This quote comes from a recent BBC article “Brazil’s burger king likes his companies lean” at the beginning of April. It reports Jorge Paulo Lemann, a former Wimbledon tennis player, who has recently invested along with Warren Buffet into Heinz, Burger King and Kraft through his company 3G Capital, takes cost cutting very seriously. They quote a range of such measures including removing personal office space, limiting Blackberry usage and fewer company jets.
Should we in the lean profession be disappointed by this use of the word lean? After all it doesn’t refer to a waste reduction process or continuous improvement, but does refer to massive job reductions. Isn’t this what concerns people when they hear of a lean implementation coming to their place of work?
On the flipside, isn’t there a problem if lean practices can’t transform a business that is carrying costs that are not adding to the value delivered to a customer, and requires thousands of excess people to run an efficient, balanced company?
Is it a choice between being nice or nasty? Does lean belong at the high table of mergers and acquisitions or is it forever destined to be used just as an operational improvement tool? Can corporate cost cutting learn from lean or vice versa?
In 2008 Booz&Co wrote a paper “Unlock the true value of your merger: Tap the power of lean” describing how two global financial institutions used a recognizable three step process of learning and assessment, future description and implementation planning to do just that. (Note Booz merged into PWC last year to create Strategy&, and I can’t find any commentary of whether they tapped their lean powers to help the process.)
With a twenty-year plus history of lean in industry, there should be lean experts at the top of some big, hungry companies who could lead the debate in practice but for my personal view, please read on.
At the heart of lean improvement is reduction in waste: waste of materials, time or effort. When less human effort is needed to support Takt time in a process, that resource can be withdrawn and a Taiichi Ohno style response would be to remove the best person from the process and use them to better effect elsewhere. A classic management accountant approach would be to say “we don’t need that person now, we can lay them off”.
Although I simplify to make the point, the choice of what you do with spare resource is like the choice you make when a business has spare cash. Do you re-invest it in the business (Taiichi Ohno style), or hand it back to shareholders through dividends or share buy-backs? Do you have the imagination and entrepreneurship to use that resource better than others, or don’t you?
Lean is a tool and the benefits it brings can be “spent” in different ways. Headcount reductions are often a lack of imagination or capability to use that resource effectively.