What is Lean Management?

Lean management is an approach to management that reduces waste, optimizes value, and facilitates continuous improvement. It's become increasingly popular in today's fast-paced, competitive world. Lean helps organizations deliver what customers need while eliminating wasteful aspects of their processes and operations.

Lean management is a simple approach to organizing work that helps companies work efficiently, delivering more value while conserving resources. Perhaps most significantly, lean management has a philosophy of continual improvement. Lean shares some basic ideas and values with agile and scrum.

Understanding the principles of lean management can help you apply agile frameworks more effectively and leverage your knowledge to achieve bigger results for your organization. 

What is lean management?

In its simplest expression, lean management works to minimize waste and maximize value. In the lean management approach, waste is anything that doesn't add value to the final product.

Value, on the other hand, is defined from the customer's perspective—what is valuable to meet their expectations or solve their problems.

Lean origins

Lean management has its origins in the Toyota Production System, which took off in the late 1940s, as Japan was trying to recover from the effects of WWII and retake its position as a major manufacturing power. 

The philosophy came to the United States in the late 1980s as the US was learning about the power of Japanese manufacturing, especially in the automotive industry. US automakers were struggling, and people were looking for the key to the success of Japanese auto manufacturing. One explanation was the effectiveness of the TPS, which was often described as "just-in-time" manufacturing until the late 1980s when the phrase "lean production" was coined and became popular. 

Articles and books emphasizing the power of TPS also represented it as a model to emulate, and it quickly increased in popularity. 

The lean management model was spreading in popularity as software developers were laying the foundations for what would later be known as agile frameworks.

Principles of lean management

Although lean management takes the TPS as its inspiration, the principles of lean management don't derive directly from the two pillars of the Toyota Way: continuous improvement and respect for people. Instead, the current understanding of lean management comes from the conceptualization by Americans James P. Womack and Daniel T. Jones, who broke it down into their five key principles:

• Value: Define the value desired by the customer. Producing items of value to the customer should be the goal of the process. 
• Map the value chain: Look at all the production steps in your business. You should be able to trace a path through each of these steps, showing that value is added in each step. Whenever you come to a step that doesn't add value, that is an example of waste and should be marked for removal consideration. 
• Create flow: As you have mapped the production steps, you should be able to see how the product flows through the different steps. Although this is easiest to envision in an assembly line factory, it's also true of most products that they will flow through multiple stages of work. Looking at the work in these stages can help you visualize the places where bottlenecks and slowdowns occur. 
• Introduce pull: Pull, sometimes described as "traction," is a structure in which demand at the later steps of production inspires or motivates action in the earlier production steps. Nothing should be made before it is needed, minimizing excess production, which is another form of waste. 
• Continuous improvement: As you've assessed your production process, you have likely identified numerous examples of waste. Now, you need to figure out ways to reduce that waste while simultaneously increasing value from the standpoint of the customer. 

These principles are open-ended enough that they can be applied to many different contexts and job functions. Each industry adopts them with a slightly different meaning, sometimes resulting in very different practices that are all ostensibly built on the same model. 

Benefits of lean management

Organizations that adopt lean management practices can see significant improvements in their workflow, outcomes, and the value they deliver. Benefits of lean include the following—

• Cost reduction: By identifying the sources of waste in their production process, organizations can reduce their costs.
• Increased efficiency: Eliminating waste while increasing value produced is essentially the definition of increasing efficiency. 
• Shorter cycle times and lead times: Simplifying the process to its essential steps makes it faster. It also makes it easier to set up and adjust production to meet new trends in customer demand, the ultimate pull for the system. 
• Improved employee morale: Employees of all levels often enjoy the opportunity to solve their own problems, break down silos, and collaborate with colleagues to focus on the most valuable work. These things are associated with lean. 
• Better customer satisfaction: By defining value in terms of what the customer wants, organizations deliver products that make their customers happier. 
• Continuous improvement: Lean management is a process, not an endpoint. Organizations that adopt it don't just see benefits today or tomorrow. They will see increasing benefits over time, as long as they continue to follow these principles. 

How to implement lean management

With all the benefits of lean management, you would think that it would be easy to implement the practice in any organization. After all, it's just five simple principles: how hard could it be? Very challenging, in some cases. You're likely to encounter obstacles, resistance, and challenges any time you're transforming the way work is done. Upending the status quo can be arduous, but is often well worth it.

The implementation of lean management is going to be different from one organization to another. However, if you want to successfully implement lean management in your organization, here are some steps you can utilize as a rough starting point for rolling it out. 

Get everyone on board

Whenever you are trying to alter the way your organization works, it's important to make sure you have enough support to achieve the transformation. While you don't literally need to get everyone on board, you need to make sure that your engagement is broad-based. You won't succeed with just a mandate from leadership to test the model, you need buy-in from the people who will be implementing the strategy. 

Consider starting small with lean practices in a team or two. As those teams see wins, share these with the rest of the organization to demonstrate the potential benefits.

Define value as a team

In lean management, the meaning of "value" will govern almost all your practices. Bringing the team together and working on this definition together will accomplish several goals. First, it ensures that everyone has the same concept of value. Second, it gives everyone a deeper understanding of how the concept of value is derived, especially its relationship to customer demands as you understand them. Finally, it establishes a paradigm by which your notions of value can evolve as your understanding of customer priorities changes. 

Start mapping the workflow

Once everyone understands the concept of value, you can start mapping your workflow and identifying value-added and wasteful steps. Make a few simple changes to demonstrate how the process will work while watching for unexpected complications. As you and your teams get more comfortable with the process, adopt some larger changes as you get the hang of how the perfection aspect functions. 

Anticipate challenges

Many organizations have difficulty implementing lean management practices. Being prepared for some of these common challenges can make your implementation smoother. 

• Resistance to change: There will always be some people who find it hard to change. These people can be at all levels of the organization. Ideally, you laid the groundwork when you got everyone on board. However, if you encounter more resistance later on, don't dismiss the concerns. Listen, validate, and address them with the potential value lean management offers. If necessary, get incremental buy-in, such as: "Can we agree this is a good principle?" or "Can we give this a try for a while and see how it works?"
• Unexpected consequences: Often, you will make a change intended to improve the process, only to find that it has the opposite effect. Don't let this discourage you or your team. Stress that continual improvement is an ideal and a goal, but the path to get there isn't always straight. Learn from failure! Rather than changing the process back, consider whether a pivot and adaptation might achieve the original goal without the unexpected consequences. 
• Data problems: Ideally, your workflow and value mapping are based on good data that makes decisions easy and clear. However, that quality of data isn't always available. Other times, there's too much data, and sifting it takes too much time and effort, paralyzing your efforts to improve. You have to learn how to make the best decisions you can based on the data you have—or can sift—rather than waiting for the perfect data set to make everything clear. 

Lean management has become a universally respected approach to improving business practices. Deploying its few simple practices can give tremendous value to your organization, but simple doesn't always mean easy. If you want to adopt lean management practices in your organization, be prepared for the challenges and you will find its benefits make it a great investment.

Wondering how else you can apply lean? Check out lean software development.