What’s “lean dynamics,” anyway?

Lean Dynamics is a powerful business improvement methodology based on one simple principle: That organizations of all types can innovate and drive extraordinary results amid uncertain and changing circumstances.

Whereas lean manufacturing or Lean Six Sigma typically focuses on solving problems or removing “waste,” lean dynamics takes aim at addressing the dynamic conditions that drove these wastes to accumulate in the first place. Transforming your organization to work within variation and uncertainty enables it to grow, innovate, and profit not just within the narrow environment for which most operations are designed, but across the entire range of conditions that might strike.

Where did the “lean dynamics” concept come from?

The foundation for this concept was described in a research paper, and subsequently a book, titled Breaking the Cost Barrier (Wiley) by Stephen A. Ruffa and Michael J. Perozziello, detailing their findings from a multi-million dollar, international research project conducted for the Joint Strike Fighter Program—better known as the F-35 fighter. It showed how popular cost reduction techniques—from lean manufacturing to Six Sigma—can be structured in a way to break the trend of spiraling costs for developing and producing tactical aircraft.  Their results were widely acknowledged and awarded the Shingo Prize, and formed the foundation for the book Going Lean, which introduced this concept.

How is lean dynamics different?

Whereas lean manufacturing or Lean Six Sigma typically focus on solving problems or removing “waste”, lean dynamics takes aim at the dynamic conditions that drove these wastes to accumulate in the first place.

What is “dynamic value”?

What if I told you that companies could do something to avoid even the big shocks from the greatest downturns? Suppose I could point you to examples of companies that did not suffer losses during the Great Recession and other major events? There’s a term for that. We call it dynamic value — the ability to create and sustain customer and corporate value across the wide range of changing conditions that companies today increasingly face.

Those who seek to apply Toyota’s lean principles recognize the need to see value from the perspective of the customer. Dynamic value takes this concept customer value a step further: Value is what the customers say it is — even if they keep changing their minds.

Creating dynamic value gives companies the capability to tower above their peers by preventing losses from major downturns and minor ones, time and time again. And it is how they are able to innovate when others cannot, meeting and exceeding customer expectations across a wide range of conditions.

How do I measure dynamic value?

Whereas methods like Lean Six Sigma measures value locally — as the aggregation of many individual waste reduction efforts — lean dynamics acknowledges that the individual benefits do not necessarily add up.  Instead, dynamic value is measured from the perspective that matters — as bottom-line benefit to the corporation and the customer. Moreover, it is not measured at a snapshot in time, when conditions are optimal — an approach that tends to drive organizations to optimize for these conditions. It is displayed as a “value curve,” visually showing the difference between costs and benefits across the range of conditions within which the company operates.

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