Lean Innovation: Some academic perspectives

Dr Ann Ledwith,

Director Continuing and Professional Education, University of Limerick.

May 2014

Introduction

• Lean and Lean Innovation are practice based

• Academia catching up

• Value of research and reflection

1. Review of recent papers

2. Identification of themes

3. Reflection on challenges

Lean and Innovation?

Still questioning the application of Lean to innovation/knowledge work

– ‘…conventional wisdom holds that lean principles don’t lean themselves to knowledge work.’

– ‘… lean principles, like just-in-time and jidoka, seem in apparent contradiction with the nature of the innovation process.’

– ‘In complex and novel environments, characterised by a need for innovation, is it even possible to be “Lean”.’

The Trade-off Between Lean and Innovation

• Can applying Lean Principles on innovation work?

• A study of a large multinational in communications technology. Based on 40 interviews.

• Observations:

– Creating Flow

– Managing Variability and Measurement

– Developing Leadership

– Continuous Learning

Bianchi, Modig & Richter, 2014

Challenges

• Long Cycle times of Innovation Activities

• Lack of ex-Ante Knowledge

• Complexity of standardising creative, non repetitive innovation work

• Measurement systems of innovation

• Myths and commonly held beliefs

• Learning

Bianchi, Modig & Richter, 2014

Two Paths to Lean

Browning and Saunders 2012

Traditional vs. Novel and Complex

Browning and Saunders 2012

Definitions

• Novelty: a lack of familiarity with a kind of work

• Complexity: characteristic of an entity that contains a large number of varied parts that interact in varied ways

• First Order Learning: (informal) learning by repetition, experience and experimentation – learning curves

• Second Order Learning: (formal) learning through training, new policies or technology, product design.

Browning and Saunders 2012

Learning in novel and complex environments

Browning and Saunders 2012

Five Caveats to Lean Implementation

Browning and Saunders 2012

Repositioning for Lean

Browning and Saunders 2012

Lean Knowledge Work

• Study of 1,883 projects at Wipro (large Indian IT and product engineering firm, >100,000 employees) 772 lean, 1,111 not:

– No difference on quality

– 5% less time

– 7% less cost

• How did it work?

Staats and Upton, 2011

Six Principles

1. Continually route out all waste

– Teach everyone to ask ‘the five whys’

– Encourage everyone to look for small forms of waste – not just big ones

– Periodically review the structure and content of every job

2. Strive to make tacit knowledge explicit

– Look for repeatable parts of the process and codify them

– Don’t try to specify everything initially, if ever

– Use data to get buy-in

– Keep studying the work that has been designated as tacit

Staats and Upton, 2011

Six Principles (cont.)

3. Specify how workers should communicate

– Define who should be communicating, how often, and what

– Create a shared understanding

– Resolve disagreements with facts, not opinions

4. Use the scientific method to solve problems quickly

– If a problem arises, ideally the person who created it should fix it

– Problems should be solved where they occur

– Solve problems as soon as possible after they emerge

Staats and Upton, 2011

Six Principles (cont.)

5. Recognise that a lean system is a work in progress

– Start small

– Codify the lessons learned

– Keep looking for new ways to work

– Remember that the lean approach is not useful everywhere

6. Have leaders blaze a trail

– Project managers and other middle leaders must train and motivate their teams

– Senior leaders must be long-term champions

Staats and Upton, 2011

Common Themes

• Flow: A move away from resource efficiency, but humans are a problem!

• Variability: In innovation variability is not always bad. There needs to be a trade-off between standardisation and creativity.

• Measurement: Measurement is much more difficult in knowledge work, value is not as easy to identify

• Leadership: As always essential, but beware of senior managers and ‘Romantic Lean’

• Learning: Critical for lean but not easy in novel and complex environments (negative knowledge transfer)

Challenges

• Is it just more of the same in a different package?

• How does Lean apply to the front end of innovation (fuzzy front end) or to radical innovation?

• There will always be more tacit knowledge that we would like.

• The time frame for innovation can extend to months – pull is not so easy.

• Imperfect knowledge is part of innovation, there is no ex-ante knowledge

Lean and Innovation?

Conclusions:

– ‘..lean and innovation can be brought together, but this requires overcoming a set of challenges.’

– ‘Turning a knowledge operation, which has far fewer repetitive, codifiable processes, into a lean system is harder still. But as we have witnessed, it can be done. And the very difficulty of the process means the system will be tough for competitors to replicate. This is the power.’

– ‘It is a foolish strategy for an organisation to implement traditional Lean practices blindly in innovative processes and operations characterised by novelty…..Applying Lean principles with these caveats can get the best out of an established philosophy while maintaining an organisations innovative capabilities.’

References

• Bianchi, M., Modig, N., and Richter, A. 2014. ‘Making Innovation Flow: Solving the Trade-off between Lean and Innovation’, International Product Development Management Conference, Limerick, Ireland.

• Browning, T.R. and Saunders, N.R. 2012. ‘Can Innovation be Lean?’, California Management Review, 54(4), 5-19

• Staats, B.R. and Upton, D.M. 2011. ‘Lean Knowledge Work’, Harvard Business Review, 89(10), 100-110