Stephen Ruffa, the author of ‘Going Lean,’ spent time with Manufacturing.net discussing his concept of Lean Dynamics, designed to help manufacturers navigate through challenging business conditions.
Manufacturing.net: Could you give us a brief overview of your book ‘Going Lean’?
Stephen Ruffa: ‘Going Lean’ offers a fresh way of looking at the principles of lean manufacturing -- based on a different understanding of why some of today’s most successful companies embarked on their shift to this different system of management in the first place.
Simply cutting costs doesn’t seem to be what enabled Toyota to overcome the low, volatile demand and intense competition it faced when it started its journey after the end of World War II. Instead, the company had to put in place a way of doing business that was better suited to the uncertain environment it faced -- a condition that today seems to have become the norm.
‘Going Lean’ shows that rather than attacking visible symptoms or going after desired outcomes, the real solution is for companies to structure their operations, decision-making, and how they flow information and innovation, in a way that creates a degree of dynamic stability, essentially giving them the ability to right themselves when things go wrong.
This underlying ability to overcome the effects of sudden change and uncertainty -- something I call Lean Dynamics -- seems central to why some companies thrive even during some of today’s most severe circumstances.
MNET: How did you come up with the concept of Lean Dynamics?
Ruffa: I’ve been fortunate to have had a number of opportunities to research how companies have applied lean tools and practices within challenging, dynamic environments. I’ve also had the chance to apply some of these lessons to overcome significant constraints, such as projects on mitigating the risk for the Defense Department in obtaining critical supplies during wartime demand spikes.
My first opportunity came when I led a government-industry study into what seventeen aerospace producers were doing with lean, looking for lessons in overcoming the challenges of cost-effectively turning out new, cutting-edge systems. What we found was rather surprising.
For instance, slashing inventories or speeding operations didn’t necessarily translate to significant bottom-line savings. Those showing the greatest savings had gone further, addressing the underlying conditions that led this waste to accumulate in the first place.
To better understand this, I looked for other lean examples -- companies in different industries that had sustained strong, growing value when faced with extreme conditions. Unfortunately, we’ve seen plenty of these so far this decade, from September 11th, to Hurricane Katrina, to spiking oil prices and economic downturns. What I found was that a few companies stood out. Companies like Toyota, Southwest Airlines, and Wal-Mart defied conventional wisdom and thrived when others struggled. When I examined them further, I found that each had independently learned to do business very differently, a way that I call Lean Dynamics.
MNET: In your opinion, can a company handle any problem by going lean?
Ruffa: While it’s hard to say that going lean will overcome every problem, it certainly appears to make a dramatic difference. My research shows that companies that apply its principles seem to consistently thrive despite facing serious conditions that can throw others into crisis. But this ability to overcome severe circumstances seems to depend on the company’s willingness to really embrace this system of management.
MNET: What’s the first step in implementing Lean Dynamics?
Ruffa: It’s important to realize that it isn’t enough just to stabilize the business for those conditions a company faces today. Instead, achieving strong, lasting results takes understanding its broader dynamic conditions -- the sources of uncertainty and sudden change that that can undermine stability and cause inefficiencies and waste to accumulate in the first place.
A key aspect of this is determining what type of value its customers expect, and to understand that the best way to deliver it might be very different than what it has done in the past. Part of this is recognizing that today’s challenges don’t just impact the company. Its customers also are forced to deal with increased uncertainty, sudden change, and even crisis. Companies that continue to thrive during challenging conditions seem to see this, creating a range of value better matched to their customers’ changing needs, which they are better able to sustain over time. The result seems to be better trust and customers that come back again and again.
MNET: Why aren’t companies doing this already?
Ruffa: I think a lot of companies are setting their sights on gaining efficiencies that are still based on how they have traditionally done things. They might see risk in making deeper changes, so they instead work to find and remove waste and inefficiencies to stretch a little further their underlying way of doing business that has worked very well for a long time.
But going lean means making deeper changes -- changes that to some might appear to be risky. However, if firms were to analyze their situation using the methods offered in this book, I believe many would see that the greater risk comes from staying on their current course, and that they’ll face greater problems by continuing to depend on a system of management that was built for a very different environment than what they now face.
MNET: Is that system more at the management level, or does it involve all levels of the company?
Ruffa: The whole company needs to contribute to the success, which means everyone needs to understand why change is necessary and what needs to be done. People with different backgrounds need to understand what the real challenges are that the company faces, and the compelling reasons why all must contribute to making this change.
But while transforming to a lean system of management requires the involvement of everybody from the workforce to the leadership, it is critical that the leadership fully understands the transformation and is able to set the pace and continue to make decisions in a way that is consistent with this new way of thinking.
MNET: How do you know you’re implementing a Lean Dynamics system properly? Is there a way to measure your progress?
Ruffa: Absolutely -- that’s really an important part of Lean Dynamics. Lean begins with identifying value; measurement is integrally linked to this. Based on how value is defined for a firm, measurements can be designed at different levels to keep things on track.
With that said, it’s important to point out that this book shows a top-level way of mapping out the value that companies create across a range of conditions. You can get a picture of how a firm is progressing in its lean journey, something that was very important to the analysis in this book. I believe this can serve as an important tool to help guide a company’s decision to embark on Lean Dynamics and also provide it with a way to track its performance and help it stay on course.
MNET: Could you explain that measurement system?
Ruffa: It’s termed the value curve analysis, and is a way of comparing the value the corporation creates with what it takes to turn this out, as measured across the range of conditions in which it must do business. It really does paint a stark difference between traditionally managed firms and lean firms.
For additional information, visit http://www.goinglean.net/