Book Notes #40: Lean Thinking by James Womack and Daniel Jones

Title: Lean Thinking
Author: James P. Womack and Daniel T. Jones
Year: 1996
Pages: 350

Lean Thinking is one of the first books written in America where the Term ´Lean´ was used. Lean Thinking is a book written by James Womack and Daniel Jones that provides an overview of the Lean methodology and its principles, and how it can be applied to improve efficiency and effectiveness in various organizations and industries.

This book follows a previous highly successful book by Womack entitled The Machine That Changed the World. Both books address the revolution in manufacturing represented by the Toyota Production System of the Toyota Corporation of Japan. 

This type of manufacturing system is called a “lean system” and is contrasted throughout the book with the traditional “mass production” system of manufacturing epitomized by batch-and-queue methods.

As a result, I gave this book a rating of 8.5/10.

For me, a book with a note 10 is one I consider reading again every year. Among the books I rank with 10, for example, are How to Win Friends and Influence People and Factfulness.

3 Reasons to Read Lean Thinking

Book Overview

We’re so used to the idea that growth means complexity. More layers. Bigger systems. More departments. But what if the very structure we rely on to grow is actually what’s holding us back?

That’s the quiet revolution Lean Thinking invites us to consider. James Womack and Daniel Jones don’t just offer tweaks to improve how businesses operate—they propose a complete rethinking of how value is created, how waste is tolerated, and how work flows through an organization. And they do it not with lofty theories, but through grounded, often messy, real-world stories of people and companies wrestling with broken systems.

The heart of Lean Thinking is beautifully simple: figure out what customers truly value, then deliver it with as little waste as possible. But like most things that sound simple, the challenge lies in actually doing it. What counts as value? What’s waste? And how do you even begin to untangle decades of habits, hierarchies, and functional silos?

The book walks us through these questions not with checklists or toolkits, but through the lens of companies—some thriving, some floundering—who dared to take a different path. There’s the story of Lantech, a packaging machinery firm that looked successful on the surface but nearly collapsed under its own internal inefficiencies. By shifting from batch production to continuous flow and radically reducing lead times, they didn’t just recover—they doubled output without adding a single worker.

Then there’s Wiremold, an unremarkable manufacturer of wire management products that became a case study in lean transformation. Under Art Byrne’s leadership, Wiremold tore down walls—literally and metaphorically—cutting layers of management, collapsing job classifications, and replacing departmental silos with product-focused teams. What happened next was the kind of change that rarely gets captured in a spreadsheet: employee engagement soared, innovation sped up, and customer satisfaction followed naturally.

But Lean Thinking doesn’t shy away from the hard stuff. It confronts the resistance that comes when people are asked to change how they work, especially in places where tradition runs deep. The chapter on Porsche is especially telling. Known for its engineering excellence and craftsmanship, Porsche had to confront a brutal truth: brilliant products alone weren’t enough. The real challenge was in the day-to-day processes, the handoffs, the batching, the rework. Lean thinking didn’t ask them to give up their identity—it asked them to rethink how to support that identity with smarter systems.

And that’s really the theme that keeps surfacing throughout the book. Lean isn’t about cutting corners or doing more with less just for the sake of it. It’s about doing better with what you already have. Whether it’s Pratt & Whitney shaving months off product development, Showa Manufacturing transforming its supply chain from the ground up, or Toyota quietly setting the gold standard for global production, each story is a reminder that improvement is never done—it’s a mindset, not a milestone.

What makes Lean Thinking feel especially relevant—decades after its publication—is its vision for the future. In one of the more imaginative chapters, the authors ask: what would happen if we applied lean thinking to healthcare, construction, food delivery, or even how we get from place to place? It’s a provocative thought exercise, but not a far-fetched one. You start to see how many parts of our lives are built around waiting, overproduction, duplication, and confusion—things lean thinking exposes and invites us to fix.

At its core, the book isn’t really about manufacturing. It’s about how we work. How we lead. How we solve problems. It challenges the notion that big problems require big solutions. Sometimes, the breakthrough isn’t a radical new idea—it’s seeing clearly what’s already broken and having the courage to change it.

So if you’ve ever looked at your team, your organization, or even your personal workflow and thought, “Why does this feel harder than it should be?”—this book has an answer. Not a shortcut. Not a silver bullet. But a way of thinking that, once you see it, is hard to unsee.

Because maybe, just maybe, the path to real progress isn’t about adding more. It’s about learning to let go of what doesn’t serve. And that’s the quiet power of Lean Thinking.

So, what exactly is lean thinking? And what are these five principles everyone keeps talking about?

Imagine you’re trying to clean up your garage. It’s packed with tools you never use, half-empty paint cans, tangled cords, and a broken bicycle you swear you’ll fix someday.

You want to make it a space that actually works—somewhere you can find what you need, do the work you enjoy, and not trip over clutter every time you walk in.

That’s basically what lean thinking does to organizations. It’s about removing the clutter—both physical and mental—and creating systems that make work smoother, faster, and more valuable. And to do that, there are five core principles. They’re simple in theory but powerful in practice.

Let’s take a look.

1. Value: Start with what matters most

The first principle asks a fundamental question: What does the customer actually want?

This is where most organizations trip up. They assume they know what people want, or they add features, steps, and extras that sound impressive but don’t really solve the problem. Lean thinking pushes you to zoom in on what truly delivers value from the customer’s point of view—not yours.

It’s like going to a restaurant and ordering a simple meal. You want your food hot, fast, and tasty. You don’t care if the chef used a rare imported spice unless it actually improves the dish. Lean thinking says: figure out what matters to your customer and focus relentlessly on delivering that—nothing more, nothing less.

2. Value Stream: Map out how that value gets delivered

Once you know what the customer wants, the next step is to understand how it actually gets to them. This is where you map the value stream—every single step it takes to deliver your product or service.

What’s eye-opening here is how much waste you often uncover. Unnecessary approvals, long waits, duplicated steps, confusion between teams—it’s like realizing that your simple dinner order went through six kitchens before it reached your table, and no one noticed it was getting cold.

The value stream lets you see the whole journey from start to finish, so you can spot what adds value and what doesn’t. Once you see it clearly, you can start fixing it.

3. Flow: Make the process move smoothly

Now that you’ve cleared out the clutter, the next goal is flow—getting value to move continuously, without stops and starts.

Think about traffic on a highway. When it flows, everyone gets where they’re going efficiently. But one stalled car can create a chain reaction of delays. The same thing happens in companies. A late approval, a missing part, or a broken handoff between teams can stop everything.

Lean thinking helps you rearrange how work happens—physically and organizationally—so things move naturally from one step to the next. No more bottlenecks, no more silos, no more unnecessary delays.

4. Pull: Only make what’s needed, when it’s needed

Traditional businesses love to “push” work through the system—build things in advance, stockpile inventory, or produce based on forecasts. The problem? You often end up with too much of what people don’t want and not enough of what they do.

The pull principle flips that. Instead of pushing work forward, you respond to actual demand. You only produce or act when there’s a real need. Like a coffee shop making your drink when you order—not brewing 100 cups in the morning and hoping someone wants them.

This approach keeps you flexible, reduces waste, and makes your business way more responsive.

5. Perfection: Keep improving—always

Here’s the truth: you’ll never be done. Lean thinking doesn’t promise a final, perfect state where everything works forever. Instead, it encourages a mindset of continuous improvement. No matter how good your system is, there’s always something to tweak, something to learn, something to make better.

It’s not about chasing perfection as a destination—it’s about leaning into it as a way of life. Every day, you ask: how can we make this simpler, faster, better, more meaningful?

The book share very important concepts that we must understand:

Value: Everything starts with understanding what the customer truly wants. Not what you think they want. Not what the system was designed to deliver years ago. Value is what the customer is willing to pay for—nothing more, nothing less. Lean forces us to rethink all the work we do and ask: does this step contribute directly to that value? If not, it might be waste.

Value Stream: Once value is clear, the next step is to see the entire path value takes to reach the customer. The value stream includes every activity—from raw materials to delivery—and helps you spot where time, energy, and money are wasted. It’s only by seeing the whole stream that you can fix the real problems, not just patch symptoms.

Waste (Muda): In lean, waste is anything that doesn’t add value. Womack and Jones use the Japanese term muda to describe these non-value-adding activities. It includes overproduction, waiting, unnecessary movement, overprocessing, excess inventory, defects, and unused talent. Seeing waste clearly is the first step to removing it.

Flow: Flow is the ideal state where work moves smoothly and continuously through the value stream without stops, delays, or pileups. Traditional systems break work into chunks and move them in batches, but lean flow focuses on steady progress—like water running through a well-designed channel. When flow is achieved, everything feels easier, faster, and more responsive.

Pull: Instead of pushing work forward based on forecasts or plans, pull systems wait for a real demand signal before acting. Think of a restaurant that cooks when you order—not hours before. Pull helps prevent overproduction and keeps you aligned with what the customer actually needs. It’s one of the most powerful shifts in lean thinking.

Perfection: Lean doesn’t have a finish line. The fifth principle—perfection—is about continuous improvement. You keep spotting problems, tweaking processes, and eliminating waste. Every time you get better, you see new opportunities to improve. It’s not about being flawless—it’s about never settling.

Just-In-Time (JIT): This is the heartbeat of pull systems. Just-in-time means making and delivering what’s needed, when it’s needed, and in the amount needed. It helps reduce inventory, speed up flow, and align production with real customer demand. But it also requires stability, reliability, and tight coordination—so when it works, it’s incredibly efficient.

Batch Thinking (and Why It’s a Problem): Traditional systems love batching—doing things in big chunks because it feels efficient. But batching creates queues, delays, inventory, and defects. Lean thinking challenges this norm by showing that small batches or single-piece flow often move faster, with better quality and less cost. Breaking away from batch thinking is hard—but necessary.

Kaizen (Continuous Improvement): Kaizen is the day-to-day habit of finding better ways. Everyone, at every level, is encouraged to make improvements—small ones, big ones, whatever moves the needle. Kaizen isn’t a program or a meeting—it’s a mindset. The belief that today’s process can always be improved tomorrow, and that those doing the work have the best insights on how to do it.

Standardized Work: To improve something, you need a baseline. Standardized work means creating a consistent, agreed-upon way to do each task. It’s not about rigidity—it’s about clarity. Once everyone is following the same best-known method, it becomes much easier to identify problems, train others, and improve.

Cellular Manufacturing: Instead of organizing work by function (e.g., all machines in one room), lean groups equipment and people into cells—small, self-contained units that complete a full product or process. This reduces handoffs, cuts travel time, and helps teams own their output. Cells bring people closer to the value they create.

Right-Sized Tools: Lean avoids giant, complex machines that require long setups and lots of space. Instead, it uses right-sized tools—simple, flexible equipment built for the job at hand. They’re cheaper, faster to change, and easier to maintain. It’s a mindset: use what you need, nothing more.

Visual Management: Lean systems are designed to make problems visible. Whether it’s a signal board, color-coded inventory, or a physical indicator when something’s behind schedule—visual management helps teams see the current state at a glance. This reduces confusion, enables faster response, and builds shared awareness.

Takt Time: This is the rhythm of customer demand—how fast you need to produce something to meet demand without overproducing. Takt time helps balance workloads and pace operations. It’s like setting a metronome for your process: steady, predictable, and tuned to your customer.

Heijunka (Level Scheduling): Customer demand fluctuates. But lean doesn’t chase every up and down. Heijunka means leveling the schedule—producing at a consistent pace to reduce chaos. It helps create stability, balance capacity, and keep flow going, even when demand spikes or drops.

Line Balancing: In flow systems, one slow step can create a bottleneck. Line balancing is the process of redistributing tasks so that work is evenly spread across all steps. The goal is to make sure each person or machine is working at the same rhythm, avoiding idle time or overloads.

5 Whys (Root Cause Thinking): Instead of fixing symptoms, lean digs into why a problem happened. Often, the first answer isn’t the real cause. So you ask “why?” five times (or as many as it takes) to get to the root. It’s a simple technique with powerful results—it shifts the focus from blaming people to fixing systems.

Andon: An andon is a signal—often a light or cord—that alerts the team when something goes wrong. When pulled, it stops the process so the problem can be fixed immediately. It encourages quality at the source and empowers workers to speak up instead of letting issues pass down the line.

Gemba: This Japanese term means “the real place.” In lean thinking, leaders and managers are encouraged to go to the gemba—the shop floor, the customer interaction, the place where value is created. It’s where you see the truth, understand problems, and support improvements firsthand.

Cross-Functional Teams: Rather than organizing around departments, lean promotes cross-functional teams that own the entire value stream. This improves communication, reduces handoffs, and gives people a clearer purpose. It replaces “us vs. them” with shared goals.

Lean Culture: Ultimately, lean isn’t just about tools or systems—it’s about culture. A lean culture values learning, collaboration, and respect. Leaders are humble and curious. Teams are empowered and trusted. Problems are welcomed as opportunities. And improvement is everyone’s job, every day.

Lean Enterprise: The principles don’t stop at the factory door. A lean enterprise is a network of companies—suppliers, partners, distributors—working together to deliver value efficiently. It means aligning goals, sharing improvements, and treating every link in the chain as part of the same mission.

Hoshin Kanri (Policy Deployment): Lean strategy isn’t top-down or vague. Hoshin Kanri connects long-term vision to short-term actions, aligning everyone from frontline workers to senior leadership. It helps avoid random initiatives and focuses effort on what truly matters.

Respect for People: A final, crucial concept: lean isn’t about squeezing more out of fewer people. It’s about respect. That means giving people the tools, time, and trust to improve their work. It means listening, involving, and developing others. Without this foundation, lean efforts eventually collapse.

Chapter by Chapter

Chapter 1 – Value

A House or a Hassle-Free Experience?

The chapter begins with a vivid example: Doyle Wilson, a homebuilder in Austin, Texas, realized that most of his work involved fixing mistakes, managing delays, and dealing with unhappy customers. He stumbled upon the concept of quality after reading Customers for Life and diving into Deming’s principles. His transformation was radical—he restructured his company around Total Quality Management, eliminated job incentives that promoted shortcuts, and held contractors accountable for quality.

But the real breakthrough came when he realized that 78% of buyers in his market preferred older homes. Why? Because buying a used home meant fewer hassles. They could see what they were getting, avoid endless customization decisions, and move in immediately. By contrast, Wilson’s new homes came with long waits, complex choices, and inevitable “to-do” lists after moving in. That was the moment he began redefining his product—not just the house, but the experience of buying and moving into it.

He built a one-stop sales center to make customization smoother, redesigned the construction process to reduce lead time from six months to 30 days, and introduced pull scheduling and standardized toolkits. The goal? A hassle-free customer experience that offered real value, not just a finished house.

Start by Challenging Traditional Definitions of Value

So why is it so hard for companies to start with a proper definition of value? The authors argue it’s because both producers and customers are stuck in old habits. Producers want to keep making what they’ve always made. Customers tend to ask for variations of what they already know. As a result, most discussions about value stay shallow—focusing on cost, speed, or customization—without ever questioning the basics.

The Wiremold Company offers another great case. They made wiring equipment and surge protectors through a traditional, step-by-step development process. Marketing would spot a market gap, engineers would design based on specs, and the prototype team would build and test it. But the products often fell flat. The reason? No one had asked what the customer really valued.

Steve Maynard changed that by creating dedicated, cross-functional product teams. These teams engaged directly with customers, dropped old assumptions, and co-created products based on actual needs. For instance, customers wanted wire guides that looked good and were quick to install—not just rugged and cheap. That shift in mindset led to a 40% sales boost and healthier margins within two years.

Define Value in Terms of the Whole Product

One of the most relatable examples in the chapter comes from a family vacation. A simple holiday to Crete involved nineteen different organizations—from taxi services and airport security to airlines and customs. The trip took 13 hours, with over 6 hours spent simply waiting in lines. Each organization focused on its own small piece of the puzzle, trying to be “efficient” in isolation. No one looked at the whole customer experience.

The takeaway is powerful: if no one’s responsible for the full experience, value gets lost. The process becomes fragmented, frustrating, and full of muda. Redefining value means looking at everything through the eyes of the customer—what they want, how they want it, and what adds unnecessary friction.

The Critical Need to Rethink Value

Rethinking value isn’t just a nice idea—it’s a survival strategy for lean organizations. When companies apply lean principles, they end up freeing resources, cutting lead times, and reducing costs. But if they don’t find new customers or expand existing ones by redefining value, they risk wasting the gains they’ve made.

So lean firms must constantly revisit how they define value. This isn’t a one-time fix—it’s a mindset. Teams should challenge their assumptions, ask if they’re still solving the right problems, and use what the authors call “kaizen for value”: a steady, ongoing effort to improve how value is defined and delivered.

The Final Element: Target Cost

Once value is clearly defined, the next big step is setting a target cost. Not a wishful number pulled from thin air, but a cost grounded in what’s possible if all visible muda is removed. Traditional firms set selling prices based on what they think the market will pay and work backward to figure out how to make money. Lean firms flip the script. They figure out the real cost of delivering value without waste, and use that as the anchor for development, delivery, and pricing decisions.

And because this target cost is usually far lower than competitors’, lean firms have options. They can lower prices to increase volume, add features or services, expand their reach, or invest in new innovations—all while staying profitable.

In the End, It All Starts with Value

This chapter isn’t just about a concept—it’s about a mindset shift. If you define value poorly, everything else crumbles. You’ll make the wrong products, build the wrong systems, and serve customers in all the wrong ways. But if you get value right—from the customer’s perspective—you unlock the power of lean thinking.

Defining value is where lean begins. But it’s also something lean thinkers never stop doing.

Chapter 2 – The Value Stream

The View from the Aisle

To understand the value stream, the authors suggest we start by observing the aisle of a supermarket—a perfect vantage point. The supermarket is a place where many streams converge, ultimately delivering products to the customer. Just like a product’s journey through the supply chain, it is shaped by numerous decisions and processes that push it along. This idea inspired Taiichi Ohno, the father of Lean, to create the Just-in-Time (JIT) system back in 1950.

As the authors explore this, they share their own experiences collaborating with Tesco and its suppliers to analyze the value stream of specific products. This deep dive into each step of production reveals crucial insights. Without measuring and identifying every step, businesses can’t eliminate waste, improve, or strive for perfection. The goal is to manage value streams for specific products—not just generic processes.

Mapping the Value Stream

The authors introduce the concept of mapping the value stream, where every action required to design, order, and produce a product is identified and categorized. These steps fall into three categories:

1. Value-creating steps (the ones that actually matter to the customer).
2. Type One muda (waste that’s currently necessary due to system limitations but can’t be eliminated just yet).
3. Type Two muda (waste that serves no purpose and can be eliminated immediately).

By eliminating the Type Two muda, organizations can then focus on improving the remaining inefficiencies using tools like flow, pull, and perfection—which are explored in later chapters.

The Value Stream for a Carton of Cola

To make this concept clearer, the authors walk us through the value stream for a carton of cola from Tesco. They break down a process that takes over 300 days and involves an intricate, waste-filled journey. From mining bauxite in Australia to delivering finished cola cans to the shelves of a Tesco store, it’s a textbook case of inefficiency.

Most of the time, during this journey, value isn’t being added—just waiting, transporting, and storing products. For example, the aluminum for the cans moves through numerous stages: from mining in Australia to smelting in Norway, to rolling in Sweden, before it reaches the can makers in England. Throughout this, the product often sits in storage for weeks at a time, adding no value to the final product and costing money instead.

The amount of time spent on actual value creation (from raw materials to the final product) is minimal compared to the waiting and movement times—this is what the authors refer to as muda, or waste. This chapter illustrates how looking at the flow of materials, not just individual parts of the production process, can expose where the real inefficiencies lie.

The Root Cause of Muda

The authors argue that much of the waste in the cola value stream is due to the scale and complexity of mass-production methods. Each company along the stream has built systems that operate on large batches, high-speed machinery, and long production cycles, all designed for efficiency within their own isolated operations. However, when the broader system is examined, these “efficient” steps may actually add more costs and time than necessary.

The key issue is that these systems aren’t designed to react quickly to customer demand; they’re designed for high-volume, low-cost production. This leads to inventory buildup, long storage times, and delays—all of which add to the overall inefficiency.

Rethinking the Ordering Process

The chapter also highlights how Tesco improved its ordering system by introducing a more agile, responsive approach. Instead of relying on traditional, long-term forecasts, Tesco shifted to a more accurate, daily replenishment system, using data from point-of-sale (POS) systems to trigger orders. This system allowed them to keep inventory levels low while still meeting customer demand, avoiding stockouts and reducing waste.

However, the authors point out that the real challenge lies beyond Tesco. Even though they’ve made great strides in improving their internal processes, they can’t achieve true efficiency until the companies upstream in the value stream (like the bottlers and raw material suppliers) also rethink their operations. Until then, they will continue to rely on large inventories and batch processing, creating waste and inefficiencies throughout the entire supply chain.

The Need for Lean Product Development

Another important point the authors make is that even product development processes are bogged down by inefficiencies. For example, product development in the beverage industry takes about a year and costs around $15 million to launch a new product (often with disappointing results). The process is slow, fragmented, and disconnected from customer needs. By rethinking product development in terms of value and customer demand, companies like Tesco could streamline this process, create more relevant products, and ultimately save both time and money.

Applying Value Stream Thinking

The authors make it clear that the key to eliminating waste in any value stream is to stop looking at isolated activities (like the efficiency of individual machines or departments) and instead focus on the whole value stream. By doing so, companies can identify where waste is occurring, challenge existing practices, and eliminate the steps that don’t add value to the customer.

The focus should be on improving the flow of value, not just optimizing individual processes. This means engaging with suppliers and partners, not in isolation, but as part of a larger, collaborative effort to reduce waste across the entire system.

The Key to Lean Thinking: Eliminating Muda

Finally, the authors emphasize that Lean isn’t about benchmarking against competitors. Instead, it’s about continuously striving for perfection by eliminating all types of waste—muda. By identifying waste in every step and constantly improving, companies can move closer to creating value for the customer with minimal effort, time, and resources.

Chapter 3 – Flow

The World of Batch-and-Queue

The chapter kicks off by contrasting two worlds: the batch-and-queue system we often experience and the world of flow. The authors take the example of a visit to the doctor to illustrate a common scenario of waiting—waiting for an appointment, waiting for tests, waiting for results. In essence, the bulk of your time is spent moving from one step to the next, rather than engaging in real value-added activity. This is typical of a batch-and-queue approach, where work is broken into chunks, and waiting time accumulates at every stage.

In the world of manufacturing and services, the same concept applies: efficiency is often misunderstood as optimizing each individual step rather than looking at the entire process. The result? Waiting, interruptions, and inefficiencies that collectively waste time, money, and human effort.

Flow in Healthcare and Manufacturing

The authors then expand the idea of batch-and-queue systems to other sectors, including healthcare and manufacturing. In healthcare, patients are often passed from one specialist to another, leading to significant waiting times between tests and treatments. Similarly, the bicycle manufacturing industry historically operated on a batch-and-queue system—parts would be produced in bulk, stored, and then assembled later in large, often disjointed steps.

This misalignment leads to an inefficient use of resources, as value is not being added at every step. Rather than continuous improvement, each stage in the process is isolated, with little thought given to how one step affects the next.

The Need for Flow

The key lesson here is that real improvement can only happen when value flows continuously from one step to the next. In a continuous flow system, work proceeds without interruptions or waiting periods. Every step adds value without waiting for parts to accumulate, and the production moves in a streamlined, uninterrupted sequence.

The chapter emphasizes that the traditional approach in manufacturing, particularly in industries like bicycle production, is a fragmented and inefficient system. Every step from design to final assembly needs to be reconsidered, with the aim to create a seamless, flow-driven process.

The Techniques of Flow

The authors lay out three major steps to achieve flow:

1. Focus on the object: Keep the product or service at the center of the entire process. Design, order, and production should all be aligned and transparent.
2. Remove barriers: Traditional job boundaries and organizational silos must be broken down to allow teams to work collaboratively without delays.
3. Rethink work practices and tools: The way people work and the tools they use must be continuously assessed to eliminate waste, reduce errors, and maintain continuous flow.

These steps work together, enabling teams to keep the value stream moving smoothly, without the bottlenecks typical of batch-and-queue systems.

From Batch to Flow in Bicycles

The chapter uses the bicycle industry as a case study. The historical model in bicycle production involved a series of departments—each working on a separate task—leading to delays and inefficiencies. The solution? Switch to a flow system where every production step is seamlessly integrated, and each team works on the product until it’s completed.

With the introduction of a lean enterprise, the production system changed from batch-based to continuous flow. Product teams are no longer isolated, and the manufacturing process becomes more synchronized. One example is how machines that were traditionally large and inefficient are reengineered to suit smaller batches and reduce downtime between different production runs. Additionally, simplification of machinery, better integration of teams, and clear communication contribute to a smoother, faster process.

The Lean Revolution in Action

The concept of lean flow is exemplified through the transition in bicycle production. As lean principles are applied, the plant layout changes, workstations are streamlined, and parts move quickly from one station to another without long waiting times. More importantly, the employees’ roles shift. They move away from their narrow, specialized functions and become part of cross-functional teams, directly engaged in solving problems and improving the process.

This shift drastically reduces the time and effort needed to complete a product. It’s not about pushing more parts through a system; it’s about ensuring that parts move when needed, that waiting times are minimized, and that quality remains high at every stage.

Just-in-Time and Lean Thinking

The authors also discuss the concept of Just-in-Time (JIT), which is crucial in ensuring that flow continues uninterrupted. However, for JIT to work, setup times must be reduced, and the schedule must be smoother—otherwise, bottlenecks will emerge, and the system will collapse.

The shift to lean production means thinking differently about scheduling, tool changes, and inventory management. JIT doesn’t just mean ordering parts when you need them—it requires a level of synchronization between production and demand that avoids both shortages and overproduction.

The Power of Flow in All Activities

The beauty of flow thinking is that it’s not limited to manufacturing—it can be applied to any business activity, including services. From healthcare to customer service, the principles of lean thinking can help streamline processes, reduce waiting times, and improve the overall experience. For businesses to thrive, they must ensure that their operations are designed for flow, making the whole process smoother and faster.

Psychological Flow at Work

Interestingly, the chapter also delves into the psychological aspects of flow. Mihaly Csikszentmihalyi’s research on “flow” in work shows that when employees are deeply involved in their tasks, they experience satisfaction not just from the outcome but from the task itself. In a lean environment, employees are engaged in a continuous process of improvement, giving them the chance to experience flow and feel more connected to their work.

Flow Is Not Enough

However, flow alone isn’t sufficient for success. The authors stress that the real challenge is ensuring that the product being produced or the service being delivered actually aligns with customer needs. Flow must not just be about speed—it must also create value that the customer desires. Lean thinking aims to not only streamline processes but also ensure that they are delivering the right products and services at the right time.

Chapter 4 – Pull

Pull: Let the Customer Lead

The concept of pull in Lean thinking is simple but powerful. It means that no one in the production system should create a good or service until a customer downstream asks for it. This principle flips the traditional model of pushing products through a system based on forecasts or production schedules. Instead, pull focuses on responding directly to actual customer demand.

To understand the intricacies of pull thinking, let’s look at an example. Bob Scott, who owns a Toyota pickup truck, needed a new bumper after backing into a pole. He drove to Sloane Toyota, triggering a sequence of events that eventually got him the bumper he needed, thanks to a well-implemented pull system. This case highlights how pull systems work in practice, emphasizing the importance of synchronizing demand with production.

The Challenge of the Old Way: Batch-and-Queue

Before pull systems, the traditional method was batch-and-queue production, where manufacturers created large quantities of parts in advance based on forecasts. This leads to massive inventories, long wait times, and inefficiency. In the case of Bob Scott’s bumper, if this had happened a year or two earlier, the dealer would have had to order the part from a warehouse, taking several days or more to get it in. Despite having massive inventories, the parts weren’t readily available when needed, creating delays and frustration.

The Transformation: Pull Production at Bumper Works

Shahid Khan, president of Bumper Works, had a typical batch-and-queue system in place at his factory, producing large batches of bumpers for various models. While this system worked under the old paradigm, it didn’t align with Toyota’s lean principles. Toyota’s introduction of lean thinking led Khan to reimagine his production system, eliminating waste by reducing batch sizes and implementing quick changeovers.

A major breakthrough came when Khan reduced his changeover time from 16 hours to just 22 minutes, allowing the production process to be far more flexible and responsive. This change transformed Bumper Works into a more efficient, responsive manufacturer. Instead of making bumpers in large batches and waiting for them to be shipped, bumpers were produced in small batches, “pulled” through the system as needed. This allowed them to meet real-time demand efficiently.

Kanban: The Simple Signal for Pull

At the heart of the pull system is the kanban system—a signaling mechanism used to trigger the production or movement of parts. Once a bumper part was welded at Bumper Works, a kanban card would be sent to the next step in production, signaling that more materials were needed. This creates a flow where each part is produced only when it is needed, based on the demand from the next step in the process.

Creating Flow in the Supply Chain

The pull system doesn’t just stop at manufacturing; it extends throughout the entire supply chain. At Toyota’s parts distribution centers, they moved from large, inflexible inventories to a pull system where parts were replenished as needed. The change from batch-and-queue methods meant that Toyota could now send daily deliveries of parts to dealerships, reducing storage space, improving response times, and eliminating excess inventory costs.

At dealerships like Sloane Toyota, the change was equally transformative. By reducing inventory sizes and focusing on daily part orders, they could offer faster service to customers. Parts that were needed were no longer buried under mountains of inventory; instead, the process became more responsive and fluid. The result was reduced storage space, improved cash flow, and happier customers.

Challenges of Pull: Supplier Coordination

Despite the successes, implementing pull is not without its challenges. One of the biggest obstacles is ensuring that suppliers are aligned with the pull system. While Toyota was able to implement a lean supply chain with many of its parts suppliers, some suppliers still relied on batch production methods. The key challenge here was getting these suppliers to adopt the same quick-changeover principles and to work in smaller, more flexible batches.

An example of this challenge was seen at Chrome Craft, a chroming supplier for Bumper Works. Chrome Craft’s processes were initially not aligned with Bumper Works’ pull system, leading to delays. However, after implementing quick-changeover methods, Chrome Craft dramatically reduced turnaround times, transforming the production flow.

The Bigger Picture: Pull in Service Parts

Toyota also applied the pull principle to its service parts network. Instead of dealers stocking large inventories of parts, they began ordering parts daily based on actual customer demand. This helped reduce unnecessary inventories and increased the range of parts available for service. By shrinking inventory sizes, dealers were able to keep a wider variety of parts on hand, which meant that service issues like Bob Scott’s bumper could be resolved much more quickly.

From Service Bay to Raw Materials: Connecting the Dots

By the mid-1990s, Toyota had refined its pull system to cover the entire value stream—from the service bay at the dealership all the way to raw material suppliers. If a customer requested a specific part, it would trigger the whole supply chain, from the dealer to Bumper Works, and from there to steel manufacturers. This ensured that parts were produced and shipped only when necessary, eliminating excess inventory at every step.

This reimagining of the supply chain and service parts distribution created a much more responsive system. The time to deliver a bumper, from raw materials to customer installation, was drastically reduced, improving both customer satisfaction and operational efficiency.

Continuous Improvement: The Journey Towards Perfection

The shift to a pull system is a significant achievement, but it’s not the end of the journey. Toyota’s commitment to lean thinking means constantly refining and improving the system. By focusing on continuous improvement (kaizen), Toyota and its suppliers continue to reduce waste, improve efficiency, and respond even faster to customer demand. The goal is not just to meet demand but to anticipate it, creating an ecosystem where everything flows smoothly, and waste is constantly minimized.

Chapter 5 – Perfection

The Incremental Path

In this chapter, the authors dive into the concept of perfection in lean thinking, which is far from a one-time achievement. It’s an ongoing journey. Joe Day, president of Freudenberg-NOK General Partnership (FNGP), observed that no matter how much they improved a specific activity, more waste could always be eliminated. Every improvement led to better results, but there was always room to improve further. This concept, known as kaizen, was applied repeatedly over a span of years to increase productivity by an incredible 991% and reduce the space needed for manufacturing by 48%.

What’s fascinating here is that the improvement didn’t stop after the first few wins. Instead of accepting diminishing returns as a given, FNGP continuously went back to the drawing board, tweaking and refining their systems. This counters the traditional belief that once things are fixed, they should stay “steady” and just be maintained. Lean thinking argues that perfection is always within reach through constant improvement.

A Radical Approach to Perfection

The chapter introduces a radical path to perfection that requires a total reconfiguration of the entire value stream, as seen in the glassmaking process for the automotive industry. Currently, glass production for car windows involves several steps that lead to delays, waste, and inefficiency. For instance, glass is created in huge batches, stored, and then transported, adding unnecessary time and cost. By switching to a pull system and using continuous flow, the glass-making process could be dramatically improved.

Radical improvements in the value stream might involve positioning production facilities closer to the customer or breaking down production steps into smaller batches to enhance responsiveness. The goal is to eliminate not just inefficiencies at each stage, but to create an integrated flow from raw material to finished product.

Continuous Incremental and Radical Improvements

To pursue perfection, lean enterprises need both incremental and radical improvements. Incremental improvements are achieved by refining individual steps, while radical improvements involve rethinking the entire system. For example, smaller batch sizes and quicker tool changes can be implemented to improve a manufacturing process incrementally. However, the radical improvements—such as rethinking the entire location of plants or how parts are integrated into the production line—will unlock even greater value.

Both approaches are necessary for long-term success. Incremental improvements make things better, but radical changes are required to achieve a truly lean enterprise.

The Role of Lean Tools and Techniques

To effectively pursue these improvements, managers need to apply key lean principles such as value specification, value stream identification, flow, and pull. These principles give managers a clear picture of what the ideal, lean system looks like. The authors also introduce the concept of policy deployment, or hoshin kanri, which is a tool for aligning goals with action. This process helps organizations focus on a few key goals at a time, rather than overloading themselves with too many projects.

Creating a Vision of Perfection

A critical aspect of lean thinking is forming a vision of perfection. This vision guides the company and its employees, ensuring that everyone is working toward the same goal. The authors suggest that perfection, while an ideal, should be pursued through continuous improvement. This picture of perfection should evolve as the organization progresses, always offering a new target to aim for.

The authors also stress that in order to pursue perfection effectively, managers must ensure that their current technologies, systems, and products are aligned with lean principles. Old, bulky systems that don’t support continuous flow or flexibility need to be rethought to fit the lean model.

Focusing Resources for Improvement

The pursuit of perfection requires focus. Many organizations start strong but lose momentum because they try to tackle too many things at once. The authors advise organizations to select the most important goals, set clear timelines, and ensure that resources are properly allocated. A well-defined policy deployment matrix can help track progress, set improvement targets, and avoid taking on too many projects at once.

Successful lean transformations often follow a strategic timetable, where specific, measurable goals are set, and resources are allocated to achieving those goals. The most successful companies keep their focus on a few key areas and push to complete those projects before moving on to others.

Breaking Through Inertia

One of the biggest challenges in adopting lean thinking is inertia. Even when managers understand the principles of lean, they may hesitate to implement them fully, fearing disruption. The authors explain that this hesitation is often due to the lack of a clear vision or overwhelming pressure from existing systems.

The key to overcoming inertia is to start small, focus on achievable goals, and gradually build momentum. The role of the change agent—someone who can break through organizational resistance—is essential. Change agents often face resistance, but those who succeed are seen as leaders who genuinely want to improve the system for everyone, rather than promoting a “quick fix” for their own benefit.

Chapter 6 – The Simple Case

The Story of Pat Lancaster

Pat Lancaster, an inventor and entrepreneur from Louisville, Kentucky, is at the heart of this chapter. He founded Lantech, a company that revolutionized the way products are packaged and shipped. His breakthrough invention was a stretch-wrapping machine that used plastic film to tightly secure pallet loads. This machine eliminated the need for traditional shrink-wrapping, saving both energy and plastic, significantly reducing costs for manufacturers.

What sets Lancaster’s story apart is how he transitioned from being an inventor to managing a growing business. He faced the challenge of scaling his operations, and in doing so, created a traditional batch-and-queue system to meet demand. The chapter explores how Lancaster’s journey highlights both the initial success and the struggles that come with transitioning from a lean startup to a complex, mass-production system.

The Shift to Mass Production and Its Pitfalls

At first, Lancaster’s company operated with a lean mindset. However, as the company grew, Lancaster began to structure his operations around traditional business practices. He hired operations, engineering, and sales managers, and the company became divided into departments—each handling a step in the production process.

However, as Lancaster expanded, he realized that this batch-and-queue system caused significant inefficiencies. It took long lead times, which meant that customer orders would take months to process. And because each department handled its own part of the production process, the flow of materials became disjointed.

The real breakthrough came when Lancaster realized that these delays and inefficiencies were hurting his ability to compete as prices fell and competitors caught up with his technology. The company’s initial growth was driven by superior product design and patent protection, but as the market became flooded with lower-cost competitors, Lancaster knew that his company had to rethink its entire production system to stay competitive.

A Change in Perspective: The Lean Revolution

After realizing the flaws in the batch-and-queue system, Lancaster turned to the ideas in lean thinking. The author explains that despite the initial success, Lancaster’s company was on the brink of disaster by the end of the 1980s, losing a patent lawsuit and facing increasing competition.

Lancaster sought to revolutionize Lantech’s approach by introducing lean principles—transforming the factory into a more agile, continuous-flow system. This process involved reducing lead times, improving product quality, and eliminating unnecessary processes in the value stream.

The change was radical. Instead of traditional departments, Lantech started to build production cells that allowed for single-piece flow. This means that each product was completed one at a time rather than in batches, reducing time spent on waiting and handling excess inventory.

The Kaizen Approach: Small Steps to Big Changes

The chapter emphasizes how the kaizen approach—small, incremental improvements—was essential for the company’s turnaround. Instead of just focusing on immediate fixes, Lantech engaged in constant improvement, regularly assessing its production and order systems.

By adopting these principles, Lantech made remarkable improvements. Lead times were reduced from 16 weeks to just 14 hours, and customer satisfaction skyrocketed. What’s more, the company’s sales grew, and the workspace shrunk, despite higher output. Defect rates dropped significantly, and machines were delivered on time far more frequently.

Changing the Way Lantech Worked

What made this shift work was the mindset that the company adopted. Workers, initially skeptical, began to see the value in standardized work and takt time—the time allocated for each part of the production process to meet customer demand. This allowed Lantech to balance production speed and quality, improving both without sacrificing one for the other.

By the end of the chapter, the lean transformation was fully in motion at Lantech. The company was operating more efficiently than ever before, doubling its output without increasing headcount. And while it wasn’t an easy journey, with challenges like inconsistent parts supply and poor tool maintenance, the team’s dedication to the new process brought remarkable results.

Chapter 7 – A Harder Case

Wiremold’s Lean Transformation

This chapter focuses on Wiremold, a company that faced significant struggles before its transformation under Art Byrne’s leadership. Wiremold, a producer of wire management systems and surge protectors, had a complex history with challenges in sales, aging machinery, and inefficient production systems. Art Byrne’s task was not just to manage the company, but to implement lean thinking in a company that had a lot of internal resistance.

When Art Byrne took over as CEO of Wiremold in 1991, the company was in deep crisis. Sales were declining, production was slow, and the company was struggling to stay afloat. Despite being in a mature and competitive market, the company was still using outdated production methods. The plant was old and inefficient, the workforce was aging, and many employees had limited skills.

The Struggles with Just-in-Time (JIT)

Wiremold’s earlier attempt to implement Just-in-Time (JIT) had been disastrous. They tried to reduce their inventories and improve flow by simply adopting JIT principles without understanding the complete picture. The company ended up struggling with high costs, late deliveries, and poor tool maintenance, as their production systems could not support such a drastic shift without proper implementation.

In short, the company almost “JIT’d themselves to death” by doing it the wrong way. The results were late deliveries, unnecessary costs (including express freight), and machine breakdowns, as they did not know how to reduce changeover times effectively or deal with inventory management in a lean context.

The Role of Art Byrne as a Change Agent

Byrne’s journey to transforming Wiremold began with his experience at Danaher Corporation where he saw firsthand the power of lean principles. He understood that introducing lean thinking required not only theoretical knowledge but real-world, hands-on implementation. He knew that for true lean success, the CEO must lead the change by immersing themselves directly in the operations of the company.

When Byrne arrived at Wiremold, he found the company stuck in a batch-and-queue production system. The company’s order-taking, production operations, and product development all relied on slow, disconnected processes. A product could take up to six weeks to move from raw materials to a finished product, and new products took years to launch. There was massive inefficiency everywhere, and the company’s financial situation was dire.

Dealing with Resistance and People

One of the biggest challenges Byrne faced was overcoming resistance from within. The workforce was unionized, the management structure was hierarchical, and there was a longstanding division between office workers and factory workers. Art understood that to make a lean transformation work, he needed to get everyone on board.

He began by de-layering the organization—cutting unnecessary managerial positions and making the workforce leaner. This wasn’t about firing people but about ensuring that the right people, who could embrace the new system, stayed and thrived. The rest were offered early retirement packages. He also made it clear that no one would lose their job due to improvements made during the lean transition.

Byrne also made a bold move by removing the fear of job loss. This created an atmosphere where workers felt safe to embrace change, knowing that their efforts to improve processes would not result in layoffs.

Training and Implementing Lean

Art Byrne led the charge by personally teaching lean principles to the workforce. He conducted two-day training sessions on lean thinking followed by three-day kaizen events, where employees could directly apply what they learned on the shop floor. Byrne’s hands-on approach was essential in driving change. He then walked the managers through the plant, showing them how to see waste and how every process could be improved.

In terms of production systems, Byrne introduced single-piece flow and value stream mapping to eliminate bottlenecks. He also focused on eliminating departmental silos and reorganizing the company around product families instead of functional areas. This meant that instead of having separate departments for each stage of production, the product teams were now responsible for the entire value stream, from start to finish.

Kaizen and Continuous Improvement

Wiremold’s approach to continuous improvement was relentless. They didn’t just stop after a few small wins; they continuously applied kaizen—small, incremental improvements—across the entire company. Every employee was involved, and the company embraced the idea that no process was ever perfect and could always be improved.

Byrne emphasized that improvement needed to happen every day. Wiremold took part in weekly kaizen exercises involving everyone in the company. Over time, this led to dramatic improvements, including reduced setup times for machines and decreased defect rates.

Changing the Financial System

To align with lean thinking, Byrne had to overhaul the financial system at Wiremold. The old cost-accounting methods were deeply ingrained in a batch production mindset, which focused on cost absorption and inventory management. Instead, he introduced a new system where product teams would track real costs for each product family. This system helped eliminate waste and improve visibility into actual production costs.

Wiremold’s new approach to profitability was simple: get rid of excess inventory and create value streams where products flowed smoothly from one step to the next. This meant that the company could focus on producing only what was needed, when it was needed, and without overproducing. The result was a leaner operation that didn’t rely on large batch sizes and could respond quickly to customer demand.

The Leaning of Wiremold’s Product Development System

One of the most impressive transformations at Wiremold was in its product development process. Before lean, it took years to develop and launch new products. But under Byrne’s leadership, the time-to-market was cut by 75%, and the company began to introduce 16-18 new products per year, compared to just 2-3 before. This was accomplished by streamlining product development, improving communication between teams, and making the product design process much more collaborative.

Byrne also helped establish a system where customer feedback was integrated into the development process from the start. This ensured that products met customer needs more accurately and quickly, leading to more successful product launches.

Achieving Growth and Lean Expansion

As a result of these changes, Wiremold not only improved its internal processes but also saw massive growth. Sales grew significantly, and the company was able to expand its market share. One of the key factors in this success was the strategic acquisitions of companies that used batch-and-queue systems. These companies were brought into the lean fold, and Wiremold continued to grow through acquisitions while maintaining its lean principles.

Chapter 8 – The Acid Test

A crisis as a turning point

This chapter tells the story of a bold transformation. When Mark Coran was sent to lead operations at Pratt & Whitney in 1991, it was supposed to be a cost-cutting assignment. But what he walked into was a full-blown crisis. The Cold War was ending, military orders were disappearing, and although commercial engine sales were booming, everyone knew it wouldn’t last. Pratt needed to downsize, but more importantly, it needed to rethink everything.

From mass production to a lean experiment

Pratt wasn’t just any company—it had deep roots in American manufacturing, going all the way back to the Colt armory and the birth of interchangeable parts. Over the years, the company moved from small-scale, flexible production to the giant, batch-based, functionally siloed operations we associate with mass production. Ironically, this same mass production system, which Pratt helped pioneer, was now dragging it down.

So what Coran and others proposed was not just a tweak. It was a complete shift. This chapter makes clear: lean thinking would face its biggest test yet. Could it work in a massive, high-tech, highly regulated company like Pratt & Whitney? If it could, the authors argue, then lean could work anywhere.

The early signs of lean thinking

Before the real transformation, there had been some movement toward lean ideas. Pratt had introduced “focused factories” in 1984 and grouped part-making into business units. There were even efforts to use cross-functional teams and Integrated Product Development (IPD) to improve coordination. These helped, but they weren’t enough. The organization was still bloated, and responsiveness was limited. Physical production lead times shrank a bit—from 24 to 18 months—but the system still ran on long batches, silos, and old habits.

The moment everything changed

In 1991, the bottom fell out. Orders vanished. Spare parts demand collapsed. Suddenly, the company was bleeding money. But it also meant there was no choice but to act boldly. That’s when lean thinking began to take hold in earnest.

Mark Coran announced massive space reductions, cost cuts, and a target to bring production lead time down to four months. He brought in lean experts and launched a Continuous Improvement Office, determined to reconfigure the entire production system around flow.

Fighting old habits and resistance

It wasn’t easy. Workers were skeptical. Managers were stuck in old ways. The idea of putting multiple machines in a cell and having one person run them challenged decades of company culture. And layoffs were real.

But Coran had support from the top—George David, UTC’s president. And when things stalled, they brought in Shingijutsu’s Chihiro Nakao and Yoshiki Iwata, senseis from Japan with deep Toyota experience. Their bold, hands-on style shocked people. Suddenly, what seemed impossible—reducing space, cost, and lead time dramatically—was happening in real time.

A second wave of transformation

The chapter then introduces Karl Krapek, brought in as the new president of Pratt. He had lean experience from his time at GM and Carrier, and he wasted no time. Under his leadership, the company went through a major reorganization: from plant-based structures to Product Centers focused on key components. Union rules were renegotiated, space was cut, job classifications were streamlined, and lean practices became the new norm.

Importantly, the leadership realized that some managers just couldn’t adapt—and replaced them. By 1994, only 17 of 72 operations leaders from 1991 remained.

The lean breakthrough in practice

Two case stories show what lean looks like in real life:

1. The turbine blade plant at North Haven: Under Ed Northern, the plant saw stunning improvements—back orders dropped, costs halved, inventory shrank. The team even tackled the infamous $80 million “Blohm grinders”—monument machines that were supposed to automate blade grinding but ended up adding huge complexity. They replaced them with simple machines in cells, cutting total processing time from 10 days to 75 minutes. The irony? The lean setup cost just $1.7 million.
2. Final assembly under Bob Weiner: Assembly times were slashed from 30 to 10 days. Modular design, moving lines, and standardized work made it all possible. By eliminating backflows and improving upstream quality, flow became the default.

The real test: changing the culture

Lean methods alone weren’t enough. Pratt had to fight a deeply rooted culture that resisted change. For instance, there were 1,151 union job classifications, and employees had been taught for generations to specialize narrowly. To succeed, the transformation had to reach into labor agreements, mindsets, and management practices.

By 1994, 22,000 employees had been let go, processes had been redesigned, and Pratt had become a completely different company. The lean experiment didn’t just work—it saved them.

This chapter is powerful because it shows lean thinking at its toughest. It’s one thing to apply lean in small, agile companies. It’s another to transform a massive, hierarchical, 50,000-person manufacturer entrenched in decades of traditional methods. What happened at Pratt is proof that lean thinking isn’t just for startups or workshops—it can revolutionize even the most complex organizations, if there’s courage, leadership, and persistence.

Chapter 9 – Lean Thinking versus German Technik

Introduction: The Porsche Transformation

This chapter dives into Porsche’s struggle to embrace lean thinking while maintaining its core tradition of superior technology, or Technik, which has long defined the company. The key turning point came in 1994 when Porsche produced its first defect-free car, a remarkable achievement considering the company’s reliance on traditional German craftsmanship and production systems.

The company’s transformation, led by Wendelin Wiedeking, was difficult because it had to marry the lean principles of continuous improvement, flow, and waste elimination with Porsche’s traditional strengths: high-tech engineering and craftsmanship.

From Craftsmanship to Lean

Porsche’s legacy was deeply rooted in craftsmanship, and its assembly process was based on long work cycles that allowed skilled workers to handle complicated tasks. While this was effective for producing high-performance vehicles, it led to significant inefficiencies. The company’s traditional batch-and-queue system was slow, with a high rate of defects and costly rectifications.

In the 1980s, Porsche had enjoyed success in a growing luxury sports car market, but by the 1990s, they were facing a decline in sales due to economic changes and increasing competition. The company was heavily reliant on its skilled workforce, but the time had come to reconsider how to improve both quality and efficiency.

The Lean Shift: A New Leadership Approach

Wiedeking’s arrival in 1991 came at a critical moment for Porsche. The company was facing a financial crisis, with a significant drop in sales. The answer, as Wiedeking realized, lay not in improving technology alone but in applying lean thinking to every aspect of the organization. He saw that Porsche’s high-tech systems were efficient in creating amazing vehicles but were not effective at the production level.

Wiedeking understood that Porsche had to adapt to lean principles or risk falling behind competitors, particularly Japanese automakers like Toyota, who had mastered lean manufacturing. He started by radically restructuring the company, focusing on eliminating waste, reducing inventory, and improving flow.

The Role of Shingijutsu Consultants

One of the most pivotal moves was bringing in Japanese lean experts from Shingijutsu to guide Porsche’s transformation. Initially, there was resistance, particularly from the workforce and unions, as many saw the change as a threat to their jobs and craftsmanship. However, these consultants were instrumental in helping Porsche understand the value of continuous improvement and kaizen.

The consultants helped Porsche set measurable targets for cost, quality, logistics, and employee motivation, with a focus on eliminating unnecessary processes and parts. This system was introduced through policy deployment (PDP), where every team and department had clear, measurable goals. This shift brought about a more open, transparent approach to performance, which had previously been tightly controlled by senior management.

Breaking with Tradition: Organizational Changes

Another challenge was changing the hierarchical structure that had defined Porsche’s management for decades. With six layers of management, decision-making was slow and rigid. Wiedeking knew that the company needed to reduce layers of bureaucracy to encourage faster decision-making and foster a more collaborative approach. He cut the number of managers by 38%, from 362 to 226 in two years, and introduced smaller teams for leaner, more agile operations.

He also implemented changes in the team structures within production departments, moving away from long, isolated work cycles to teams with direct responsibilities. This was a significant departure from Porsche’s craftsmanship tradition, where workers had long enjoyed autonomy over their tasks.

Quality at the Source

Porsche’s previous focus was on quality control at the end of the line, where defects were caught and fixed. This approach, while effective in catching mistakes, was wasteful and delayed production. With lean principles, Wiedeking emphasized the importance of preventing defects at the source. He implemented visual management systems, where workers could immediately see and report defects in real-time, preventing issues from propagating downstream.

He also introduced a system where the cost of detecting defects at different stages of production was measured. The cost of fixing a problem at the source was much lower than waiting until the end of the line or, worse, discovering it at the customer’s end. This shift in mindset helped Porsche significantly reduce the time and cost involved in quality control.

Changing the Supplier Base

One of Porsche’s biggest challenges was its supply chain. While the company had strong relationships with its suppliers, it also had a highly fragmented and inefficient supply base. Porsche relied on 950 suppliers, with many providing low volumes and frequent errors. Wiedeking knew that to achieve the lean transformation, Porsche needed to reduce supplier numbers and focus on developing closer relationships with the most critical suppliers.

He restructured the supply chain by reducing the number of suppliers to 300, focusing on the most crucial components and creating strong, long-term partnerships. Porsche then worked closely with these suppliers to help them implement lean processes, ensuring that parts were delivered on time, with fewer defects, and in the right quantities.

The Lean Transformation’s Impact

By 1995, Porsche had made significant strides. The company had reduced inventory by 90%, cut lead times dramatically, and improved its first-time quality. More importantly, the shift to lean thinking was not just about cutting costs—it was about creating a culture of continuous improvement.

Porsche’s workforce, initially resistant to the changes, began to see the value of lean thinking in improving their work environment. The transition from craftsmanship to lean craftsmanship was not easy, but it ultimately helped create a more efficient, collaborative environment. The focus was no longer just on individual skills but on the collective effort to improve and innovate.

This chapter illustrates the profound challenge Porsche faced in integrating lean thinking with German engineering traditions. Despite initial resistance and deep-rooted cultural norms, Porsche’s successful adoption of lean principles proved that even the most prestigious, traditional firms can evolve and thrive in a lean world. The combination of German Technik and lean practices led Porsche to not only survive its crisis but also to set a new standard in the automotive industry.

Chapter 10 – Mighty Toyota; Tiny Showa

Introduction: The Showa Crisis and Transformation

The chapter begins with Taiichi Ohno’s encounter at the Koga foundry of Showa Manufacturing Company in 1984. Ohno, a legendary figure in lean thinking and a key architect of the Toyota Production System (TPS), was known for his tough, no-nonsense approach. His initial critique of Showa’s practices was harsh, calling the operation a “disgrace.” However, instead of simply firing the plant manager, Tetsuo Yamamoto, Showa’s president, suggested that Ohno guide them in adopting lean principles. This marked the beginning of Showa’s transformation—a process that would take years but ultimately saved the company.

The Initial Struggles at Showa

In the 1970s, Showa had thrived in the Japanese market but struggled after the second oil shock in 1979. The company’s growth stalled, and its outdated production methods became more evident. When it relocated its plants to more cost-effective sites in 1983, it didn’t realize any significant improvements. The new plants were still operating under the old batch-based system, which led to inefficiencies, delays, and mountains of inventory. The company was bogged down by these inefficiencies, and it was at this point that Yamamoto decided to reach out to Taiichi Ohno for help.

Ohno’s Bold Approach

Ohno’s arrival at Showa was met with skepticism. The workers and management were initially resistant to the idea that lean techniques could work for a company like Showa, which produced specialized parts in low volumes, unlike Toyota’s high-volume vehicle production. Ohno’s proposal to implement small-lot production and drastically reduce inventory seemed too radical for the workers, who believed that such a change was not achievable without drastic sacrifices.

However, under Yamamoto’s leadership and Ohno’s guidance, the transformation began. The first step was to convert coil making and assembly from a batch process to a single-piece flow. High-speed machines were replaced with designs from Showa’s own tool shop, making tool changeovers faster and allowing them to adapt to different coil designs in just minutes. As a result, Showa reduced its space by half, slashed in-process inventory by 95%, and halved the throughput time to produce a coil—all with minimal capital investment.

Results of the Transformation

The initial results were stunning. Productivity soared, and quality improved significantly. The workforce, which had been initially skeptical, began to see the benefits of lean practices, and attitudes started to change. Showa’s president Yamamoto, who had been initially hesitant, eventually became a strong advocate for lean thinking and helped lead the company through the transformation.

In the following years, Showa continued to reduce its inventory, streamline its processes, and improve productivity. The company’s operations were kaizen-ed repeatedly, making gradual but consistent improvements. By 1992, Showa had slashed its product line in half, improving its profitability and increasing sales despite a stagnant market.

The Challenge of Market Strategy

Despite the significant improvements in its production processes, Showa’s market strategy was at odds with its lean transformation. Showa was still attempting to sell standardized products in overseas markets like America, which required long supply chains and didn’t leverage the full flexibility of its new lean production system. This misalignment between production capabilities and market strategy became a critical issue.

To address this, Yamamoto realized that Showa needed to rethink its entire strategy. Instead of focusing on standardized exports, Showa pivoted to a strategy of customized products tailored to the domestic Japanese market, focusing on higher quality and more flexible production. This required a major overhaul of Showa’s organizational structure, breaking away from traditional functional silos and creating cross-functional product teams for each line of business.

Creating a New Organization

In 1987, Yamamoto restructured Showa by creating horizontal product teams that were responsible for all aspects of production—from design to marketing. This approach not only improved Showa’s efficiency but also allowed the company to adapt quickly to market changes. Each product team had its own dedicated production system, with a strong focus on customization and high-quality standards.

The result was a leaner, more agile company that could respond quickly to customer needs. This shift helped Showa reduce its production space needs by 75%, cut inventory costs dramatically, and streamline its product development process. As a result, Showa moved from deep financial struggles to modest profitability.

The Importance of Continuous Improvement

One of the key insights from Showa’s transformation was the importance of continuous improvement. Showa’s commitment to kaizen led to improvements in every department and across all processes. Even when the company achieved its initial improvements, Showa didn’t stop there. Instead, the company continued to refine and optimize its operations, applying lean principles not just to production but to product development and order-taking as well.

The Global Strategy and the Future

Showa’s transformation didn’t stop in Japan. As part of its new strategy, Showa established a subsidiary in China in 1995, where the company applied lean principles to manufacture products for the Chinese market. This move helped Showa maintain its competitive edge and establish a lean presence outside Japan.

Toyota’s Influence and the Struggles of Other Japanese Firms

Interestingly, while Showa’s story is one of transformation, it highlights a broader trend in Japan’s manufacturing sector. Even today, many Japanese companies still lag behind Toyota in fully adopting lean principles. Showa’s lean transformation, although successful, was still a difficult and slow process, and many firms in Japan continue to face resistance to lean practices. The chapter suggests that Toyota, despite its enormous success with lean, still struggles with implementing lean practices across the entire value stream, especially in its dealings with raw materials suppliers and global distribution networks.

By 1995, Showa had fully embraced lean principles and was reaping the benefits of its transformation. The company had improved its productivity, reduced space needs and inventory, and aligned its production system with a more flexible, customer-centric strategy. This success story is not just about Showa—it serves as a model for other Japanese firms and even Toyota itself, illustrating that lean principles, when fully embraced and continuously improved, can drive long-term success.

Chapter 11 – An Action Plan

Introduction: Starting the Transformation Journey

In this chapter, the authors outline a clear, actionable approach to begin a lean transformation in your organization. They emphasize that while understanding the principles of lean thinking—such as distinguishing value from muda (waste)—is crucial, the real challenge lies in implementing these ideas and creating a lasting transformation. The key lies in finding the right leaders, committing to rapid, dramatic changes, and progressively expanding lean practices across the entire organization.

Finding the Right Change Agent

The first essential step is finding the right change agent. This could be someone already in the organization, or you may need to bring in an external leader—someone with a clear vision and the ability to challenge the status quo. The right change agent needs to understand lean principles and, importantly, be willing to apply them, even if they aren’t an expert at the start.

The authors argue that the change agent doesn’t have to have all the knowledge upfront but must be ready to learn and act quickly. Successful transformations often bring in people with lean experience, like Wendelin Wiedeking at Porsche or Mark Coran at Pratt & Whitney. It’s also crucial for the leadership to commit to lean, not just as a passing trend but as an essential strategic direction.

Getting the Knowledge

Once you have a change agent in place, the next step is acquiring the necessary lean knowledge. The authors stress that this knowledge doesn’t come from reading books or attending seminars alone. You need hands-on experience in applying lean techniques, often with external support from experts who can guide the implementation. They also recommend learning from successful lean firms, observing how they implement changes, and involving your suppliers and customers in the process.

The authors caution against relying on consultants who only offer theoretical knowledge without engaging in real-world applications. They suggest looking for those with deep expertise who can lead by example and help your team navigate the transformation journey.

Seizing the Crisis or Creating One

A critical point made in the chapter is that lean transformations are most successful when driven by a crisis. If your company is already in trouble—facing financial or operational challenges—then the crisis can be leveraged to push for the necessary changes. Alternatively, if there is no immediate crisis, you might create one by focusing on a particular part of the business facing significant challenges and applying lean techniques to it.

The chapter discusses how focusing on one unit or product family in crisis can provide the push needed for broader transformation. The success in one area often serves as a catalyst, allowing you to showcase the benefits of lean practices and build momentum across the entire organization.

Mapping the Value Stream

The next step involves mapping your value streams—an essential exercise in identifying the current flow of value and waste across your operations. This is where many firms get caught up in reengineering, focusing too much on administrative tasks and information flows, which are important but not as critical as understanding the flow of actual value.

The authors explain that value stream mapping isn’t just about addressing one area of the process; it’s about looking at the entire product family and every step that adds or detracts from value. By doing this, you’ll uncover waste in both physical and non-physical processes and can start focusing on eliminating them systematically.

Taking Immediate Action

Once you’ve mapped your value stream, it’s time to take immediate action. The authors stress the importance of quick wins—improvements that are visible and impactful right away. The best way to achieve this is by tackling a critical activity that is underperforming but crucial to your business. By improving this activity, you can show everyone the value of lean transformation, building confidence in the process.

Expanding Your Efforts

After the initial successes, the authors emphasize the need to expand your lean efforts. Once you have made significant improvements in one area, the next step is to look at the entire value stream and make the necessary adjustments to other parts of the business, including product development, order-taking, and scheduling. They suggest connecting upstream and downstream processes to the changes already made to maintain a smooth flow.

The shift from batch production to flow and from push to pull systems is critical to achieving broader lean transformation. For instance, once a manufacturing area has implemented flow, it’s time to move upstream and integrate suppliers into the process.

Reorganizing for Lean

As lean thinking spreads throughout the organization, it becomes clear that a reorganization is necessary to sustain the transformation. The authors suggest reorganizing around product families rather than traditional functional silos. This restructuring helps ensure that each product family receives the attention and resources it needs to thrive under lean principles.

This restructuring involves creating lean promotion functions within the organization to continue driving the transformation. These functions act as internal coaches, supporting managers and employees as they implement lean techniques in their respective areas.

Addressing Workforce Challenges

As the transformation progresses, there will be a need to address workforce concerns. Lean will likely lead to a reduction in excess labor, but it’s essential to handle this with care. The chapter recommends committing to job protection and ensuring that lean techniques are not seen as a threat to job security but as an opportunity for employees to grow and contribute in new ways.

One of the biggest challenges for a change agent is handling the cultural shift. Many employees will resist change, and some managers will never fully embrace lean thinking. The authors argue that it’s crucial to remove those managers who resist change as they can slow down the entire transformation.

The Role of Leadership in Lean Transformation

The final part of the chapter highlights the importance of leadership in sustaining lean transformation. The role of leadership shifts from directing to coaching. Once the foundation of lean is established, it’s the responsibility of leaders to foster a culture where every employee is empowered to continue improving. This process of transformation should become bottom-up, with management offering support and guidance rather than micromanagement.

The authors emphasize that lean transformation is not a quick fix—it’s a long-term commitment that takes five years or more. During this period, the organization will face setbacks, but the critical element is the commitment to continuous improvement. When the transformation is complete, lean thinking becomes ingrained in the company culture, making it difficult to go back to old ways.

Chapter 12 – A Channel for the Stream; a Valley for the Channel

Introduction: The Lean Enterprise Concept

This chapter introduces the concept of the lean enterprise, which acts as a mechanism for aligning the entire value stream in a way that maximizes value creation for the customer. The lean enterprise focuses on creating continuous flow and eliminating waste across all stages of production. The authors emphasize that the key to lean transformation is not just optimizing individual parts of the process, but rethinking the entire value stream from start to finish.

The chapter explains that the transformation to a lean enterprise requires a shift in thinking. Instead of focusing on traditional functions like engineering or sales, organizations must focus on value creation—ensuring that every action along the value stream is contributing to customer satisfaction. This approach challenges the conventional thinking that each department or function should operate in isolation, focusing on its own goals, rather than collaborating to achieve shared objectives.

Creating the Lean Enterprise

The lean enterprise involves a collaborative approach where all firms in the value stream work together to continuously improve their processes. This is accomplished through regular, rapid evaluations of the entire value stream, where muda (waste) is identified, and improvement actions are taken swiftly. The key to this process is that the firm coordinating the value stream is the one that assembles all the parts into a finished product—acting as the leader, while treating all partners in the stream as equal contributors working towards the same goal of eliminating waste.

One of the central ideas is that all firms along the value stream must jointly define value—not just from their own perspective, but from the customer’s perspective. This collaborative definition of value ensures that everyone is working towards creating a product that meets customer expectations, while also ensuring that costs are controlled and profits are shared fairly along the stream.

The Industrial Cold War

The chapter uses the metaphor of the Cold War to describe the traditional relationships between firms in a value stream. Historically, firms along the stream often competed covertly and avoided sharing information, focusing on maximizing their own profits at the expense of others in the stream. This kind of behavior is inefficient and counterproductive for lean thinking.

In contrast, the lean enterprise requires that firms abandon this mentality and work together more transparently. The relationship between firms must shift from competition and secrecy to cooperation and trust. To make this work, firms must agree on principles that guide their collective behavior, including defining joint value, establishing target costs, and eliminating waste. The key to this cooperation is the continuous evaluation and improvement of the value stream.

Core Principles of the Lean Enterprise

Several core principles are outlined for lean enterprises:

1. Value Definition: Firms along the value stream must define value from the customer’s perspective, ensuring that the focus is always on delivering what the customer truly values.
2. Target Costing: Along with defining value, firms must agree on a target cost, which reflects both customer expectations and the need for firms to make an adequate return on investment.
3. Elimination of Muda: The focus of every firm in the value stream must be to identify and eliminate muda (waste). This requires each firm to be transparent about its operations and work together to find opportunities for improvement.
4. Joint Analysis: Firms should jointly analyze every activity in the value stream, examining whether each step adds value and where waste exists.
5. Continuous Improvement: Even after meeting cost and value targets, the firms must continue to work together to identify further waste and make additional improvements.

Alternating Careers and Organizational Challenges

The chapter also discusses the need to rethink careers and functions within a lean organization. Traditional career paths that focus on vertical progression and specialization in a single function must be replaced with new models that emphasize horizontal collaboration and continuous learning. The idea of alternating careers is introduced, where employees switch between product teams and functional roles to gain a broader understanding of the value stream and contribute to different aspects of the process.

This change requires a shift in the mindset of employees and leaders alike. Rather than focusing solely on advancing through hierarchical levels, employees must embrace the idea of cross-functional teamwork, where they can apply their skills in new ways and contribute to value creation in different areas.

The Future Role of Functions

In a lean enterprise, the role of traditional functions such as engineering, purchasing, and quality control also needs to change. These functions should no longer focus on day-to-day tasks like designing individual products or managing individual suppliers. Instead, they should focus on the future—looking for new technologies, improving processes, and ensuring that product teams have the resources and capabilities they need to create value continuously.

For example, instead of managing production schedules and directing workers, operations should focus on designing processes that enable value creation and flow. Similarly, engineering should work on new technologies that improve production efficiency or product quality, while quality control should focus on developing standards and systems for ensuring that products meet customer expectations without requiring extensive inspections.

The Role of the Firm in Lean Thinking

The firm, as a whole, is redefined in the context of lean thinking. Instead of serving as a siloed entity that seeks to maximize its own profits, the firm is seen as part of a larger network of firms that work together to create value. The firm’s primary role is to act as a link between value streams, ensuring that resources are allocated effectively across the value chain and that information flows smoothly between partners.

Firms should strive to participate in multiple value streams, collaborating with different partners to create value for customers across various products and markets. This approach allows firms to leverage their resources and capabilities more effectively, responding to customer needs and market changes more quickly.

Global Challenges: American, German, and Japanese Contexts

The chapter concludes by discussing the challenges that different industrial traditions face in adopting lean thinking:

• American Firms: The challenge for American companies lies in overcoming their deeply ingrained individualism and understanding the need to cooperate with others along the value stream. Companies like Wal-Mart have made significant strides in streamlining their internal operations, but they must now learn how to optimize entire value streams collectively.
• German Firms: German firms, while traditionally strong in cooperation between firms, struggle with creating horizontal teamwork. German workers are accustomed to specialization and tend to resist the broader roles required in lean organizations. The challenge is to overcome this resistance and foster a culture of collaboration and continuous improvement.
• Japanese Firms: Japanese firms, while pioneers of lean thinking, face their own challenges. Despite the widespread belief that lean has been fully applied, many Japanese firms have not yet extended lean principles to the entire value stream. The shift from high-volume, export-oriented production to low-volume, build-to-order production represents a significant change for many firms.

Chapter 13 – Dreaming About Perfection

Introduction: Imagining a Perfect System

In this chapter, the authors ask the reader to dream about what a perfectly lean system could look like. Rather than just focusing on the everyday practices we’ve discussed so far, the chapter challenges the reader to envision how lean principles could be applied to everyday activities such as travel, healthcare, food production, construction, and personal mobility. By applying lean thinking to these areas, the authors suggest we could fundamentally change how we deliver services and products to the consumer, making them more efficient, cost-effective, and convenient.

The core idea is that by thinking outside the traditional methods, we can create far better systems that not only save time and costs but also provide a higher level of customer satisfaction and value.

Long-Distance Travel

The chapter begins by exploring long-distance travel and asking what travelers truly want. Most travelers simply want to get from point A to point B as quickly, comfortably, and affordably as possible, often by air. However, the current travel system is fragmented and inefficient, with multiple organizations involved, each optimizing only its part of the journey (e.g., airlines, airports, travel agents).

In the ideal world of lean thinking, the system would be integrated—with the traveler at the center of the process. By using lean principles, the entire travel experience could be streamlined, eliminating waste such as waiting, delays, and redundant steps. This could involve direct flights, smaller planes, eliminating baggage handling, and electronic ticketing, all while maintaining a high level of customer convenience and reducing costs.

One example in the chapter is Southwest Airlines, which has taken some steps toward a lean system by simplifying its processes, cutting down turnaround times, and focusing on direct flights. These improvements have made Southwest the most profitable airline in North America.

The authors suggest that a new service provider could emerge—an organization that integrates the entire travel experience and applies lean thinking to reduce the cost and complexity of travel, creating a seamless, direct connection from the traveler’s home to their destination.

Medical Care

Next, the chapter explores healthcare, which is another area where lean thinking could create significant improvements. Traditional healthcare systems are often fragmented, with patients bouncing between specialists and departments, leading to long wait times and inefficiencies.

In a lean healthcare system, patients would be at the forefront, with a dedicated, multiskilled team handling most of their needs. The team would be empowered to address a wide range of issues, cutting down on the need for unnecessary referrals and tests. This system would also focus on flow, where information and patients move seamlessly through the process with fewer bottlenecks.

The concept of patient empowerment is another crucial part of this transformation. Patients would be up-skilled to handle simple diagnoses and preventive measures on their own, reducing unnecessary visits and improving the overall efficiency of the healthcare system. Additionally, telemedicine and remote monitoring would become a standard part of care, reducing the need for physical visits and expanding access to healthcare services.

In this ideal system, not only would patients receive faster and more efficient care, but the costs of healthcare would decrease due to fewer delays, errors, and inefficiencies.

Food Production and Distribution

The chapter then shifts focus to food production and distribution, exploring how lean principles could transform the food industry. In the current system, food production is fragmented, with supply chains that are slow, inefficient, and prone to stockouts. This results in wasted time, resources, and money.

Using lean thinking, grocery stores could shift from an inventory-heavy model to a pull system, where products are replenished in response to actual demand rather than forecasts. This would significantly reduce waste, as goods would be produced and distributed only as needed. Lean systems could also eliminate stockouts and reduce the need for promotional sales that create artificially inflated demand and unnecessary costs.

The chapter goes further to suggest that instead of traditional stores, we could move towards a home delivery model, where orders are fulfilled directly from warehouses, eliminating the need for physical stores altogether. This approach would save time for consumers and reduce overhead for stores. It would also create a more personalized shopping experience, where grocery lists could be curated based on individual preferences, offering menu planning and even precooked meals as a service.

Construction

The authors then apply lean principles to construction, an industry notorious for delays, inefficiencies, and high costs. The current system is plagued by long project cycles, numerous errors, and frequent rework. By embracing lean thinking, the authors argue, construction timelines could be drastically reduced.

Using lean principles, homebuilding could be transformed by organizing work more efficiently, creating cross-functional teams, and eliminating rework. The production process could be simplified by using factory-made components that are assembled quickly on-site, rather than going through the traditional, slow construction process.

The key idea is to rethink the entire value stream—from design to delivery—so that the entire project flows smoothly, reducing delays and costs. As the authors suggest, the process could go from several months to just a few weeks from contract to completion if lean methods are fully implemented.

Short-Range Personal Mobility

The final section focuses on personal mobility and how it could be radically transformed with lean thinking. The authors point out that most people don’t want a car—they just want mobility. Yet, buying, owning, and maintaining a car is a hassle, and the system around personal vehicles is fragmented and inefficient.

A lean system would involve a mobility provider that offers all types of transportation, from taxis to rental cars, all under one roof, with no need for ownership. Insurance, registration, and maintenance would be handled by the provider, while the customer would only pay for what they need, when they need it.

This system would eliminate the hassle of ownership while allowing customers to have access to the right vehicle at the right time, whether it’s for a quick trip to the store or a long vacation. The provider would optimize vehicle usage and reduce costs by keeping everything in-house—streamlining operations and allowing for lower prices and fewer maintenance issues.

The Power of Dreams

At the conclusion of the chapter, the authors emphasize that these ideas, while ambitious, are entirely feasible. The transformation to lean systems in industries such as healthcare, food production, and transportation could lead to dramatic improvements in efficiency, cost reduction, and customer satisfaction. However, the real challenge lies in turning these dreams into action—creating organizations that can look at the entire value stream and eliminate waste.

The authors argue that these improvements won’t just create better systems; they’ll also create more satisfying jobs and help revitalize industries that are stagnating. They call for bold leaders who are willing to embrace lean thinking and begin the journey toward a more efficient and sustainable future.

Chapter 14 – The Steady Advance of Lean Thinking

Introduction: The Triumph of Lean Thinking at Wiremold

This chapter begins with a reflection on the success story of Wiremold, a company that was once on the brink of bankruptcy but transformed into a thriving business by applying lean thinking. In 2000, Wiremold was sold to Legrand S.A. for $770 million—an impressive turnaround from its valuation of just $30 million in 1991 when lean practices were first introduced. The company’s success was not just in increasing profits but in creating shared wealth for all involved—customers, owners, employees, and suppliers. The chapter emphasizes that this model of steady, incremental improvement could have been replicated by most companies in the 1990s by simply focusing on waste reduction and responding more effectively to customer needs.

The Slow but Steady Advance of Toyota

The chapter also turns to Toyota, the company that pioneered lean thinking, and its steady rise as a global market leader. In 2002, Toyota revealed its “2010 Global Vision”, which aimed to increase its global market share from 11% to 15% by 2010. This target represented Toyota’s commitment to becoming the world’s leader in vehicle production, surpassing General Motors. Toyota’s success in achieving this goal wasn’t due to revolutionary product designs but to its brilliant management of core processes—such as product development, supplier management, and production systems—that continuously delivered value to customers at a lower cost.

The authors highlight that Toyota’s approach to product development—delivering new products with fewer defects and at a lower cost—allowed it to remain competitive without needing to engage in risky, innovative product designs. Toyota excelled by continuously refining its processes and improving efficiency. A key example is Toyota’s spare parts distribution system, where it shifted from ordering parts monthly to ordering them daily, significantly improving flow and reducing costs.

Porsche: Combining Brilliant Products with Lean Processes

Another example of lean thinking applied successfully is Porsche, which the authors mention in this chapter as a firm that combined brilliant products with lean processes. Porsche’s focus was on improving the efficiency of its operations while producing high-quality vehicles, which required both innovative engineering and lean manufacturing processes.

The chapter recounts how Porsche not only improved its manufacturing processes but also enhanced its ability to offer a wide range of product options while reducing assembly time. By applying lean principles across its production system, Porsche achieved higher quality and reduced the need for post-assembly inspection, further improving its reputation for quality.

Lantech: A Lean Transformation in Packaging

The authors also reference Lantech, a company that applies lean thinking in the packaging industry. Pat Lancaster, Lantech’s founder, created machines that could stretch and shrink-wrap small amounts of goods in a continuous-flow manner, as opposed to previous systems that wrapped large batches. This shift to right-sized machines that fit seamlessly into manufacturing cells led to a significant reduction in footprint, cost, and capital investment.

Lantech’s lean transformation allowed it to grow its sales despite an industry downturn, demonstrating that applying lean principles to product design can provide an edge even in difficult times. The company’s focus on streamlining production through lean product technologies resulted in more cost-effective and adaptable systems.

Pratt & Whitney: Lean Thinking Amidst a Crisis

The chapter highlights Pratt & Whitney, which applied lean principles to manage through an industry crisis. The aerospace industry faced stagnation in the 1990s due to reduced demand and increasing competition from companies like General Electric and Rolls-Royce. Pratt & Whitney, known for its engines, was facing financial difficulty despite holding a strong position in the military market.

By applying lean thinking, Pratt & Whitney was able to shrink its footprint, reduce inventory, and improve its return on assets and return on sales. Lean practices helped the company weather the financial pressures brought on by the downturn in aircraft production and military demand. Moreover, Pratt’s lean approach helped it reduce capital spending by purchasing right-sized tools for production, which kept the company competitive despite a shrinking market.

Beyond Isolated Advances: The Broader Economic Impact

The chapter concludes with a reflection on the broader impact of lean thinking across the global economy. The authors argue that lean thinking isn’t just a series of isolated success stories but represents a growing trend that is shifting how businesses create value. They use the concept of inventory turns to illustrate this trend—an indicator of how effectively inventory is being managed.

In industries such as automotive manufacturing, wholesale, and retail, companies are beginning to embrace lean practices, leading to a steady increase in inventory turns. This change indicates that more and more businesses are adopting lean strategies, improving their efficiency, and reducing waste.

The authors also note that, despite the positive trend, the pace of lean adoption is still too slow. While companies like Toyota and those in the lean network have seen significant success, there is still room for improvement. The chapter urges companies to take a more aggressive stance in implementing lean practices across their value chains to realize the full potential of zero waste and pure value.

Chapter 15 – Institutionalizing the Revolution

Introduction: Making Lean Thinking a Long-Term Reality

This chapter explores how organizations can successfully institutionalize lean thinking, making it a sustainable, long-term practice rather than a short-lived initiative. It builds on the action plan from Chapter 11 but enhances it based on the authors’ experiences over the past six years working with a variety of organizations. They emphasize the importance of a systematic approach to embedding lean practices across the organization, ensuring that the changes don’t just fade once the initial excitement has worn off.

The Need for a Change Agent

The first step in institutionalizing lean thinking remains finding the right change agent. The authors emphasize that while the leader driving the transformation needs to have passion and vision, the role of the change agent is evolving. Initially, strong, visionary leaders—like CEOs—were necessary to drive the process. However, more recently, mid-level managers have emerged as successful agents of change, showing that leadership doesn’t always need to be loud and forceful. Quiet, persistent leadership can be just as effective.

An important insight from the chapter is the dual role of leadership. While change agents are crucial for initiating transformation, they often lack the management skills required to sustain it long-term. The key to successful lean transformation is pairing the visionary change agent with a system builder—someone who ensures that the new lean system is implemented, maintained, and continually improved. Without a system builder, many successful changes regress after the original change agent moves on.

Getting the Knowledge Right

The second key step is acquiring lean knowledge. The authors point out that the initial focus of lean thinking was on specific, isolated improvements within companies, often driven by sensei (Japanese lean masters). This led to individual successes but didn’t always produce a comprehensive, integrated approach. The authors argue that to truly implement lean, companies must adopt a system-level approach for each product family, ensuring the lean system aligns with business needs and flows across the value stream.

For organizations without direct access to sensei, the authors recommend value-stream mapping as a tool to help managers see the big picture, focusing on the entire value stream, rather than isolated improvements. This approach, combined with the right coaching and expertise, allows the organization to begin its lean transformation at the system level.

Seizing or Creating a Crisis

Another critical step involves finding a crisis or creating one. The authors argue that recessions and difficult times create an opportunity to adopt lean thinking, as the crisis forces organizations to address inefficiencies and rethink their practices. However, simply having a crisis is not enough; leadership and knowledge are required to leverage the situation effectively. A well-executed lean transformation in response to a crisis can lead to long-term, sustainable improvements.

Mapping the Value Stream

One of the most valuable tools for institutionalizing lean thinking is value-stream mapping. The authors discuss how earlier versions of value-stream maps were too simple and did not fully capture the complexities of the relationship between information flow and material flow. The new version of value-stream mapping incorporates both aspects, providing a clear picture of the entire value stream, from customer demand to the production process.

This exercise helps organizations identify waste, bottlenecks, and areas for improvement across the entire value stream. The authors argue that the key to achieving a successful lean transformation lies in collaborative team efforts to map the current state and envision a future state. This process is essential for identifying the kaizen bursts (rapid improvement actions) that can drive continuous progress.

Reorganizing by Product Family and Value Stream

Once value-stream mapping is complete, the next step is to reorganize the company around product families and value streams. The authors argue that traditional, functional silos often get in the way of lean thinking. Instead, product families should have dedicated value-stream managers who are responsible for improving the flow and performance of the entire value stream.

This shift requires a new organizational structure where decision-making is decentralized, and responsibility for improving value streams is clearly assigned. The authors emphasize that value-stream managers don’t need traditional authority but should be able to coordinate across functions and hold departments accountable for their contributions to the value stream.

Creating a Lean Promotion Function

The authors discuss the need for a lean promotion office, a dedicated team that coordinates the lean transformation and ensures the organization has the knowledge and tools to succeed. This office brings together experts from various fields—quality, engineering, maintenance, and lean management—to support the value stream managers and help embed lean thinking throughout the company.

The lean promotion function plays a crucial role in training and coaching, ensuring that lean practices are not just applied sporadically but become a core part of the company’s culture.

The Continuous Improvement Cycle

The chapter emphasizes that lean transformation is not a one-time event but a continuous improvement process. Even after significant improvements are made, the process never stops. The authors recount how Freudenberg-NOK, a company that had already made great strides in lean thinking, continued to improve its processes over a decade. The company’s commitment to constant re-evaluation and kaizen ensured that it maintained its competitive edge.

The authors also note that lean is fractal—meaning that as lean thinking becomes ingrained in an organization, it is replicated at various levels and scales. This fractal nature allows lean practices to be adopted not only by top leaders but also by average managers, who can achieve remarkable results when given the right processes and tools.

Policy Deployment and Global Strategy

The chapter closes with a discussion on policy deployment—a process where senior leadership makes critical choices about the company’s priorities and goals. The authors caution that policy deployment can be a difficult and ongoing process but is essential for aligning the organization’s efforts and ensuring that lean goals are achieved. They note that policy deployment needs to be a flexible and dynamic process, as plans must be adjusted based on changing conditions.

In addition to policy deployment, the authors emphasize the importance of lean global strategy. Many companies, in their pursuit of lower labor costs, have spread their value streams across the globe, leading to long lead times and inefficient production systems. The authors advocate for lean math, where the full costs of global value streams—including currency risk, safety stocks, and connectivity costs—are considered. They suggest that in many cases, co-locating production closer to customers can lead to significant benefits, reducing lead times and enhancing responsiveness.

4 Key Ideas from Lean Thinking

6 Main Lessons from Lean Thinking

My Book Highlights & Quotes

“… We believe that the volatility—the perceived marketplace chaos—in these industrial activities is in fact self-induced, the inevitable consequence of the long lead times and large inventories in the traditional world of batch-and-queue overlaid with relatively flat demand and promotional activities—like specials on auto service—which producers employ in response…”

“… When carefully analyzed, these costs and revenue losses are often found to more than offset the savings in production costs from low wages, savings which can be obtained in any case by locating smaller flow facilities incorporating more of the total production steps much closer to the customer…”

“… The ability to get parts resupplied very quickly from the next level of the system, and therefore the ability to reorder in small amounts, is always the secret to reducing total inventories in a complex production and supply stream…”

“… Concentrate on managing the value stream for the specific service or good, eliminate organizational barriers by creating a lean enterprise, relocate and right-size tools, and apply the full complement of lean techniques so that value can flow continuously…”

“… Conventional wisdom among economists is that about half of the downswing of economic activity in business cycles is due to consumers and producers working off the inventories built up toward the top of the cycle…”

“… The problem here is not that there were too many firms involved. Each was appropriately specialized for its current task. The problem instead is that each firm was providing a partial product, often only looking inward toward its own operational “efficiency” while no one was looking at the whole product through the eyes of the customer…”

“… Classic batch-and-queue work conditions are hardly conducive to psychological flow. The worker can see only a small part of the task, there is often no feedback (much less immediate feedback), the task requires only a small portion of one’s concentration and skills, and there are constant interruptions to deal with other tasks in one’s area of responsibility…”

“… The important point about takt time was that when orders did not require the full utilization of equipment and workers, takt time was increased. The machinery was slowed down and each of the multiskilled workers in the Q cell performed several of the jobs in the cell while excess workers were put on other tasks around Lantech…”

“… No matter how many times his employees improved a given activity to make it leaner, they could always find more ways to remove muda by eliminating effort, time, space, and errors…”

“… The Toyota sensei applied their standard formula that machines should be available for production about 90 percent of the time and down for changeovers about 10 percent of the time…”

“… Converting a classic batch-and-queue production system to continuous flow with effective pull by the customer will double labor productivity all the way through the system (for direct, managerial, and technical workers, from raw materials to delivered product) while cutting production throughput times by 90 percent and reducing inventories in the system by 90 percent as well…”

“… Dedicated product teams in direct dialogue with customers always find ways to specify value more accurately and often learn of ways to enhance flow and pull as well…”

“… How can performance be improved? Sweat and longer hours are not the answer but will be employed if no one knows how to work smarter…”

“… Let’s just reemphasize the critical leap in embracing value stream thinking: Stop looking at aggregated activities and isolated machines—the smelter, the rolling mill, the warehouse, and the can-filling machine. Start looking at all the specific actions required to produce specific products to see how they interact with each other. Then start to challenge those actions which singly and in combination don’t actually create or optimize value for the customer…”

“… The types of activities which people all over the world consistently report as most rewarding—that is, which make them feel best—involve a clear objective, a need for concentration so intense that no attention is left over, a lack of interruptions and distractions, clear and immediate feedback on progress toward the objective, and a sense of challenge—the perception that one’s skills are adequate, but just adequate, to cope with the task at hand…”

“… By contrast, work in an organization where value is made to flow continuously also creates the conditions for psychological flow. Every employee has immediate knowledge of whether the job has been done right and can see the status of the entire system…”

“… In the lean enterprise, however, the workforce on the plant floor needs to talk constantly to solve production problems and implement improvements in the process. What’s more, they need to have their professional support staff right by their side and everyone needs to be able to see the status of the entire production system…”

“… Pull in simplest terms means that no one upstream should produce a good or service until the customer downstream asks for it…”

Conclusion

Lean Thinking doesn’t promise a miracle—it invites you to think differently. It’s not about doing more for the sake of growth, but about doing what matters in a way that flows better, feels better, and delivers more value.

Whether you lead a team or just want to lead your own day better, this book is a practical, people-centered guide to making work work again. And once you start seeing the waste, you won’t be able to stop seeing the opportunity.

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Do you want to check previous Book Notes? Check these from the last couple of weeks:

• Book Notes #126: Inevitable by Mike Colias2025-03-24
• Book Notes #125: Revenge of the Tipping Point by Malcolm Gladwell2025-03-21
• Book Notes #124: Radical Candor by Kim Scott2024-09-04
• Book Notes #123: The Personal MBA by Josh Kaufman2024-05-09
• Book Notes #122: The First 20 Hours by Josh Kaufman2024-05-02

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