Lean lessons for the climate crisis
From competitiveness to survival
We live in very different times from when we discovered lean more than 30 years ago. We are in the middle of a climate crisis that threatens our very existence on this planet, and it is obvious that this demands a very different response from the one we have given so far. In fact, it is no longer about competitiveness, but about survival.
Addressing this crisis means rethinking everything we do – the technologies we develop, the products and services we provide, the energy sources we use, the supply chains we depend on, the global footprint we produce, and the management systems we have in place in our organizations. At the end of the day, it is the decisions and actions of millions of companies and individuals that will determine how we survive this critical decade.
Lean is often perceived as a bottom-up method for increasing competitiveness by eliminating waste, but that is only a fraction of its true potential. Lean thinking has already helped improve many important processes in large operations of our biggest corporations – which I regard as a legacy of the mass production era. Industry leaders were eager to see step changes in performance, but many of them did not feel challenged enough to change their behaviors to sustain them.
Is it possible that the climate crisis could force us to rethink more fundamentally the way we think and act, unlocking the full potential of lean thinking? What lessons can we draw from our experiences with lean that can help us deal with the climate emergency? I see three main lessons, which I describe below. But first, let's summarize the fundamental changes brought about by lean thinking over the last three decades.
The Toyota revolution
The postwar period saw the deployment of specialized expertise within organizations, in functions, departments, machines, plants, warehouses, etc. Each of these activities was “managed by the numbers” and by control systems (such as MRP, ERP, and SAP) to optimize their use, keeping all activities busy. Likewise, each new product development department handed its work over to the next department, and so on, until launch. Strategy, therefore, focused on securing dominant positions in markets through branding and marketing. Externalities were the responsibility of governments, and supply chains cut whatever they could to take advantage of cheap transportation and low-wage locations, including China. The large amount of waste and the lack of flexibility in these systems were largely ignored.
More than 30 years ago, Toyota showed the world how to go further – how to double productivity, eliminate quality defects, and design new products in half the time. On the one hand, they did this by integrating production activities into value streams and synchronizing those value streams with users' needs. Making complicated integrated systems work depends on each step always being fully capable of completing the task and of responding quickly to interruptions or deviations. It also depends on being able to work according to demand pulled by users, rather than a chain of forecasts that amplify the signals upstream. And on a shared commitment to collaborate in solving problems in order to deliver benefits in other parts of the system.
On the other hand, Toyota also integrated its development activities into a continuous process, designing new products at a regular cadence. Each product family is led by a chief engineer, charged with examining changes in user needs, technology options, and production experience to define the problems to be addressed in this new product. The chief engineer also articulates the resources the team requires to solve these problems and regularly reviews progress with the team in a visual project room, or obeya. Instead of jumping to ready-made solutions, the team explores alternative technical solutions simultaneously, so that the resulting design can progress quickly to launch. At each stage, learning is reviewed and captured for future use. Inspired by Toyota's example, software development went through a similar progression, from agile to scrum and DevOps, with continuous improvement of modular design and testing, enabling them to move from twice-yearly releases to daily ones.
Learning from problem solving
The first very important lesson we can draw from lean in figuring out the best way to deal with climate change is that integrated systems only work if all employees are engaged in stabilizing their work, responding to interruptions, and using scientific problem solving to make detailed improvements to the system. Although routine steps can be automated, human decision-making is indispensable, especially in unstable, rapidly changing times. Cumulative problem solving develops the capabilities to deal with change, more complex tasks, and new challenges. This is crucial (along with user feedback) in product design, in next-generation processes, and in the rapid scaling of new technologies through successive iterations.
Developing these capabilities through “learning generated by problem solving” does not happen simply. It needs to be part of a structured improvement process in which team leaders and managers at all levels are responsible for developing the capabilities of their direct reports, supported by a network of sensei (teachers) who guide the learners – including senior executives –, ask questions, and help them reflect on the lessons learned in each problem-solving cycle. This commitment to learning and to developing people creates a culture of respect and responsibility, instead of treating employees as disposable assets. How well these capabilities are mobilized will be a test of how seriously leaders take the climate crisis.
Seeing the whole
The second lesson is the importance of seeing the performance and impact of the whole system and of the extended value stream with its main tributaries. I have helped executive teams see their operations as a system of interconnected processes. I have also “walked” many extended supply chains around the world and found that economies of scale and labor cost advantages are more than offset by the gains from synchronization and co-development. For example, I witnessed a case in which the parts of an automotive system were made in 14 different plants in China, Japan, Brazil, and Europe. As a result, they took up to 630 days to reach a customer in the USA. The latest-generation product from that same automaker, now developed on lean foundations, is made with right-sized tools in only 9 plants, all within trucking distance of the customer, reducing the lead time to 37 days and eliminating shipping and air freight dispatch.
Proximity alone is not enough, but it allows supply chain partners to commit to developing the other capabilities needed to continuously improve the synchronization of their joint operations. The purpose of just-in-time is to reveal the next problems for teams to work on, rather than to optimize long-distance logistics, as is often mistakenly reported. The climate crisis presents the opportunity to rethink the logic of location and to build dynamic supply complexes in each region. It also raises questions about which approach will prevail in the future – centralizing production in large plants or distributing it across right-sized plants located closer to customers. Seeing the whole system is also fundamental to understanding its impact on the environment and on the circular economy, from recycling to reuse.
Decision-making using science
The third lesson is that the scientific method is the essential ingredient in managing integrated systems and in “learning generated by problem solving.” Deming distilled the scientific method into his Plan-Do-Check-Act (PDCA) problem-solving cycle. Over time, Eiji Toyoda operationalized it into a complete business system. PDCA is the common language for making and executing decisions at all levels, from formulating strategies and big leaps to detailed incremental improvements. It is embedded in a performance management system that tracks the progress, stability, and capabilities of the value stream; in the visualization of “planned” versus “actual” everywhere; in visual rooms for project management and strategic decision-making (obeya); in a framework for planning and conducting experiments to find solutions that work (A3); in a catchball dialogue up and down the organization aligning corporate performance gaps with proposed actions to close them (hoshin); and in “help chains” to escalate and remove obstacles to improvement.
This scientific approach also drives the strategic process of finding and defining which high-level problems the organization needs to focus on. This is particularly important in times of profound change, when we face new problems we do not yet know how to solve, such as surviving the climate crisis. It begins with what Toyota calls “problem consciousness,” finding the right questions to be answered through detailed observation of the current situation and of the technical possibilities. These problems are then broken down into manageable parts, establishing a measurement system to track progress and solve them. Each problem is framed as a gap to be closed, and proposals for doing so are solicited through a hoshin catchball dialogue, before many different experiments are conducted to find out what works and what doesn't. Finally, the knowledge acquired is captured and shared with the company's teams.
This process of discovering high-level problems is the key to making the problem-solving architecture work and to harnessing the creative power of the organization. It is a challenge for leaders accustomed to deciding on solutions, drawing up plans to hand over to specialists to deploy across the company, and then dealing with the unintended consequences. This traditional management approach stifles learning and inevitably leads to resistance to change and to the protection of existing assets and markets. A lean approach to strategy and learning, on the other hand, provides a promising way to face the challenges of the climate crisis.
Science has been fundamental to understanding what is happening to the global climate system, and scientific thinking will be fundamental to responding to it and to our survival. New technologies will be important, but so will our ability to scale them up quickly enough and integrate them into our lives. Learning to use scientific problem solving at work will also give millions of people direct experience of the importance of scientific thinking. This democratization of science may be one of the lasting legacies of lean thinking.
