Book Notes: This is Lean - Niklas Modig, Pär Åhlström

Book Notes: This is Lean - Niklas Modig, Pär Åhlström
In order to start a lean culture, you must understand the principles and values, and this book gives you a great introduction.

Summary

Title: This is Lean - The Solution to the Efficiency Paradox
Author: Niklas Modig, Pär Åhlström
Themes: Leadership, Management, Business, Agile, Lean
Year: 2012
Publisher: Rheologica Publishing
ISBN: 919803930X, 9789198039306
Pages: 168

While lean management is the most widely used management philosophy in our time, it has yet to be properly defined and is widely misunderstood.

This book provides individuals, as well as internal organizations, with an understanding of what they read by using clear, concise language and insightful examples, introduces the paradoxical concept of efficiency, and argues that organizations lack an understanding of what efficiency means. 

It is common for organizations to focus too much on not using resources efficiently - in the traditional and more common sense of efficiency. 

This leads to an increase in work that does not add value to the organization. 

The result of the organizations is that we try to be efficient (to be busy) and they become less effective.

Book Notes: This is Lean - Niklas Modig, Pär Åhlström

There is a great deal of emphasis in the book on the efficiency paradox - what organizations perceive as being efficient and whether it is actually true. 

Depending on how many variations you're dealing with, resource efficiency can lead to even more work. 

Because of the additional work, the more you strive for resource efficiency, the more inefficient you can become. 

"... Lean is not a static state to reach. It is not something you complete. It is a dynamic state characterized by constant improvement..."

In the efficiency matrix, suggested in this book, operations can be optimized along two axes: flow efficiency and resource efficiency. 

The flow efficiency of a process measures how quickly and undisturbed a customer's demand is met. 

The efficiency of a company's resources can be defined as the extent to which they are used in its processes. 

Niklas and Pär's goal is to solve this 'efficiency paradox'.

Book Notes: This is Lean - Niklas Modig, Pär Åhlström

In order to achieve high resource efficiency, you must have high inventories and long throughput times, whereas to achieve high flow efficiency, you must have low inventories. 

An efficiency matrix suggests that companies can have four different states of efficiency; 'wasteland', 'efficient ocean', 'efficient islands', and 'perfect state'. 

The perfect state, or lean, is not easy to achieve, and it is not even strategic for all companies. 

The biggest enemy of lean is variation. 

The company is forced to choose between optimizing flow or resource efficiency as variation increases. 

If the company decides to build inventory, resource efficiency will be improved on flow efficiency expenses. 

The pursuit of the perfect lean state is not always the right strategy for all companies.

Chapters of the Book:

Chapter 1: From resource focus to customer focus
Chapter 2: Processes are central to flow efficiency
Chapter 3: What makes a process flow
Chapter 4: The efficiency paradox
Chapter 5: How Toyota became number one through customer focus
Chapter 6: Welcome to the Wild West... We call it lean
Chapter 7: What lean is not
Chapter 8: The efficiency matrix
Chapter 9: This is lean!
Chapter 10: Realizing a lean operations strategy
Chapter 11: Are you lean? Learn to fish!
Epilogue: Develop a lean outfit!
 

Niklas Modig has been conducting research at the Stockholm School of Economics since 2004 and was a visiting researcher at the University of Tokyo between 2006 and 2008. Thanks to his fluency in Japanese, Niklas had the opportunity to spend thousands of hours within Toyota's service organization in an attempt to understand how its philosophy can be applied in non-manufacturing contexts. 

Pär Åhlström holds the Torsten and Ragnar Söderberg Chair in Business Administration at the Stockholm School of Economics. He previously held positions at Chalmers University of Technology and the London Business School. With 20 years of experience researching Lean, he is one of the pioneers in the field. He frequently publishes Lean in manufacturing, product development, and, more recently, in the service sector. His research is often cited, and he is also an award-winning professor.

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