One of the most important, and most misunderstood, principles in Lean thinking is this:
Lean is not a cost-cutting strategy. Lean is a people-development strategy.
If your organization is using Lean as a tool to justify layoffs, you're not practicing Lean–you're undermining it.
This idea came up in a recent conversation with Dave Fitzpatrick, my colleague in our Lean Healthcare Accelerator Experience trips to Japan. As Dave put it so well:
“Improvement here is never connected to the idea of headcount reduction. It's about finding new value. So there's no fear behind improvement.”
In the Japanese organizations we visit–both hospitals and manufacturers–leaders are clear and consistent: Lean is about developing people, not eliminating them. That clarity matters. Because when fear is present, improvement stalls.
Fear Destroys Engagement
If staff associate Lean with job loss, the message is clear: keep your head down. Don't point out problems. Don't participate in improvement. It's safer that way.
But Lean thrives on participation. It depends on people feeling safe enough to speak up, experiment, and learn.
In too many American organizations, I've seen well-meaning Lean efforts derailed because improvement was tied to cost-cutting. Sometimes explicitly. Sometimes quietly. Either way, the result is the same: fear kills the very engagement we need.
That's why I've long advocated for a foundational commitment that some call a “no layoffs due to Lean” policy. It's not just semantics. It's about creating a culture of psychological safety, trust, and long-term thinking.
UMass Memorial Health: A U.S. Example of Respectful, Fear-Free Improvement
At UMass Memorial Health, Lean and continuous improvement are being used exactly as intended–to engage frontline staff, not displace them. Dr. Eric Dickson, their CEO, and his leadership team have created a thriving system where employee ideas are actively welcomed and supported.
In a 2022 webinar, they showcased how they've implemented over 100,000 employee-driven improvements–ideas that came from people doing the work, not from a cost-cutting task force. They didn't slash jobs–they built capability.
They're now over 100,000 improvements — and that's still rising!
This is what Lean looks like at its best: practical problem-solving driven by those closest to the work in an environment where people feel safe and valued.
Scripps Health: Leading with Principles
Back in 2015, I wrote about Scripps Health CEO Chris Van Gorder, who has long rejected layoffs as a go-to move during financial pressures. He once said:
“Layoffs are not a strategy.”
That kind of leadership matters. It sets the tone. When frontline staff know their jobs aren't on the line every time a new strategy is introduced, they can focus on delivering care and improving the system–not just protecting themselves.
Layoffs may feel like a quick fix, but they often come with long-term costs: lower morale, reduced trust, and slower improvement. Van Gorder's stance is a reminder that leading with respect isn't just nice–it's effective.
What We See in Japan
On our learning trips to Japan, we've consistently seen organizations that practice what they preach. At Toyota and other standout companies, improvement isn't feared–it's expected. Not because people are culturally wired that way, but because leaders have created the conditions that make it safe.
Dave Fitzpatrick and I have heard the same message over and over: improvement leads to better care, better flow, better quality–not fewer people.
I'd add that Lean is about SQDC – Safety, Quality, Delivery, and Cost:
We've seen hospitals that have been practicing quality circles and Kaizen for over 25 years, not because of tradition, but because they've made intentional decisions to stick with it and evolve.
What these organizations demonstrate–whether in Japan or Massachusetts–is that when you remove fear, you unlock improvement.
Make the Commitment Explicit
If you're serious about Lean, here are three questions to ask:
- Have we publicly committed to no layoffs due to Lean?
- Have we communicated that clearly to our employees?
- Are we investing in systems and roles that repurpose freed-up time into more value-added work?
Without these foundations, Lean can quickly become another top-down initiative that fizzles–or worse, breeds cynicism.
Lean Is About People. Always.
If you think Lean is about cutting costs by cutting heads, you've missed the point.
Lean is about building better systems and growing better people.
That means treating people as assets to develop–not costs to eliminate. That means fostering a culture of improvement, not a climate of fear.
And yes, it means being brave enough to say:
“We will not lay off staff due to Lean.”
See It for Yourself
If you want to see what this looks like in action, I invite you to join us on an upcoming Lean Healthcare Accelerator Experience in Japan. Together with Dave Fitzpatrick and Reiko Kano, we visit organizations that don't just talk about Lean–they live it.
It's not about copying. It's about learning–and coming home with a clearer vision of what's possible.
Learn more: https://japanleantrip.com
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Let’s work together to build a culture of continuous improvement and psychological safety. If you're a leader looking to create lasting change—not just projects—I help organizations:
- Engage people at all levels in sustainable improvement
- Shift from fear of mistakes to learning from them
- Apply Lean thinking in practical, people-centered ways
Interested in coaching or a keynote talk? Let’s start a conversation.
