Lean and The Resilient Enterprise

“Resilient” is not one of the adjectives typically used in describing a lean enterprise. (“Flexible” or “agile” can be heard more often.)

But I believe that many lean organizations are resilient, a conclusion I come to after hearing a speech by Yossi Sheffi, professor of engineering at MIT, director of the MIT Center for Transportation and Logistics, and author of The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage (MIT Press, 2005).

Sheffi, a keynote speaker at the recent conference of the Lean Aerospace Initiative, defines resiliency as the ability of an enterprise or a company to get back to its former level of service or production after being hit by some type of disruption. In his book, he describes how some organizations successfully recovered from disasters while others did not.

            Resiliency can be achieved in two ways, Sheffi contends: redundancy or flexibility.

            I don’t believe anyone would argue that redundancy is consistent with lean principles. But flexibility is a different story, as that is a hallmark of a lean enterprise.

            I also got the impression that Sheffi believes the flexible approach is better, as he spent more time talking about it during his presentation. Not surprisingly, Toyota is one of the organizations he cited as having flexibility built into its DNA.

            According to Sheffi, that DNA – the cultural characteristics of flexibility – includes:

• Continuous communication, through which all employees constantly know what is going on
  
• Distributed power (meaning empowerment of lower-level employees, with power not concentrated in top management)
  
• Passion for the company’s work and its mission
  
• Showing deference to expertise
  
• Conditioning for disruptions

 

            On showing deference to expertise, Sheffi made the interesting point that some organizational structures are designed to break down when there is a problem. What he meant is that the chain of command may be deliberately ignored so that lower level employees with the greatest expertise and knowledge can adapt to the situation. He cited the Marines, the FAA and certain chemical plants as embodying this idea; one example might be a Marine sergeant who changes his company’s mission when he finds that the situation is not what was expected. (I question whether “break down” is the correct phrase here, but that’s a minor quibble.)

            One part of the presentation I found intriguing was when Sheffi laid out a four-quadrant chart of possible disruptions. One axis of the chart was a scale for the severity of the disruption, the other for its probability.

            He said that one mistake companies make is focusing on the high-severity/high-probability disruptions. As an example, he mentioned a hurricane damaging an offshore oil drilling rig – which happens almost every year.

            When a disruption occurs frequently, even a severe one, a company has usually developed procedures for dealing with it, Sheffi said. The bigger problem, he argued, is the high-severity/low-probability disruption for which no one is prepared.

            But I digress. My main point is that the flexibility and reliability of the processes in a lean organization contribute to that organization being resilient.  Do you agree?