We’re Not Done with Waste

WSJ.com – In the Lead “For Now, the FocusIs More on Innovation Than on Budget Cuts”

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This column goes into the category, almost, of the “what’s beyond lean?” article that pops up from time to time. The trend is to talk about “innovation” as if you can’t have efficiency and innovation. Look at Toyota, they manage to do both.

Innovation is the latest management mantra for a growing list of CEOs, especially at big, established companies who for years have fixated on reducing budgets. With just-in-time inventory, outsourcing and other cost-squeezing measures now widespread, executives know their companies must become more creative to capture customers in the global market.

At least you can read between the lines here and say we’ve “done JIT” (maybe many or most companies have “lean” materials — a potential misuse of the word “lean”). Even if you have a kanban system in place (more likely we’ve pushed inventory back on the suppliers), you most likely do not have a true lean culture and widespread lean practices. You most certainly haven’t cut all of the waste out of your system.

At General Electric, CEO Jeffrey Immelt is telling managers that no matter how efficient their work processes, they won’t achieve his goal of 8% organic growth unless they have great products and services to sell.

Well, of course. What’s with this stupid artificial “either/or” between efficiency and innovation? Lean, done right, brings “efficient work processes” as well as quality or “great” products (“JIT inventory” alone doesn’t ensure quality).

Don’t let the innovation talk fool anyone into thinking that lean approaches are passe or “done.” Lean never was about mere “cost cutting” or “budget cutting”. The author seems amazed at the following:

Cost-cutting and manufacturing efficiency have been main concerns for CEO Robert Lane since he took charge six years ago. But he hasn’t cut spending for research. He reminds employees that Deere was founded in 1837 after blacksmith John Deere invented a steel plow that worked well in prairie soil. The company’s ability to keep inventing new products that are useful to customers is still the key to Deere’s growth, he says.

He hasn’t cut R&D. Of course not. Lean, innovation, whatever buzzwords you want to throw at it, he’s running a business and slashing R&D to hit profit goals is never a smart approach.

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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