Be sure to see all five parts of the Q&A, links are above and at the end of Part #1.
Thanks to James P. Womack, co-author along with Daniel T. Jones, of the book Lean Solutions: How Companies and Customers Can Create Value and Wealth Together for offering to participate in an exclusive Q&A for the Lean Blog. Jim graciously took time from his globe-trotting to write quite a bit, including responses to questions submitted by Lean Blog readers. I am going to post his thoughts in small batches over the next week. Check back, or subscribe via the Blogarithm service (a link is in the right hand column). If you have comments, please click on “Comments” at the bottom of the post to share your thoughts and opinions.
Q: We’re all familiar with the five principles of Lean Thinking. What are the main principles of Lean Solutions? Do the lessons of the new book apply to those of us in manufacturing?
The whole idea of lean solutions is to start with today’s customer in today’s circumstances and ask what the customer really wants. When we do this, the first thing to note is that manufactured goods have gotten vastly better, somewhat cheaper, and a lot more varied in the 26 years since we started thinking about manufacturing. (Lean production gets some of the credit for both quality improvement and cost reductions. So does the great Asian labor rush, for providing a lot of labor at a lot lower cost.)
To take the case of automobiles, which we know best, the real cost of a given bundle of vehicle attributes has fallen steadily as have defects per vehicle. And the variety of products and options on offer is truly staggering. (In a recent conversation, Dave Power of J.D.Power & Company – who we have known for years – pointed at that all makes soon will probably be at or below 1.0 defects per vehicle and it will be very hard for the long-time quality leader, Toyota, to differentiate itself on this dimension.)
At the same time manufactured goods have been getting better, cheaper, and more varied, we have all been buying more products in the category of “personal capital goods.” These are goods (and lets call software a “good” for this purpose) that we use to create our own value. The most striking, of course, are the PC, the PDA, the printer, the copier and (but fading fast) the fax. With a full set of these any of us can, and practically all of us do, become our own one-person offices. (Our fathers had secretaries with typewriters; we have no personal help, except for our personal capital goods, in running fairly substantial organizations.)
Another aspect of the economy for today’s consumers is that it is remarkably deregulated with an extraordinary range of options to choose from: When we were young there were typically two airlines between every city pair with identical, government-regulated fares. There was a standard government-regulated interest rate at the bank for individual accounts. There was one phone company for local and long distance. And our parents had defined benefit pensions that they never thought about. Choices were limited but so was the amount decision time to get the best deal. In fact, there weren’t many best deals.
Today we have a range of choices – sometimes, as in the case of telecoms, quite bewildering (have you switched to Skype yet?) They are available for practically every good and service, but with a corresponding increase in search and decision time. And, because we need many of our products to work not just in isolation but together, we spend a lot of time thinking about installation and integration. For example, I need to replace my early model Treo with a Treo 650 (or maybe there is already a newer/better model?) but I’ve been holding back because I dread all the work on my part to get the data transferred and everything to sync nicely with Outlook and all my other software.
Finally, there is the matter of demographics: Many folks like Jones and Womack are in the fabled sandwich generation, with kids still at home and elderly parents under our care. And many more adults are single-handing households than in the past. Plus, the population as a whole – including even in China – is getting older as the Post World War II baby boom generation progresses through the life cycle. As a consequence, there are a lot more consumer choices to be made, in many cases for the generation ahead and the generation behind, by a lot of consumers who are getting older and who will have less energy..
The one thing that hasn’t changed for the current-day consumer is time. It turns out that there are still 24 hours in the day. (And there will be for about another 157 million years until tidal action slows the earth to a point that we have a 25 hour day.) Yet there are so many things for the consumer to do in order to obtain, install, integrate, maintain, repair, upgrade, and recycle all the kit needed. The feeling we have often had in recent years is that we are drowning in a sea of brilliant low-cost products. This insight – that we’ve actually done great things in manufacturing but that there is an enormous gap between the factory and the consumer – was the starting point for lean consumption as examined in Lean Solutions.
It follows that in addition to brilliant, isolated goods and services, the consumer now wants something more. We’ve formulated this something as the principles of lean consumption (putting the six principles in the voice of the consumer):
- “Solve my problem completely”. (That is, get all the products in my life not just to work but to work together and without me spending days on help lines.)
- “Don’t waste my time.” (Which companies seemingly love to do, thinking the consumer’s time is worthless, or at least that the consumer doesn’t have a choice.)
- “Get me exactly what I want.” (The proposition of retailers and other providers of goods from stock is that you can always find any of the items they have on offer, but this turns out not to be true or even close.)
- “Get me want I want where I want.” (We believe that Wal-Mart is really the end point of mass consumption: The idea that lower cost is tied to larger scale and that the customer ought to go to the provider to get the things needed at a good price, no matter how far away. We know that there is actually a better way.)
- “Get me what I want when I want.” (As every manufacturer knows, it is simply impossible to get consumer exactly the make-to-order item he or she wants with no notice, except with infinite amounts for production capacity or massive inventories lurking somewhere, even if this is what firms like Dell promise. The interesting question is when consumers really do want things. And we believe that when varies by customer and customer circumstance. What’s more, we believe that many consumers are both able and willing to plan ahead with providers in return for lower costs and prices. But today they have no one to talk to.)
- “Reduce the number of problems I need to solve.” (Usually Consumers obtain goods and services not for the products themselves but in order to solve problems in their lives. Yet even as manufacturers steadily reduce their number of suppliers and let a few, more-talented firms solve larger problems on a continuing basis, consumers are steadily increasing their supply base to cover the whole world (thanks to the web.) They obtain more items from more suppliers who are mostly strangers involved in one-time transactions. Surely there is a better way.)
After thinking about what consumers in the current era really want, we realized that there is usually a lean solution available to completely solve the consumers problems while saving the consumer’s time and actually reducing the provider’s cost. However, to find the lean solution it is necessary for providers, including manufacturers to start thinking systematically about consumption and provision as processes just the way we have learned to think of production as a process (including the linked processes of product development, factory operations, logistics, and supplier management.) We believe that by looking at the process the consumer follows to solve problems, comparing this with the process the provider follows (along with the manufacturer), and then synchronizing and rationalizing all three processes, we can product a win-win-win for consumers, providers, and manufacturers. These win-win-wins are lean solutions.
Q: After your contributions to the manufacturing world, why write Lean Solutions? Is the book a result of your own personal customer service horror stories (traveling, buying a PC, having a car fixed) or because of a higher calling?
We certainly were affected by our own experiences, particularly given our situation in life with lots of stuff, kids, pets, elderly parents and in-laws, and our feeling that we could never get everything done. But we have also noticed for years the growing gap between the factory, where things are getting better, and the situation of providers and consumers where it often appears that things are getting worse. Plus this gap is really the big opportunity space for all of us in the advanced countries. Some manufacturing will continue to drift, no matter how lean it may be, but most of what goes on between the factory and consumers (and this accounts for 80 percent or more of the American economy) will stay at home. We strongly believe that our future standard of living in America, Europe and Japan largely depends on our ability to improve the consumption and provision processes.
Q:What impact do you hope your book will have?
We hope it will expand the universe of process thinkers to retail, healthcare, financial services, transport, logistics, shelter (home and office builders plus the maintenance and repair industry), and even government services. Right now the best process thinkers tend to be in manufacturing and society is missing most of the benefit.
We also hope that we can convert at least a few CEOs to process thinking and entrepreneurs as well. The former are mostly strategic and financial thinkers and have simply never had anyone show them the benefits in terms of cost, quality, responsiveness, consumer satisfaction, and growth and profit opportunities of fixing their existing processes rather buying and divesting assets (the strategists) and fully utilizing assets (the financial thinkers.) Meanwhile, entrepreneurs are a particularly important group to attract (as we explain) in Chapter 9 because they don’t have any respect for existing assets and are happy to rethink whole business systems. If only they would use more process thinking we would all be better off.
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