by Ted Stiles, Partner
Stiles Associates

It’s well understood that the tools, concepts and management system practices we know as “Lean” are rooted in the Toyota Production System, but the last three decades have shown us that Lean’s applicability extends well beyond automotive manufacturing. Today, these tools and concepts are used in nearly every type of manufacturing process in existence including food and beverage, pharmaceuticals, medical devices, building materials, industrial materials and much more.

Along the way, Lean has also moved beyond the shop floor. In manufacturing companies, these tools and concepts are now widely used as a way to drive improvement in processes upstream and downstream from production. This includes using process improvement to reduce the amount of time required to close the books in finance, reducing the non-value added steps in recruiting and onboarding new hires in HR; or collapsing the steps and overall lead times seen in new product development and other critical design engineering processes.

As Lean’s application in non-manufacturing business process workflows gained more popularity, soon the methodology expanded out of manufacturing altogether. It’s hard to say exactly when this first started, but by the early 2000s companies across a wide range of industries began to experiment with applying the Toyota Production System playbook. Today, Lean is used in service companies with heavy processes, cross-departmental workflows and complex inputs.

Perhaps the most frequent users of Lean include companies in financial services, insurance and healthcare. In a 2019 interview with the Lean Enterprise Institute, Dr. Lisa Yerian, who leads the Lean / Process Improvement function for the Cleveland Clinic explained that “Since 2014, the work that my team has been involved in has generated $214 million worth of impact. There’s a lot of waste that’s been eliminated, a lot of capacity that’s opened up to enable us to really serve more patients, which is what we’re all about.” Yerian went on to also point out demonstrable improvements in patient safety and quality over the same period of time. ¹

The Cleveland Clinic, a client of Stiles Associates, is not alone. Over the last decade and a half, the results of process improvement applied in healthcare settings have been significant and widespread. Demand for more learning and knowledge on its application has spurred a cottage industry of Lean Healthcare consulting firms, non-profit advocacy groups and well-attended annual conferences such as the Catalysis Lean Healthcare Summit.

Nationwide Insurance began using Lean in 2011 as part of blended methodology to improve the speed, quality and overall performance of its software development operations. The organization, which had over 5,000 people in its software development ranks, realigned the workflows to mirror a production line model and overlaid the use of visual controls, Gemba walks and structured problem solving – all components from classic Lean manufacturing models. In 2017, the organization reported results of this effort yielding $60M in annual savings and nearly double-digit improvements in unit costs versus previous years. ²

The examples of impact can be seen well beyond these industries. Over the last decade, our client diversity has expanded dramatically. Most recently, it’s grown to include players from non-manufacturing segments including: governmental agencies, weight loss program providers, national car retailers, third party logistics providers, academia, national laboratory services, aquaculture farms, energy and direct mail services to name just a few.

One of the key enabling factors of this Lean adoption trend is the movement of deeply experienced TPS experts. Most organizations that are new to using Lean will typically start by engaging with a consulting firm to test the application feasibility. Once the organization determines that it wants to pursue Lean more seriously, the next step will be to create a Lean / Operational Excellence department.

The organizations that tend to get off on the right start understand it’s important those individuals have significant experience starting and supporting Lean programs from scratch. Because of this, most of the time, those individuals are being recruited away from manufacturing companies or they started their careers in manufacturing. This is the bedrock industry for Lean in the United States and it’s where some of the most talented Lean leaders learned how to lead this type of work.

Having started and learned Lean in manufacturing alone is not enough on its own, however. The right individuals to lead a Lean effort in a service field tend to have other highly critical traits including: high emotional intelligence, strong influencing skills, deep understanding of change management practices and flexibility. This last trait is key as Lean tools and concepts that work a certain way in a manufacturing setting may not be identically applied in a service setting. The fundamentals will be the same but the application may need to be adaptive. Someone who is too rigid a practitioner will struggle with this.

Observing this ever-expanding horizon of Lean thinking service companies, it’s clear that Lean is industry and process agnostic – it can be applied with demonstrable results in any process-based environment. The reason this is true comes back to fundamental realities at play in almost any work culture:

• Lack of process stability and understanding
• Legacy thinking: “we have always done it this way”
• Poor interdepartmental hand-offs
• Leaders disconnected from work / conditions on front line
• Cultures that discourage making process problems visible
• Siloed thinking and process development vs. designing processes based on end-to-end value streams
• Lack of root cause problem understanding (and solving capabilities)
• Weak connection to the voice of the customer and an understanding of what constitutes “value.”

The conditions listed above are fixable and sustainable using a Lean management approach. It takes time, commitment from leadership and the willingness to brave the slings and arrows of driving culture change. For those who are ready, the results are waiting.

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Sources:

¹ LEI: Cleveland Clinic's Prescription for Creating a Culture of Continuous Improvement

² How Nationwide Fostered Digital Disruption Using Agile, Lean, and DevOps