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Ready to begin your first Lean Six Sigma project? Looking for examples for inspiration or reference to get you started? Here are some project storyboards from different industries and from home. Remember, Lean Six Sigma can help you with more than just work!

• Reducing Underwriting Resubmits by Over 20%  

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• A Call to Change: Pioneering Lean Six Sigma at Los Angeles County  
• Can Lean Six Sigma Be Applied in County Government?  
• How the City of San Antonio Increased Payments for Street Maintenance Using Lean Six Sigma  
• Reducing Bid Tab Creation Cycle Time by 22%  
• Reducing Cycle Time for Natural Disaster Response by 50%  

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• Increasing First Run Parts From 60% to 90% With Lean Six Sigma  
• Reducing Bent/Scratched/Damaged (BSD) Scrap for Building Envelopes  
• Reducing Lead Time in Customer Replacement Part Orders by 41%  
• Reducing Learning Curve Ramp for Temp Employees by 2 Weeks  
• Reducing Purchase Order Lead Time by 33% Using Lean Six Sigma  
• Herding Cats Using Lean Six Sigma: How to Plan for and Manage the Chaos of Parallel Processes  
• Lean Six Sigma Increases Daily Meat Production by 25%  
• Lean Six Sigma Helps Feed People In Need 45% Faster  
• Accelerating Lean Productivity With Immersive Collaboration  
• Reducing Incorrect Router Installations by 60% for Call One  
• Reducing Software Bug Fix Lead Time From 25 to 15 Days  

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Drive Agile Value with SAFe Lean Business Case

• On May 18, 2023
• By David Usifo (PSM, MBCS, PMP®)

The Scaled Agile Framework (SAFe) is a proven and widely-adopted methodology that helps organizations scale Agile practices across all levels of the enterprise.

One of the key aspects of implementing SAFe successfully is the Lean Business Case. This article aims to provide a comprehensive understanding of the Lean Business Case in SAFe, its importance, components, and best practices for creating, reviewing, and updating it.

Table of Contents

Basics of the Lean Business Case

A Business Case is a formal document that captures the rationale behind a proposed initiative, project, or investment.

It outlines the expected benefits, costs, risks, and other relevant factors, providing a basis for informed decision-making.

Lean thinking  is an approach focused on maximizing customer value while minimizing waste. In the context of a Business Case, this means focusing on the most critical information and minimizing unnecessary complexity.

A Lean Business Case is a streamlined, hypothesis-driven version of a traditional business case, emphasizing agility, learning, and adaptability.

Key elements of a Lean Business Case include:

• A clear hypothesis statement
• Assumptions and dependencies
• Financial analysis
• Risks and mitigations
• An implementation plan

The Role of the Lean Business Case in SAFe

The Lean Business Case plays a crucial role in the SAFe framework, supporting several core principles:

• Aligning strategy with execution : Lean Business Cases help ensure that initiatives align with an organization’s strategic objectives and focus on delivering value.
• Decentralizing decision-making : By providing clear and concise information, Lean Business Cases empower teams and stakeholders to make informed decisions at all levels of the organization.
• Embracing a culture of continuous learning : Lean Business Cases encourage organizations to test hypotheses, learn from feedback, and adapt their plans accordingly.

In the SAFe implementation roadmap, the Lean Business Case is integrated with the Portfolio, Large Solution, and Program levels, fostering collaboration and decision-making among stakeholders .

Components of a SAFe Lean Business Case

The SAFe Lean Business Case is made up of the following components:

1. Hypothesis Statement

The hypothesis statement is the foundation of the Lean Business Case. It succinctly captures the problem or opportunity being addressed, the proposed solution, the target market and customers, and the success criteria for the initiative.

2. Assumptions and Dependencies

Documenting assumptions and dependencies helps to identify areas of uncertainty that may impact the success of the initiative. This includes business, technical, and organizational assumptions, as well as dependencies on other projects or initiatives.

3. Financial Analysis

The financial analysis provides an estimate of the costs, projected revenues, and financial returns associated with the proposed initiative. 

Key metrics include Return on Investment (ROI), Net Present Value (NPV), and Internal Rate of Return (IRR). A sensitivity analysis can also be included to assess the impact of changes in key variables.

4. Risks and Mitigations

Identifying, prioritizing, and mitigating risks is essential to ensure the success of the initiative.  Risk assessment  involves examining potential threats, their likelihood, and their potential impact, as well as defining appropriate mitigation strategies.

5. Implementation Plan

The implementation plan provides a high-level timeline, resource requirements, key milestones, and governance structure for the proposed initiative. This helps stakeholders understand the scope, complexity, and dependencies of the project.

Creating a Lean Business Case in SAFe

1. steps to create a lean business case.

• Gather input and data from stakeholders : Engage with key stakeholders to gather insights, data, and perspectives that will inform the Lean Business Case.
• Develop hypothesis statement : Define the problem or opportunity, proposed solution, target market, and success criteria.
• Identify assumptions and dependencies : Document the assumptions and dependencies that underpin the hypothesis statement and financial analysis.
• Conduct financial analysis : Estimate costs, projected revenues, and financial returns, and perform sensitivity analysis.
• Assess risks and define mitigations : Identify and prioritize risks, and develop mitigation strategies.
• Create implementation plan : Outline the timeline, resource requirements, key milestones, and governance structure.
• Review and refine the business case : Engage with stakeholders to review, refine, and validate the Lean Business Case.

2. Tips for Creating an Effective Lean Business Case

• Focus on the most critical information : Identify the key elements that stakeholders need to understand and make decisions.
• Be concise and clear : Use clear, concise language and avoid unnecessary complexity or jargon.
• Use visuals to convey information : Leverage diagrams, charts, and other visuals to present information in an easily digestible format.
• Iterate and update as needed : Continuously refine the Lean Business Case as new information becomes available, and learn from feedback.

Reviewing and Approving a SAFe Lean Business Case

1. roles involved in the review and approval process.

• Portfolio Steering Committee : Ensures alignment with strategic objectives and oversees portfolio-level decision-making.
• Lean Portfolio Management : Provides guidance and support for Lean Business Case development and evaluation.
• Enterprise Architects : Assess technical feasibility and alignment with enterprise architecture standards and practices.
• Other relevant stakeholders : Contribute insights and expertise to inform the decision-making process.

2. Criteria for Evaluating a Lean Business Case

• Alignment with strategic objectives : The proposed initiative should support the organization’s strategic goals and priorities.
• Financial viability : The financial analysis should demonstrate a positive return on investment and acceptable levels of risk.
• Feasibility and risk : The initiative should be technically and organizationally feasible, with manageable risks and appropriate mitigations in place.
• Capacity and resource availability : The organization must have the necessary resources and capacity to execute the initiative successfully.

3. Decision-Making Process in SAFe

SAFe emphasizes collaborative decision-making, continuous exploration and learning, and adaptation based on feedback.

In the context of Lean Business Cases, this means that stakeholders should work together to evaluate proposals, identify opportunities for improvement, and make informed decisions about whether to proceed, pivot, or cancel initiatives.

Monitoring and Updating the Lean Business Case

Regular monitoring and updating of the Lean Business Case are essential to ensure that it remains accurate and relevant as the initiative progresses and new information becomes available.

This includes tracking key performance indicators (KPIs) to measure progress against success criteria, conducting periodic reviews and updates, and incorporating lessons learned and feedback from stakeholders.

1. Importance of Monitoring and Updating the Lean Business Case

• Ensures alignment with evolving strategic objectives and priorities
• Provides an opportunity to learn from feedback and adapt plans and assumptions as needed
• Maintains transparency and accountability across the organization

2. Key Performance Indicators (KPIs) to Track Progress

• Financial metrics (e.g., Return on Investment (ROI), Net Present Value (NPV), Internal Rate of Return (IRR))
• Operational metrics (e.g., delivery milestones, resource utilization)
• Customer value metrics (e.g., customer satisfaction, market share)

3. Periodic reviews and updates

• Conduct regular progress reviews with stakeholders
• Update the Lean Business Case to reflect changes in assumptions, risks, or other factors
• Revise the implementation plan, financial analysis, and risk mitigation strategies as needed

4. Incorporating Lessons Learned and Feedback

• Gather insights and feedback from stakeholders throughout the initiative lifecycle
• Use this information to refine the Lean Business Case, improve decision-making, and enhance the overall effectiveness of the SAFe implementation

The SAFe Lean Business Case is a vital tool for aligning strategy with execution, fostering collaboration and informed decision-making, and promoting a culture of continuous learning.

By following the best practices outlined in this article, organizations can create, review, and update their Lean Business Cases effectively, ensuring that they deliver maximum value and minimize waste.

Embrace the Lean Business Case to drive success in your SAFe implementation and achieve your strategic objectives.

David Usifo (PSM, MBCS, PMP®)

David Usifo is a certified Project Management professional, professional Scrum Master, and a BCS certified Business Analyst with a background in product development and database management.

He enjoys using his knowledge and skills to share with aspiring and experienced Project Managers and Business Analysts the core concept of value-creation through adaptive solutions.

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The Business Case for Lean

Five Lean East business case studies that show the benefits of Lean Thinking

The Lean East team is focused on teaching and applying proven Lean Six Sigma principles and tools to develop high-performing organizations. We focus specifically on organizations that provide customers with a service rather than a product. Examples include healthcare, government, financial, insurance, education, construction, repairs, etc.

Lean Six Sigma has a long track record of success in manufacturing. Recently, however, it became embraced by service-based industries. Many of our clients use Lean thinking as a strategic differentiator – far surpassing their previous results (and their competition).

Some of our clients select us because of our expertise in Lean Six Sigma methodology. Others have “no idea what this Lean stuff is about.” Our goal in this post is to share a few examples of our Lean engagements and the difference they made to the organizations we worked with. Please enjoy these five Lean business case studies.

Lean focuses on increasing customer value and eliminating waste

Lean East was hired to support a services company that had experienced sustained growth in revenues for the past ten years. Each stage of growth required additional staff, more variation in the sales and production processes, and pressures on profitability. The company had just experienced a year with approximately 20% growth in revenue. Their profits, however, were flat.

Our team worked with the leaders and employees to map out the customer fulfillment process. We then held an off-site meeting with all involved employees to understand what customers valued. We also defined what they would pay for. Then, we compared this to the actual process. The team identified many areas of waste in the current process along with new practices that would increase customer value.

Lean East ended the meeting with a discussion of pricing and a business finance 101 topic:

Customers will pay more money for more value. We set a goal to implement changes to increase value while reducing waste(s). This consists of direct costs and overhead costs. Most importantly, we then charged a higher price for the increased value.

The results one year later were impressive. The company again grew revenues by 25-30%. But instead of profits remaining flat, they nearly tripled! The team loved the return on investment, and we expect the results will be maintained in future years.

Lean improvements involve employees in the solution for lasting change

One of the great benefits of Lean thinking is the involvement of every employee in process improvement. This was made clear when the Lean East team was asked to rescue a process improvement project in a governmental services organization.

The project involved implementing an expensive software solution for the department. Lean East worked with the team to go back to the beginning and understand the goals and current problems. The team soon realized that the new software was too complex a solution for the current problems. The employees were then able to work together to develop a much simpler, internally developed solution. This solution would better meet the overall objectives.

Lean East visited with team members a year later and learned that the team was still happy with their changes. They were also still using the process! We soon began a new project to help the original software vendor who was still under contract. We worked together to develop a solution built upon the department’s new process.

Lean improvements identify and address root cause problems

A Director of Materials Management wanting to reduce supply costs used in the hospital surgical services department hired Lean Healthcare East. We lead a Lean project team and made improvements. The team began by reviewing background data on inventory stocking levels, replenishment times, lead times, and costs. We then worked together with the cross-functional members of the team to value stream map the process of ordering, stocking, consuming, and replenishing surgical supplies. This team included a Surgeon, Nurse, Scrub Technician, Sterilization Coordinator, Nursing Director, and Materials Management Buyer. Background data showed that 34% of stocked items had no usage in the past year. 31% of the items were stocked at levels higher than the established maximum levels in the system. Canceled cases were only avoided due to several employees making herculean efforts to keep surgeons in business and overcome the failing process.

The team identified additional improvement goals and the root causes of issues . A new process was mapped out to convert the paper-based inventory system to an online system. This allowed for material replenishment and billing to be done more quickly and accurately. Most importantly, the “ super nurses ” on the team who would regularly correct the mistakes instead began to address root causes. They no longer had to hide the process problems!

The operating rooms converted to the new system and actively decreased the obsolete and inactive items. The team was able to reduce inventory by over $100,000 in the first three months. They were also able to reduce the lead time for replenishment by 24 hours. They were also able to reduce the nursing and materials management staffing required for ordering and stocking.

Servant leadership: setting expectations and holding teams accountable

The Lean East mission is to bring out the best in organizations by bringing out the best in the people. The Lean East team helps develop leaders that treat their employees and other people with respect. The best leaders surround themselves with the best people. Everyone is continually learning and growing. Performance expectations can be set very high. Therefore, the CEO is responsible for setting the vision and breaking down barriers.

A retail sales client recently made significant organizational changes by establishing an executive leadership team. This team improved decision-making. The Owner/CEO was struggling with too much of the decision-making and responsibility for results at the top. Thus, essentially micro-managing a large percentage of the company.

We worked together as a management team to first define the current-state organizational reporting structure. It was clearly out of balance, with the CEO personally responsible for many processes.

We identified the value-creating processes in the company as well as the people responsible for those processes. We then met to agree upon key goals for each process. Responsibility for achieving the goals was divided amongst the managers on the team. Thankfully, managers were eager to step up and help define expectations and desired results. A key performance indicator dashboard was soon after established. Monthly dashboard review meetings were then scheduled so the team could work together to identify and address problems.

The team is now using the new dashboard and beginning to see early results. Results for the previous year set company records for revenue and profitability. The Owner/CEO is less involved in the day-to-day operations and now has time to work on the vision and strategic initiatives. Key employees in the company have embraced the increased responsibilities and are working together as a Lead Team.

Improved process results using Key Performance Indicators (KPIs)

Our final Lean business case covers performance measurement. At Lean East, we help all of our clients better define the customer value they provide. We also define ways to measure said value. We understand and apply best practices when selecting and communicating KPIs.

One Lean East client was a large governmental services organization. The group had many employees broken into over twenty separate workgroups. Each workgroup had a manager and team responsible for their part of the overall government service. Unfortunately, each team focused their daily efforts on work that would not draw any attention to their group from management.

Lean East worked with the COO of the organization to set up Key Performance Indicators for each team, as well as a process for sharing those KPIs. The teams each tracked their KPIs on a display board in the area. Each employee was able to learn about the key metrics and how to track them. Leaders then set improvement targets. Finally, regular visits by management and team leaders to other KPI boards helped break down some of the silos and share best practices.

The return on investment of Lean thinking

Lean East develops high-performing organizations. We partner with our clients and help their processes become more effective, not necessarily more efficient. We strive for a 10-X return on all of our projects. Our goal is for the long-term benefits of our work to make back ten times the initial cost. Please connect with us for a discussion about your organization to see if Lean can help you.

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Lean Six Sigma Case Studies

Welcome to the Lean Six Sigma Academy’s Case Studies section! Here, you will find a collection of real-world examples of how companies have successfully implemented the Lean Six Sigma methodology to improve their business operations. Each case study includes an overview of the business challenge that was faced, the approach that was taken, the results that were achieved and feedback from the client on their experience. These case studies showcase the wide range of industries and organizations that have benefited from Lean Six Sigma, and serve as inspiration and guidance for those looking to implement the methodology in their own business. 

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What if we found ourselves building something that nobody wanted? In that case, what did it matter if we did it on time and on budget? —Eric Ries, The Lean Startup [1]

An Epic is a significant solution development initiative.

Portfolio epics are typically cross-cutting, typically spanning multiple Value Streams and PIs . To accelerate learning and development and reduce risk, SAFe recommends applying the Lean Startup build-measure-learn cycle for these epics.

This article describes the portfolio epic’s definition, approval, and implementation. Agile Release Train (ART) and Solution Train epics, which follow a similar pattern, are described briefly at the end of this article.

There are two types of epics, each of which may occur at different levels of the Framework. Business epics directly deliver business value, while enabler epics advance the  Architectural Runway  to support upcoming business or technical needs.

It’s important to note that epics are not merely a synonym for projects; they operate quite differently, as Figure 1 highlights.

SAFe discourages using the project funding model (refer to the Lean Portfolio Management article). Instead, the funding to implement epics is allocated directly to the value streams within a portfolio. Moreover, Agile Release Trains (ARTs) develop and deliver epics following the Lean Startup Cycle discussed later in this article (Figure 6).

Defining Epics

Since epics are some of the most significant enterprise investments, stakeholders must agree on their intent and definition. Figure 2 provides an epic hypothesis statement template for capturing, organizing, and communicating critical information about an epic.

Epics above the approval Guardrail are made visible, developed, and managed through the  Portfolio Kanban system, where they proceed through various states of maturity until they’re approved or rejected. Before being committed to implementation, epics require analysis. Epic Owners take responsibility for the critical collaborations needed for Business Epics, while  Enterprise Architects  typically guide the Enabler epics that support the technical considerations for business epics.

Creating the Lean Business Case

The result of the epic analysis is a Lean business case (Figure 3).

The LPM reviews the Lean business case to make a go/no-go decision for the epic. Once approved, portfolio epics move to the Ready state of the Portfolio Kanban. When capacity and budget become available from one or more ARTs, the Epic is pulled into implementation. The Epic Owner is responsible for working with Product  and  Solution Management  and  System Architects  to split the epic into Features or Capabilities during backlog refinement. Epic Owners help prioritize these items in their respective backlogs and have ongoing responsibilities for their development and follow-up.

Defining the MVP

Analysis of an epic includes the definition of a Minimum Viable Product (MVP) for the epic. In the context of SAFe, an MVP is an early and minimal version of a new product or business  Solution  used to prove or disprove the epic hypothesis. Unlike storyboards, prototypes, mockups, wireframes, and other exploratory techniques, the MVP is an actual product that real customers can use to generate validated learning.

Estimating Epic Costs

As Epics progress through the Portfolio Kanban, the LPM team will eventually need to understand the potential investment required to realize the hypothesized value. This analysis requires a meaningful estimate of the cost of the MVP, and the forecasted cost of the full implementation should the epic hypothesis be proven true.

• The  MVP cost  ensures the portfolio is budgeting enough money to prove or disprove the Epic hypothesis. It helps ensure that LPM makes sufficient investments in innovation aligned with Lean budget guardrails.
• The forecasted implementation cost considers ROI analysis, helping determine if the business case is sound, and allows the LPM team to prepare for potential adjustments to value stream budgets.

The Epic owner determines the amount of the MVP’s investment in collaboration with other key stakeholders. This investment should be sufficient to prove or disprove the MVP’s hypothesis. Once approved, the value stream cannot spend more than the defined investment cost to build and evaluate the MVP. If the value stream has evidence that this cost will be exceeded during epic implementation, further work on the epic should be discussed with LPM before exceeding the MVP’s estimated cost.

Estimating Implementation Cost

Considerable strategic efforts often require collaboration with external Suppliers to develop Solutions. The MVP and the anticipated full implementation cost estimates should include internal costs and forecasted external Supplier expenses.

Estimating epics in the early stages can be challenging since there is limited data and learning at this point. As illustrated in Figure 4, ‘T-shirt sizing’ is a simple way to estimate epics, especially in the early stages:

• A cost range is established for each t-shirt size using historical data
• The gaps in the cost ranges reflect the uncertainty of estimates and avoid excessive discussion around edge cases
• Each portfolio must determine the relevant cost range for the t-shirt sizes

The Epic Owner can incrementally refine the total implementation cost as the MVP is built and learning occurs.

Supplier Costs

An epic investment often includes the contribution and cost from suppliers, whether internal or external. Ideally, enterprises engage external suppliers via Agile contracts, which supports estimating the costs of a supplier’s contribution to a specific epic. For more on this topic, see the Agile Contracts  extended guidance article.

Forecasting an Epic’s Duration

While it can be challenging to forecast the duration of an epic implemented by a mix of internal ARTs and external suppliers, an understanding of the forecasted duration of the epic is critical to the proper functioning of the portfolio.

Like an epic’s cost, its duration isn’t easy to forecast as it includes several components, such as internal duration, supplier duration, and the collaborations and interactions between the internal and external teams. Practically, unless the epic is wholly outsourced, LPM can focus on forecasts of the internal ARTs affected by the epic, as they are expected to coordinate work with external suppliers.

Forecasting an epic’s duration requires an understanding of three data points:

• An epic’s estimated size in story points for each affected ART can also be calculated using T-shirt sizes and replacing the cost range with a story point range.
• The historical velocity of the impacted ARTs.
• The percent (%) capacity allocation that ARTs can dedicate to working on the epic. This allocation typically results from negotiation between Product and Solution Management, Epic Owners, and LPM.

In the example shown in Figure 5, a portfolio has a substantial enabler epic that affects three ARTs, and LPM seeks to gain an estimate of the forecasted number of PIs.

ART 1 has estimated the epic’s size as 2,000 – 2,500 points. Product Management determines that ART 1 can allocate 40% of total capacity toward implementing its part of the epic. With a historical velocity of 1,000 story points per PI, ART 1 forecasts between five to seven PIs for the epic.

After repeating these calculations for each ART, the Epic Owner can see that some ARTs will likely be ready to release on demand earlier than others. However, the forecasted duration to deliver the entire epic across all ARTs will likely be between six and eight PIs. If this forecast does not align with business needs, negotiations such as adjusting capacity allocations or increasing the budget for suppliers will ensue. The Epic Owner updates the forecasted completion once work begins on the epic.

Implementing Epics

The SAFe Lean startup strategy recommends a highly iterative build-measure-learn cycle for product innovation and strategic investments. This approach for implementing epics provides the economic and strategic advantages of a Lean startup by managing investment and risk incrementally while leveraging the flow and visibility benefits of SAFe (Figure 6).

Gathering the data necessary to prove or disprove the epic hypothesis is highly iterative. These iterations continue until a data-driven result is obtained or the teams consume the entirety of the MVP budget. In general, the result of a proven hypothesis is an MVP suitable for continued investment by the value streams. Otherwise, any further investment requires the creation of a new epic.

After it’s approved for implementation, the Epic Owner works with the Agile Teams  to begin the development activities needed to realize the business outcomes hypothesis for the epic:

• If the hypothesis is true , the epic enters the persevere state, which will drive more work by implementing additional features and capabilities. ARTs manage any further investment in the epic via ongoing WSJF feature prioritization of the ART Backlog . Local features identified by the ART, and those from the epic, compete during routine WSJF reprioritization.
• If the hypothesis is false , Epic Owners can decide to pivot by creating a new epic for LPM review or dropping the initiative altogether and switching to other work in the backlog.

After evaluating an epic’s hypothesis, it may or may not be considered a portfolio concern. However, the Epic Owner may have ongoing stewardship and follow-up responsibilities.

Lean budgets’ empowerment and decentralized decision-making depend on Guardrails for specific checks and balances. Value stream KPIs and other metrics also support guardrails to keep the LPM informed of the epic’s progress toward meeting its business outcomes hypothesis.

ART and Solution Train Epics

Epics may originate from local ARTs or Solution Trains, often starting as initiatives that warrant LPM attention because of their significant business impact or initiatives that exceed the epic threshold. ART and Solution Train epics may also originate from portfolio epics that must be split to facilitate incremental implementation. Like any other epics, ART and Solution Train epics deserve a Lean business case that captures these significant investments’ purpose and expected benefits. The ART and Solution Train Backlogs article describes methods for managing the flow of local epics that do not meet the criteria for portfolio attention.

Last update: 6 September 2023

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Building a business case for lean implementation

Introducing lean thinking to your staff means explaining what lean does and how it will help your business. identifying your goals, explaining the concepts of kaizen and kanban and setting up lean training programs are all parts of building a business case for lean implementation..

Introducing lean thinking to your staff means explaining what lean does and how it will help your business. In this excerpt from chapter 8 of the book How to Implement Lean Manufacturing, learn how to identify your goals, explain the concepts of kaizen and kanban and set up lean training programs to build a business case for lean implementation.

Step 3: Perform an Educational Evaluation

Formally Introducing the Issue

A formal introduction is often a key to getting started well. Remember, the second requisite skill of leadership--the ability to articulate the plan so all can understand it. It is worthwhile to tell the entire facility, "We are going to make a change and that change is to implement the concept of Lean manufacturing."

Many facilities make this a monster effort, with special invitations, a formalized meeting attended by all the top management, coupled with meals and motivational speakers galore. I find this degree of effort is not needed. In the end, the most important aspect of selling the issue of changing to Lean is dependent upon the continued actions of the Lean leaders and top management. If they talk Lean and do not walk the talk, no amount of up-front selling will work. On the other hand, if the Lean leaders and top management do really walk the talk, then no large selling effort is required. Either way, a mega-effort at selling is generally a waste, hence I do not recommend it.

Rather, I recommend you have two types of Lean introductory training sessions, as described in the following paragraphs.

First and foremost, an introductory session to management will need to be prepared. This group should be the key decisionmakers, usually what is referred to as "top management." This first training is the classic "Who, What, Where, When, Why" training with special emphasis on the: "What," which is the House of Lean that was created with the help of your sensei ; and the "Why," which is the motivating force behind the effort. This training is often more than a one-day event. It could be the basis for a two or three-day retreat for the management team. This group needs to especially understand the House of Lean. The training should include exercises on variation reduction (the dice game in Chap. 19 works nicely), takt calculations, OEE calculations and line balancing (for these, my Lean Kit is a great tool and is available at my web site: www. qc-ep.com). This training session should be hands-on and instructional, and it must take into account both the present state of the facility and the desired state of the facility. Change, including the types and amounts of changes needed, should be openly and honestly discussed. At this point, it is unlikely that all four of the systemwide evaluations of the present state have been done, but still your Lean implementation manager and your sensei will be able to quantify this concept for the purposes of this training.

The second type of training is informational in nature and should be given to all employees on all shifts. It should first be given to those reporting to top management, next supervisors, and then to the general plant population. This is typically a PowerPoint presentation describing the House of Lean and the implementation schedule. Including ample time for a Q&A session, this usually takes about four hours, and groups can be as large as 40 and still be effective.

Specific Skills Training

The systemwide evaluations almost always create a very large list of needed training to teach the strategies, tactics, and Lean skills. The composite list will largely follow directly from the Five Precursors to a Lean Initiative, which have already been added to your Gantt chart. In addition, as you do the assessment of each value stream, training topics will almost surely be found. Once combined, these trainings will almost always include problem-solving training, training on statistical tools, and facilitation training for all in leadership positions. In addition, Lean-specific trainings are available in skills such as line balancing, SMED methodology, takt, and kanban calculations, to name just a few. It will be necessary to inventory the needed skills and teach them as they are needed to those using the tools.

Just another word on education and training: It should be focused and JIT. For example, during the implementation, if you choose to change the plant one value stream at a time, train just those people involved. Often, it is not that simple and some people may need to be trained prior to the implementation of their product; it is never perfect. The point here is to avoid the global mass training of individuals that makes good use of the training resources, yet provides the training either too early or too late. Efficiency of the training organization is not of paramount importance when compared to training effectiveness. If there is long time between the training and the implementation of that training, a large fraction of the learned material is forgotten. Consequently, it will not be effective and it is then waste, the very item we are trying to eliminate, not create.

At this point, you can also add these introductory training items to your Gantt chart.

Step 4: Document the Current Condition

Preparing a Present State Value Stream Map (PSVSM)

This document will be used to gather current information of the present state conditions for the entire value stream. This will be a door-to-door PSVSM--that is, we will start at the shipping dock and document the value stream up to the raw materials supply.

Step 5: Redesign to Reduce Wastes

Prepare a Future State Value Steam Map (FSVSM) That Will:

• Synchronize supply to customer, externally.
• Synchronize production, internally.
• Create flow (including the jidoka concept).
• Establish pull-demand systems.

This will analyze current conditions and redesign the process flow to eliminate waste. Refer to Chap. 7 for the specific technical details of this step.

Creating a Spaghetti Diagram

This diagram will show the movement of the assembly as it is constructed, and show the movement of both the people and the product. Work to reduce the movement and transportation wastes and free up floor space. Do this on a plot plan, made to scale.

Document all kaizen activities determined in Step 5 on your Gantt chart.

Step 6: Evaluate and Determine the Goals for This Line

• Determine critical process indicators (for more details on goals, see Chap. 9).
• Set specific goals for this line/product (goal #1 is to protect the customer).
• Document all kaizen activities found in this analysis on the Gantt chart.

Step 7: Implement the Kaizen Activities

• Implement finished goods inventory controls to protect the supply to the customer.
• Implement your jidoka concept as defined in Step 5.
• Prioritize and implement all other kaizen activities on the Gantt chart.

Step 8: Evaluate the Newly Formed Present State, Stress the System, Then Return to Step 1

Some Clarification on Step 8

As part of the project prescription, you will:

• Evaluate the newly formed present state.
• Stress the system.
• Return to Step 1.

To make a system Lean is a never-ending process. Each change brings about a new present state that then gets evaluated for improvement activities, which creates more changes and the cycle starts all over again. On many occasions, the system will stress itself through the unexpected appearance of quality or availability problems, for example. Sometimes demand changes will put a stress on the system. All of these are opportunities to improve the robustness of the system. Although it sounds a bit crazy at first, it is wise to stress the system yourself to see what other process opportunities may be present. A typical "stressor" for the system would be to remove a few kanban cards and see what the system response will be. The primary tool you will use to protect you from system failure will be system transparency. Remember when we said we need to create a culture that embraces change? This may be the clearest manifestation that we have changed the culture, when we start stressing the system to make it better. Recall the metaphor of the athlete in Chap. 6. How did he get better? Isn't this the same concept?

Lean goals (Step 6, item 2) are always an interesting topic. The name Lean came about because, in the end, the process can run using less manpower, take less time, consume less space, and use less equipment and material investment. So often when evaluating the success of a Lean initiative, these terms are used and calculations of space utilization, and even distance traveled, are used. In the long run, these are not very meaningful measures since they typically are not a good subset of the plant goals, nor do they readily translate into key business parameters such as profits or return on investment (ROI).

Most plants already have good measures of manpower utilization. For the other Lean measures, the ones that typically get woven into the general plant goals are inventory management measured as inventory turns, and the lead time, measured as manufacturing lead time. If OEE (Overall Equipment Effectiveness) is not already a line goal, this is clearly to be added. In total, there should be five to seven goals that are the metrics to measure how the line will supply the product, with better quality, with shorter lead times, and do so less expensively.

What about Goals for the Lean Initiative Itself?

We do not favor any specific goals here beyond the goals of the project that are included in the schedule. This is for two very sound reasons:

• At some point these goals will clash with the plant goals. It is best to simply weave them into the plant goals. If the plant goals do not reflect the need to be Lean, change the plant goals.
• We want to make as much effort as we can to weave the Lean initiative into the normal workings of the plant and not make it a "New Thing We Do." Rather, it should not be a new thing, but a new way of doing the things we need to do. We want to begin immediately weaving Lean activities into the culture, which will start the needed cultural change to sustain the gains. There is no better point to start than right here.

What to Do with the Plan?

Management Review

The plan needs management review, discussion, and acceptance. This should be done in a formal meeting. This formal review is done for four reasons.

• It will show, in one document, what is going to happen and when.
• It will give top management, the movers and shakers, an opportunity to see the entire effort. They can see and comment on those things in their areas of responsibility and also those changes outside their areas, but these changes still might affect them. In short, they will have an opportunity to bring up questions.
• Any plan includes the topics of objectives, timing, and resources. This meeting will allow a check on not only those three topics, but their interrelationships as well.
• How they respond to the plan will be a reality check on the commitment of the top management. This is most important.

It is necessary to make sure, at this meeting, that everyone understands that the next step is implementation. You want to leave the meeting with the understanding that the top management understands and will support the plan, because in five minutes you will implement it.

Publish and Follow-up

Immediately following the meeting, publish the plan and put it into action.

Let the Fun Begin!

Chapter Summary

The book How to Implement Lean Manufacturing is summarized in this chapter. First, we make evaluations using the following tools:

• The three fundamental issues to cultural change, outlined in Chap. 6.
• The fourfold evaluation of the present manufacturing system, including the commitment evaluations, five precursors to Lean, ten reasons Lean initiatives fail, and process maturity (found in Chap. 19).
• The educational evaluation of the workforce.
• Specific value stream evaluations, as detailed in Chap. 7.

These evaluations, and the countermeasures, then create a huge list of kaizen activities that can be included in a Gantt chart or an appropriate project planning and tracking tool. We can then evaluate and determine completion dates for kaizen activities in the project, set specific goals for the value stream, prioritize the activities, and implement the kaizen activities. Almost always, our first two goals will be to implement finished goods inventory to protect the supply to the customer and to implement our jidoka concept. Finally, we will present this to management for review, and once reviewed and accepted, we will begin to immediately eliminate the waste.

Related Resources

• 5 key tips for successful ERP implementation –Be-Terna
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SAFe lean business case template

By scaled agile, inc..

Create a lean business case for your portfolio epic based on SAFe agile practices

Having one standardized and organized method to keep track of all of your portfolio epics is essential to successful  lean portfolio management . Moreover, adopting SAFe practices allows you to manage opportunities and risks via lean business cases that are implemented through the  build-measure-learn SAFe Lean Startup Cycle . With this template, you’ll be able to document a business case based on a benefit hypothesis and a defined MVP, rather than a speculative ROI that would require the full potential investment. With Confluence, you can organize all of your portfolio epic documentation in one space, making it easy to analyze inputs, record decisions, and keep everyone aligned to a common objective. Read more on the  SAFe epic article .

How to use the SAFe lean business case template

Step 1. determine the scope and details of the epic..

The creation of the business case is usually the primary responsibility of the epic owner. Before diving into the creation of your lean business case, set the stage for this portfolio epic. Make sure you are creating the lean business case at the right time. It is part of the analyzing phase of the  portfolio Kanban  system. Too early would create waste, and too late risks making investments without understanding the context. First, decide who will be involved in the proposal, to ensure that all sponsoring stakeholders are included. Then, concisely describe the epic, define how the success of the epic will be measured in the Business Outcomes Hypothesis, and establish what leading indicators will be used to indicate progress. This will help you determine the scope of the epic, and most importantly, how to define your MVP. Make sure to include any background analyses you conducted, and leave space to capture the final go/no-go recommendation.

Step 2. Create the lean business case.

Once you’ve laid down the groundwork, you’re ready to write the lean business case. Start by using the  Epic Hypothesis Statement  to describe the epic. This provides a short and concise way to define the business rationale, or the “why” of this Epic. Then define what is in and out of scope for this epic, as well as any nonfunctional requirements. Then define the MVP that will be used to test the hypothesis, as well as potential features this MVP will spawn Estimate the cost, preferably in the same currency used to run  participatory budgeting . Don’t forget to provide an estimate of the overall cost of the Epic, once the MVP is successful. Lastly, document the kind of value return that is expected from the investment in the epic.

Step 3. Document any supporting data.

Document the solution analysis that was carried out during the analyzing phase. Reference any additional resources, links, and supporting evidence so other team members and stakeholders can access it easily. Ensure that the attachments are labeled, using the Notes and Comments section to jot down any miscellaneous evidence. All of this informs the upcoming go/no-go decision. Be careful of information overload. The lean business case was created to make the process of laying out a business case faster and to make the review process easier. Attaching too many support documents in this field can slow down the reviewers and negate some of the benefits.  Alternatively, this space can be used to document notes during your team planning meetings.

Step 4. Keep the epic up to date.

As analysis and implementation of the MVP continue, keep the lean business case up to date to facilitate any portfolio review meetings or future portfolio funding.

Through courses, trainings, partners, and solutions, Scaled Agile, Inc. provides practices for scaling agile practices across the entire company. Through SAFe, they empower large and complex organizations to achieve the benefits of Lean-Agile at scale.

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CASE STUDY – For the past year, Elementia Materiales, a producer of materials for the construction industry, has begun a lean journey that’s already brought impressive quality results.

FEATURE – This Siemens Group-owned medium-sized manufacturer of electrical low-voltage devices has been experimenting with hoshin kanri. In this article, they share their experience and lessons learned.

CASE STUDY – This Chilean agrobusiness company achieved great results in a very short time by applying lean to standardize its processes and improve its productivity. They are now berry fond of the methodology.

CASE STUDY – Combining the lean and agile methodologies, HP’s site in Barcelona has streamlined and greatly improved its product development. Along the way, they transformed their culture, too.

CASE STUDY – The turning point in this Colombian construction company’s transformation came when they started to embrace lean as a culture rather than just a set of tools.

CASE STUDY – This packaging company in Catalonia has been able to cleverly balance the resolution of urgent problems and the advancement of the lean transformation. But what to do when the burning platform is no more?

CASE STUDY – Brazil-based construction company Andrade Gutierrez has been able to sustain its transformation by consistently developing internal capabilities and making Lean Thinking its strategy.

CASE STUDY – The reimbursement department of the largest independent insurance company in Brazil has brought together lean and digitalization to improve its service to customers.

CASE STUDY – Clinical trials are known for their rigorous analysis and approval process. The experience of Roche Brasil teaches us what lean and agile thinking can do to speed it up.

CASE STUDY – Lean Thinking travels far and wide. Here’s how the experience and insights of an Indiana-based farmer have supported a USAID project to improve outcomes for farmers across Nigeria.

CASE STUDY – This hospital in Argentina has leveraged the power of Lean Thinking to greatly enhance patient care, even in the pandemic, and receive internationally renowned accreditations.

CASE STUDY – How does a small food shop in Sichuan turn into a $30 billion chain with around 900 restaurants in several countries? By always going the extra mile for customers!

CASE STUDY – Pall Corporation used lean product and process development principles to create the process to produce billions of doses of the Oxford/AstraZeneca vaccine for Covid-19 in record time.

CASE STUDY – Some blamed lean for the shortages of personal protective equipment (PPE) in first wave of the pandemic. This small Norwegian producer of disposable bedsheets used it to establish and ramp up the production of medical gowns for healthcare workers.

CASE STUDY – Have you ever considered how Lean Thinking could apply to politics? The author explains how the result of a mayoral race in southern Italy was ultimately determined by the lean approach adopted by one of the candidates.

CASE STUDY – This Barcelona hospital began its journey with ambitious projects and is starting to see the fruits of its labor, with the pandemic acting as an unexpected but powerful catalyst for change.

CASE STUDY – This hotel in Spain has been able to leverage Lean Thinking in its restaurant to successfully adapt to the new Covid-19 regulations enforced in the country, becoming more efficient along the way.

CASE STUDY – An Esquel factory in GuiLin, China injected lean principles and practices into its processes to become more efficient and environmentally-friendly.

CASE STUDY – Not even a pandemic can prevent a lean organization from learning: this hotel in Tenerife has decided to make the most of its forced closure to review and improve its processes.

CASE STUDY – By streamlining its internal processes, an agribusiness company in Brazil managed to reduce its material handling cycle time by 75% and the associated costs by 66%.

CASE STUDY – The implementation of lean in the internal logistics of a pharmaceutical company in Brazil proved key to increasing productivity and quality in the organization.

CASE STUDY – This insurtech venture has found in Lean Thinking a way to tackle its many scaling issues. It’s grown from two to fifty-five people in less than four years, ultimately thanks to a strong focus on quality.

CASES STUDY – Struggling to win the hearts and minds of his people, the author took lean home, learned as much as he could about it and brought it back to his business with the idea of making everybody's lives easier.

CASE STUDY – The author, who leads the CI team in a large real estate company, discusses the lean transformation of the business and role of the improvement team in it.

CASE STUDY – This Italian manufacturer has found in lean a way to ensure business continuity and provide support to a distraught workforce in the midst of the coronavirus outbreak.

CASE STUDY – Here’s the story of a mature lean company from Michigan. The author tells us about Zingerman’s Mail Order’s lean transformation, their challenges and their successes.

CASE STUDY – In a Brazilian insurance company, a team worked hard to streamline the revision of dental claims – a great example of Lean Thinking in an administrative process.

CASE STUDY – The story of this Norwegian window and door manufacturer shows how a deep and ongoing commitment to a lean transformation can help a company thrive against all odds.

CASE STUDY – This article briefly outlines the different stages of the lean transformation at Mercedes Benz Brazil, as the company looked for the best approach to engage everyone in continuous improvement.

FEATURE – How lean daily management helped a Brazilian construction company to stabilize production in a tailing dam elevation project.

CASE STUDY – A boutique law firm in Milan has initiated a lean transformation to turn around its processes, improve service to its clients and make life easier for the team.

CASE STUDY – This company in Botswana has embraced lean thinking passionately to build the capacity and ability to deal with higher demand for its converted vehicles. The author tells us about their journey.

CASE STUDY – From client and supplier to partners-in-lean: how solving a problem together transformed the relationship between a Dutch hospital and the laundry supplying clean garments to it.

CASE STUDY – Seven years ago, this Italian manufacturer ran an experiment to reduce inventory in its warehouse. Today, lean thinking permeates every aspect of life at FPZ.

CASE STUDY – What is the approach to people development used at Volvo Cars? The authors explain how the organization has created a production system fully owned by operators and managers.

CASE STUDY – Effectively deploying and executing your strategy requires mastering quick follow-ups at different levels of the organization – in other words, Daily Management.

CASE STUDY – Logistics can be the key to achieving success and creating a competitive advantage in a company. This case study tells the story of a port terminal in Brazil that has used lean to achieve significant gains in managing its road flow.

CASE STUDY – Catalonia’s largest hospital is undergoing a successful transformation – supported by pioneering hoshin experiments – that has already turned it into a poster child for lean healthcare in the region.

CASE STUDY – TechnipFMC has introduced the Concept Paper in its lean product development process. This article shares some of the learnings resulting from the experience.

CASE STUDY – Thousands of kaizens, a relentless focus on learning and the determination to continuously improve have made of this Norwegian company something of a lean fairytale.

CASE STUDY – What to do when you operate in a competitive market and are located in a remote corner of Europe, thousands of miles from your customer? One word: lean.

CASE STUDY – This Dutch company awards social benefits to the unemployed. Thanks to lean thinking, they were able to radically transform the service they offer them.

CASE STUDY – The CEO of a hospital in Johannesburg looks back to the last five years to reflect on a lean healthcare transformation that is creating positive outcomes for patients.

CASE STUDY – This automotive parts supplier based in southwest Spain is discovering the power of lean thinking applied to recruitment and Human Resources.

CASE STUDY – Starting with a series of pilot sites, the NHS is hoping to engage the Kata coaching approach to really spread an improvement culture to staff and patients.

CASE STUDY – The story of this NGO shows how visualizing the work enables improvement and removes barriers among teams. It is a first, fundamental step towards a lean transformation.

FEATURE – Philips has embarked in an ambitious development program for lean executives, which is helping the organization make substantial progress in their transformation.

FEATURE – Successfully engaging people and building a solid daily management system is allowing a Velux factory in Poland to fulfill its strategic goals.

CASE STUDY – This Polish debt collection company is refocusing its work around true customer needs and increasing problem visibility by implementing hoshin kanri.

FEATURE – A dedicated pathway and the introduction of lean healthcare principles is bringing people together to provide better care to older, frail people in an Irish hospital group.

FEATURE – By leveraging lean product and process development principles, Nichirin Spain is becoming more flexible managing last-minute changes in product design requested by customers.

FEATURE – One year into its lean journey, this Lithuanian mining company is winning the hearts and minds of its people. Here, the management team reflects on how they are doing it.

FEATURE – Dreamplace Hotels in Tenerife have been on an improvement journey for several years, but only recently did they find a way to truly become a learning organization: lean thinking.

FEATURE – Hospitals are often part of larger healthcare systems, which makes it critical to learn how to bring lean to such diverse and complex environments. We hear from a large hospital group in Ireland.

CASE STUDY – This Turkish producer of sanitaryware has boosted its quality so dramatically it’s now a player in the German market. It did so by bringing drastic change to its production system.

FEATURE – How an amusement park in Norway is using lean visual management to support actors during their busy schedule and to give visitors an experience they will never forget.

FEATURE – Building on the benefits of the Last Planner System™, lean thinking is supporting people at Turner Construction Company as they solve problems in a structured way.

FEATURE – A laboratory testing services firm in Istanbul has turned to lean management to reduce complexity, shorten lead-times, and make its growth sustainable.

CASE STUDY – A Turkish producer of gas valves for kitchen appliances has discovered the power of the lean principles of pull and flow, reaching results beyond its imagination.

FEATURE – The application of lean management to education is not new, but we all know how hard changing legacy systems is. This greenfield lean school aims higher, trying to rethink learning altogether.

FEATURE – The power of cross-pollination: learning from a manufacturing company has helped a cancer treatment center in Brazil to thrive in its lean transformation.

CASE STUDY – The author looks back at the impressive lean transformation of the Hungarian plant of Coloplast, a Danish company offering medical devices and services.

CASE STUDY – An elementary school in Budapest is trying to bring innovation to the education by harnessing the power of lean thinking combined with a solid digital strategy.

CASE STUDY – A physician tells PL the story of how the East Denver Medical Office became a catalyst for the lean transformation at Colorado Permanente Medical Group.

CASE STUDY – How do you keep up with a market changing at the speed of light? The Chief Inventor of an Australian digital company explains how they are using lean to safeguard their future.

CASE STUDY – An insurance company in São Paulo is experiencing a complete turnaround driven by a very capable Lean Office that understands its role is to gradually make people autonomous.

CASE STUDY – Faced with complex logistics and customer complaints, a small deli and butchery in Botswana saw in lean a way to bring the business back from the brink. The philosophy didn’t fail them.

CASE STUDY – One-piece flow and a focus on lean leadership and kaizen have allowed the Halfway Production Centre in Johannesburg to turn itself around in just 14 months.

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The Lean Post / Articles / The Business Case for Kaizen

Problem Solving

The Business Case for Kaizen

By Michael Ballé

February 11, 2010

Dear Gemba Coach: I can see the benefits kaizen has brought our company, but find it hard to formulate the argument persuasively. Is there a powerful way to make the business case for kaizen?

Dear Gemba Coach,

Our management team introduced kaizen events to our company three years ago. As a manager involved with lean, I have participated in many of these, and can say that a large number of managers are now able to run kaizen with our own black belts – without consulting support. Yet in this difficult period, I find that events are lagging. Managers often cancel or postpone scheduled events, and the kaizen approach is being challenged by executives who say that it is costly in resources and disappointing in improvements. I can see the benefits kaizen has brought our company, but find it hard to formulate the argument persuasively. Is there a powerful way to make the business case for kaizen?

Thank you for this deep and difficult question, which crops up often. The good news is that yes, there is a business case for kaizen. Unfortunately, it’s not easily explained to someone who is not open minded enough to hear it.

The traditional argument for kaizen finds a way to calculate actual “savings,” i.e. translating the improvement in dollar value . This is a great way to confirm the value of the work to the kaizen group, but it rarely convinces management. That’s because these savings often appear paltry at the global level compared to overall budgetary considerations, and because these specific savings are rarely tied directly to the bottom line – there are too many other factors over time in the system that muddy these numbers. So how can one clarify the cost/benefit formula here?

The first step is to ask the simple question: what is the real benefit of kaizen? It is quite clear that the profitability of any industrial process (whether manufacturing or service) is mainly a result of its design: the technology and organization which structure the process which should deliver a product or service at a target unit cost for a target volume level. However this target level is rarely reached because reality happens. People have to use the software, equipment, materials, premises and so on in varying local conditions, with varying markets and supply conditions, with varying degrees of staff training and motivation and so on. As a result many unforeseen problems occur which hamper the “ideal” working of the process, and make it run suboptimally. These problems add up and create real costs which do show up in the accounts as extra resources (or lower sales due to disappointed customers).

The Biggest Benefit

Running processes closer to target performance is essentially about getting the operators of the processes to learn the tricks of the trade that will allow them to use the software, equipment, materials, premises smartly in real-life conditions. Continuous improvement in this sense is a constant drive to close the gap between actual performance of the existing process and target performance of the process as it was originally designed.

Occasionally, during a kaizen event someone might hit upon a brilliant idea which will lead to a very profitable process redesign – which is nice, but not the main aim of kaizen. The number one benefit of kaizen is teaching people how to solve day to day issues to run the process well in existing conditions . This will show up in the accounts by taking out a layer of additional costs one incurs to compensate for broken processes.

To estimate the potential benefit of kaizen, take the best day performance of your process, and apply this to every day of the month (if we’ve done it one day, we should be able to do it every day) and compare this to real day-to-day performance data. The gap is the potential benefit from kaizen.

Why kaizen? Because frequent iterations is a superior training method. The best known way to learn to do something is to try it again and again until one gets the hang of it. So the best way of learning how to solve specific process problems is to kaizen on this topic again and again until the problem is “solved” (i.e. the new way of doing things is inscribed in the standard). On this topic I recommend Rob Austin and Lee Devin’s great book on Artful Making .

Kaizen Non-Events

Now, to your question: what about the cost side? As Austin and Devin show, frequent iterations is the best known way to both learn and explore problems, but each iteration has a cost . And indeed, running a “classic” kaizen event has to be the costliest way of doing kaizen: a team of people “immobilized” for three to five days, a coach (internal is cheaper than a consultant, but still), a meeting room, sometimes stopping operations for the event.

From a cost point of view, what would be the ideal kaizen event? Well, a non-event. Imagine that an operator herself figures out something is wrong in the process (at a rental car service desk, for example, she has to pick up the phone to help customers find their way to rental returns, thus slowing the queue of customers who want to pick up a car), and tries several ways in which to solve the problem (written instructions, maps, etc.). This isn’t likely to happen on its own with every operator, so it’s the supervisor’s job to get us closer and closer to this ideal .

In fact, we can kaizen how we do kaizen. There is a real skill in learning to do kaizen at the lowest possible cost of iteration. From the starting point of “no investment” in full-scale kaizen events, to getting operators to use cardboard mock ups and simple tricks to test kaizen ideas directly on the workstation in the course of their shift. Indeed, one of the fascinating things to look for in a Toyota plant (and not obvious to see at first glance) is all the scotch-taped and cardboard modifications around workstations where operators are trying new ideas as they work . And ideally, operators would be able to draw a “kaizen” document explaining the problem they tried to solve, and the savings generated by their solution, once this has been refined and accepted by the entire team.

Iterations are the way to learn how to keep processes close to target performance, but iterations have a cost, so it’s part of our lean work to learn to increase these iterations while continuously reducing their cost. This is a specific kaizen skill which must be developed in-house and taught to the supervisors, so they can engage every one of their staff into such ongoing activities.

Should we entirely forego “classic” kaizen events? Probably not. The coach led kaizen events are important as a refresher course on what kaizen is supposed to be. The important point of these events is that they should tackle larger changes, involving more cross-functional players and rigorously follow the PDCA methodology to “show how it’s done .” In order to support kaizen done in the work areas by the frontline managers and their teams, it’s important to maintain a schedule of full production kaizen events – but these can be planned through the year and budgeted carefully.

Kaizening Kaizen

I’m not sure whether this will help you with your management colleagues, my experience is that it’s hard to wake up someone who is pretending to sleep, but here is how the kaizen argument goes:

• To make money in our business and satisfy our customers, our processes must run every day close to their target performance.
• People who run these processes at the gemba experience day-to-day difficulties due to local conditions that reduce effectiveness and generate additional costs to compensate for these inefficiencies.
• To reach target performance we need to constantly engage and train people to solve these problems and improve real performance, aiming for target performance.
• The best known way of doing this is through “kaizen” – frequent quick iterations of problem solving in order to “get it right” from experience and deep thinking, locally.
• These iterations, however, have a cost (most obviously the cost of running “classic” kaizen events), and we must work to reduce this cost by pushing kaizen further and further into a normal part of daily work.
• This requires deepening our own understanding of kaizen every day and, in a way, kaizening how we do kaizen.

Should we forgo the hope of big payoffs then? Absolutely not – we still want the big bucks. But the big payoff won’t likely come from existing processes. As we learn how to deal with the problems posed by existing operations (through solving them), we will also generate new ways of doing things for the next investment.

When I first studied how Toyota involved one of their suppliers 15 years ago, I was surprised by the fact that they didn’t ask for any financial concessions upfront for all their help (as opposed to their competitors who said: give us a 15% price rebate now, and we’ll show you how to get the next 15% out of your processes). It took me a while to figure out that Toyota did have a financial advantage at having a supplier cell which ran smoothly without quality issues for then. But what happened then, a few years down the line, is that when it was time to design the new version of the product, all the learning accumulated from a couple of years of kaizen led to a design which was 27% cheaper than the first one – and Toyota and the supplier shared this windfall.

I recently had the privilege of dining with Mr. Masaaki Imai who coined the term “kai’zen” 30 years ago, and as we discussed kaizen, I realized he had explained this basic mechanism linking small step improvement to large performance leap right from the start. It just took me many, many, iterations to figure it out.

Written by:

About Michael Ballé

Michael Ballé is co-author of The Gold Mine, a best-selling business novel of lean turnaround, and recently The Lean Manager, a novel of lean transformation, both published by the Lean Enterprise Institute. For the past 25 years, he has studied lean transformation and helped companies develop a lean culture. He is…

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