FEATURE – We start the new year with a reminder to put customers first, always. It is they who make our business and keep our lean initiatives true, says the author.

Words: Michael Ballé

Take a pen and the back of an envelope and sketch your business. Indulge me, here. Just draw whatever comes to your mind, without overthinking it. This is an exercise I’ve done many times with CEOs and department heads. Mostly, they draw some of their activities – what their business does. They sometimes illustrate a simplified organizational chart, blocks representing turnover, or a process delivering a service to customers. My own sketch looks something like this:

Your turnover comes from a bunch of people who find what you do useful and are willing to pay for it. In order to get what they pay you for, you have another bunch of people doing the work and delivering the product and service. Your profit depends on how well this second group of people work together and how effectively they compete against other similar bunches of people offering the same service to those same customers.

In truth, my vision is closer to the following:

Some customers we have robust, longstanding relationships with. We trust they will continue to order and pay for the same amount over time (at whatever cadence your product or service is used). Others are one-off customers that are shopping around but unlikely to come back. Internally, some people are committed to the company’s project and willing to think, learn and adapt in order to keep customers happy – a difficult endeavor in changing market conditions, with changing customer tastes and problems, in changing technological environments. Others are just there for their job and their career and are using the company to keep their head down, stay out of trouble and do the minimum work to bring their paycheck home. The more ambitious types use the company to have a career, indulge in their taste for bossing others and milking it for whatever they can get in status and bonus.

Now let me ask you this: What is the true aim of your lean initiative? To clarify the question and avoid debate, my definition of “lean” is applying the Toyota Production System (TPS) outside of Toyota – no operational excellence, no lean six sigma, no agile or SAFe, etc. Because the TPS is both a fascinating and complex system, I feel about it the same way I do about Tai Chi: you never know the TPS, you always learn the TPS, particularly in new and different contexts, such as service company, software houses or hospitals. Still, what is our aim? And how does it become apparent in the envelope sketches above?

There are many representations of the Toyota Production Systems, but all of them aim to satisfy customers by means of highest quality, lowest cost, and shortest lead-time. The thinking behind this is long-term sustainable success by making sure that every new acquired customer will become a lifelong customer – in other words, every white customer dot in our sketch will be turned into a black dot. This is how we build sustainable, stable turnover. Every instance of losing a black dot customer is a disaster, whatever the valid reasons at the time. Every case of not transforming a white dot occasional customer into a black dot customer is a failure, whatever the circumstances. Everything in TPS or lean is about, first, taking care of those customers and secondly, making sure we’re left with enough profit to reinvest in the business and, these days, pay our pound of flesh to shareholders.

Everyone nods their heads when we have the customer relationship and customer satisfaction discussion, but then we go to the gemba and what do we see? Customers appear nowhere. Real customers, people, with specific wants, needs, career politics, preferences, special circumstances. We see company names. We see market segments. We see “customers” as some kind overall concept. What we don’t see is a focus on working with real flesh-and-blood people to attach them to our brand in order to become their default provider.

What we do see on the gemba are efforts to solve internal process issues. People do use Toyota’s visualization techniques, which I plead guilty to writing about and teaching, to reveal issues and then do something about it. React quickly, now, without thinking about it too much. To my dismay, many of the systems we’ve put in place are used by managers to increase the pressure in reacting faster and with less thought rather than reflect on what is happening, what the implications are, what decisions have to be made, and how to find new options.

In the very early days of learning TPS from Toyota sensei, their focus was all about kaizen: how do we encourage operators themselves to think of something new to improve quality, reduce cost or shorten lead-times? Then, as we “learned” about the tricks of the TPS trade, this became about installing lean processes – Kanban, Red Bins, Hoshin Kanri (save us!) – to create new production management systems, rather than to encourage kaizen spirit. Middle managers quickly learn to use the lean system against its original intent of spurring creative thinking.

This brings us to the internal black dots: how do we better engage our own people in a continuous conversation on what’s going on, what we are doing about it, what we should continue to do and what we should change? This conversation is about developing people by bringing them to the table of the company or department project – giving them a voice, both at operational level (there could be a better way of doing this) and at strategic level (should we really be doing this in the first place or have things changed and we need to look at it differently?).

Learning theory has progressed considerably over the past half-century and has finally shed some of its behaviorist origins (sadly, managerial theory has not). We now know that adults do not learn by reinforcement from external rewards and punishments – they simply adapt to them. The idea that by having the proper rituals people will develop the “right” habits is plain silly and stems from a bizarre wish of turning people into robots. People are intentional agents with individual thought processes, and they learn from 1) expressing a goal (that works for them), 2) formulating a plan, 3) monitoring whether this plan is getting them closer to their goal or not, and 4) pondering whether to stick to the plan a while longer or whether to change the plan. It has taken learning research fifty years to catch up with Walter Shewhart and J. Edwards Deming’s PDCA insight.

This is about thinking, not relentlessly reacting. The emerging secret is that, to perform, human beings need to balance their performance zone (results matter) with a learning zone (let’s be goofy and think outside the box without consequences just to look at things differently and try new approaches). Reducing human activity to constant performance has the immense drawback of diminishing returns: people burn-out or bore-out, narrow their vision of what is possible, lose focus and attention, and in the end deliver mediocre performance at best. Still, we need to understand that once they’ve put themselves in this corner, they will resist any attempt of getting out of it. A key feature of humans is that if they are not being challenged on considering whether their plans work all the time, they will lock onto their rituals and maintain them whatever their outcomes.

Lean programs are not immune to that – so many lean efforts I see on the gemba have turned into an added layer of bureaucracy, with its standup meetings, fake Kanban, absurd discussions, micromanagement focus on applying “standards” and all the unpleasant features of red-tape bureaucratic behavior. This is the dark side of lean. This is lean without an experienced sensei challenging you to go back to customers and explore how things are done until technical mysteries are resolved and talk to the operators themselves to see what they think about their work. This is the lean that rearranges how components are ordered along the workstation to reduce steps without ever fixing that one main defect of the product everyone knows about. This is the lean that rigidifies operations to satisfy management’s endless craving for control regardless of its impact on real-life customers, people or suppliers. We all know about this dark lean. We’ve all done it at one point or another.

To revitalize your lean effort, to bring in positive and dynamic energy, you should go back to the original aim of “one-time customer, life-long customer”.To succeed with a lean initiative, we need to always keep in mind that we are bringing together a customer focus and building the ability of people to formulate plans and evaluate them in order to change their minds. If we return to my sketch, we can look at individual customers and ask ourselves: do we have a plan to strengthen this relationship by being more reliable in terms of quality, price and lead-time – as well as dealing with their specific needs? Are we reviewing and considering this plan, whether it is working or not, and its implications? In short, are we thinking about these real people?

Go to the gemba, ask people about what they understand customers want, need, complain about, request, and what problems this causes us. Do this again and again. If you lose focus there, your lean effort is going to become self-absorbed (and self-justifying) and, unless you’re very lucky, fall into dark lean. In a service business, ask yourself how available your staff is to customers, how friendly their tone, how well they communicate plans, how flexible they are to meet specific requests. In a software house, ask yourself how customers use your system, how it matches with their own internal system, how intuitive and reliable it is, how they feel about yet another digital tool. Similarly, in a hospital, continuously ask, “Where is the patient in this?” Ask yourself how you make things better for the patient rather than deal with the overwhelming complexity of the system and the – legitimate – endless grievances of doctors and nurses.

Quality is about doing the right thing and then doing it well. But right for whom? Legendary one-time Toyota president Fujio Cho is often quoted in lean talks as saying “Go see, ask why, show respect.” But the first time I heard the quote in the US plant he had run, it was “put customers first, go see, ask why, show respect.” Putting customers first is what keeps us honest and our lean true. As we embark in a new year of lean ask yourself: are you really putting customers first? As you go and see and look at processes and lean efforts, are you looking at real, flesh and blood, individual customers? Or are simply paying lip service to “customers”? Do people have a plan for each customer, and can they understand which problems they have to solve in order to fully satisfy them? How often do we deeply reflect on these plans and where they are taking us rather than jump the gun and react to every email?

Hopefully, when you next think of your business, you’ll think first beyond its organizational boundaries to the people who make it a business – the people who offer you cash for service hoping to get what they want and trusting you to make your best efforts to delivery highest quality, lowest costs, and shortest lead-times. Customers are the business.

_{THE AUTHOR}