The Lean Decision Process: Applying the Toyota Production System to Decision Making
By
Kathy Pearson, Ph.D.
Director, Executive Development, DSI
Increasingly senior executives need to make strategic decisions that are of higher quality and to make these decisions more quickly. Frequently, however, the decision process that they employ is biased, ineffective, and costly.
For example, traditionally leaders spend too much time gathering massive amounts of data in order to make the decision process "rigorous." This often leads to wasted effort when irrelevant or biased data are obtained.
The Decision Strategies International (DSI) model for decision making promotes a process that is more rigorous, while meeting the objective of high quality amid time constraints. In fact, this rigorous decision process is analogous to a manufacturing process that is predicated on the lean philosophy.
Figure 1 - The Lean Decision Process
[click image to enlarge]
The lean philosophy was initially developed by Toyota to bring efficiencies to the automobile manufacturing process while improving quality by eliminating "waste." In contrast, the American automotive industry operated for decades under the assumption that in order to achieve high quality, inefficiency and high costs were natural and unavoidable outputs. These same behaviors and attitudes are exhibited in traditional decision making.
APPLYING THE LESSONS OF THE MANUFACTURING ENVIRONMENT AND THE LEAN PHILOSOPHY TO DECISION MAKING
Decision Strategies International's model for decision making implicitly promotes the very principles of the Toyota Production System (TPS) and more broadly, the lean concept. Of major significance here is to understand that the overarching objective of a lean process is to eliminate waste of any type. (Waste refers to inventory, non-value-added activities, defects, and even wait time.)
Toyota, through TPS, translates this objective to eliminate waste of any type into specific executable actions, which can be directly related to the four phases of the DSI decision making model, which are:
- Framing the issues
- Gathering intelligence
- Choosing between alternatives
- Learning from experience
KEY COMPONENTS OF THE TOYOTA PRODUCTION SYSTEM AND THE DSI MODEL FOR DECISION MAKING
In examining the key components of TPS, the parallels are evident between effective decision making and the lean philosophy.
Eliminate wasted steps, particularly muda (activities that add no value).
In the second decision phase of the DSI process, gathering intelligence, decision makers often spend an inordinate amount of time gathering biased or irrelevant data. In fact, when information biases are avoided, the time spent in this phase is greatly reduced and is much more "efficient" and effective.
For example, seeking disconfirming evidence instead of the more natural confirming evidence leads to a decision of higher quality by avoiding the confirmation bias, while reducing time spent in gathering data that simply bolsters pre-conceived possibly erroneous solutions.
Get people at all levels involved in continuous process improvement, or kaisen.
Stakeholder groups that are seen as holding little power in the decision-making process may be ignored when, in fact, they can provide essential information at all phases of the process.
First, these stakeholders possess unique frames on problems that can lead to more rigorous root cause analysis. Second, disconfirming evidence that is critical in obtaining relevant data and avoiding the phenomena of groupthink can be obtained from people at every level. Third, stakeholders that are in line positions are often key to successful implementation of decisions. And finally, the fourth phase of the DSI decision-making process, learning from experience, naturally leads to continuous improvement in future decision making. Managers almost never explicitly debrief all major decisions with stakeholders (saving this task for those "bad" decisions), because there are always more decisions waiting in the in-box to be solved.
Embed quality into the manufacturing process.
Quality control during every "step" of manufacturing ensures that there is no wasted work on a unit that may otherwise be identified as "defective" only at the end of the manufacturing process.
The DSI phase of framing the issues can be considered a quality control activity. Leaders and managers spend little time on framing, because it is an "expensive" use of valuable time and is not "action-oriented." However, proper framing forces a decision maker to consider multiple perspectives and reduces the probability that time and financial resources are wasted solving the wrong problem. Clearly, time and resources are potentially exhausted when decision makers move to gathering intelligence and choosing between alternatives without ensuring that all frames have been considered.
Perform rigorous root cause analysis.
In TPS, the use of the andon cord, which virtually halts a manufacturing line when a quality problem arises until the problem is resolved, ensures that the root of it is discovered and addressed in a timely manner.
Once again, the process of seeking the proper frames of a decision by design causes the decision maker to seek the root cause of a problem. In fact, traditional root cause analysis tools, such as the Ishikawa Diagram, the "Five Why's" process, and the Kepner-Tragoe methodology, are quite useful in guiding the framing process.
CONCLUSIONS
In summary, the lean concept has been successfully adopted in many manufacturing and service applications to improve processes, including most recently the delivery of healthcare. The DSI decision model embeds the lean philosophy in the decision making process with the same effectiveness.
Precious leadership time should be reallocated from the gathering intelligence phase to the framing and learning phases of decision making. Thus, a more robust decision process can be employed, raising the probability of a good decision outcome and of obtaining a decision of higher quality. Eliminating waste and increasing the level of quality should be the guiding principles in manufacturing, service, and strategic decision making.
