Lean innovation

Management typically looks at innovation the same way they deal with traditional initiatives — inside-out, based on a formal business plan, metrics and implementation roadmap.

However, lean innovation starts with a new product or business model hypothesis and goes directly to the customer, seeking to quickly validate the innovation’s appeal, demand and assumptions. This is what we mean by the “voice of the customer.”

Toyota, for example, has many ways of getting feedback from customers. They say they listen sincerely to customer voices and continue to reinvent themselves through sufficient information, disclosure and dialogue.

In fact, Toyota gets nearly as many continuous improvement ideas from listening to customers as it does from its employees. In addition to attending to traditional metrics like ROI or payback, lean innovators focus on longer term measures such as lifetime customer value. So it’s no surprise that more than 90 per cent of all Camry vehicles sold since 1995 are still on the road (according to Polk U.S. Vehicles In Operation registration statistics MY 1996-2010 as of July 2010).

So how does the auto giant get innovation that sticks? How does it make cars with such lasting power?

I believe it’s because they develop continuous improvement (kaizen) and then they make that the new work standard. Their belief is that many steps in the same general direction, coupled with standard work, will generate more innovation and new thinking than waiting for “big” innovation.

So they get small suggestions from the customers and employees, try them out and see which ones work. Using an A3 (or the PDCA cycle), they test out their hypotheses. For the ones that work out in this test or pilot phase, they adopt the changes as the new standard of work. It’s important to get people to try out their ideas with the A3. In fact, it’s more important that they follow through with their A3s than it is that those A3s prove to be successful. As other lean leaders have said, once you’ve got them using the A3 process, they’re hooked into continuous improvement.

This avoids the “compliance fade” that often accompanies lean introduction with standard work. They might be able to kaizen the process, but without the transition to standard work, the innovation simply does not stick. People do not couple their accountabilities to the new way of doing things. Pretty soon people go back to how they used to do things. This is the “fade” part of the compliance fade. In fact, things will degrade to a point where they’re often worse off than when they started!

To answer the question of how Toyota and other lean leaders build innovation into everything that they do, consider these points:

•    Always ask those who are closest to production (e.g., the customers and employees) for their input. How? You could get them used to doing A3s or PDCA cycles, survey them, ask them questions when you’ve got them in the dealership, etc. In Japan, Toyota sends salespeople to your home with a car that you’re interested in. They also have an initiative called “To Be Rewarded with the Smiles of Customers” where they apply customer feedback to the creation of better products and services. In fact, Toyota says, “in order to make better cars, we make rigorous use of customer opinions gleaned from dealers and the Customer Assistance Center.”
•    Never be afraid to “go and see” or “go to the gemba” yourself. Taiichi Ohno, the father of TPS, told people to go to the gemba. If you were really sincere in your efforts to “listen to those closest to production,” your gemba walks would be rewarded with many kaizen suggestions.
•    Do the kaizen. Very often people get stuck in the “Plan” part of PDCA. Some sectors are better than others, but very often we get stuck in “analysis paralysis” and rarely move on to the “Do” portion of the PDCA cycle.
•    When the kaizen works out, standardize that work and link peoples’ accountability to this work. This is the future state.
• This new future state becomes the next current state, and people should feel free to be innovative and improve on this! True innovation never rests on its laurels. Never be afraid to ask why five times and think about how something can be done — not how it can’t!

Question: I’ve put up lean boards and they started off well enough. How can I get my people to move past the simple ideas and suggestions that they’re giving me?

Answer: I’m going to assume that you just recently got people using the lean boards. Don’t be surprised if the initial continuous improvement suggestions that you get are all somewhat simple. The people are just testing the water, looking to see that the system will work as advertised.

Many managers ask me how they can  accelerate their company’s lean transformation. I usually tell them to set the goal, generally set the direction and let the peoples’ A3s and PDCAs get you there. But not everyone will be on the same page.

Ryuji Fukuda, a Deming Prize winner and author of Managerial Engineering, likened the problem to rowing a boat. You’ve got the “red-faced” employees, the ones who are already rowing, the ones who are “in the boat but not yet rowing” and then you’ve got the employees who are not even in the boat. You want to be careful not to get everyone involved in rowing. Start with the red-faced ones. This is an important lesson for many.

Taiichi Ohno, the father of TPS, recognized that an organization’s philosophy must precede its strategy. More recently, that philosophy was put forth by the Toyota Production System Support Center with a further analogy: True North — a set of fundamental guiding principles for transforming your organization.

You’ve got to make sure that the boat is heading True North, and then mentor everyone in that boat rowing in that direction.

Lean Innovation: Understanding What’s Next in Today’s Economy
Barry L. Cross, Productivity Press

Barry Cross is an operations management professor at the Queens University School of Business. His book has reached the number one spot on the Globe & Mail’s list of business book bestsellers.

In this book — aimed at today’s business leaders and business students — he challenges us on the use of the concepts of “lean innovation” to free up resources from within the organization to support and fund innovation and create a culture of creativity. More than that, he takes on the complaints that I and every other lean sensei hear: “We would love to be more innovative, but we don’t have the resources;” “Innovation works in some companies, but we just aren’t that creative;” and “We get some good ideas, but nothing ever happens with them.”

Unfortunately, these three items reflect the general perception and environment for innovation in many firms today. To tackle these complaints, he shows readers how to eliminate waste within the company and present the value that comes from waste elimination to members of the senior team and to customers. He does this by showing that innovation comes through a system of culture, ideas, refinement, communication and adoption of lean principles. He does a particularly good job of showing how applying lean concepts correctly can free up resources to fund innovation. This book is easy to read and the tales he tells are all very applicable.

This column originally appeared in the May 2014 issue of Manufacturing AUTOMATION.