customer Focus – The external customer is both the starting point and ending point. Maximize value to the customer. Optimize not around internal operations, but around the customer. Seek to understand not only the customer’s requirements but also their expectations of quality, delivery, and price.
- Purpose – The purpose of an organization encompasses your vision (where you want to go), your mission (what you do), and your strategies (how you do it). Focus on purpose, not tools.
- Organizational Alignment – You want people to understand their purpose, not just their job description or the tasks that are assigned to them. All the people involved need to have a common understanding of the organization’s purpose, and practical understanding of the consequences of failure and the benefits of success.
- Knowledge – People are the engine of the company, so it is vital to build knowledge and share it. This includes explicit knowledge (like that from books) as well as tacit knowledge, involving soft skills. Knowledge is built through the scientific method of PDCA.
- Questioning – Encourage a questioning culture. Ask why several times to try to get to the root cause. Encourage everyone to question. “Seek first to understand, then to be understood,” said Stephen Covey.
- Humility – The more you strive for Lean, the more you realize how little you know, and how much there is yet to learn. Learning begins with humility
- Trust – Build confidence in your promises and commitments. Building trust takes time.
- Empowered employees – Give frontline employees the first opportunity to solve problems. All employees should share in the responsibility for success and failure.
- Flexible workforce – As the Greek philosopher Heraclitus once said “The only constant is change.” Flexibility is the ability to react to changes in customer demand. The key to success is to maintain redundancy and hence flexibility within the core competency.
- Partnership – Use teams, not individuals, internally between functions and externally with suppliers. Employees are partners too. As Covey says, “You must find a win-win, never win-lose, solution and if you can’t you should walk away.”
- Simplicity – Lean is not simple, but simplicity pervades. Simplicity is best achieved through the avoidance of complexity, than by ‘rationalization’ exercises.
- Process – Organize and think by end-to-end process. Think horizontal, not vertical. Concentrate on the way the product moves, not on the way the machines, people, or customers move.
- Improvement – Continuous improvement is everyone’s concern. Improvement should go beyond incremental waste reduction to include innovation breakthrough.
- Prevention – Seek to prevent problems and waste, rather than to inspect and fix. Shift the emphasis from failure and appraisal to prevention. Inspecting the process, not the product, is prevention. Use poka yoke to mistake proof process errors.
- Visualization – Visuals translate performance of every process into expected versus actual, throughout the management systems. It is regular, frequent, and factual data driven. Visuals provide the opportunity to quickly spot and take action at the earliest point that performance has not met what was expected.
A Lean Enterprise is not created quickly. When a business applies lean thinking, culture, and methods throughout the entire organization and beyond its four walls to customers and suppliers a Lean Enterprise is formed