Confusion over #Lean Manufacturing, Lean Healthcare, and #LeanStartup

Editor’s note: The 2015 Lean Startup Conference is just around the corner (it’s from November 16-19th in San Francisco, and there’s still time to get your ticket!). We have dozens of excellent speakers and mentors who are eager to share their product development, entrepreneurship, and innovation stories–you’ll never see these experts in one place ever again. Learn more about them in our ‘Lean Startup Speakers’ series.

Next up is Mark Graban, who is the Founder of Constancy, Inc. and the VP of Customer Success at KaiNexus. He’ll be facilitating a talk on Lessons on Lean Collaborations in Health, Energy & Talent Markets at the 2015 Lean Startup Conference. Learn more about him here and see this original post here.

I’m going to be attending the Lean Startup Conference in San Francisco, as a “faculty member,” a moderator for a session, and maybe serving as a mentor. The organizers asked me to write a post introducing myself to that audience.

Eric Ries, author of the book The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, makes it very clear that the Lean Startup methodology has its roots in the Toyota Production System and Lean manufacturing. Ries writes about factory settings and gives credit to giants like Taiichi Ohno (listen to our podcast talking about this).

There are some in the Lean Startup circles who seem pretty unaware of the industrial roots of Lean. This often causes confusion.

Let me tell a little bit of my story to help set context.

Listen to Mark read the post (and subscribe to the podcast here.)

Lean Manufacturing

I started my career as an industrial engineer at General Motors in 1995 (yikes, 20 years). I worked in an engine plant and our productivity and quality were far worse than a benchmark Toyota plant. We were trying to catch up by copying Lean and TPS methods and leadership styles. It made quite an impact.

The roots of “Lean Production” go back further than that, with the origins in Toyota post 1945 and as the term “Lean Production” was coined over 25 years ago.

Lean has been around much longer than the Lean Startup methodology. That lead to the creation of this meme:

lean meme startup

Lean Healthcare

Hospitals and health systems started using Lean or TPS methods in the mid to late 1990s. Listen to my podcast with Joan Wellman, one of the early innovators who helped bridge the gap between manufacturing and healthcare.

“Lean Healthcare” could basically be called “Lean Manufacturing Applied to Healthcare” but that’s an awkward term (and why emphasize the terms manufacturing or production in a hospital setting?).

I got involved in Lean healthcare 10 years ago and have focused on that ever since. There’s a lot to be learned from the management and improvement methods of Lean manufacturing — making the hospital a better hospital rather than “turning it into a factory.” I’ve written some books on Lean healthcare and remain active in this field.

Lean Startups

I first heard about Eric and the Lean Startup movement in late 2009, before his book was published. I wrote a blog post with my impressions here.

The main parallels of Lean Startup to my experience in manufacturing and healthcare include:

  • Respect people (customers and employees)
  • Be customer focused, solve problems for them
  • Improve using an iterative, scientific method
  • Be willing to discover the answer by testing things instead of “knowing” the answer
  • Do work in small batches and focus on flow and quality
  • Ask “why” instead of “who” when something goes wrong

To me, “Lean Startup” could also be called something like “Lean Manufacturing Applied to Startups,” but that’s, again, an unwieldy term. Edit: Or, more confusingly, Lean Startup concepts can be used by old, large companies to create new products and services.. or could be used by a hospital to help develop a new service line.

In my mind, “Lean” is a broader term, an umbrella that covers Lean manufacturing, Lean healthcare, Lean Startup, and more. Some in the Lean Startup community use Lean as a shorthand term for “Lean Startup,” which causes confusion.

There’s a bit of a family tree… although there are more “Lean ________” fields than can be crammed into an org chart.

Screen Shot 2015-10-19 at 8.59.30 AM

Now, you could maybe have “Lean Services” as a parent in the tree, but hopefully you get my point.

To say a company like Intuit uses “Lean” might be less accurate than saying they use “Lean Startup” methods. Arguably, “Lean Startup” methods are a subset of the broader Lean philosophy and management system. If a startup is using Lean Startup methods, that might be closer to the “Lean Product Development System” used by Toyota and others (listen to a podcast about this).

It’s possible that a manufacturer could use the Lean Product Development System without using Lean Production methods in their factories or using a broader Lean management system. How many startups use Lean Startup methods to launch a product but don’t have a Lean culture? If a startup uses “Build – Measure – Learn” cycles but has a culture of blame, cost cutting, and silos that don’t work together, they can’t be called a “Lean” organization in the broader sense any more than a factory that uses 5S is a Lean culture.

Lean Startup in Manufacturing

One source of confusion is manufacturing companies like GE and Toyota starting to use Lean Startup methods to develop new products. Toyota (of course) and GE (in recent years) have used Lean methods in their factories. It could be that Toyota is much more of a Lean culture than GE has become, but I don’t know GE very well. When Jack Welch was CEO and called some employees “turkeys,” that’s not a respectful Lean culture at all. I hope GE has gotten better about things like that.

When Lean Startup people say “GE is using Lean” now, they shouldn’t mean just “GE is using Lean Startup.”

The fact that GE is using Lean in factories (as part of their reshoring efforts, which I applaud) doesn’t mean they are doing “Lean Startup in Factories.” They’re doing Lean. Or Lean manufacturing. I believe GE was embracing Lean Manufacturing before they started with Lean Startup.

The approaches are compatible and complementary. Hopefully, they are part of a broader Lean culture that’s developing at GE. Or they’re just using Lean tools.

Lean Startup in Healthcare?

I sometimes get asked about my work as, “So they’re doing Lean Startups in healthcare now?” Maybe, but that’s not the work I do. I’m focused on improving healthcare operations (including how care is delivered) and the culture and management system of hospitals.

If there are organizations using Lean Startup methods to develop medical devices or innovative new clinics, that would be very interesting… but different than the Lean Healthcare work that many of us are doing.

I hope this helps clarify some of the history and connections between these Lean practices. At some level, Lean is Lean, if there are consistent mindsets and philosophies (such as “don’t blame individuals for system problems”). Maybe we can talk about this at the conference!