Can lean and innovation coexist?

Research and development depends on trial and error, which suggests that a key part of basic research is that enemy of lean thinking: waste. This raises an important question: Can lean thinking and radical innovation coexist?

The answer, writes Michigan State University Professor Steve Melnyk in the following excerpt from his classic Supply Chain Quarterly 2007 Quarter 3 article, is a qualified "yes."

But if these two approaches are to "live" together, a company must separate the system it relies on to foster innovation and new products from the system that it uses to drive out waste and variance and to standardize products and processes. Each system needs its own resources and its own controls. The innovation system can then become the "feeder" for the lean system. That is, once a new product has been found to be economically and strategically viable, it is then passed to the lean system for production. In this environment, "separate but equal" is a strategic and cultural imperative.

This does not mean that lean systems are flawed or somehow "wrong." Nothing could be further from the truth. Rather, this argument shows that there is no universal solution or system for every business situation.

Every system or solution will perform well in certain circumstances and poorly in others. Although a lean system is very effective for cost control, that achievement comes at a price: the cost of standardization. One of lean's guiding principles is that there is only one way to do things. Without standardization, there is no opportunity for improvement.

Yet standardization may reduce a company's flexibility. An emphasis on standardization can inhibit the ability to adopt new processes or to introduce radical breakthroughs, either in product or in process. The perceived need for sameness conflicts with the desire for differentiation.

The danger lies in allowing lean systems to stifle innovation by transforming radical breakthroughs (something that lean has difficulty handling) into incremental breakthroughs (something it can deal with). Companies that are competing in an environment that rewards innovation must ensure that their supply chains support and facilitate flexibility.

To read Melnyk's full article, see "Lean to a fault?" in the Quarter 3, 2007 issue of the Quarterly.