Will digital transformation of business doom Lean transformation? It might, for certain businesses, perhaps large corporations, but maybe less so for small- and medium-sized businesses that are more people-dependent and whose leaders understand the importance of having a human-centered management system.

Corporate investment is increasingly shifting from traditional machinery and employees to robots and software. Why? Because CEOs think data and digital transformation will be sources of competitive advantage. And it is a transformation that they think they can execute more rapidly compared to Lean transformation. CEOs also think that automation and artificial intelligence will take on greater roles, while the work of employees will take on less significance over time. They think technology is becoming more valuable than employees.

Digital transformation has emerged as a major sub-component of corporate strategy, while data analytics has emerged as a new pathway for problem recognition, problem-solving, and decision-making. Lean, it seems, is being displaced, and, in some cases, moved significantly down or even off the list of corporate priorities.

Interestingly, digital transformation of a business forces other people to change, such as customers, while Lean transformation requires managers to change. It seems clear, given the long history of technology in business, that managers vastly prefer other people to change. Changing someone else’s routines is much easier than changing your own routines because the value proposition is clear in the former and unclear in the latter. Business transformation succeeds when others must change. Business transformation typically fails when managers must change. 

CEOs see technology as becoming the major corporate asset, while employees are an asset to the extent that they contribute to innovation. Innovation may be the business need that helps Lean management survive; especially, kaizen. Perhaps kaizen, more than any other aspect of Lean management.

While nobody can predict the future, it seems that the current path we are on is one in which the leaders of large businesses favor investment in software and analytics over traditional machinery as a source of competitive advantage and productivity improvement. Investments in traditional, large capital equipment will be left to supply chains. There will be exceptions however, particularly among those businesses who view manufacturing as a capability worth saving and developing, as part of its long-term strategy for survival; as a means staying close to customers, both humanly and digitally, and satisfying customers by giving them what they want, when they want it, and in the amount wanted.

Unless great care is taken, digital transformation seems likely to make an organization less flexible and less able to adapt to changing circumstances, at least in the near term. It will be the result of designing systems where people are driven to serve machines, when, instead, machines must serve people. Artificial intelligence may (or may not) correct that in the not-too-distant future. Regardless, the current groupthink among business leaders is that the talents of employees are not so important in a digital future (a odd perspective given that humans create digital technologies). They also think that data analytics can identify and help correct shortfalls in employee performance. 

In part 2 of this blog post, I will describe how Taiichi Ohno thought the Toyota production system and computer information systems could work together in harmony.

4 Responses to Digital Transformation vs. Lean Transformation

  1. William Ryan says:

    Although AI, robots and automation will become ever increasingly more present in all aspects of life and work humans will always be the most adaptable species on the planet. Some even predict future wars between humans and robots. If to many people become displaced by robots then the notion of a “universal wage” begins to make more sense if we let the robots do all the work for humans. Who will control who will become the issue. Ray Kurzwiel even predicts the coming convergence or “singularity” of man and machine.

  2. Jay Bitsack says:

    Hi All,

    The journey toward leveraging digital technologies to more completely automate (e.g., the notion of the “lights-out-factory”) production operations/facilities began back in the mid-80’s and continued into the mid-90’s under the banners of CAD/CAE/CAM/CIM and CIE. And substantial progress was made, with companies like GM leading the way with massive investments in factory automation. UNFORTUNATELY, there were a number of major hurdles/stumbling-blocks that stood in the way of realizing this vision. One such hurdle happened to be an integrated communications architecture and supporting standards. The closest that anyone (i.e., GM and Boeing along with a host of participating vendors) ever came to achieving the necessary level of software and hardware integration in this context was known as the Manufacturing Automation Protocol (or MAP for short).

    Ultimately (during the 90’s), many (if not all) of the leading players involved in this early quest to create fully/highly-automated (even autonomous) production facilities threw in the towel and backed away from their lofty ambitions. Several reasons contributed to making such a decision, not the least of which of was the cost factor. But possibly more important was the realization – particularly by those on the front lines – of exactly how difficult it was to achieve the level of flexibility that would be needed to justify the investment.

    Since that time, further progress has been made, but it has remained primarily in the form of “islands-of-automation” (i.e., manufacturing cells and conveyance mechanisms). Good examples of these advances are manifest in the likes of: computer-controlled additive and subtractive manufacturing, in/on-line robotic assembly/welding/winding/laying, process control, automated/vision guided vehicles, etc. HOWEVER, in spite of these manufacturing-related advances, along with others in areas such as networking technologies and networking protocols/standards, sensor devices, and artificial intelligence, the vision of being able to integrate, monitor, and control the highly-choreographed and synchronous interactions that need to occur within a complex web/network of machines and devices still presents a myriad of substantive intellectual and technological challenges. In this regard, what seems to be standing in the way of achieving any real breakthroughs (i.e., of the sort capable of fulfilling the promise of mass production in quantities of one) is the level of complexity that is introduced into any automated or self-governing system by the need for dynamic flexibility and adaptability.

    As is typically the case whenever it comes to making change happen (ideally in the most efficient and effective manner possible) within any SYSTEM, it’s the application of HUMAN KNOWLEDGE, RAPID/ADAPTIVE PROBLEM-SOLVING, and LEARNING (as it involves the creation of NEW knowledge, often via hands-on experimentation) have proven to be invaluable elements in determining the on-going viability of any SYSTEM undergoing change. And whether artificial intelligence will be able – in a reasonable amount of time, if ever – to achieve the same or a higher level of THINKING and ADAPTATION ability as the human brain is capable of, is likely a matter of supreme speculation.

    That said, when it comes to TRUE LEAN THINKING AND BEHAVING, its highest-order value-added potential resides in the rapid/adaptive response capabilities it affords any organization. Keeping that thought in mind, in combination with an awareness of the increasingly obvious and tragic lack of adequate response capabilities being manifest in the face of numerous real and pending social, environmental, economic, and political calamities, it should appear obvious to anyone familiar with the subject, that the on-going application of TRUE LEAN THINKING AND BEHAVING competencies and capabilities are at the heart/core of humankind’s sustainable viability (aka salvation). As such, envisioning a world where such competencies and capabilities are to be sidelined by technology or in any other way diminished – as opposed to being enhanced and expanded on an on-going basis – is tantamount to being an apocalyptic vision.

  3. Andy Carlino says:

    I’ve been on a bit of a rant regarding digital transformation. Lean transformation and digital transformation are not mutually exclusive; in fact, digital transformation is dependent on lean. I believe an effective digital transformation is likely doomed without lean, not the other way around. I’ve interviewed and observed several manufacturers and I’ve found that the digital “transformation” is in danger of failing for the same reason lean has failed so often— thinking it’s only about the tools. Only now it’s about a collection of digital tools versus lean tools and the danger is bigger. The tools aren’t new, the infrastructure exists and all that’s left is “plug and play”. Regardless if you think I’m right or wrong what is true is the digital train has left the station, is gaining speed, and won’t be stopped. As Bob indicated, digital is, or will be, a major component of cooperate strategy but it’s a weakened strategy if not connected and aligned with a lean strategy.

    There is some sense that this digital transformation will be the competitive difference. All companies have or can easily get all the same “stuff” (technology, equipment, suppliers, etc.). The competitive difference is how companies connect the “stuff” to employees. The single biggest competitive advantage is connectivity and therefore the strategy should be a “connectivity transformation”, not a digital transformation.

    Lean transformed how we worked and what we worked on (CI, problem solving, replication, etc.) There is a purpose and vision of lean that we can measure but what is the purpose or vision of “digital” that we can measure and hold an organization accountable. It can’t simply be how much technology a company employs. More data is not as important as the ability to interpret and translate the data, learn from the data, and make informed decisions. Every connection needs to increase the employee’s IQ and every connection needs to add value. That means every one of employees will be more valuable to the organization, not less. We in the lean community have a major role and should be the enablers. First, we should help with organizational readiness. Second, we should help the employees be ready.

    • Bob Emiliani says:

      Part two of this blog post, “Digital Transformation & Lean Transformation” argues for a combination of the two working in harmony, instead of it being an either-or proposition. The problem that we all face in the Lean community is that the big consulting companies (McKinsey, etc.) are selling digital transformation as separate from Lean transformation. Historically, their perspective is most influential and they usually win.

      My sense is that CEOs will use digital transformation as an excuse for them to quietly move away from Lean, which they clearly have struggled with. Business leaders have always preferred new machines and technologies to people. What circumstances exist today (or tomorrow) to change that?

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