# If You Think Lean Is Inherently Japanese, Think Again | Planet Lean | Katie Anderson

“Nearly two years ago my family and I moved to Tokyo. As a lean coach and enthusiast, you can imagine my excitement. I set out with the intention to deeply learn about Japanese business culture, leadership, and application of kaizen (Japanese for “continuous improvement”). I saw my time in Japan as a unique opportunity to immerse myself in the environment where the principles we call “lean” were born.

Now, after 18 months spent in Japan (we have just moved back to California), I find myself reflecting on what I learned and how the experience living there has shaped my own thinking about and understanding of lean. I want to share some of these thoughts with you.

The main theme that has emerged from my reflection is that Japanese culture does not equal Toyota culture. What we call “lean” is not inherently easy for the Japanese and there are cultural traits that both enable and inhibit the adoption of principles of the Toyota Production System (TPS)…”

Sourced through Planet Lean

Michel Baudin‘s comments: Katie Anderson is back from Japan, after 18 months, where she realized that the Toyota Production System (TPS) is the brainchild of smart people who happened to be Japanese and not the product of Japanese culture. Based on my own immersion in Japanese culture, and years of work with Japanese mentors and partners, I concur.

# Japan Update

Whether or not you join us on the Making Things in Japan  Tour 2014 this April, you may be interested in some of the updates about the country that Brad Schmidt and I have been posting on the tour’s site. While the fear of “Japan, Inc.” taking over the world has receded since the 1980s, Japan remains a society that values the art of making things, known as “monozukuri” (物作), hosts a unique concentration of thinkers and inventors in this area, and has developed many brands of manufactured products with worldwide renown.

What is it like today? We plan to keep providing more details, but the following can give you some answers:

• Today’s Japan in Numbers. Japan is facing the same challenges as other advanced economies, and in particular an aging population receiving high wages. The numbers on Japan’s economy and demographics from the CIA World Factbook and the US Census Bureau bear it out, in comparison with other manufacturing heavyweights, like the US, China, and Germany:
• Japan’s Manufacturing Sector in Numbers. The numbers on Manufacturing’s share of the Japanese economy show the sector holding steady at about 19% of GDP, 16.9% of the work force, and a value-added per employee of about \$97K/year, placing Japan between the US and Germany on all three metrics, and far from China. The numbers are consistent with Japan’s manufacturing sector paying high wages for high productivity and using advanced technology.
• Manufacturing Trends in Japan. Brad Schmidt, who is based in Tokyo and is in daily contact with Japanese manufacturers, sees a trend for companies to be moving production from China to Japan but only when the market is Japan.
• The Experience of Visiting Plants in Japan. This is a gallery of pictures from the <120 tours Brad has organized to date, showing the different phases of a plant visit.

# From Kaizen to the Kaizen Blitz | Blue Heron Journal

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Ken McGuire: “My humble observation is that the degree of enthusiasm about all things Lean is in direct inverse correlation to how recently the enthusiast has discovered it.”

Michel Baudin‘s insight:

Enlightening account from participants in the invention of the Kaizen Blitz in the US in the 1990s.

# A French government agency report on Lean and Safety | EU-OSHA

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“The implementation of this organizational model of production [Lean] may result if certain conditions are not met, in a deterioration of the workers´ health (musculoskeletal disorders, psychosocial risks, accidents).”

Michel Baudin‘s insight:

This document, from a French government agency, asserts that the implementation of Lean could make saferty worse in French plants. This might suggest that, without Lean, safety in French plants is adequate.

Lean is debated in France with the zero-sum assumption that, if you improve productivity and quality, it can only be at the expense of something else, usually safety. The idea that you can improve all dimensions of performance at the same time is not accepted.

My experience of French plants is of safety levels that are perhaps higher than China’s but a far cry from what you see in Japan or the US. The accidents waiting to happen range from people and forklifts sharing space without marked aisles, wine served in factory cafeterias, slick floors in metal working shops, operator jobs that require long carries of heavy parts,…

While it is conceivable that a poor Lean implementation could make this even worse, a reasonably good one is guaranteed to improve on this dismal situation, simply by paying long overdue attention to the details of operator job designs. There is nothing intrinsically wrong with the INRS summary of recommendations, but they are already part of Lean.

See on osha.europa.eu

# Enterprise Ireland and Lean | Irish Times

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“The Japanese are renowned worldwide for their car production where the concept of the management philosophy Lean derives from. It all began at Toyota when the car manufacturers discovered a new, more efficient method of producing cars valued by customers all over the world. The principles learned at Toyota became known as Lean which is claimed can be applied to almost any business. The core principle is creating value by reducing waste and unnecessary risk.”

Michel Baudin‘s insight:

While informing us that the Irish government has an agency promoting Lean, this article reflects common misconceptions.

No, it’s not a “Japanese management philosophy.” it is an approach developed by individuals who happened to be Japanese, which is not the same. Most Japanese today do not know or practice it, and quite a few non-Japanese do.

And this emphasis on “creating value” is an American talking point, not the Toyota Production System.

According to the article “Toyota benchmark themselves constantly,” which is news to me. While it is clear that Toyota is on the lookout for new ideas, I had not heard of Toyota doing benchmarking surveys of competitors. My understanding is that Toyota’s management considers such surveys to be a waste of time.

The article equates Lean with Continuous Improvement, giving the impression that it’s all there is to it.

And finally, the article repeats the Business Week claim that the Shingo Prize is “the Nobel Prize for operational excellence.”

See on www.irishtimes.com

# Absence of “Value Added” in the TPS literature

When improving operations, the only distinction of practical relevance is between necessary and unnecessary activities (See Occam’s Razor… and Whack-a-Mole). It really doesn’t matter whether they physically transform a product or whether a hypothetical customer would be willing to pay for them; the only thing that matters is whether they are needed to get the job done. Eliminating the unnecessary means getting the right things done, or being effective. The step after that is getting these things done right, or being efficient.

The American literature on Lean is centered on Value Added — defined as “what the customer is willing to pay for.” As I indicated, this is not the case for the Japanese literature or even the American literature on the Toyota Production System (TPS). I listed some examples from my personal library in Occam’s Razor…, and would like here to give more specifics.

## “Value Added” in the TPS Literature

The following books on TPS — ranging in vintage from 1977 to 2009 — contain no reference that I could find to value added:

• Fundamental Principles of Lean Manufacturing, Shigeo Shingo (1977). The English title contains “Lean Manufacturing,” a term that wasn’t coined until a decade after this book came out. Shingo’s title translates to “Original intent of plant improvement” (工場改善の原点的志向).
• Zero Inventories, Robert W. Hall (1983). This was the first book in English to cover the technical content of TPS. ‘Doc’ Hall is an American academic, who researched Japanese sources. He is still active today in the AME, and was inducted in the Manufacturing Hall of Fame in 2012.
• Kanban, Just-In-Time at Toyota, JMA (トヨタの現場管理：カンバン方式の正しい進め方, 1985). This is based on training materials from one of the oldest manufacturing consulting firms in Japan.
• The Evolution of a Manufacturing System at Toyota, Takahiro Fujimoto (1999). Fujimoto is an academic who studied the emergence of TPS in the history of Toyota and, in the process, explains many details of its development in the 1990s.
• The heart of introducing TPS (トヨタ生産方式導入の奥義）Mikiharu Aoki (2009). The author left Toyota in 2004 after 26 years to become a consultant. He is still in his fifties, and what he describes is not your grandfather’s TPS. Still, there is not a word about value added.

There are mentions of value added in a few books on TPS, but they are brief and no connection is made with customers’ willingness to pay. In these books, what is called “value added” is what physically transforms the product, a definition that, incidentally, has its own problems. Following are the books I have on TPS that contain a fleeting mention of value added:

• Toyota Production System, Taiichi Ohno (トヨタ生産方式, 1978). “Value Added” is discussed on pp. 57-58, and that’s it: two pages out of a 132-page book. The English translation includes the following diagram, which does not quite match the Japanese original:

The original, Japanese diagram was as follows, with my  own annotations in red:

There are differences in both style and content:

• The “Value-added work” caption in the translation does not make sense in its context and does not match the original, which is just one word, “sagyo” (作業) which just means work or operation.
• The bullet lists in the translation do not match the starred captions in the original, which only contain the first two items. I don’t know why the translator added items to each list.
• The original figure is in the style of a comic strip, which is almost standard for the Japanese literature on manufacturing. It is not intended to impress readers of the Harvard Business Review, but to communicate with people who read manga while riding trains to work.

One vital feature of this discussion is that it is exclusively about the breakdown of operator movements. It is not about materials handlers, managers or any kind of support groups, whose work is branded as intrinsically “non-value added” by managers who have read the US Lean literature.

Why this narrow focus on production operators? Most organizations have a subgroup of members who fill its purpose while all others support them. In a hospital, it is the surgeons; in aviation, the pilots; in the military, the shooters; in car racing, the drivers. In a manufacturing company, it’s the production operators. And their time is particularly precious because they work in sequence, so that, if you delay any one of them, you delay the entire production line. This is not true of the support staff, who work mostly in parallel.

Even in the restricted sense that he uses, if Ohno had felt that this was an important concept for TPS, he certainly would have used it elsewhere in his book. But he didn’t.

• Toyota Production System, Yasuhiro Monden, 2nd Edition (1993). Monden is a professor of production management at Tsukuba University, who has been granted extensive access by Toyota. Value Added appears once, on p. 179 of this 423-page book, where he repeats what Ohno had written.
• 25 keywords of the Nissan Production Way (実践日産生産方式ｷｰﾜｰﾄ25, 2005). This book is about Nissan, not Toyota. Keywords 11-15, on pp. 62-83 are about “the pursuit of Value Added production” (付加価値生産)。 “Value-added tasks,” however, are simply defined as the ones that physically modify the product.
• The Birth of Lean, Koichi Shimokawa and Takahiro Fujimoto (Ed.) (2009). There is one instance of “value added” on p. 52.
• The Toyota Way, Jeffrey Liker (2003). On p. 27, it says “The first question in TPS is always ‘What does the customer want from this process?’ (Both the internal customer at the next steps in the production line and the final, external customer.) This defines value. Through the customer’s eyes, you can observe a process and separate the value-added steps from the non-value-added steps.”
• Since “internal customers” are really downstream operations that don’t pay, the willingness-to-pay criterion is not applicable, which explains why Liker changes it to what the customer “wants from the process,” and it may not be a physical transformation. For example, what car assembly wants from painting inspection is the assurance that the bodies started on the final assembly line are free of paint defects.

Later, on p. 89, the concept migrates to an engineering office. Finally, on p. 280, value-added work is “the actual transformation process core to the service that the customer is paying for.” So the willingness to pay that was excluded on p. 27 is back in, and so is the physical transformation, apparently mashing together the US Lean and Japanese TPS versions of value added. Again, this concept is only referenced in three of the book’s 330 pages, which strongly suggests that it is not important. Toyota is just not that into it.

In light of this, why have American Lean authors focused on value-added? They zoomed in on a minor detail, changed the meaning from physical transformation to willingness to pay, and made it the foundation of Lean.

My personal guess is that they felt it necessary to attract decision makers under the influence of business schools and  uncomfortable with TPS plain talk. If we need to intellectualize the notion of waste elimination, however, we can do it in other ways, for example by stating as principle that a factory in never Pareto-optimal, meaning that it can always be improved.

In fact, it is fortunate that the concept of value added plays such a negligible role in TPS, because, as discussed in More Musings on Muda,  its definition in terms of physical transformation doesn’t withstand scrutiny much better than that in terms of willingness to pay. In particular, it is not applicable to anyone who does useful work that does not physically change a product.

In addition, in both senses, “value-added” is an attribute that an activities possesses or lacks. In economics or game theory, value added is a quantity of money.

In economics, the value added of a business is the difference between sales and external inputs, where the external inputs are materials, energy, and outsourced services. In other words:

$Value\: Added = Sales - \left ( Materials + Energy + Outsourced\: Services \right )$

This is the basis for Value-Added Taxes (VAT) in countries that charge them and. Aggregate it over an entire country, and you get its Gross Domestic Product (GDP).

Out of this Value Added, companies have to pay for people, facilities and equipment, and taxes. I have found this concept useful in several contexts. For example, a plant’s value added per employee is a better measure of productivity than sales per employee, because you can’t game it by outsourcing.

I have also found it useful to compare a company’s value added per employee with industry averages that you can retrieve from sources like the US Bureau of Labor Statistics or the Economic Census. But it is clearly not applicable to one production operator at one work station.

In game theory, the value added of a player is the amount by which his presence increases the size of the pot. A player who joins a poker table puts more chips in play. A company that sells software to run on a given hardware platform increases the value of this platform, while a competitor providing alternative hardware to run the same software reduces it. As explained in Brandenburger and Nalebuff’s Co-opetition, it is a useful concept in business strategy, but also irrelevant at the level of an individual work station.

Yet another use of the term is found in corporate finance, where the Economic Value Added (EVA)  is the difference between a company’s net, after-tax profits and its cost of capital.  The idea is that, unless a company has a positive EVA, its investors would be better off putting their money elsewhere.

None of these uses is applicable to a work station on the shop floor of a manufacturing plant, and there is no way any of them is connected to the notion of willingness to pay.

Focusing on what customers are willing to pay for is a direction that might be given to Marketing. Top management must of course be concerned with customers, but also with suppliers, employees, the local community, the environment,  local and national governments, not to mention creditors and investors.

Because TPS is a system that was developed by an actual company with all these stakeholders and more, it encompasses approaches to supply chain management, human resources, corporate social responsibility, and finance. In this context,  the notion that only activities add value only if customers are willing to pay for them is not helpful and is inconsistent with the more general usage of “value added”  as a technical term.

# Japan can still teach the world about management: Toshiyuki Shiga, Nissan – Economic Times

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One might expect the Chief Operating Officer (COO) of a leading Japanese automobile company to be a man from manufacturing, an engineer who talks kanban and just-in-time processes. Not soToshiyuki Shiga, COO of Nissan. Shiga is a marketing man, an economics graduate fromOsaka Prefecture University and he’s more at home talking sociology than technology. Shiga has been with Nissan Motor Co for 37 years and he’s currently the second-in-command, after CEO Carlos Ghosn.

Michel Baudin‘s insight:

As a source of ideas in management and technology, Japan should neither be ignored, as it was through the 1970s, nor idealized as it was in the 1980s. It is 130 million fallible humans struggling with the hands they are dealt, who occasionally come up with insights we can all benefit from. This ia what I read in Shiga’s words.