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Supply Chain News: Kanban as A Learning Strategy Part 2


Maybe Strategy is Best Achieved through Lean Execution

May 16, 2019
SCDigest Editorial Staff

The following colum, part 2 of a series, comes through special arrangement with the Lean Enterprise Institute. It was authored by Lean experts Michael Ballé, Jacques Chaize, Orest (Orry) Fiumea and Daniel T. Jones. It is pretty "deep."

You can read part 1 here.


Kanban as a Learning System

Beyond the amazing productivity gains Toyota was generating in its entire supply chain, the true impact was felt in how the company worked as a system. For example, product engineers got involved, and with the steady rhythm of model change and product renewal, would start to use knowledge learned from kaizen efforts to design products with greater functionality and lower costs. Toyota's "just-in-time" supply chain was far more than simply controlling the logistics flow (which already delivered massive productivity increases) – it was about organizing a steady flow of value towards making better cars and better satisfying customers. The lesson here was: there is no best, only better.

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An action plan allows you to prioritize items, and choose to do the easy things first until you stumble on the hard things and nothing ever gets done.

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In many ways the underlying model for Kanban cards—to use representations of work as a means of controlling its progress and providing real-time information among the workers—was a precursor to today's digital economy. The Kanban driven just-in-time value chain is: pixelized (lead-time is followed box by box), real time (the challenge is always to reduce the lead-time between demand and delivery to get to instantaneous) and connected as Kanbans connect the entire value network to better satisfy customers. This dynamic was the foundation for Toyota's main strategy of "one time customer, lifelong customer" (focus on satisfying existing customers rather than seek to escape problems by convincing new ones – "churn" in modern terms), realized through "sell one, make one", which could only happen by using Kanban and supporting, encouraging, cajoling all people all the time into kaizen efforts. Herein lies Toyota's truly disruptive innovation.

Toyota's Kanban legacy—it's underlying ideas—have far more direct lineage with today's digital economy than most folks realize; and capture the core elements of the disruptive lean strategy fueling many of today's successes. And yet we are amazed at the number of "lean" books that reassure readers they can do "lean" without trying their hands with kanbans, although all the spectacular success stories we've had the privilege to see firsthand started with kanbans. Similarly, it's not surprising that disruptive companies such as Amazon deliberately built their supply chains on Toyota lines, hiring executives well versed in lean thinking to do so. As the dust settles, the tool is essential. Electricity allowed Henry Ford to create the conveyor driven flow line. Toyota engineers picked that up right away in the 1930s when they were building looms. Airplane manufacturers only started experimenting with the first flow lines at the end of the previous century, and, regardless of the advances this triggered, this has yet to spread far in the industry.

Toyota has offered the world a method to get from the traditional industrial mindset to the modern thinking of digital disruption. They've developed it ahead of everyone else, and have strenuously written it down for the practical purposes of educating their suppliers and transplant operations. We discovered this in the late eighties, when we coined the term "lean" to describe these fundamental ideas, and have been studying the various efforts to translate this thinking outside of Toyota and more widely outside of the auto industry. What we found confirmed that mental models are incredibly sticky—that even the smartest people find it hard to change their minds. In reviewing the past twenty years of lean experiments, we have been asking ourselves what ideas need to change in order to adopt the lean thinking method to transform companies and prepare them to the challenges ahead. We've come up with four critical thinking changes:

1. Reusable learning rather than best practices adoption

2. Performance results from dynamic engagement rather than static optimization

3. Innovation from people-centric, leadership from the ground up

4. A radical change in how we understand executive decision making, with the Find-Face-Frame-Form decision cycle rather than the usual Define-Decide-Drive-Deal, and a shift in the role of hierarchy from a chain of command to a chain of help.

The first reason we've found people refuse to look into the telescope – specifically, adopt kanbans – is that they see the Kanban system as a "best practice" that will replace their current IT driven scheduling with paper cards. There are two deep misunderstandings here.

There is No Best Practice

First, the very idea of "best practice" is a surviving notion from Frederick Taylor's "one best way." Of course, there is no best practice – every context is different, and things change too fast anyhow. The obsession with "reusable learning" is similar to the one with economies of scale. It hinges on the incorrect assumption that learning is about applying a static piece of knowledge to new situations. Today more than ever, learning is about transferring knowledge to new contexts, which means blending an initial grasp of the idea and reinventing it every time to better understand its deeper sense. What we need are ways to learn faster. Reusable learning is not about applying a "best practice" to all possible cases, but about looking for a smarter way to do things more effectively. To do so, we need 1) a starting point, a key to enter the room, and 2) a direction in which to look for solutions (and to avoid repeating known mistakes).

(Article Continued Below)



The second misunderstanding is that Kanban is about the cards – Kanban is about measuring the response time on every individual demand, a very different concept. In essence, the flow of Kanban cards is a key circulatory system in a learning organization. Itemizing demand and tracking response time (there are many digital tools to do so now) is the entry point. Kanban is the start of learning, not the end. In using Kanban we're not implementing a solution, we are looking for the next step to improve so that we will discover new ways of doing things through teamwork between all stakeholders. The Kanban card has to be served. The problems are immediate and urgent. This focuses everyone on solving innovatively clear and present issues rather than blue-sky invent applications for problems that will never appear. Improvement takes on a radically different meaning, starting from where we are right now. We need to manage learning curves, not action plans. We need to find smart ways to do the hard things (which are hard for every competitor) not work our way around them. We need to accelerate learning, not make obsolete processes and procedures fixed and rigid.

Better performance results from the dynamic of engaging with issues to better satisfy customers right now—rather than with many executive's obsession to statically optimize through reorganization and footprint restructuring. Improve the work you have now by engaging all people in better seeing their line of sight to final users, better understanding how they help or hinder their immediate clients, and what can be improved in the way their work to make their jobs safer, easier and more interesting. Yet most companies would rather work with consultants to imagine the system upgrade that will solve all their problems in three years' time (something, for that matter, that they will never know how to implement). Look, try, measure, think, look, try, measure, think, is about teaching scientific thinking to everyone all the time, and to create a dynamic of teams of teams rather than smother engagement and initiative with expert-driven processes, procedures and all the usual reasons not to try something new.

This new way of sustaining dynamic improvement requires a very different type of leadership. Daily kaizen is about learning to change, in small ways every day, by solving real-life problems for customers, for co-workers, for partners. It only works if leaders support this firsthand every day.

Yet this learning-based approach, paradoxically, often requires a humbler and less certain mindset from those in charge. Using response time as the entry key, the "cognitive handle" that enables people to tackle large complex problems pragmatically (as a real-life handle allows you to pick up a large and cumbersome suitcase) we saw that most of management decision theory rests on a "I am master of my fate" deep metaphor. We think quite naturally that, being the masters of our fate, our job is to figure out the right strategy and then get the organization of execute it. When things don't work out the way we'd hoped, it's not about that the strategic thinking was wrong, but that unknown (unknowable) factors and the unavoidable resistance to change led us astray. By looking into item by item demand and studying response time, we came to see there is a completely alternate deep metaphor in terms of "we're challenged and we respond – with our allies." In this worldview, we accept that we'll always be challenged by a world that changes faster than organizations can, and that we don't know the correct way to respond because of our own legacy mental models. The key to velocity then lies in facing the challenge rather than looking around the elephant in the room and then looking for new ideas with our allies in order to craft new responses rather than apply tired old "best practice" recipes that no longer work.

The traditional executive cycle can be described as (1) Define the problem from the information you have, (2) Decide on a strategy, (3) Drive this strategy through the rank and file to implement it and then (4) Deal with the consequences when things never work out as planned. By contrast, we offer a radically different vision of executive choices in (1) Find all "now!" problems (through just-in-time techniques) (2) Face the real challenges that emerge and set yourself a measure of these (3) Frame them in terms that anyone in the company, from executive committee member to janitor can understand (so they can contribute) and (4) Form the solutions by shaping organizational coordination around new tools and new ideas as we go, with employees and partners alike.

Opportunities from new digital capabilities on the market now come far faster than most organizations can absorb. Typically, many organizations we see try to digitalize their current ways of working rather than embrace the revolutionary ideas underpinning digital tools. The deepest mental model shift needed to embrace the digital century is to abandon the notion that we are masters of our fate and that we will impose our brilliant strategies on employees, customers and partners alike but to think in terms of challenge and response, and studying the quality of our responses: facing our problems together and forming solutions with our allies. This leads to a radically new understanding of performance as the result of a people-centric dynamic in the business where everyone understands the plot (what the game is and see how they can contribute) and management steers the flow of ideas rather than impose rules and procedures. Such dynamism builds on constant learning-as-we-work so that we create true learning companies that manager learning curves at the same time as day-to-day work.

In the end, it's all about the tool and if this dynamic vision is a lever, the pivot point is the simple idea that we should measure response time, not piece rate or unit costs. And the best way to fully grasp what a disruptive digital strategy can be is to, as many fast-growing IT companies now do, experiment with paper Kanban cards to understand intuitively what pixelisation, immediacy and connectivity really feel like in terms of responding to customer dissatisfactions, putting resources at the right place right now, and supporting individual learning and teamwork. To learn to disrupt, start by disrupting your thinking. To disrupt your thinking, disrupt your practice: try using Kanban on your own activities.

Kanban don't lie. An action plan allows you to prioritize items, and choose to do the easy things first until you stumble on the hard things and nothing ever gets done. Line by line budget management allows you to spread gains and losses on convenient accounting lines. But Kanban cards mechanically reproduce customer demand, and demand to be served. The lean logic is the following: by responding to cards in the same sequence as they appear, the people who do the work themselves learn to better understand what their customers expect of them, better recognize problems, better interpret abnormal situations and react more astutely. As a result of doing this day in and day out, the inventories or backlog are lowered, and significant capacity is freed to make room for new products. Furthermore, the technical learning accumulated in the process of solving all the large or small problems revealed by the Kanban cards are invaluable to design better new products with more robust production processes. Not only does using Kanban free capacity for innovation, it also teaches how to innovate in practice, in order to better satisfy real customer needs.

In the end, this apparently mundane-but-hard change of practice will open your eyes to a radical rethinking of what strategy truly is: the ability to confront your clear-and-present challenges with trusted allies, to train your managers to understand better their own responses and the collective intent, and to learn at all levels, from the executive committee to the janitor to discover a more adaptive way to do the work so that the business, as a whole, responds faster and smarter. There is no such thing as "best," there is only better, every day, everywhere, with everyone.

What is your reaction to this provocative article? Can Kanban really equal strategy? Let us know your thoughts at the Feedback section below.


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