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Jeff Liker

Dan Jones: Lean Insights before Lean Innovation

By Jeff Liker, - Last updated: Tuesday, May 25, 2010 - Save & Share - Leave a comment

I have always thought that innovation rather than simply quality, delivery and cost was the real purpose and ultimate result of lean thinking; innovation in terms of the products and services we design, in how we relate to customers and in how we find new ways of working together to create value. The experience with lean is that it leads to new capabilities which in turn open up new business models that turn the tables on the competition and reshape whole industries. In other words lean insights can lead to lean innovations. There is no short cut.

Think of it this way – the first stage of lean is to improve the operations to make existing designs with existing assets. Although substantial improvements are possible it will necessarily be constrained by decisions made well before working with lean. We are in fact establishing a new stable base line with a full understanding of what this involves.

Having learnt how to use lean to remove a lot of waste from existing systems the second opportunity is to design the next generation products and processes in a very different way – delivering superior capabilities and lower costs with differently configured equipment and supply chains. But as we link lean improvements across the whole business we realize that we can now also do new things that were previously impossible to do cost effectively. The third lean opportunity then is to use these new capabilities to develop new business models that the competition will find it hard to follow.

Examples of this are Toyota’s pioneering of hybrid engines which could only have become cost effective in a relatively short space of time because of the rapid iterations of its much quicker new product development process. Tesco was only able to pioneer cost effective web shopping, modern convenience stores and multi-format retailing because it developed lean rapid response supply chains for its core products combined with a more precise insight into real customer demand from its loyalty card and home shopping orders. Streamlining back office processes in banks can potentially open up new ways to manage more complex portfolios of risk, cash and investments for ordinary customers rather than just the very rich.

As we outlined in Lean Solutions, the right combination of insights into consumption processes on the one hand and production and service delivery processes on the other point to the right combination of products, services and knowledge to help customers solve their problems in the future.

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