Book: This is LEAN - Niklas Modig & Par Ahlstrom

August 15th, 2022

(Book: This Is Lean - Niklas Modig)



Lean means valuing flow efficiency over resource efficiency

Choosing for lean operations is a strategic choice with pros and cons.


Maybe also

Lean means valuing continuous small improvements over one big improvement.

That continuous improvement is aimed towards the (impossible) ideal of 100% flow efficiency AND 100% resource efficiency.

But favors flow efficiency, so it will focus first and focus more on flow efficiency.


Table of Contents

[x] Ch0 500 times faster care

[x] Ch1 From resource focus to customer focus

[x] Ch3 What makes a process flow

[x] Ch4 efficiency paradox


[x] Ch5 Once upon a time ... How Toyota became number one through customer focus

[x] Ch6 Welcome to the Wild West ... We call it lean

[x] Ch7 What lean is not

[x] Ch8 The efficiency matrix

[x] Ch9 This is lean!

[x] Ch10 Realizing a lean operations strategy

[x] Ch11 Are you lean? Learn to fish!

[x] Ch12 Develop a lean outfit!


Ch0 500 times faster care


Flow efficiency

time it takes from identifying a need to satisfying that need


ch 1-4 flow efficiency, decision impact, efficiency paradox, wasting resources

ch 5-11Toyota


Ch1 From resource focus to customer focus


Model: resource efficiency


Model: flow efficiency


Which route to take?

both are important

hard/impossible to optimize for both


Ch2 Processes are central to flow efficiency


process is from flow unit's perspective


Model: flow units

Model: value transfer - resource vs flow efficiency

Quote: throughput time in most organisations


classifying activities

  • value adding activities vs wasteful activities

  • need defines value (when the customer is not clear, look at need)

process should be defined from the time the need is identified to the point at which the need is met


Ch3 What makes a process flow


3 laws

  1. Little's Law

  2. law of bottlenecks

  3. law of the effect of variation


(1) Little's Law

Model: Little's Law

throughput time = flow units in process * cycle time

eg. time for you to make it through airport security queue = ppl before you * avg time to check a person



ensuring a buffer of flow units

in order to ensure maximum utilisation of resources

serves to increase throughput time


(2) Law of bottlenecks

bottlenecks lengthen throughput time

(with non-value-adding time)

bottleneck: stage in the process

  • longest cycle time

  • limits the flow

key characteristics

  • before the bottleneck there is a queue

  • after the bottleneck there is waiting

if a bottleneck is eliminated, the bottleneck will appear somewhere else

reasons why bottlenecks appear

  1. stages in the process must be performed in a certain order

  2. variation in the process


(3) Law of the effect of variation

variation in the processing time in one stage will lead to variation in arrival time in the following stage



It has a particularly negative impact on an organisation's ability to combine high resource effifiency and high flow efficiency


Model: sources of variation


Model: Kingman's formula


summary: Throughput time increases when

  • number of flow units in process increases (Little's law)

  • cycle time increases (Little's law)

  • when there are bottlenecks

  • variation increases

  • process get's closer to 100% utilisation


if throughput time increases

(without an increase in value-added)

then flow efficiency decreases




Ch4 efficiency paradox


Model: 3 sources of inefficiency

(1) The first source of inefficiency: long throughput times

(2) The second source of inefficiency: many flow units

(3) The third source of inefficiency: many restarts per flow unit


(4) Secondary needs generate superfluous work

Model: secondary needs

(5) managing receipts: the art of being extremely inefficient

Model: superfluous work


(6) the efficiency Paradox

Model: efficiency paradox


(7) resolving the efficiency paradox

focus on flow efficiency

decisions that

- decrease throughput time

- decrease the amount of flow units in process

- decrease the amount of restarts



Ch5 Once upon a time ... How Toyota became number one through customer focus


(1) The history of Toyota motor corporation


automation with a human touch

eg. loom that stopped automatically when a thread broke



creating flow in production by eliminating all inventory and only producing what the customer wants


(2) Toyota faces an economy in crisis

economies of scarcity

  • land

  • technology

  • raw materials

  • finances


(3) focus on doing the right things


customer needs

  • what (product) does the customer want?

  • when does the customer want it?

  • what amount does the customer want?

pull system

  • car was not produced until there was a customer order

  • order information (what, when, how) is sent upstream

  • step = internal supplier + internal customer


(4) focus on doing things right

Model: seven forms of waste in manufacturing


(5) the economies of scarcity created a strong focus on seeing the whole

the lack of resources forced the company to develop a production system that focused on flow efficiency



Ch6 Welcome to the Wild West ... We call it lean


(1) Ohno defines the Toyota Production System (TPS)

[ ] Book: Toyota Production System: beyond large-scale production - Taiichi Ohno

Ohno rejected economies of scale and large-scale production


All we are doing is looking at the time-line from the moment the customer gives us an order to the point when we collect the cash. Ans we are reducing the time-line by reducing the non-value adding wastes.


(2) Lean sees the light of day

[ ] Article: Triumph of the Lean Production System - John Krafcik

two types of production systems

  • robust system

    • economies of scale

    • advanced technology

  • fragile system

    • low inventory

    • low buffers

    • simple technology

Krafcik thought that the term 'fragile' had negative connotations; instead, he used the term 'lean' to represent the efficient production system


(3) The book that changed the world

[ ] Book: The machine that Changed the World - James Womack & Daniel Jones & Daniel Roos

comprehensive view of what lean production was about

four core principles

  1. teamwork

  2. communication

  3. efficient use of resources & elimination of waste

  4. continuous improvement


[ ] Book: Lean Thinking - James Womack & Daniel Jones

what a company should do in order to 'be lean'

five new principles

  1. specify value from the standpoint of the end customer

  2. identify the value stream and eliminate all steps that do not add value

  3. make the remaining value-creating steps flow, so that the product flows smoothly towards the customer

  4. when the flow is established, let the customer pull value upstream from the next upstream activity

  5. when steps 1 through 4 are complete, the process starts all over again and continues until a state of perfection is reached in which perfect value is created with no waste


(4) Fujimoto places focus on Toyota's capabilities

[ ] Book: The Evolution of a Manufacturing System at Toyota - Takahiro Fujimoto

historical account of the evolution of Toyota's production system

managed to capture many abstract phenomena

three levels of capabilities

  1. lvl 1 - routinised manufacturing capability

  2. lvl 2 - routinised learning capability (Kaizen capability)

  3. lvl 3 - evolutionary capability (capability-building capability)

the key to Toyota's success is

the capability of always ensuring development,

regardless of what setbacks or obstacles the company encounters


(5) Decoding Toyota's DNA

[ ] Article: Decoding the DNA of the Toyota Production System - Stephen Spear & H. Kent Bowen (HBR)

four rules for designing, operating, and improving processes and the activities in the processes:

  1. all work shall be highly specified in terms of

    • content,

    • sequence,

    • timing and

    • outcome

  2. every customer-supplier connection must be direct, and there must be an unambiguous yer or no way to send requests and receive responses

  3. the pathway for every product and service must be simple and direct

  4. any improvement must be made

    • in accordance with the scientific method,

    • under the guidance of a teacher,

    • at the lowest possible level in the organization


(6) The Toyota Way is encoded internally by Toyota

internal publication

[ ] Article: The Toyota Way - Toyota

16 pages long

each value is illustrated with a testimonial from a Toyota employee

Toyota's five core values

  • continuous improvement

    • Challenge - We form a long-term vision and meet challenges with courage and creativity to realize our dreams

    • Kaizen - We continuously improve our business operations, always striving for innovation and evolution

    • Genchi Genbutsu - We practice genchi genbutsu; we go to the source to find the facts to make correct decisions, build consensus, and achieve goals at our best speed

  • respect for people

    • Respect - We respect others, make every effort to understand each other, take responsibility, and do our best to build mutual trust

    • Teamwork - We stimulate personal and professional growth, share the opportunities of development, and maximize individual and team performance


(7) Liker launches The Toyota Way

[ ] Book: The Toyota Way - Jeffrey Liker

14 principles

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Ch7 What lean is not

(1) problem 1: Lean is defined at different levels of abstraction

Model: lean definition abstraction levels


by defining lean at a low level of abstraction, it is not necessary that the methods and tools will be suitable outside the particular environment in which they were developed


(2) problem 2: Lean as a means instead of an end

the focus on the goal creates flexibility,

whereas a focus on the means may create limitations


a problem arises when the focus falls on 'which means' Toyota uses, rather than asking and understanding 'why' these means were used


eg. standardization - one goal of standardization is that it provides a foundation for continuous improvement


(3) problem 3: lean is everything good and everything good is lean

Model: trivial definition


Lean is a choice at a crossroads.

Which road did they not choose?


Ch8 The efficiency matrix

(1) The efficiency matrix

Model: Efficiency Matrix


(2) Variation limits possible positions in the matrix


(3) Strategy decides position in the matrix

Model: business strategy vs operations strategy


(4) Moving in the matrix

"continuous improvement" is a trivial statement

define the direction in which they intend to improve

- resource efficiency can be increased or decreased

- flow efficiency can be increased or decreased

Model: trivial statement


fictional companies

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a) startup: reinvent the wheel -> more structure

b) bathroom refurbishing: "customers pay a premium for faster refurbishing"

c) manufacturing -> lean manufacturing

d) luxury hotel -> business hotel


Ch9 This is lean!


Model: Lean improvement pattern: U-shaped

Model: Lean is an operations Strategy

Ch10 Realizing a lean operations strategy


Model: values, principles, methods, tools & activities


Model: Situational Awareness (aka jidoka)


Ch11 Are you lean? Learn to fish!



The goal of a lean operations strategy is to improve the flow efficiency,

without sacrificing resource efficiency, and ideally improving it.


Model: static vs dynamic goal


The continuously flow-improving organization

The continuously flow-improving organization

will always be developing

- new knowledge,

- new understanding and

- new eperiences

and learning new things about it's customers' needs

and how to meet those needs as efficiently as possible


How do we ensure we learn something new every day?


Metaphor: Catching the big fish vs learning to fish


Ch12 Develop a lean outfit!


Is there any little adjustment that can make us a little bit more beautiful than we were yesterday?


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