The placement of a suggestion box within an organization speaks volumes about their level of commitment and sophistication in pursuing customer service, quality and continuous improvement. The example above was in the lobby of a county health center, on the way to the restroom. All in all, not bad placement. However the lack of suggestion forms, paper or writing tools in the vicinity made me suspect that the convenience of the yellow column was the chief design principle in its location.

Under the ambitious but ambiguous words "Success is Our Goal!" another sentence in smaller font says "Your Ideas Make a Difference!" You ideas, in fact, make no difference at all. Actions make a difference. Ideas may inspire action, but they do not in themselves make a difference. If ideas made a difference, without the necessary buffer of action, the world would be a combination of far more horrible and far more fabulous. People working at the non-executive levels of an organization (which at one time or another, is practically everybody) experience and know that our ideas do not make a difference at all. Management thinkers from Edwards Deming to Daniel Pink have pointed out how having a degree of control, direction and ability to improve one's own work can be a larger source of motivation than financial rewards.

In order to take this dangerous idea that our ideas make a difference and make it true, we must take action. The location of the suggestion box is one critical element in enabling ideas to make a difference.

The suggestion box is a three-dimensional representation of the kaizen process of an organization. It is a good idea, a positive intent. However, suggestion boxes as a kaizen process are rarely executed well. This is because ideas are not developed within or through boxes. Nor are actions taken via boxes. How we design the process of gaining improvement suggestions and how we link this to action makes the difference between a box on a wall and another type of box, pictured below.

This is illustrated by a recent experience upon checking out of a Best Western Hotel in the greater Minneapolis area. The young man at the reception desk asked "How was your stay?" Normally this question packs as much meaning as a "good morning" or "hello" between strangers passing in the elevator. These phrases are what linguists call phatic expressions, serving a social purpose but not conveying any useful information. The Japanese person saying "hai" and seeming to agree earnestly with everything you are saying is in fact only fulfilling a social need for harmony, another example of phatic communication.

When the fellow at the Best Western desk asked about my stay, he was making small talk. He did not expect customer feedback. He did not in fact want any concrete information about my hotel say experience. Even if he was genuinely interested, the process did not enable it. He had other people to check out of the hotel, other work to do. The truly irate customer may have caught his attention.My socially tone-deaf yet polite response to his phatic communication with two detailed suggestions for improving hygiene and in the design and set up of the breakfast and coffee areas did not land in his suggestion box. He did not know what to do with such non-urgent complaints. He made no effort to document these abnormalities.

The kaizen philosophy requires that we be bothered by small abnormalities, not be satisfied with the status quo, and give constructive criticism to any who ask sincerely. It takes almost no effort at all to find improvement suggestions when staying in hotels, even the best ones. It takes far more effort for customers to follow-through and check whether our suggestions led to action. When one visits a particular hotel repeatedly, it is possible to check. From the point of view of the hotel, the inability to demonstrate a process of immediate containment and correction action is a lost opportunity to impress the customer.

A few weeks after my stay I received an e-mail from the regional manager of the Best Western, asking that I fill out an online survey. Normally these are "unsubscribe and delete" e-mails, but recalling the episode above, I clicked the link. After giving feedback on how closely they met my expectations on several dozen generic criteria, I was given one field of about 150 characters to provide suggestions for improvement. I suggested they expand the field size. On the next page was a generous space, about ten times larger, for recognizing individual staff who had made my experience at their hotel a good one. Kaizen, 0; Respect for People, 1.

At the end of the customer survey there was an "other comments" section. I repeated my two suggestions and added the fact that the response of the hotel staff to my suggestions was only vague acknowledgement rather than immediate action to correct the simple problems. I received an e-mail reply thanking me for my feedback and apologizing for the fact that the hotel did not exceed my expectations. If my travels take me back to that Best Western, I will check whether the minor issues were corrected, and more importantly whether "How was your stay?" has become more than a phatic expression.

In the articled Decoding the DNA of the Toyota Production System, authors H. Kent Bowen and Stephen Spear generalize the continuous improvement process as a series of experiments aimed at achieving an ideal condition, a perfect customer experience. As an example of the kaizen process, the suggestion box is inadequate according to their design criteria known simply as "the four rules". To paraphrase and apply to the customer satisfaction, suggestion box or kaizen context:

1. Highly specify content, sequence, timing and outcome
2. Connect customer and supplier directly with unambiguous yes-no signals
3. Flow material and information in simple and direct pathways
4. Improve via the scientific method, as close to the front lines as possible, with a mentor

In other words, every suggestion box should be labeled:

"Dear customer, the process you just experienced was designed under the hypothesis that you will be delighted if this process did X in Y amount of time with outcomes of Z. If we failed, please share the details of how we fell short. Thank you for participating in our experiment."

Or something with more specificity to the situation and less cheek. Instead most suggestion boxes communicate big, vague intents on the order of "Please give us your suggestion on how to improve our airport!" or "Success is Our Goal / Your Ideas Make a Difference!" Asked the wrong questions, we give the wrong answers, or stop caring.

How many process-specific suggestion boxes most organizations would need to actually have direct and unambiguous lines of customer-supplier two-way communication at the process level? This brings us back to the question and title of this post.

Where is your suggestion box?

The only good place for a suggestion box is between your ears. When your suggestion box doubles as your personal ambulatory hatstand, the only way you can fill it with other people's creative thinking and intentions to take action is to carry said suggestion box within earshot of them. If a specific kaizen idea needs more work, put something slightly better back into the other person's suggestion box and let them carry it around for a while. A suggestion, from my box to yours.

PDCA. Plan, Do, Check, Act. This process is at the core of kaizen, lean, six sigma, continuous improvement, hoshin kanri, the scientific method and the learning organization. I also believe that the PDCA cycle is inherent to the creative process. PDCA powers innovation. Perhaps it is a question of language tripping us up, or a matter of nuance, but the notion that continuous improvement and it's friends in the PDCA family are inimical to innovation appeared again today in a Harvard Business Review article titled It's Time to Rethink Continuous Improvement. Author and consultant Ron Ashkenas writes:

Six Sigma, Kaizen, Lean, and other variations on continuous improvement can be hazardous to your organization's health.

Granted, anything can be harmful. All things in moderation.

While it may be heresy to say this, recent evidence from Japan and elsewhere suggests that it's time to question these methods.

This is not heretical at all. While it makes a catchy closing to the introductory paragraph, the author seems to forget that continuous improvement is not a rigid dogma. It is the scientific method, inherently self-critical and rethinking of its current paradigms. An essential part of kaizen to question the status quo, even when this means questioning the very effectiveness of "Six Sigma, Kaizen, Lean and other variations on continuous improvement".

Giving credit to the astonishing turnaround in quality in Japanese manufacturing "from worst to first" over the past half-century, the author attempts the causal leap using the "the recent evidence from Japan" of the focus on quality and continuous improvement resulting in the struggles of some major Japanese industrial firms:

But what's happened in Japan? In the past year Japan's major electronics firms have lost an aggregated $21 billion and have been routinely displaced by competitors from China, South Korea, and elsewhere.

The continuous improvement mindset teaches us to pay attention and think critically whenever the word "evidence" is used. Not all Japanese electronics firms practice continuous improvement, kaizen, lean or six sigma. Not all Japanese firms that do practice these things are losing billions. If we want to understand the problem, we need to break it down. We need to look for multiple causes and their interaction, rather than a single one to explain a complex phenomenon.

If we are free to make causal leaps of this kind, why not choose one of many other factors and claim evidence for these lost billions? Japanese firms with fewer than 2 female board members? Losing money. Japanese consumer products companies whose major market was export? Losing money. Japanese firms with a strong dedication to the environment? Losing money. Japanese firms that had no foreigners in executive positions prior to 25 years ago? Losing money. Pick a favorite theme and look for correlation, and confirmation bias will help you find it. When we are right, we are lucky. When we are wrong, we haven't disproved a hypothesis; we haven't learned.

Since we are telling stories rather than presenting evidence, I will share my experience. Having lived, worked, traveled in Japan for much of the past four decades, I have witnessed the trend towards lower volumes and greater variety by Japanese manufacturers for many years. At first this was driven by the need to create constant demand for new things in the quickly saturated and oversupplied Japanese domestic market. The Japanese house had only room for one television. These lasted for 10 years without breaking. So it became necessary to create a reason to cause consumers to desire a new television in fewer years. Japanese brands had to create demand.

Japanese firms became good at quickly launching new and often trivial variations on electronics, automobiles, soft drinks, etc. These were often targeting niche or very localized tastes. One time zone, one language, a compact population base and rapid word of mouth made it feasible to create buzz for new products, long before the internet. However the short product life cycles did not allow for global distribution along complex supply chains. With the rare exception of the Tamagotchi, these products did not escape Japanese borders except in later years, as novelty items.

Each year there is a new flavor of 5-person color-coded superhero (think Power Rangers) TV show not because the old superheroes are dead or no longer capable of saving the world from villains oddly focused on world domination through conquest of Japan, but because the studio needs to sell a new set of toys to a new batch of 5 year old children. In the USA, we are generally content with Spiderman, year after year.

These are quite different types of innovation, more to do with packaging, marketing and selling to a niche that craves novelty. Perhaps this made the Japanese bad at inventing brilliant new technology products. Then again, the packaging and marketing of the MP3 player as the iPod was a brilliant page Steve Jobs took out of exactly this book.

In any case, the point is that Japanese firms became inordinately good at producing a high variety of products in low volumes. For a long time the high volume market was for export. The global recession was not kind to this market. The Japanese economic bubble imploded two decades ago and ushered in a period of low growth and deflation, weakening the domestic market. The population of the country is aging and declining by something like 50,000 people per year. The 30% change in the exchange rate over the past year has not helped the export business. The erosion of volume in Japanese manufacturing was finally capped off by the loss of most low-end, high volume work to China, South Korea and and other competitors. These are a few of the factors, with the possible though not probably contribution for a focus on continuous improvement, which have put Japanese industrial giants on the ropes.

These Japanese firms have learned a historic lesson that no amount of continuous improvement and steady, gradual cost reduction could compete for high volume work with the advantages of Chinese firms with lower cost labor, free land, low interest government loans and leapfrogging by firms entering the market at similar-to-Japan levels of manufacturing technology. The Forbes article Sayonara Sony: How Industrial, MBA-Style Leadership Killed a Once Great Company, while making the misstep of assigning partial cause of Sony's failure to the work of Deming, does a better job of explaining how the company was a prisoner of its own industrial footprint, making the classic mistake of taking the "product-out" rather than "market-in" path.

The Japanese saw the loss of high volume exports coming for decades but could do little about it. Mass layoffs, social upheaval and restructuring a fixed industrial base only happened when it was inevitable and not a moment sooner, in a few cases only under the hand of a non-Japanese leader. This has nothing to do with a Japanese hyper-focus on continuous improvement and kaizen, and everything to do with the value they place on social stability, and the negligible financial incentives that Japanese CEOs have for gutting their organization, when compared to Western firms.

I fail to see the "evidence" that continuous improvement has caused Japanese firms to fall behind or fail. The failure to launch game-changing innovative products was certainly a factor for the decline of Sony, for example, but if you talk to Sony people they will tell you not about a stifling culture of continuous improvement but the culture where senior engineers decisions were not be be questioned. Don't ask for evidence of why their brilliant idea will be a winner, in other words. This seems to be an instance of exactly a place where management by fact could have helped.

Ashkenas names a few American companies who practiced six sigma and failed to be innovative, implying but once again without providing a causal link, and quotes innovation thinker Vijay Govindarajan:

"The more you hardwire a company on total quality management, [the more] it is going to hurt breakthrough innovation. The mindset that is needed, the capabilities that are needed, the metrics that are needed, the whole culture that is needed for discontinuous innovation, are fundamentally different."

This may be true. But as presented, this is an opinion by Mr. Govindarajan, not factual evidence. Many things, including TQM, ISO, six sigma, improper incentives, a lack of customer collaboration, bad food in the cafeteria, can stifle innovation. Simply finding a quote by an expert in the topic is not the same as providing evidence. The full context of Mr. Govindarajan's quote is below, from a 2007 BusinessWeek article At 3M, A Struggle Between Efficiency and Creativity:

Indeed, the very factors that make Six Sigma effective in one context can make it ineffective in another. Traditionally, it uses rigorous statistical analysis to produce unambiguous data that help produce better quality, lower costs, and more efficiency. That all sounds great when you know what outcomes you'd like to control. But what about when there are few facts to go on--or you don't even know the nature of the problem you're trying to define? "New things look very bad on this scale," says MITSloan School of Management professor Eric von Hippel, who has worked with 3M on innovation projects that he says "took a backseat" once Six Sigma settled in. "The more you hardwire a company on total quality management, [the more] it is going to hurt breakthrough innovation," adds Vijay Govindarajan, a management professor at Dartmouth's Tuck School of Business. "The mindset that is needed, the capabilities that are needed, the metrics that are needed, the whole culture that is needed for discontinuous innovation, are fundamentally different."

The conclusion of the author is that we should not abandon continuous improvement which has done much good, but to nuance it, by avoiding a one-size-fits-all approach, question whether processes should be improved, disrupted or done away with, and by assessing the impact of continuous improvement on company culture. Regardless of the premise, the conclusion is agreeable.

The author's main concern seems to be be that continuous improvement asks for decisions to be made based on data and facts, even in cases where there ambiguity or a complete lack. But this is not a case of continuous improvement versus innovation; we are faced daily with inadequate information to make perfect decisions, regardless of industry, process or maturity of the organization. Even when we have adequate levels of information, we fall prey to a variety of biases and choose incorrectly. Daniel Kahneman writes brilliantly and in depth about these in his book Thinking, Fast and Slow.

In spite of these limitations, we must make decisions daily, and move on. The key is to have a structured way for the organization to learn from these decisions, good or bad. Continuous improvement is the framework that allows us to learn. It is the scientific method. It is a question of knowing how to use inductive and deductive reasoning, intuition to process subconscious queues and statistics to make good decisions based on long-term tendencies. One of the central tenets of kaizen is to go see for yourself. Demand data but do not trust it, verify it.

A few simple ways to successfully integrate continuous improvement to innovation are to lay bare our assumptions (visual management), seek out the voice of the customer (management by fact) and learn from experimentation (kaizen).

The HBR article is a variation on the meme of "saying 'prove it' is the enemy of innovation". Yet it is sad when we don't make a serious, evidence-based attempt to prove this idea. Intuitively, we all know that too much structure can stifle creativity. For as long as there have been accountants and designers, their ways of working have not been completely in synch. If we could show with evidence that this is true, we could begin to solve this problem in a structured way. Unless, of course, innovative leaps of insight are the only ways to resolve such issues.

I am wrapping up a fairly intensive period of reflection. This week was the first board meeting since the merger of Gemba Research and Kaizen Institute nearly 18 months ago. It has been a time of challenge, opportunity and personal growth, requiring much hansei. This was about half of our work this week, the other half looking ahead. As a result, the following are a few realizations on how to do hansei.

Don't batch hansei. Reflection, learning and behavior correction is easier and better in small doses. The practices of hoshin kanri as well as the daily management / leader standard work build in regular reviews for the purpose of learning and course correction. Don't wait 12-18 months for a review, no matter how major the project or how busy you may be.

Reflect as a team. It's not easy to hold up the mirror steadily and gaze honestly at yourself. It is better to give and take feedback from multiple outside perspectives. While it's not impossible to do hansei on one's own, it's immeasurably better to do so as a team.

Do hansei whenever you have an expectation. An expectation is a desire to see a particular output as a result of a process. We need to compare target (expectation) versus actual when doing hansei. Also, whenever we expected to see a result cannot, we also need to do hansei, and take action to correct the situation.

The reflection on the hansei process reminded me of a bit of eastern wisdom that goes "Know yourself, know what is good, know when to stop". This is amazing advice in almost any situation. Applied to hansei,

Know yourself. This is the gist of hansei, an honest reflection on the self as an individual or the team as a unit.

Know what is good. Have a target to compare against and reflect upon. Hansei is less an exchange of opinions about a situation and more an honest look at the facts.

Know when to stop. The purpose of hansei is not to beat ourselves into a pulp or to express every dissatisfaction and every missed expectation. We must know when we have done sufficient reflection to identify a few actionable lessons. Stop while you are ahead and end reflection on a positive note if all possible.

There is a fundamental cultural difference between cultures, regions and within organization when it comes to facing up to faults and failures, accepting responsibility, and learning. The capacity to reflect may be what separate homo sapiens from animals, successful organizations from those less so. Kaizen, the PDCA cycle, hansei and the scientific method are all instances of the same principle. In general the more time we spend on Check and Act, the more effective our Plans and Doings will be. This is the spirit of hansei.

Do you struggle to manage too many e-mails in your inbox? Not clear on how exactly 5S and visual management can be applied to knowledge work? Looking for some practical ways to kaizen your work, starting today? If so, the webinar Factory of One is not to be missed.

Delivered by Dan Markovitz, consultant and author of the book by the same name, it is available to view free of charge until May 15, 2012 after which it will be viewable through Gemba Academy.

In less than 40 minutes, you will learn why multi-tasking is a lie, what variety has to do with your choice of jam, the importance of tying your shoes, and much more.

Ernest Shackleton was a British explorer celebrated for his exploration of the Antarctic. During the 1914-1917 expedition aboard the aptly-named Endurance, he lead his crew without loss of life through disasters which included their ship being trapped and crushed in ice, a journey across a frozen world and even a return to rescue stranded crew. How did he manage this? Perhaps he had the best equipment, or the best trained and best paid crew. Perhaps it was luck. Or was Shackleton simply a larger than life leader, a true hero?

According to lore, Shackleton assembled his team with the following advertisement in the newspaper:

"Men wanted for Hazardous journey. Small wages, bitter cold, long months of complete darkness, constant danger, safe return doubtful. Honour and recognition in case of success."

What type of men would be attracted to such a proposition? It is nearly the antithesis of everyday marketing copy which promises us us great things for little effort. Perhaps Shackleton was sounding a pessimistic tone so as not to waste his time with applicants who would negotiate for better terms. Perhaps he had a sense of humor. Or perhaps he was looking for hardened men, attracted by the prospect of "constant danger", survivors who wished to sail headlong into death or glory.

By luck or by design, everyone on the expedition survived. If there are lessons to be learned from this for our day and in leading change, I think they are these:

1) The advertisement. The lean journey is far more rewarding in many ways, but too often lacking in honor and recognition. It is also long, sometimes cold and not free of dangers. Leaders need to have a clear and compelling purpose for embarking on such a journey. Leaders also need to speak the blunt and brutal truth when leading people through change and risk.

2) The crew. A lean journey requires that we first build a crew out of survivors, explorers and seasoned takers of intelligent risks. Like frost nipping at our fingers, we must brave the shrinking of the comfort zone during a lean journey. A core leadership team, sometimes called the guiding coalition, must be prepared to face up to adverse conditions along the way, ready to find creative solutions across untested territory.

3) The passengers. Unlike the Antarctic explorer's vessel, there are many passengers on the ship of organizational change. Guiding a large organization through change requires that everyone is engaged in some way. There can be idle observers on the deck. And we must leave nobody behind on the journey.

We are all survivors. It is merely a question of "for how long and of what challenges?"

This may be the most unhelpful emergency evacuation visual control in the United States of America. The evacuation plan resembles a journey through a shark's intestines. Should one need to actually consult it, the ability to read Japanese is required. The black dot at the top left is marked "current location". There are plenty of exits, but none were visible from this sign, which was located in a cul de sac next to the prehistoric shark display. Perhaps noticing this, a helpful Japanese patron donated this ambiguous visual control.

What is the message here?

Do some people prefer and wish to be directed to the unclean rooms?

Room 621 was in fact quite nice.

Last week Mike Wroblewski of Kaizen Institute USA delivered a webinar sponsored by Gemba Academy, titled A Day in the Life of a Lean Supervisor. It's a must-see for anyone interested in standard work for leaders, developing front line supervisors, gemba kanri and linking daily management on the gemba to the strategy of the business.

The leader standard work video presentation runs just over 57 minutes, which includes about 10 minutes of audience Q&A at the end. The video introduces many of the visual tools and skills that provide structure to a lean supervisor's day.

It is free to view until April 15th, 2012 after which it will be available to all Gemba Academy subscribers.

Michel Baudin's blog article More Musings on Muda, meant to end fruitless debate on the definitions and categorizations of the types of waste, in fact led to some brief but interesting exchanges on Twitter. The discussion centered around the claim by lean healthcare practitioners that in healthcare there is a lot of grey area between overproduction or overprocessing. I disagree with this notion. Two questions to support this idea were:

Is an unneeded MRI overproduction or overprocessing?

What waste is drawing five tubes of blood when only one is needed?

The answers seemed straightforward to me. I will purposely not give my answer here, to encourage thought.

These may be a bit harder:

Performing a Cesarean section at physician discretion rather patient medical need

Writing a prescription for 12 days' supply of medication when 9 days' supply will suffice

With the notable exception of cataract surgeries performed in India, patient care fundamentally does not resemble a production process; it is a service process. Any production steps are ancillary to care delivery. For example the preparation of medicines is production, but the process of care delivery involves diagnosing, prescribing, and having the patient follow a regimen of taking these meds. If too many meds were prepared, that would be overproduction. If unnecessary meds were prescribed, that would be a waste of processing. The excess in the former case can be reduced to match the patient needs, while the latter can be eliminated totally.

Masaaki Imai explains the 7 types of waste in his book Gemba Kaizen:

Muda of overproduction is a function of the mentality of the area supervisor, who is worried about such problems as machine failures, rejects, and absenteeism and who feels compelled to produce more than necessary just to be on the safe side. This type of muda results from getting ahead of the production schedule. When an expensive machine is involved, the requirement for the number of products is often disregard ed in favor of efficient utilization of the machine.

The underlying causes of the waste of overprocessing, a.k.a. the waste of processing or the waste of "processing itself" as it is called in works attributed to Taiichi Ohno, are somewhat more varied and less obvious:

Sometimes inadequate technology or design leads to muda in the processing work itself. An unduly long approach or over run for machine processing, unproductive striking of the press, and deburring are all examples of processing muda that can be avoided. At every step in which a workpiece or piece of information is worked on, value is added and sent to the next process. Processing here refers to modifying such a workpiece or piece of information. Elimination of muda in processing frequently can be achieved with a commonsense, low -cost technique. Some wasteful processing can be avoid ed by combining operations. For instance, at a plant where telephones are produced, the receiver and the body are assembled on separate lines and later put together on the assembly line. To protect the surfaces of the receivers from scratches as they are being transported to the final assembly line, each receiver is wrapped in a plastic bag. By connecting the receiver assembly line and the final assembly line, how ever, the company can eliminate the plastic-wrapping operation.

Processing waste is performed because of vague standards or poor understanding of the needs of internal or external customer. Examples from my experience include:

Painting the interior of a body panel: The painted body panel was a pair with a hatch on the other side of the vehicle, which was opened and visible, needing to look good. However the body panel side had no need for the paint, only the hatch. The painting step was removed, along with various inspection and touch up processes that guaranteed the quality of this unnecessary process.

Cleaning a table top: Sawdust and grime was removed from the part at every step along the batch process. Linking the process in a flow eliminated the need to clean between steps because the part did not rest for long enough to accumulate sawdust or grime.

Another way to keep overproduction and processing clear is to understand whether the waste being observed is an input or an output. If the activity is an input, it cannot be overproduction. Likewise, if the activity is an output it not the waste of processing.

The types of waste which are observable as inputs are:

• Motion - moving arms, eyes, torso as part of the process
• Transportation / Conveyance - moving things using legs, wheels or conveyors
• Inventory - raw materials or in-process goods waiting to be consumed at the process
• Correction / rework - this is a close relative of both Processing and Defect wastes, typically bundled into the latter
• Waiting - people not able to work because something is missing or wrong
• Processing - any process, containing some, all or none of the above, that is itself not necessary

The types of waste which are observable as outputs are:

• Overproduction - excess output of a process
• Defects - nonconforming product or service
• Inventory - work in process, finished goods

I believe Mr. Timothy U. Wood bears some responsibility for the confusion between overprocessing and overproduction. The "over" that Tim attached to the waste of processing itself is itself a waste of processing. The four-letter word adds no value, does not further clarify definition and in fact causes people to associate it with overproduction. It is, as we sometimes say, overly redundant.

When observing waste, we need to ask three questions:

1. What does it cost?


2. What causes it?


3. What are the countermeasures?

The costs, causes and countermeasures to the various wastes tend to be rather specific to the type of waste. Remembering the names, or even that there are 7 types of waste, is far less important than being able to identify them all accurately. If there is in fact an 8th or 9th type of waste to unique to healthcare that lies in the grey area between processing and overproduction, by all means let's capture and categorize this muda so we can all benefit from a quicker and more accurate of diagnosis.

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My experience with startups extends to starting Gemba Research, a consulting and training company which we merged last year with Kaizen Institute, Gemba Academy, an online lean training venture, and three other business selling lean-related goods and services. With the exception of Gemba Academy, none of the ventures involved information technology in any meaningful way, and even with that one my contribution in that area. We've pivoted a few times along the way, probably not enough. It's possible there are more failed startups in my past that I've chosen to forget. The lessons are more dear, and harder to forget.

The past 19.5 years of my career has been focused on the field of lean. It's with mixed emotion in recent years that I watch lean go fully mainstream (or "terminal" as my friend Jim would say) by extending into all corners of the world, all sectors both public and private. Lean has proven remarkably resilient in spite of its inarticulate naming and a history of suboptimzing around techniques, tools and short-term gains. Lean persists because there are plenty of us still who don't practice it so well. Lean persists because it approximately works, for the vast majority of organizations and people who give it a good go.

So it was with great interest that I finally made time to read The Lean Startup by Eric Ries which brings the ideas of lean not to a particular sector, but to a particular stage and development cycle of business, to the particular practice of entrepreneurship. I found the book to be a breezy read, well-written and sparing in the use of lean lingo and jargon (kanban, genchi genbutsu), with a genuine and internally consistent spirit of continuous improvement evident throughout.

The main lean ideas involve speeding up the cycle from idea to product to profit by deliberate experimentation and learning. The adaption the OODA learning loop (itself a variant of the PDCA cycle) to form the "build-measure-learn" loop is clever innovation that captures this idea for startups and beyond. In some ways the startup environment is more suited to lean than the mature company, as a greenfield environment with a bias to change. At the same time, nearly all organizations I have consulted with over the years share the same structural barriers to lean with startups: accounting systems that drive local optimization and build queues, management infrastructure that is not fit to purpose, and failing to systematically value learning. These are all discussed by Ries in the book.

The other notable concept is MVP or Minimum Viable Product. Much like the process and equipment design notion of moonshining or "3P" in lean, the product is released barely ready so that it can be user-tested, improved and rapidly validated or revised. Or as they say at 3M, "Make a little, sell a little"

The term "pivot" seems to have entered the lean lexicon thanks to this book. In startup terms, it means to take feedback of failed experiments and change direction, to find another business model or path to the vision. In lean problem solving terms, it is to try a different countermeasure. There is a certain ambivalence, almost a battle between heard and heart, which can be detected in the author's discussion of pivoting, hypothesis testing and the use of human judgment in when to persist or change course (pivot). Hypothesis testing may start with an observation, a judgment or even a hunch to develop a theory about what the market needs, followed by testing this against experimental results. Ries correctly points out that human judgment is flawed, but quickly redeems judgment, as "luckily" we can improve our judgment through experimental results. Lean Startup does not go as far as to say that deciding based on data is a must for this learning to be rigorous. Even though flawed, in the Lean Startup approach sometimes it is OK to pivot based on judgment. This is more startup thinking than lean thinking.

In Ries' discussion of batching, it is true that small is generally better but not always. One piece flow may be the ideal for discrete production due to ease or problem exposure, balancing work between processes and minimization of in-process stock. However in knowledge work or highly variable service processes, batch size is a question of queuing theory. A supply chain, or even an engineering process, that does not have sufficient WIP will create delays downstream, resulting in suboptimal WIP-building to keep busy, wasteful under-utilization of a critical resource, and other undesirable behaviors. These are wastes caused by variation and overburden, principles that are poorly understood without a good grasp of the data across the entire process. The software development kanban illustration touches very briefly on this, but a deeper discussion of variation and its sourced, and the role of overburden would be beneficial to students of Lean Startup.

The section on 5 Why gave me pause. There are three major problems with Ries' explanation and recommendations. First, he cites a passage from Taiichi Ohno, explaining that the 5 Why helps companies solve problems and accelerate by allowing "proportional investments" to be made at each level of the 5 Why questioning. This misses the point that the 5 Why drill down is not intended to generate more countermeasures (1 for each of the 5 levels) but in fact it is meant to raise fewer countermeasures at deeper levels in the root cause analysis, ideally just one simple countermeasure at the true root cause. Taking countermeasures or "proportional investments" at each level of the 5 Why analysis merely adds cost in the real world, because attacking the root cause prevents all hither level "whys" to be blocked. If this is not the case, the 5 Why analysis has not been performed properly or at all. The "therefore test" has not been passed, and the 5 Why questions are simply 5 separate causes rather than linked in a logical causal chain.

Second, Ries gives no indication that he understands that "5 Why" is not aimed at finding five actionable causes, but rather a guideline to ask why a minimum of five times, or fewer than five if necessary, merely until the root cause has been identified. The number 5 is a relic of 5W1H and Ohno's penchant for wordplay. Taiichi Ohno once scolded his student, "We don't need 5W1H. Just ask "why?" 5 times!" The 5W1H are "what, where, when, who, why and how" used to tell stories, when Ohno only cared about genchi gembutsu, close observation, relentless root cause analysis and a bias for action.

As the diagram below shows, the 5 Why process is better understood when paired with a fishbone (cause and effect) diagram or tree diagram. The first why can lead to several branching causes, which in turn can branch into more. A complex problem may create a tree with dozens of nodes, only a few of which may be the root causes. The "proportional investment", while sounding like a good idea when limited to only 5 countermeasures, quickly becomes an expensive exercise when applied to the correct application of the 5 Why process.

The third point of concern is Ries' claim that 5 Why exposes the root cause to be human factors, writing "every seemingly technical problem is a human problem." This is an incorrect understanding of the 5 Why principle. The golden rule of problem solving is to never find the root cause to be "human error". Human errors are caused by poorly designed processes, inadequate standards, weak governance, poor hiring practices, etc. Ultimately these are all processes and systems designed by people, but even then we cannot assign "human error" as the root cause. The reasons why they are designed incorrectly (or not at all) need to be exposed at the incentive, motivational, cognitive or organization structural and system levels. It is at this level of culture that organizations win or lose in the long run. Simply making proportional investments at higher levels in the 5 Why chain is a waste of time that will not prevent problem recurrence for common root causes at these deep levels, except where specific fixes have been made to correct specific flaws. The underlying non-human and system-level root causes remain in the organization and will find their way, like water, inexorably through the cracks in the process.

I encourage anyone curious about the Lean Startup model study alternate sources to gain a better understanding of 5 Why, before practicing it.

Writing "organizations have muscle memory", Ries recognizes the challenge of creating lasting behavior change in an organization. Yet like so many early lean manufacturing applications, the Lean Startup concept seems overly concerned with tools and techniques to make the work flow and not concerned enough with the leadership elements, the incentives and organization structures required to make lasting change happen. This is understandable as the role of the CTO or tech company CEO is often not organizational development but innovation, thought leadership and marketing. The technology startup in the Silicon Valley garage is notorious in popular consciousness for being the antithesis of a mature, well-structured organization, a fact Ries is well aware. He cautions several times against the drift of large organizations toward bureaucracy and away from agility. Any discussion of lean needs to include the importance of small teams, linked checking of processes and coaching by leaders, pervasive practical problem solving as elements of what is boringly called "daily management". Daily management is still much neglected within organizations tackling lean from the tools and systems point of view, even in manufacturing, but for greenfield companies and startups, adoption should be quicker.

The concept of "entrepreneur is a job title" is a good one. Taking it a step closer to "Lean" than to "Startup" we can say that "problem solver is a job title". Innovator, entrepreneur or inventor are certainly sexier job descriptions than problem solver, which can imply mopping up rather than building something new. We can say that invention is nothing more than solving a problem. Innovation is often recombining existing solutions in new ways or for new markets, and entrepreneurs are nothing if not problem solvers, the successful ones at least. The point is, for the majority of people to whom entrepreneurship is not a short-term option, a grasp of the portability of problem solving skills from a traditional organization to a Lean Startup environment, should be empowering.

Ries concludes by humbly submitting his work to rigorous scientific inquiry, asking "Can we use the theory to predict the results of the proposed change?" The concept of a Lean Startup is itself a startup, and Ries shows that he is willing to pivot if necessary. This is an important attitude, because nothing fails like success, and by all appearances the book has done well. The stories told of successful "lean" startups in the book are persuasive, red meat for entrepreneurs eager to learn how to use "continuous innovations to create radically successful businesses" as the cover advertises. Yet the sample size of data is very small. The hypothesis about Lean Startup is more induction than deduction at this point. Just as many of the exemplar companies in Jim Collins' bestseller Good to Great turned out to be just lucky, or victims of regression to the mean and not built to last, only time and data will prove or disprove the Lean Startup hypothesis.

There is much we can do to test, challenge and advance ideas in The Lean Startup. A serious application of lean principles to the notion of a startup should start by questioning the very premise. Ries' definition that "A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty" begs the questions, why extreme uncertainty? What exactly is meant by extreme? What things are uncertain? What is knowable but unknown? What is knowable but ignored in favor of false beliefs? What things are unknowable and represent genuine risks? The key point is that professional management exists to handle these questions, minimize risks, and allow those with the entrepreneurial spirit to focus their creative energies and intuitive abilities on only the "necessary uncertainties". I challenge the Lean Startup community not to accept "extreme uncertainty" as a given.

In the epilogue Ries asks, "What percentage of all of this waste is preventable?" This begs the larger question of how much of the wasted effort of failed startups can be prevented. The vast majority of entrepreneurs believe their venture will succeed, yet 82% of first time entrepreneurs fail. Fully 80% of people think they are above average, yet this is mathematically impossible. The statistics do not encourage us to dive into startups, and we should listen closely to what data tells us. Surely the Lean Startup methodology can guide a portion of these to success. However there is also the unintended consequence of encouraging unworthy startups to make the leap of faith, or even prolonging the life of startups that do not deserve to be funded, using Lean Startup methods.

Similar to the allures and dangers of Scientific Management which Ries points out, the Lean Startup concept is at a critical juncture: to continue as a popular movement that builds around a business guru or to buckle down, do the homework and shape it into a science. Like Scientific Management, which was essentially an embryonic version of industrial engineering applied to industry a half century before the days of modern management, the Lean Startup methodology approximately works. It could approximately work for years. Nothing fails like success.

If we are believers in reducing waste, a true science of startups should have a rigorous and statistics-based method for filtering and scoping startups before time, money and energy is devoted to them. In a free country, we have the right to pursue business ideas which we firmly believe will succeed even though the odds are clearly against us. We are free to fail and learn. Failed ventures can provide the humus from which sprout the seeds of the next ventures. Encouraging individual initiative is the American way. It is time to learn from a half-century of lean manufacturing and decades of failed startups, to develop a management system for entrepreneurship.

I look forward to the sequel from Eric Ries, The Lean Six Sigma Startup.

I considered myself to be appropriately biased against biases, but it turned out I was wrong. Such is often the way with cognitive biases. Reading Daniel Kahneman's book Thinking, Fast and Slow, I learned to think of biases in a new way. His work is often cited and has become increasingly important in behavioral economics, decision science and human psychology. It turns out that what Doctors Deming and Juran taught us, that 80% - 95% percent of an organization's problems stem from the system and not with the people working with it, is only half of the answer.

Bias means to be unfairly partial, prejudiced to leaning towards one side of an issue without factual justification. The opposite of bias is impartiality, fairness, conforming to rules and standards in how we decide, or justness. In a pleasing bit of wordplay, we can say that "to be biased" is to have an unfair or inappropriate inclination toward a thing or action, to "to have a leaning". On the other hand, in the business excellence usage, "to Lean" means to have the property of making decisions in a way that is fact-based, impartial, fair and resulting in justness.

We often make statements "...but I am biased" when admitting a preference about a particular approach or choice about which one should supposedly be making an objective judgment. We acknowledge that we are not making a fully objective evaluation, but at the same seek and give forgiveness or even permission for holding biases as part of the human condition. In common use, bias has taken on a similar but somewhat less negative connotation than homonyms such as prejudice or intolerance. We have developed a tolerance for bias. In day-to-day use, bias has almost come to mean opinion, to which we are only too eager to entitle each other.

In the author's words, "Systemic errors are known as biases, and they recur predictably in particular circumstances." Kahneman's association of bias with error implies an underlying assumption that there is a correct judgment, a correct choice or answer, and that our biases are not justified preferences but in fact errors. Kahneman's work makes a convincing case that there is a set of biases that are rooted in our biology which lead us to make poor decisions. We need to strengthen our grasp on statistics and probability in balance with our intuitions.

As pioneer of kaizen and architect of the Toyota Production System, perhaps the greatest legacy of Taiichi Ohno was not the logistics, quality and continuous improvement systems he built at Toyota but rather the influence he had on a generation of leaders at that company. Ohno was deeply concerned with what he termed "misconceptions". He taught that our casual perceptions are not to be trusted. Only thorough, up close observation and verification of results of one's beliefs through trial and error would Ohno allow a student to get away with the claim "I understand". These misconceptions are incorrect understandings which drove people and organizations to make decisions and build systems which were wasteful or did not effectively serve the intended purpose. What Ohno called "rationalization" was not merely cost-driven consolidation but "to do what is rational" based on observation of facts and challenging of practices built on our misconceptions or biases.

Taiicho Ohno passed on before he could "ask why 5 times" and delve deeper into the causes underlying these thought illusions he observed within industry. If Kahneman were familiar with Ohno's work and interest in misconceptions, he would likely trace them through human psychology and human evolution. In many ways, the insight of Japanese industrial leaders to embrace the work of Dr. Edwards Deming so thoroughly in the post-World War II years was a brilliant countermeasure to a set of biases that continue to plague organizations worldwide in through poor decision making, poor quality and poor performance. Statistical thinking does not come naturally to humans, in the short-term instinct triumphs, and is often adequate. In the long-term, we regress to the mean.

What intrigued me about Kahneman's sentence "Systemic errors are known as biases" is the realization that we can in fact think of any system as a set of biases. A system is a set of processes and sub-systems, and within these are various processes and rules, the outcomes of decisions. These processes run according to either correct or incorrect parameters; decisions made based on biases or facts. The systems based on incorrect assumptions are biased towards, or tend towards failures, entropy, loss, variability and waste in general. Superior systems are not only intolerant of biases, they systematically challenge them by requiring participants in the system to go see, ask why and speak with data. Lean management systems are built on better sets of assumptions, ones tested and proven to be true, and tend to minimize errors and undesirable outcomes.

Non-lean operations suffer from systemic errors such as the inability to match supply with demand, the inability to produce good quality the first time every time, the failure to maintain perfect safety, the failure to solve problems systematically and in a standardized way, the failure to respect and fully engage human potential in the endeavor of any team, organization or society. These are not due to personal faults of our leaders, they are due to systemic errors that allow us to continue believing that the way we work and live, the leaders we choose and the processes for making these choices are OK, have no lasting negative consequences, or are not in fact biases, systemic errors. Non-lean systems are often based on belief, bias and story-telling.

Lacking the statistics to support this idea, I must admit that it may be purely a figment of my personal bias (opinion). But on reflection Kahneman's work seems to say that systemic errors within social systems such as governments, hospitals, schools and companies are there due to our cognitive biases. Call them misconceptions or false beliefs, in the end systems do not exist a priori, they are built, enabled or allowed by people. Unless systems are delivered to us innocent humans from some Platonic plane, we as people are responsible for the systems that we should blame. This seems to flip Dr. Deming's notion that people are never to blame and that systems are always to blame, on its head. The finger points back at people. This is not such a scary idea, it just requires replacing the notion of assigning blame with one of taking responsibility.

The lean journey is a daily struggle against ourselves, our biases and our biological inclinations. The universe does not care; it is governed by statistics, which we are at liberty to remain ignorant of, replace with our beliefs or use to our advantage. The lean journey is the pursuit of systems ever more free of bias, impartial and just. To paraphrase Martin Luther King, Jr, "Let us realize the path to a Lean Operating System is long but it bends toward justness."

There's never been a better time to learn how to implement the kanban system in a manufacturing or logistics environment, with the new Kanban online video course from Gemba Academy. During the month of March we are offering free DVDs with all subscriptions. We are celebrating not only the release of our newest course and the third anniversary of Gemba Academy, but also the 100th anniversary of the birth of Taiichi Ohno, the inventor of the kanban system.

Since starting in 2009 with 1 course and 12 videos, we have built up the online training curriculum to 230 videos. Our aim is to put the entire body of knowledge of operational excellence and continuous improvement online, and we are making progress in the Lean area. This year we will also build more modules on Six Sigma, including an online certification product.

Structuring the Kanban course was been particularly challenging because the kanban system appears deceptively simple, but in fact relies on many other sub-systems for it to function properly. To put it simply, kanban is a massive topic. Much of the misunderstanding about JIT and Japanese manufacturing in the 1980s and 1990s came from the fact that companies attempted to go to JIT or kanban without the foundation systems.

The Kanban Course is structured in 7 modules so far, and will be accompanied in the future by more detailed courses on how to establish supermarkets, heijunka, logistics routes and so forth. Visit Gemba Academy to learn about our special offer or to see all of the online learning opportunities.

His book Kaizen is the reference on the subject and the sequel Gemba Kaizen introduced real-world applications of continuous process improvement methods in production and service businesses. McGraw-Hill will release the fully revised Gemba Kaizen 2nd edition in June 2012.