Why companies solely focused on efficiency do not have a future

“Why do we actually do Lean?”

Just the question itself is a possible indication that the person asking the question has not fully grasped what Lean actually means and where it comes from. The association with “Lean” suggests that its application is about increasing efficiency and thereby increasing potential profits. Here we are dealing with a fatal misconception. Measures and activities to increase efficiency can be one aspect of “Lean,” but they do not have to be. Companies that primarily focus on efficiency have no chance of survival in the medium to long term. Do you think this sounds contradictory? It is not. One of the basic principles of “Lean Thinking,” or more accurately referred to in many Japanese corporate cultures as “Kaizen,” is to create a culture in which all employees and executives continuously improve the company. The focus is on the customers, not only the current customers but also those of the future. In this approach, humans are not seen as a resource that is unfortunately necessary to generate the desired profit, but as a crucial source of entrepreneurial improvement. If one wants to improve something and thus move oneself and the company forward, ideally in small steps, one logically has to try things out. However, trying out ideas can result in something not working immediately or not working at all. In a company permeated by lively Kaizen, this is not seen as a failure, but as an opportunity for improvement. One learns from the mistakes made and develops the next step from them. However, this requires a culture that sees mistakes not as a penalty but as a bonus. This is not the case in most corporate cultures. Now, this trial and error learning process is certainly not efficient. If efficiency is the top priority, management will not want this experimentation because it makes those efficiency indicators that seem so important worse. Typical indicators are productivity, utilization, or production or process costs. But how can a company improve in the long run if employees and executives are not given the time and resources to try things out and be inefficient? A constant pursuit of ever greater efficiency destroys innovation and the spirit of improvement. Many companies are efficiency-driven but blind to effectiveness. Customers, who are the basis of the existence of any company, are not interested in a company's efficiency, but they are interested in its effectiveness. Here lies one of the most decisive weaknesses of management consultants, Lean trainers, executives, and business education in general: Thinking and acting are often too focused on pure efficiency values, and thus, many companies are more concerned with themselves than with their customers. In the famous Q-C-K triangle (Quality, Costs, Time), “C” is usually in the primary focus. However, efficiency and costs should be in the secondary focus. This means that these values are not unimportant, but they are less important than the focus on customers. “Q” and “T” are directly relevant to the customer, while “C” is not at all. The customer is interested in the price, which is mostly dictated by the market, but not in the costs. The described problem is a vicious circle. Effort must be made if one wants to improve and change. However, this effort is not efficient. Nevertheless, changes and improvements are expected so that the company can survive in the future. The time and resources for this, however, are not provided or only in narrowly calculated budgets for efficiency reasons. And so, one cannot build the fence because one is busy catching the chickens. Consultants and especially executives must drastically change their view of business processes. The rules of classical economics only depict a very isolated and specific situation and never represent the whole truth. As a human being, one will never fully know the whole truth. Therefore, in addition to logic and rational approaches, a good dose of intuition is needed - with all its advantages and disadvantages. Article by Dr. Mario Buchinger. He is one of the top 100 trainers in our catalog. Find his profile here!