When so many managers and businesses have access to virtually the same tools and information, it seems peculiar that two similar businesses can operate so differently, one being a success story while the other fails. To induce needed changes rather than superficial ones, managers must first accept their company’s reality. This seems like a simple task; however, it is commonly a limiting factor standing between many businesses and the real improvement they seek.

A business exists to fill a need—i.e., satisfy its customers. Many businesses pursue some form of internal improvement and in most cases, small gains are made. The problem with this is that, although applying tools and learning templates are helpful in providing basic knowledge within a firm, often larger problems go unaddressed and hinder the performance of the overall business. One business might train its associates in lean manufacturing principles over and over in an attempt to slash costs and generate more sales when the company is already lean to the point of anorexia. Another business combines appropriate tools with customer satisfaction surveys, and product and competitor research, seeking to understand its customers and their environments. The firm that is continuously learning about its market requirements is better equipped to understand its customers’ needs and fulfill them most precisely. 

Managers must identify and understand the contact points between their company and their customers. For each product or service a customer approaches the business for, whether it be a request for a quote, information, or the final product itself, a manager must know what the customer wants. Although “output” refers to the product or service, “outcome” describes the degree of success the product or service achieves in use. The measure of an outcome’s degree of success is customer satisfaction. When managers understand what the customer wants, they are empowered and able to construct processes that produce outputs with positive outcomes. By focusing on what the customer wants, processes evolve to meet customer needs, while tasks that are unnecessary or that don’t add value to the customer can be removed. Tools such as 5S and other lean principles can now be deployed intelligently as a means of achieving this end. The focus is now on streamlining processes to achieve their ultimate purpose of satisfying customers. Waste is removed as part of the natural evolution of the process, and improvement is made for the proper reasons. When a business is able to meet all of the needs of its customers in every contact situation, it generates repeat business and attracts new clients.

Lean tools should be applied whenever there is good rationale for their use; however, these tools should never substitute or mask real understanding of markets, customers, and competitors. Too many companies today have adopted the toolbox of lean manufacturing principles but have treated it like duct tape. Duct tape is meant, as its name suggests, for taping ducts; however, it is used to patch up just about everything. Lean tools have specific purposes and can be quite effective when applied appropriately, but to firms that misuse them, they can cause other problems. Instead of doing the leg work and finding out why a new competitor has stolen business from their firm, many businesses attribute their loss of sales strictly to cost and try to frantically introduce popular management concepts such as lean. Cost can often be a factor, but perhaps the new competitor has provided a lower cost not by implementing lean tools, but because it has a more intimate knowledge of the customer’s needs. The competitor may have adopted a new technology for production, found a cheaper supplier, or some other reason that will remain unknown without proper research. 

Another possibility is that the competitor is now providing its customer with a newer and better version of the product or service. The product might have been redesigned based on research and data of customer needs. If competitors offer a more useful product, they no longer need to compete strictly on price, so cost-reduction efforts alone won’t bring business back. It is a mistake to react to such competitor moves by introducing more lean initiatives. These may indeed provide some improvement to the business, but they do so while sacrificing the understanding that would have come from due diligence and the willingness to find the real problem.

The following set of diagrams, based on Deming’s famous flow diagram, help explain how many companies misuse lean tools. In the diagram, red boxes represent processes that are either absent or dysfunctional. Keep in mind that the arrows stemming from the “Support Processes” box are not limited to production. Many lean tools do focus on the material and information flow from suppliers, through to distribution, but the concepts can be useful for nonmaterial and nonproduction processes as well.

Figure 1: The business system, based on Deming’s flow diagram.

Figure 2: What the business model looks like when there is no connection between need and customer research. Without understanding the needs that exist in the market, where is a business destined to go?

Figure 3: When customer research is not practiced, a business cannot implement any meaningful plan for improving quality. A quality improvement plan that is not grounded in and directed by an understanding of need is bound to be superficial and inaccurate. This is often the source of abuse of lean principles.

Figure 4: An improvement plan that is detached from need doesn’t consist of design and redesign of the product or service because the plan doesn’t incorporate the evolution of need. Instead, design and redesign are replaced with misguided application of lean tools.

Figure 5: Implementing lean tools instead of customer research leads to the absence of a meaningful improvement plan, or the ability to design according to a deep understanding of need. The business is disconnected from the market and lacks direction. Lean implementation should be thought of as a support process.

Continuous improvement and lean efforts should be ongoing endeavors that serve the pursuit of customer satisfaction, not a firefighting technique. A firm should always seek to learn and improve, but should do so in tandem with a relentless desire to better understand its market, competitors, and customers. Trying to solve all problems by implementing tools within the four walls of a firm results in the firm losing touch with its environment. Small changes in the corporate jungle accumulate to become vast ones, and if small updates are not constantly being made as a result of new understanding and current research, a company winds up as a domestic cat. It will inevitably lack the knowledge it once had, and it will become easy pickings for more evolved competitors that better understand their environment. With the changes in so many companies and business culture as a result of lean thinking, one thing has and will continue to remain constant: Companies that understand their reality and focus on their customers continue to succeed.