The Innovative Brain Archive
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The Need for Innovation and Lean: Managing the Paradox Between Newness and QualityA white paper from New & Improved®, LLCOn the importance of Lean and Innovation: “The Japanese lean producers exercise extreme care not to isolate their advanced technologies from the day–to–day workings of the company and the incessant demands of the market. Based on their observations of US and European mass–producers, they long ago concluded that, to be effective, engineering, even of the most advanced sort, must be tied into the key market–driven activities of the company.” In 1994, a client asked us to observe their Quality training program after watching our Creative Process/Innovation training. The question the client wanted answered was, “is the Creative Process a tool for Quality/TQM, or is Quality/TQM a tool for Creative Process?” Innovation leads to big new opportunities. Lean leads to optimized existing offerings. You need both for profitable organizations.
After we each watched the other’s program, we were convinced that Quality was a tool for Creative Process, but the client answered just the opposite! Over time we realized that both answers are correct, depending upon where you start and what you need. If your focus is on Quality, you’ll need creative thinking along the way to help when you get stuck. And if your focus is on innovation, then you’ll need to apply quality techniques to make the breakthrough practical, productive, and/or profitable. In short, breakthrough solutions require quality, and a quality mindset requires innovation. So which is the most necessary? Both! In the past 15+ years of practice, the answer hasn’t changed, but what has evolved in industry is the alternating cycle between Quality methodologies (TQM, Six Sigma, Lean, etc.) and innovation methodologies (Creative Process, TRIZ, Design Thinking, etc.). Observers have seen several cycles of switching from one approach back to the other. Not because of an epic battle between good and evil or because one is right and one is wrong, but because organizational success and growth depend upon them both. The innovation/quality argument is not an either–or. It is a tension between opposites that we need to manage. When we manage this polarity well, when we get the benefits of both and reduce the detriments of both as much as possible, then we get significantly better return on effort than if we pick one over the other. Out of balance Too much of a focus on innovation yields breakthrough offerings that suffer from a lack of excellence. And too much of a focus on quality yields offerings that sacrifice newness/uniqueness for perfection. Inability to manage to the sweet spot in between these polarities can lead to disaster. Until recently, Toyota, the originator of Lean production, had a reputation for manufacturing “perfect cars” and was recognizing that they were manufacturing cars that lack excitement, consumer passion, and newness in a business that requires it. The breakthrough Prius is now 12 years old, and while the technology is slowly being shared by other vehicles in the Toyota lineup and the Prius is steadily improving, it offers very little news to the segment or category (at the time of this writing, they are slowly and cautiously exploring a plug–in hybrid version of the Prius that their aficionados have been crying out for even as the plug–in Chevy Volt takes the spotlight as the more fuel efficient alternative). Given the black eye that Toyota has recently received because of extensive product recalls due to quality issues, we believe what happened was a lack of focus on a culture of innovation to balance the quality focus. One take is that they started believing their own press and became arrogant about the quality of their vehicles. Another more likely take is that contrary to the “challenge the status quo” mentality that exists in innovation cultures, Toyota is now suffering from the downside of a long term sole focus on quality. How could that be bad? Over time, in long–term quality cultures, it becomes politically more risky to point out quality problems, because that can lead to someone getting into trouble for not having a good quality culture already. If there had been more of a culture of innovation, it would have been safer for employees to recognize and point out that things were not all so perfect. Strong innovation cultures seem to do a better job of finding the “unspeakable truth” — and saying it — than quality cultures, which are better at finding the ways to get yet one more increment of improvement from the innovations of the past. The right balance is needed. Our experience is that quality circles are far more honest when they live inside of a culture that supports innovation. The rationale behind this can be found in an examination of the Transformation Curve (the so–called “S–curve” that explains the growth and development of all organisms, offerings, organizations, or systems), articulated by George Land. Stated simply, there are three phases of transformation: 1) Invent: exploring and inventing the success pattern, 2) Improve: extending and improving the success pattern, and 3) Re–invent: integrating new and different elements. Here’s a graphical depiction: 
A simple and common example: You purchase a new computer to help you be more productive. Phase one is represented by the first few days and weeks spent loading software, setting up files, getting peripherals to work properly. Your productivity decreases during the first phase of ownership of your new computer. In phase two, things are working correctly, you now know how the programs work, you have the files you need on it, and your productivity now benefits from the increased speed, memory and capabilities of the device. Over time however, as you enter phase 3 as your computer ages, it gets glitchy, too many files start to clog up the CPU, new programs begin to conflict, and as you replace peripherals, you discover incompatibilities among new devices. At some point in there, you use a new computer and discover how much faster it is. So, you purchase a new computer to help you be more productive, and the cycle begins anew, but at a higher level of productivity. Each time we replaced a new computer over the last several years, we’ve gone through the same S–curve, but even when we were struggling in the Phase I of the latest computer, we were more productive than we were towards the top of Phase III with the first computer. Whether it’s a new computer or a new company, it is a given that all individuals, teams, organizations and offerings go through these three phases. So it makes sense that there is a real need for both quality/Lean and innovation/Creative Process during various phases of team, organizational, product, market, and/or personal development. Another way to say it is that breakthrough innovation is just as necessary as incremental improvement. Without one, the other spirals out of control. And given where you are in the curve, there is a necessary focus on one approach leading the other (but there is always a need for both) To oversimplify, here’s how we see it: 
Traditional Approaches and Case Studies As Creative Process practitioners, and Organizational Development (OD) consultants with a sole focus on the people skills to create an innovation culture, we are often asked to support and strengthen the practices of “Lean Six Sigma.” Using the language of the Six Sigma field, we are essentially “Lean/Innovation Sensei” within the specific area of creating new value for customers. Primarily and historically, Lean Six Sigma work has focused on process and product that already exists within the value stream of an organization. Traditionally, Lean concepts have found an easy home in the manufacturing–based activities of organizations and have rapidly spread in that type of work flow (and of note, they are now in the product development arena). Many billions of savings have been garnered in this way. These methods are great at gleaning value from existing systems. Where they often fall short is in the case where industries need to innovatively adapt to changes in market dynamics, and where organizations need to create a sustained engine of innovation, an engine of new customer value creation. In other words, when there’s a breakthrough required. Example: Kodak began to experiment with Lean manufacturing in the late 90’s. We were asked to provide Creative Process training to the team responsible for the rolled coating machine. While much incremental efficiency had been gained using the Lean tools, it was not until the team applied their new creative thinking skills that they found true breakthrough opportunities. In a half–day’s work, the team produced an annualized savings of US$3,000,000 by coming up with creative ways to reduce unscheduled shutdowns and increase throughput on the machine. Of note, unfortunately for Kodak, Creative Process and innovation culture skills were not widely adopted, while the focus only on incremental improvements to existing process was widely adopted. They needed new thinking and innovation as much as they needed to continue to wring savings out of the film based value stream. And hindsight tells us that Kodak is now out of the film–based business, having jumped into (what was once a new innovation) digital imaging late in the game. The addition of Six Sigma thinking to the Lean Manufacturing work has allowed for an expansion of focus to all business processes, including for instance, customer service processes. There is an interesting paradox (yet another polarity) that shows up in the focus on customer service that frustrates us (the customer) from its lack of good creative process. As a way of understanding the dangers of failing to leverage the interrelationship between good innovation practice and Lean Six Sigma, we can explore one such service example. Example: Hertz, in an attempt to reduce muri (“overburden”), and mura (“unevenness”), in its reservation system (when focused on the idea that human capital is a cost and — in part — a waste) implemented an automated web–based reservation system that allows for a reservation to be made by a customer with radically reduced human capital costs to Hertz’s bottom line. Essentially and unfortunately, they have shifted overburden and unevenness to the customer. The typical reservation time for a Hertz #1 Gold club member previous to this process change was less than 1 minute once connected to a human agent via the phone. While waiting, the typical customer eliminated their ownmuda (the “non–value–adding work” of waiting on the phone) by, for example, engaging in responding to e–mail. Now, the process of automated reservations takes approximately 5 minutes of direct singularly focused involvement for a #1 Gold Club member. Should that customer elect to speak to a human agent, they must engage in at least one minute of interaction with the automated system before being “transferred” to a new telephone answering system (accompanied by phone rings and a repeated automated welcome message, telling you over and over again how “your call is very important”) before being placed into the queue to speak to a live agent. While Lean Six Sigma methods devoid of good creative process skills clearly can and do produce incremental value, when combined with effective Creative Process and Innovative Thinking skills, LSS is far more likely to deliver its full promise. Creative Process, and the constellation of cognitive methods around it, are essentially the methods that make the Lean process fully effective, by not just diagnosing waste and self–evident solutions, but in unique and different solutions. Through the Creative Process methods, we can make Lean more effective – more lean – by eliminating the waste that exists in an organization’s innovation pipeline and problem solving processes. Creating a culture of innovation helps:
As “Lean Innovation Sensei” in new value creation, our task is to coach and train our clients to take the overburden, unevenness, non–value–adding work and institutional misbehavior out of their process for creating new customer value. Additionally, as LSS method is applied to current work flow to create value for customers through products and services, Lean opportunities/challenges arise that can be solved with elegant design or inelegant design (see Hertz above). Our Creative Process uncovers a broader range of information, a more complete understanding of the challenge(s) and a more elegant/robust set of solutions to solve the challenges that must be solved in order to “Lean up” a given process. Barry Johnson’s work in Polarity Management is instructive relative to the paradox (polarity) that is apparent between a basic understanding of LSS and an incomplete understanding of the innovation process. 
In the case of Quality/Lean, a key goal is to create growth through the removal of waste and variance. In the case of the Innovation process, the goal is also to create growth by creating new offerings (and one way to do that is to derive benefit through the exploration and leveraging of waste and variance (See Günter Pauli’s Zero Emissions Research and Initiatives to find someone who is creating new businesses and offerings from the waste of various firms and processes). Johnson guides our thinking here in this way: There are benefits and costs to both ends of the polarity (quality vs. innovation) which are described graphically in “Managing necessary opposites.” In a myopic organizational culture, there is a thought process that leads to “we must do one or the other.” The organizational “bet” gets placed on one polarity, and in typical human rationalization fashion, the negative side of the favored polarity is underemphasized while the negative side of the non–favored polarity is overemphasized. In a highly functional innovation culture, the question becomes “How might we get the benefits of both sides while at the same time reducing or eliminating the downsides of each?” This creative question inspires the game changing moves that drive organizations to significantly outperform their competitive set. If muri is the elimination of overburden, or the elimination of all of the unreasonable work that management (or management practices) imposes on workers and work process, then the imperative that companies produce innovation then requires us to ask these questions:
As Lean Sensei with an innovation process expertise, this is where we add value to organizations. By applying the discipline of Creative Process and creative thinking to Lean thinking, the organization can enjoy the best of both worlds: quality and innovation, efficiencies and breakthroughs, stability and change. Or as we like to see it, newness and improvements. By managing the inherent paradoxes of both aspects, growth is possible, and indeed, inevitable. Sources: Grow or Die: The Unifying Principle of Transformation, G. Land Lean Thinking, J. Womack and D. Jones The Machine that Changed the World, J. Womack, D. Jones and D. Roos Polarity Management – A Summary Introduction, B. Johnson Polarity management: identifying and managing unsolvable problems,B. Johnson Product Development for the Lean Enterprise, M. Kennedy |
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