CHAPTER 8
Shattering the Barriers to Innovation
INNOVATION IS perhaps the least understood aspect of going lean, but arguably the most important. Many times it is confused with product development, which is clearly a core part of innovation. But innovation goes further; its essence is translating new ideas into a successful product or service, requiring an ability to identify opportunities and a willingness to take action.1 And this is often where lean initiatives fall short.
Why is this? Creating innovation means breaking from the operations-focused mindset that marks so many business improvement initiatives. Innovation begins with developing a solid grasp of what the customer wants, along with a strong recognition of the implications across a broad range of interrelated disciplines, any of which might present constraints that must be overcome along the way. But most of all, it takes an openness to change—a constant willingness to interrupt the flow of activities whose waste has been successfully trimmed in favor of introducing something new and exciting that offers greater value to the customer.
But in some industries this creates a real challenge. Consider the reported shift in aerospace over recent years toward controlling escalating costs. Some managers now insist that new innovation must “buy its way onto the plane.”2 This raises a serious question. In an industry that has long been driven by advancements in technology, where is the benefit of promoting affordability if it comes at the cost of innovation?
Aerospace does not stand alone; other industries face similar challenges when it comes to turning innovation into practice. Health care, for instance, also faces escalating costs. Despite its many cutting-edge discoveries, implementation challenges have significantly impacted its success in making them widely available. One professional working within this industry shared with me the astonishing view that creating ways for delivering current innovations to the masses will produce far more benefits than all the discoveries in the next decade might bring.
Developing the ability to translate new discoveries into products or services is a serious challenge that must be met in order to satisfy the demands of today’s dynamic business environment. Fortunately, lean dynamics offers a solution. By reaching across traditional boundaries to drive out sources of lag and by developing products in a way that supports capabilities that are critical to a lean way of operating, lean dynamics offers a structure and approach for breaking from this pattern and promoting new innovation as an integral part of creating value.
But doing so means adopting a very different mindset from many of today’s lean initiatives, and taking a very different approach.
Leaning Product Development
Companies should proceed with caution when applying lean methods to innovation. They must recognize that this discipline is quite different from that of factory mechanics; applying lean, therefore, takes more than looking for physical waste along the path to generating ideas. The results of such a focus can be unpredictable and potentially undermine the core value their activities are intended to create.
Consider the example of 3M, a company widely recognized for its leadership in innovation. Early in this decade the company sought to apply GE’s Six Sigma methods with the goal of lowering costs across its business. It appears to have resulted in substantial savings, but the company’s reputation for innovation tumbled as well—from the top spot to number 7 on Boston Consulting Group’s Most Innovative Companies list from 2004 to 2007, while the company’s percentage of sales from new products dropped substantially (from one-third to one-quarter).3
This points to the need for caution. The process of innovation is substantially different from operational steps; it is thus risky to presume the direct applicability of waste reduction techniques that were developed for use in a factory environment. Leaning a company’s activities cannot simply mean cutting the fat; it should mean more than mapping out development steps for the purpose of routing out excesses that do not create directly visible benefit to the customer. This incorrectly presumes a narrow focus in what these activities seek to achieve, and it trivializes the complexity inherent to these activities, particularly the many incremental nuances whose contributions along the way are critical but difficult to see.
This does not mean that lean principles do not apply, but that their application necessitates a different way of thinking. Rather than attempting to force-fit standardized tools and practices, those seeking improvement need to implement the lean techniques demonstrated to fit for this particular function.
What are these techniques? The first concerns streamlining the product development process itself—reducing variation within the process, bridging disconnects between the many design specialty areas, and creating the broader span of insight and shared responsibility that can identify and eliminate sources of disruption that rolling out new designs typically creates. The second has to do with overcoming the basic challenge of creating a lean product design that will actively promote the operational objectives of creating strong, steady value.
The Challenge of Streamlining Product Introduction
The most basic challenge businesses and institutions must overcome in their efforts to innovate is to minimize the disruption and loss that traditionally follow product introduction. Rolling out new products and services using the latest technology can force substantial changes to tooling and equipment, work procedures, and workforce skills. Factories must work through unforeseen problems causing workarounds and amplifying disruption across the business. All of this can have much the same impact as an economic downturn, with factories and suppliers forced to suffer loss until challenges are worked out and operations stabilize.
Complicating this is the disruption that results from the iterations that are inherent to product development. Consider the challenge of designing for complex products like jet aircraft. Teams of engineers that are organized according to their many specialized functions must design thousands of individual parts, optimizing the system as a whole while making trade-offs between a wide range of disparate performance considerations—like balancing requirements for airframe strength with the need to hold down structural weight. Further, they must consider production issues, reliability, and a host of other competing needs while working to minimize production costs.
Any changes that designers make in one area can have a dramatic effect across the entire design, requiring redesigns of individual elements and forcing them to reconcile the functionality of the whole system. The disruption this creates is most dramatic when design deficiencies remain unrecognized until late in the development program. This is a particular challenge where introducing late changes can create manufacturing challenges, disrupt schedules, and drive up costs, causing long-term consequences which can drag down customer and corporate value for years to come.
What is the answer? Improving coordination, concurrency, and integration of product development programs can be effective in minimizing these negative outcomes. The most prominent approach is a multidisciplined teaming structure driving greater collaboration and concurrency to speed the program while helping to optimize trade-offs. Fewer lessons will be left to be discovered at the outset of production, thus minimizing the startup pains or Band-Aid fixes that can have long-lasting impact. Yet these may not go far enough. Their project orientation tends to promote a focused mind-set, rather than an overarching and ongoing shift back to the collaboration that worked well in the early days of aviation—an approach on which one Grumman executive fondly reflected.
Part of my time I would be on the factory floor, working out detail problems with shop foreman Frank Baerst and the mechanics who were building the vehicles. … Engineers and factory people appreciated the importance of each other’s problems and worked together for successful results.
Peter Viemeister4
Streamlining product introduction takes a different way of managing the business as a whole—not just a way of restructuring its design teams. It takes more than focusing on the product functionality that meets the customer’s needs; in today’s dynamic, competitive environment, it requires introducing products quickly and affordably. This means emphasizing the traditionally lower-priority considerations for optimizing how they will be built. This emphasis can drive faster introduction, higher quality, lower costs, and greater adoption of innovation for greater customer value.
Designing for Lean Maturity
We saw in Chapter 4 that implementing lean dynamics means thinking beyond streamlining how activities progress today; instead, it takes understanding what is meant by value in greater detail and applying this knowledge toward transforming the way in which value is created. Product development offers a tremendous opportunity to go beyond how value creation is currently structured; it offers the chance to design products and services in a way that will best promote a lean way of doing business.
But where should designers begin? It makes sense to start as is recommended in Chapter 4, by gaining a deeper recognition of what lean efforts are ultimately intended to achieve. My study of aerospace supported this; it indicated that those applying the most advanced techniques for leaning their designs had made the greatest progress after gaining insights from leaning their factories. In retrospect, this makes perfect sense. Rather than pushing design activities toward some foggy destination, their more specific understanding of what these efforts would do for their factories enabled them to pull toward a clearer destination.5
Many companies, for instance, have come to recognize the need to address direct sources of waste, such as improving dimensional controls, which can prevent problems with fit-up between components that have a direct impact on product quality, reliability, and cost. But those companies that progressed further with lean production activities went beyond emphasizing configurations or characteristics important to support steady-state operations. Instead, they established configurations with features important to supporting their alignment by product families such as reducing setups—natural drivers for dampening disruption that could arise during product introduction or from other changes in operating conditions.
In some ways, this more advanced lean understanding seems to help reestablish a linkage broken long ago between product development and innovation functions, and the operations that build these products.
Key Point: Extending Design Benefits
for Smoother Flow
Although lean design tools and techniques have become widely recognized and applied, their greatest strengths come from reaching beyond first-order benefits and applying them with a principle-based emphasis. Consider the following examples:
Reducing the number of parts is a well-recognized approach to driving down the time it takes to assemble the product, reducing production time. Moreover, decreasing the use of common items like fasteners, clips, and brackets can lower the number of items companies and suppliers must manage, minimizing inventories and reducing complexity. But a much greater impact is possible by seeking to more broadly slash the complexity of the bill of materials. Doing so shifts focus to reducing the number of sub-assemblies, unitizing components, simplifying details, and slashing the number of levels of buildup as well as the complexity of production routings, information, and coordination. The result can be less lag and smoother flow—improvements that are built in by design.
For decades, American manufacturers have recognized the importance of designing products within the bounds of existing process capabilities—establishing details on parts that factory equipment can reliably produce can cut production time and reduce defect rates. Some companies go farther, identifying key characteristics that can be used in production as leading indicators of problems that might affect consistency and quality. These can be used to preclude failures that would cause disruption and increase cycle time variation—an important factor in translating gains to bottom-line improvements (as described in Chapter 6).
Some businesses go beyond optimizing parts as individual items, instead designing details using group technologies (a design approach for maximizing commonalities between parts, such as “materials, tooling, setup procedures, labor skills, cycle time, and especially work flow or [process] routings”6). Applying this technique promotes greater efficiency in managing groups of items as product families, creating the cost reduction and dynamic stability described in Chapter 4 (depicted in Figure 4-1).
Innovation as an Ongoing Enterprise Focus
Former Procter & Gamble CEO A. G. Lafley noted that “innovation is all about connections, so we get everyone we can involved.” He explained that “the more connections, the more ideas; the more ideas, the more solutions.”7 With lean dynamics, creating these connections serves as the means for tackling complexity head-on. We saw in Chapter 5 that mechanisms that break through normal divisions offer the means to expand individual insight and responsibility across the business, enabling personnel to better identify and overcome the key sources of lag that undermine the creation of value.
Very often, however, design programs operate against their own project-oriented goals, creating a design that meets predetermined cost, schedule, and performance requirements largely as a stand-alone initiative. As mentioned earlier in this chapter, even efforts to lean out product development tend to focus on design as a compartmentalized process. The best that such an approach can hope for is to speed up the development of a product that ultimately falls far short of achieving full potential.
Achieving a dramatically different result involves employing a fundamentally different methodology: integrating product development activities not only with each other but with all elements across the enterprise, to contribute to understanding and flowing customer value. Innovation must be advanced not as a separate entity, as is so often the case, but integrated into an overarching lean dynamics transformation. Although this creates tremendous complexity, employing the lean dynamics approach of decentralization can break it down into manageable elements while maximizing progress and maintaining stability.
Doing so should include better integrating innovation with execution and treating product design as an integral part of the solution to attaining new levels of capability.
Integrating Innovation with Execution
Competing in today’s dynamic environment means continually shifting directions to meet changing business conditions and customer desires and demands. This requires an entirely different approach, a new mindset that enables innovation and operations to work hand in hand. Rather than competing with each other as opposing forces, they must work together to promote development of products that anticipate and capitalize on today’s challenging marketplace. The payoff can be tremendous, but it requires making a shift to a new, leaner way of thinking about how business should be done and what customers really expect.8
How is this possible? In part, by extending the concept of organizational flow (described in Chapter 5) to innovation. Streamlining flow requires first recognizing sources of lag; this comes from creating a broader span of insight so that those seeking to identify improvements can better understand the implications of proposed actions. This is particularly important so that innovators can freely translate their ideas into practical, needed solutions. Its purpose should be twofold: maximizing the innovation that can be introduced and concurrently mitigating the risk involved in rolling it out.
Toyota, for instance, deliberately expands its engineers’ capabilities to design products to fit seamlessly into its ongoing operations, a key to its ability. Before working as automobile designers, engineers spend time working in different departments to become familiar with the company’s approach to business. They must do everything from building cars in a manufacturing plant, to selling cars through a dealership, to working through an improvement project to learn how to broadly evaluate potential solutions and seek out and coordinate with others.9 The breadth of insight and collaboration skills developed are critical to maximizing commonalities between parts, simplifying routings, and reducing setups—characteristics that promote the company’s broader ability to operate at an advanced state of lean capability.
Toyota caps this off with a Simultaneous Engineering approach in which it employs a range of methods, from including “simultaneous engineers” as part of functional teams (analogous to Southwest Airlines’ boundary spanners, as described by Dr. Jody Hoffer Gittell in The Southwest Airlines Way), to creating more seamless interaction between product engineering and production engineering, to extending tools and techniques, so that all members within the design team can clearly see all aspects of the program.10
Lion Brothers, a leading manufacturer of apparel brand identification and decoration products headquartered outside Baltimore, sees the framework and mindset that lean thinking promotes as an important driver of innovation—a platform for developing innovation capabilities. The company has gone so far as to build an “innovation room” by combining several rooms at its headquarters facility. Walls have been transformed into floor-to-ceiling whiteboards; the room’s only purpose is to foster innovative discussion that brings people together from across organizational lines to brainstorm new ideas for translating individual customers’ desires into personalized products to enhance their experience.
Still, organizations must strike a balance between injecting new technology to keep products appealing and avoiding the risk of disrupting operations. Toyota’s structured approach for rolling out technologies is described by James Morgan and Jeffrey Liker in their book The Toyota Product Development System.
Each new technology must pass rigorous tests before it is deemed suitable for inclusion in a specific vehicle program. … Toyota creates a set of proven technologies that are “put on the shelf” until they are needed for specific vehicle programs.11
Seeing Product Design as an Integral
Part of the Solution
Chapter 6 illustrated how businesses can advance in lean maturity by identifying core challenges and targeting activities to overcome them. Product design must act as an integral part of the solution, not only by creating designs that cause less disruption when they are introduced but by creating the means for value to flow more efficiently—a key to competing within today’s global business environment.12
What, then, should those leading their business’s or institution’s innovation efforts do? First and most basic, they must maintain a solid understanding of the needs and desires of their customers and contribute to advancing new ideas and capabilities to satisfy them. To support this, they must gain a specific grasp of the challenges that must be overcome to make innovation possible. This includes recognizing the lag that limits their ability not only to roll out innovations but to create the value the company overall would like to create.
Finally, those individuals most familiar with the details and functionality of the company’s products should actively engage with those involved in transforming the way business is done. By bringing their in-depth insights to activities ranging from identifying product families to rethinking production processes, designers can jump-start the types of activities that can rapidly advance their organization’s lean maturity. Moreover, the insights they gain can help them identify new features and approaches that can further support these efforts in future design efforts.
Key Point: Considerations for
Advancing Innovation
A core rationale for advancing in lean maturity is reducing the barriers for translating new discoveries into products or practice. Yet this presents a chicken-or-the-egg situation. On one hand, advanced lean dynamics methods are best applied to products designed with them in mind (such as parts specifically created for rapid setups in stamping or milling machines). On the other hand, the best results in “leaning” these designs are seen in companies that have already made substantial progress with advancing these efforts in their factories.13 This points to some important considerations.
The product innovation department should not be seen as an outside entity, but should be included from the outset in determining the direction of lean dynamics activities. Its involvement in performing the dynamic value assessment will not only bring critical insights regarding the intent of product configurations but will serve to expand designers’ insights into the purpose, degree, and direction of the transformation, jump-starting their involvement.
Advancing in lean maturity requires a tight integration between product and process innovation, each of which contributes to mitigating lag and its adverse outcomes to ongoing operations, as well as the introduction of innovation.
The process of product innovation must be ongoing; it begins outside of the bounds of a formal development program with constant activities intended to promote increasing understanding of current capabilities, customers’ needs, and opportunities for improvement.
Innovation cannot be separated from the operational activities of the organization. While maintaining separate organizational elements has proven critical for companies like Toyota to sustain and grow the advanced capabilities they need within individual design specialties, it is critical to create mechanisms to promote a direct, seamless, ongoing relationship with the other elements across the organization.
The result is the ability to quickly and reliably create and roll out strong, steady value—a key to competing and expanding into new markets in even the most severe conditions.