The recent financial turmoil and my recent reading of The Black Swan by Nassim Nicholas Taleb got me to thinking about how this plays with Lean.
Like the guys at the casino did our financial companies have everything tied down and risk inside the box analysed?
Every risk such as, loan default rates, interest rate rises, economic downturn etc, except the one where the box failed and it wasn’t a case of whether they wanted to lend to us, in our businesses, or our homes and at what rate but whether they would lend to each other – does anyone know, did they ever model this?
So what does this have to do with lean and lean thinking? Some of the core tools used in lean are aimed at reducing process variability and flattening output. It could be said we too are also reducing the risks but when we introduce lean tools are we aware of the Black Swans (both positive or negative) that could be awaiting us. Or is this the danger of fake lean? when we just apply the tools without really trying to understand the market [that the company operates in] or re-design the organisation.
Is it that real Lean negates the need to keep Black Swans in mind! if you
- flatten output to match the consumer demand, i.e. make daily, sell daily,
- reduce WIP and finished goods,
- ensure processes have waste stripped out, quality built in and are documented,
- ensure products and services meet the customer values and you monitor these regularly, and
- continually strive to improve,
when you come across a Black Swan you can make the most of it and are already well placed to minimise its’ impact on your business.
As lean encourages continuous improvement and doesn’t rely on forecasts; is it the only way to organise a business in the fast paced, black swan inhabiting world of today?
What do we think? we’re not sure if we’re suffering from Platonic Blindness.
Drop us a line if you think Lean helps overcome The Black Swans