Does Lean Hinder Innovation?

Does Lean Hinder Innovation?
Industry Week November 2021
By Rick Bohan & Ron Jacques

Lean concepts and methods have a bit of a reputation for being “anti-innovation.” All the talk of standardization tends to be off-putting to some who claim that the focus on consistency hinders innovation. The strong emphasis on lean as a “cost cutting” tactic enhances the “anti-creativity” reputation. Innovation often requires an investment of resources; if lean’s primary goal is cost cutting, then innovation must suffer.

It’s our view that lean, in fact, is the foundation of innovation in that it creates operational flexibility and agility. The more agile our administrative and operating processes are, the more rapidly and effectively we can put new product and production ideas to the test. The more consistent our processes are, the more reliable are our data when trying something new. The shorter our manufacturing cycle times are, the more trials we can run in each period. The less waste there is in our manufacturing processes, the less the cost of experiments on new products and new process improvement ideas.

Some years ago, Ron worked for a well-known consumer goods manufacturer that was acquired by a larger firm in the same market. Ron’s employer (let’s call it Smallco) had been engaged for some time in successfully applying lean concepts and methods. Attention to workplace organization and visual management was followed by the creation of manufacturing cells. These efforts improved Smallco’s throughput as well as its first-pass yield. Other projects like just-in-time raw material delivery, dock to production transfers, plastic recycling and quick die exchanges were vital to the transformation of operations. Smallco came to be among the industry leaders in lead time and delivery performance. 

Just as important, the improvements to operations within Smallco were instrumental in a sharp reduction in new product development time. The company’s retail stores had pressured product development and manufacturing to reduce the time it took to respond to changing customer demands and get new products into their outlets. Lean initiatives were fundamental to its success in reducing a new product development time from almost 18 months to less than 18 weeks.

Soon after being acquired, Smallco was challenged by the parent company (we’ll call it Bigco) to develop, produce, and deliver 10,000 units of a particular product, within eight weeks. Mind you, the challenge wasn’t to simply have the product ready to begin production in eight weeks. It was to design the product, design and acquire the necessary tooling and equipment, make prototypes, begin production, then manufacture and deliver 10,000 units within eight weeks.

Truth be told, Smallco wondered if its parent wasn’t seeking to set it up for failure. The targets set by Bigco were unheard of in the industry.  Bigco also insisted on a 35% gross margin, a difficult target to hit under the most favorable of circumstances. 

Ron pulled his team together and presented the challenge. The confidence that they would meet it wasn’t based on false hubris.  It was founded on the already demonstrated superiority of their operations, which had benefitted from those years of lean-inspired improvements. They knew that there would be no troublesome handoffs between product design and the manufacturing engineers because they were well-practiced at concurrent engineering, an approach that meant fewer delays and less rework of designs. They knew that tooling and equipment design and acquisition would go smoothly for the same reason. Finally, they knew that operations would move up the efficiency curve from prototype to full production quickly because of the company’s robust manufacturing processes.

Their confidence wasn’t misplaced; the 10,000 units were shipped with a week to spare.

This example illustrates several lean principles that enhance innovation. First, lean reduces cycle times in all processes. Second, lean promotes smooth flow of information and materials through all processes. Third, lean assures that processes are consistent and predictable with respect to cycle time and throughput. Fourth, lean depends on effective teamwork and collaboration on the part of everyone embedded in a process. Finally, visual management enhances the information available regarding the status of processes. The act of generating new ideas isn’t constrained at all by these principles and the efficacy of the process of turning ideas into reality is amplified.

Lean organizations don’t sacrifice innovation at the altar of lean manufacturing concepts. In fact, lean organizations realize a competitive advantage because their ability to carry out lots of experiments quickly is superior.

The importance of innovation will only grow in coming decades. Lean concepts and methods are fundamental to a strong culture of innovation.