Recently, I have been re-reading some old books that I bought years ago to gain deeper insights into the relationship between economics and the prevalence and persistence of Fake Lean. By that I mean, the narrow use of Lean management by business leaders for the purpose of cost-cutting, in the furtherance of profit, especially in relation to its human impact; e.g. layoffs and other features that, inadvertently or not, harm employees, thus reflecting leaders’ noncompliance with the “Respect for People” principle. The books include:

While economics is not the singular cause of Fake Lean, its presence exists on at least three bones of the fishbone diagram: people, methods, and measures. Economics, therefore, is a cause that surely contributes to the observed effect, Fake Lean. Economic thought operates in conjunction with business thought. Lean management operates within the realm of business. Therefore, economics is likely to play an important role in informing (or dis-informing) business leaders about Lean management. How and to what extent do they support or interfere with the creation of Real Lean, and prohibit an organization’s advancement towards Real Lean?

Certain core economic ideas developed centuries ago in England quickly became fixed in the minds of business leaders and remain intact to this day. The most interesting critiques of classical economics were made by those who were closer to it in time than we now are, and closer in time to the days when craft work and providing for the community were more dominant features of daily human life. These are rich and insightful readings about the past that inform the present. They offer to us an understanding of more than just the inner workings of conventional business mindsets and practices. They identify gaps in relation to how Lean management has been understood and practiced over the last 65 years, as well as how its predecessor, Scientific Management, was understood and practiced in the late 19th and early 20th century.

The critic’s detailed and careful analysis of classical economics, business, and management decision-making were typically grounded in facets of daily living, with reference to the virtuous characteristics of mankind created by God and as informed by religious writings and tradition. They were deeply skeptical of certain aspects of political economy, and questioned claims made as to its standing as a science, likening it instead to astrology, for example. It is noteworthy that pioneers of modern economic thought lacked scientific training and were “regarded with ill-disguised contempt” by actual scientists in part due to their blind allegiance to generalizations of human character.

The critics viewed science as something that helps people labor for that which supports or improves life. Political economy, with its acceptance of zero-sum outcomes, was seen as something that did the opposite and therefore resulted in destruction. The religious overtones of the critiques clearly indicate that such outcomes were new and unwelcome additions to human existence. Thus, ideas central to classical economics were seen as lacking in the moral dimensions integral to human ideals and human existence as bestowed by God.

economicsland1Some key concepts of political economics that these authors found to be very troubling include:

Economic man: This fictitious abstraction of mankind removes all other human variables to simplify investigation and analysis of economic phenomena. However, as God did not create such a man, none can actually exist, thereby negating economics both as a science and as a true guide for business owners.

Self-interest: The pursuit of self-interest and personal (material) gain were seen as secondary motives to one’s work. The prime motive for one’s work is service, self-sacrifice, to fellow human beings and the community – this is the sole characteristic that constitutes a “noble” or “great profession.” Self-sacrifice must be embedded in business, not “economic man,” whose quest for gain is happily pursued in zero-sum fashion. “Self-interest” precludes business from consideration as one of the “great professions.”

Profit-seeking: This was seen as a base motive, one that grossly conflicted with the virtue of self-sacrifice. “Money-gain” was not viewed as true gain. The number of happy human beings was seen as the measure of richness. Profit-seeking brought wealth to owners and poverty to workers, and made it difficult for workers to feel affiliated with an organization knowing that owners may cast them aside at any moment and thereby fracturing human relations.

Laissez-faire: The concept of “let it go,” self-regulation, was seen by critics as “the devil’s philosophy,” an excuse for leaders to avoid their responsibilities to lead, to avoid work, and to avoid providing for the community to sustain life. Relatedly, there was strong moral disagreement with the idea that wealth unjustly derived is economically equivalent to wealth justly derived, the latter resulting in inequalities in wealth that disadvantaged workers and community interests.

Natural rights: Human being’s intrinsic or natural rights to life, liberty, and property, where ownership is given by one’s own work or by trade or by inheritance. Particularly, freedom by an owner to do as he wishes with his property, the business, and all material and human resources contained within it – to the detriment of the community.

In different ways and to varying degrees, these classical economic concepts were seen anti-human, un-human, or working against human interests given by God; e.g. of cooperation (teamwork), community, work, livelihood, and life. Respect and service, self-sacrifice (unselfishness), are intertwined. Remove self-sacrifice, and one removes respect. Thus, the foundation is laid for trickery and deceit in pursuit of one’s own interests, which leads straight to destruction. According to Cooke-Taylor, “The motive of self-interest leads men to wrong-doing more often than to right-doing, and should therefore  be replaced by the motive of public interest.”

The critics decried the acceptance of these five economic ideas with no critical thought, particularly those that exempted humanity from money-making. They viewed elements of classical economics as deeply disrespectful of people. It corrupts and compromises the virtuous gifts that God gave to humans, and reduces God’s influence and lowers His rank. People were seen as the true source of wealth, and service as the true purpose of one’s work.

Yet, the economic concepts cited above were quickly adopted by businessmen, most likely because they confirmed their biases. Unable to objectively judge the value of the human or his work, businessmen were easily able to objectively judge all matters in relation to “pecuniary interests.” These economic ideas soon became a “habit of mind” immune to criticism or re-consideration. They became entrenched for nearly two centuries and could not be appealed no matter how cogent the argument was.

Work, enmeshed with economics, must develop one’s humanity, not remove it. The combination of classical economic concepts, profit-seeking, and complex machinery were seen as a detriment to the further development of workers’ humanity, impairing their ability to absorb the world around them and bring forth their imagination and creativity into their work, and was, therefore, soul-destroying. Borrowing from Veblen, one can sum up by saying: “[Economics], their master, is no respecter of persons and knows neither morality nor dignity nor prescriptive rights, divine or human.”

• • • • • • • •

So how does this relate to Real Lean management?

The common thread that runs through the five economic concepts is disrespect for people. They give explicit permission to owners and managers (at all levels) to disrespect people in the furtherance of business ends. They either greatly discount or completely discard “Respect for People,” both in its casual definition and especially its many meanings within the context of Lean management. Classical economics, therefore, clearly introduces a defect into businessmen’s thinking in relation to Lean management, disrespect for people, which is deeply consequential in terms of its human impact. Discarding the “Respect for People” principle allows leaders to avoid work in that same way that laissez-faire was seen as an excuse for leaders to avoid work.

Lean management is meant to achieve many things. Among them is the restoration of economic and social fairness to employees, not the opposite as these ideas in classical economics compel business leaders to do. If business owner’s thinking is suffused with these key economic concepts, then it is logical to conclude that “Respect for People” is of little or no interest. This renders itself as a rigid structural problem in the advancement of Real Lean management. The practical consequence is that people are treated as costs that owners can dispose of as dictated by necessity or whim, to assure continuity of profit. Because this is the prevailing “habit of mind” among business leaders, the prevailing outcome will be Fake Lean.

Is there a remedy? If so, what could it be? A way forward lies in re-thinking how business leaders are introduced to and trained in Lean management. There are likely other ways forward that will need to be used in combination, but let me put this one forward for now. Perhaps you can think of others.

One of the things we learn from participating in kaizen is that we have much to unlearn about our knowledge of processes and people. As we dive deeper into Lean management, we discover many more things to unlearn and many completely new things to learn. Often, we learn things later that we wished we had learned closer to the beginning of our Lean experience, as this would have helped us move forward faster.

For many years, and to this day, Lean leadership training begins with Lean tools, leadership behaviors, or both. These should no longer come first; they should come later – perhaps much later. As I have previously pointed out on numerous occasions, Lean leadership training must begin with leaders’ beliefs, and in this context, their beliefs about economics. If a leader’s understanding of economics is such that it excludes the “Respect for People” principle, then it is pointless to train them in Lean tools or how to improve their behaviors.

For senior business leaders, Lean training must have a different starting point. As one would fight fire with fire, one must fight pecuniary interests with pecuniary interests. Specifically, the ideas embedded in classical economics that create a “habit of mind” that discounts humanity and results in Fake Lean. Business leaders must be shown, likely in clever and resounding ways, how certain ideas in classical economics conflict with both of the bedrock principles of Lean management, “Continuous Improvement” and “Respect for People,” as the two are deeply interwoven. And, that in order to achieve the wide-ranging benefits of Lean management over the long-term, the economic mindset must change as well as the management methods.

Obviously, this is not a silver-bullet solution. None exist. However, it is clear the focus of and methods for training business leaders cannot remain the same. What business leaders learn about economics in college or graduate school is probably out of our control. Everything about Lean is learned on-the-job and in corporate training. And so it must be when it comes to Lean management and economics.

Finally, we must recognize that workers are tired of Fake Lean, and its continued presence will almost surely lead to the decline of the Lean management and the demise of the Lean movement. But, most importantly, we must do all we can to protect workers from Fake Lean, now and into the future. It has never been acceptable to have a laissez-faire attitude towards Lean failure (a condition that is likely due to the pursuit of self-interest and profit-seeking). We must understand the causes of Lean failures using formal failure analysis methods and take what we learn to improve life. Remember, the prime motive for one’s work is service, self-sacrifice, to fellow human beings and the community.

10 Responses to How Economics Disrespects People

  1. Mark Bradway says:

    Lean is ‘Think. Develop people.’ You don’t develop those you don’t have at least some modicum of respect for. People are NOT a human resource. They are not a resource at all. They (we) are the company. A company has the power of an endless life not because of it’s name/brand but because of the ‘named’ humanity that it is at any moment in time. The spirit of service of self-sacrifice is a purely human endeavor.

    Kaizen with its proper understanding of ‘whipping oneself to offer one as a sacrifice for good’ thus making the whole (company/humanity) better is for one and all but begins ‘at the top’ first and foremost. Lean may be understood as ‘Good Stewardship’ which is very much a spiritual concept and to Bob’s point a much broader and more foundational understanding than tools and techniques are. If we ‘get it right’ than we will be able to ‘do it right’. Leaders, lead on as good stewards of all you have been made steward of! Our companies and our world are much in need of such.

  2. Bill Waddell says:

    Very well written Bob – as usual.

    Lately I have been preaching the idea that you cannot become lean by studying Toyota through your own eyes; rather you can only become lean by learning how to study your own business through Toyota’s eyes. I believe this is supportive of your central points – that the prevailing “habit of the mind” present in most managers makes it difficult (impossible) to understand lean by observing Toyota. Those habits of the mind will cause them to see only the tools and techniques that support their old thinking. Instead they have to shed the habits of the mind and look at their own world through the prism of a different (toyotaesque) economic view.

    Again – great stuff Bob. Thanks for taking the time to write and share these thoughts.

  3. Ernest Mayer says:

    This is an excellent article, one which I have experienced in Lean and six Sigma practice. “Lean the process so we may cut FTE”. I refuse to do that, now. We can have a plan built into he project charter to re-educate, re-deploy, or improve the staff so they may provide MORE value to the organization. That is why change management training is so important. every project I do now has three “deliverables”: business objectives, technical objectives, and human objectives. Too much these days Lean is practiced with a laser focus on the Activities realm, not enough in the Relationship realm, and not at all in the Context realm. Meaning, we spend all our Lean (and Six Sigma) efforts on “activities”, the mechanical aspect of improvement, and some effort on “relationships”, (change management, Prosci, CAP, AIM, Crucial Conversations/Accountability/Influencer etc.), and almost never anything about “context”, the “soulful purpose”, or, “why are we here doing this? What is it that resonates and makes us an ORGANIZATION, as opposed to a bunch of people in a room making things or providing a service?” There are some real differences there that can take Lean and Six Sigma improvement tools to the next level of human endeavor, and respect for life, as well as respect for each other.

  4. Mark Jaben says:

    Bob – I believe this is manifesting itself in healthcare with the current focus on the impact of burnout on doctors right now –a very hot topic that is gaining notice not just in the US. As this spreads to include nurses, PA’s, NP’s, techs, in short all the staff……administrations too, the concept that respect for people is good business practice is getting a new look.

  5. John Podlasek says:

    Its the economic system that is fake. Fake lean is derived from an economic system that promotes, rewards bad behavior. Similar to the Pavlovian Dog. People do not want to change fix the system due to the economic problems that would be created. We do not recycle because it can be cheaper to throw it away. We will not eliminate unnecessary work due to it would raise unemployment. Doctors prescribe medicine that is not needed in order to make more profits. So if you want to fix lean, you first have to fix the economic system and promote a system that rewards behavior for proper resource management, different behaviors. Time for the world to grow up. A good start is to read “Today and Tomorrow” by Henry Ford.

  6. William Ryan says:

    Hi all I see the Old Lean Dude commenting here and I really appreciate him and Mr. Emiliani and all the many finer comments that are all true about the many aspects of true Lean thinking, doing living, growing, sharing, caring, teaching ect. We had a mission statement that said that we must become the best in the world at what we make and do. This includes ones self, ones family, ones community of the never ending practicing (KATA)and Kaizen to be better at everything we do in life. The journey begins the day you are born to the day you die. We must always strive to become better. Lean says faster, cheaper, better and strive as a team to eliminate all unnecessary waste and cost, even the waste we do not see with respect, humility, trust honor, integrity, gemba, kaizen challenge and teamwork. What is so hard about that once you learn how to compete in life. The YOU in I CAN DO IT attitude will carry you a long way in life like wind in your sails. You will succeed because failure is not an option…Thanks all.

  7. Jeremy Old says:

    I really like the point that workers are tired of ‘Fake Lean’. You are so right that lean is usually implemented by people who want to retain their old way of thinking and just apply some sexy new tools that they think will accelerate cost cutting and promote the bottom line.

    The all important “unlearning” that is required is the psychological one. It is ironic that senior management everywhere are exasperated that employees are so disengaged and demotivated. They are oblivious to the fact that it is the standard management function, structure and style that is demotivating their people.

    Real lean works because in essence it is collaborative by nature, provides people with a strong element of autonomy and control over their work and is essentially community based. From a psychological point of view collaboration, autonomy and control of one’s life and a need to feel part of a wider community are key ’emotional needs’. The research shows that there are about eight other emotional needs. The important point is that where our needs are ignored, repressed or violated we become stressed. When stressed we manifest a range of ‘sub-optimum’ thinking and behaviour including irrational thinking, hostility, lack of empathy, dullness, disengagement from others and our host group, apathy and so on. The top down command and control organization works against human nature by failing inherently to meet most of our needs and this explains the widespread demoralization and stress. In contrast the understanding of these emotional needs explains why a ‘real lean’ company is so enjoyable to work in, why their employees are so motivated and why they consistently outperform non-lean companies in productivity.

    I believe that if you add this new psychological understanding into the five economic models mentioned above, it will probably overcome their inadequacies. As such, it is not that these models are horribly wrong, just that they are incomplete models of the human condition and need updating in the light of modern psychological research. Thanks for the article, very refreshing to read such insight.

  8. Mark Jaben says:

    Jeremy,
    To take this a step further, people rightly resist that which they believe does not work for them- either they don’t agree on the purpose of, say, the change that someone wants to implement; or they can’t see how to be succesful in the new process; or there is already too much on their plate and they have no bandwidth to engage with it- one of the three usually, but sometimes more than one.

    The brain’s physiologic response to stress- circumstances that throw the balance among all those needs out of kilter- uses adrenaline as the neurotrasmitter that messages this to one’s awareness; the message is to ‘defend’ oneself and resist. Adrenaline causes the heart to race, breathing to increase, increased bloodflow to muscles (rather than brain) and a narrowing of vision- a focus on the threat right in front of you- not a recipe that lends itself to considering options, alternatives and possibilities.

    But, people can manifest resistance from another perspective- one that is rooted in resistance intended to discover the unintended consequences and unexpected results inherent in the best devised plan, so as to find what works and is workable. This supports the collaboration, autonomy and control you reference as emotional needs. This is resistance rooted in dopamine, which causes a person to feel good about what they have done and encourages more of the same.

    It may not be that staff are demotivated by what leadership does or does not do.It may be that they are just defending themselves as the more likely path to success ( in the way their brain defines success). There is a disconnect between what leaders want- success for their organization (however that is defined) with engaged, motivated staff and what they are getting with their tactics- adrenaline based resistance.

    • Jeremy Old says:

      Hi Mark, I fully appreciate your comments and agree with them, although I would just like to take you up on your last point.

      I ought to explain that the other eight or so emotional needs, include the need to have a sense of meaning, purpose or ‘stretch’ and also the need for recognition and status. In addition, implicit in the the need to be part of a wider community or host group is that that the host group is safe and secure.

      As a result, where people are confronted with management decisions that they feel fly in the face of what they personally see as needs doing, this can trigger the stress response due to the violation of these three needs. In other words, their sense of meaning may be undermined, they feel undervalued because their views are being disregarded and their feeling that the organization they work for is unsafe or going to be damaged due to management decision-making are all situations that can trigger the fight or flight response.

      Whereas the adrenaline rush may help in short bursts to overcome immediate physical threats, these more nebulous long term threats cannot be solved by dynamic physical action or violence and so the stress cannot be ‘burned off’. Similarly what is needed to overcome these perceived stressors is rational thinking, consultation, diplomacy and tact, imagination, problem-solving and so on. These are all faculties that, as you know, tend to be diminished by the stress response. Over the long term these types of long term threats, that constantly trigger the instinctive defense mechanism wear people out. Their sleep is impaired, they become tired, overworked and are therefore prone to depression; at an early stage their enthusiasm and ability to empathize is also reduced.

      This type of long term stress is the root cause of employee disengagement. In our natural brain state we are naturally motivated and keen to work enthusiastically for the benefit of our host group. It is is the violation of so many emotional needs by insensitive and arbitrary management decisions that breeds disengagement. There is not enough space or time to explain this fully here, but if you are interested I go into this in a lot more detail in my book ‘Reinventing management thinking’. http://amzn.to/2dJeyQR. I actually feel that it is Lean management’s inherent ability to reduce the stress response and, as you mentioned, stimulate the dopamine response through collaborative problem-solving, that makes Lean such a powerful and dynamic means to transform productivity.

  9. Mark Jaben says:

    Jeremy,

    Yes.
    By the way, I am about to publish a book that takes the neuroscience research about how brains operate and applies these insights to why organizations do, or don’t, function so well.

    I sense a book exchange and a great opportunity for an extended book club discussion

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