24 July 2009


In a recent briefing, someone explained that a Lean Six Sigma analysis showed that 90% of what an organization does is "waste." Further research showed that the almighty Toyota, Masters of Lean, manage to occasionally reduce their waste to only 70% (on a good day).

Ok, this is me waving the BS flag.

First of all, how do we define "waste"? How do we measure it? Is all inefficiency in that category? And really, how much waste is appropriate? Should we aim to get to 70% like Toyota? Should we be content with 90%? His point seemed to be that there's a lot of improvement to be made. I'm not sure he really understood the implications of what he was saying - isn't it possible that 90% (if that's even the right number) is absolutely the least amount of waste we can reasonably expect to produce?

It really gets back to the question of rational optimization - and regular readers of this blog know I don't believe in optimization, at least not when it comes to human-centric activities like project leadership, technology development, etc. Yes, there's something to be said for streamlining our efforts... but there can also be great value in creative exploration, even if it doesn't lead directly to the outcome we think we want. Sometimes the messy, inelegant preparation phase of the project is the most fruitful (eventually), even though it appears to be "wasteful" at first.


Mark said...

Waste is the opposite of Value. Value is defined (at least in the context of Toyota, Lean, etc) as whatever the customer will pay for. So waste is just whatever you spend time/money on that the customer won't explicitly pay you for.

Since Toyota was mentioned, a quick automotive example: customers will pay more for a car with a steering wheel. So putting a steering wheel on the car is adding value. But any other activity with that steering wheel (shipping it from the supplier to the factory, counting the inventory, inspecting the incoming quality, staging the workpieces, etc) is just waste, even though traditionally those activities are considered "necessary" (often with large beauracracies built up to support the wasteful activities). That's one of the big epiphanies of "Lean" - seeing what most people would just consider the status quo of "how to do business" as actually mostly waste.

Of course this started in the manufacturing sector ~50 years ago (aka the Toyota Production System), but more recently the principles and philosophy, as well as some of the tools (though tools should be secondary to the principles) have been ported over to pretty much every other area of business. For example, how much value does a phase review process add to a development program? If most of the activity is centered around generating documentation to prove that the team has "checked the boxes" then isn't that wasteful? Or would a customer pay more for a new system that has 20 binders of phase review documentation than a system that has only 10 binders? A "robust process" is really just intended to be a countermeasure against defects in the development project (missed requirements, etc) - but is it the best countermeasure?

Keep digging into this one - I think Lean is a lot more FIST-y than you might expect (at least when properly applied/understood).

The Dan Ward said...

Wow, that's an interesting definition of waste... and a strange one. It sounds like what I think of as "overhead" (i.e. the behind the scenes stuff that a customer doesn't explicitly pay for).

I suspect that much of what falls into the category of "waste" (as defined by Lean) is actually essential and therefore productive, not wasteful.

So sure, if we give this word a definition that's quite different from the actual definition, then a 70 - 90% waste rate might be entirely reasonable...

Mark said...

See more at http://www.lean.org/WhatsLean/

The definition of Waste might seem strange, but it can lead to a pretty powerful mindshift. It forces questioning of the status quo, and raises the question of what activities in an organization are truly valuable. And Value is whatever the customer defines it to be.

If something is essential and productive, then who is the customer? If nobody is out there who wants the fruit of your organizations efforts, then aren't those efforts wasteful? (I'll argue that prospective customers count, btw.)