Can Lean, Blockchain, and Systems Thinking Be Combined?

Back in June,  Machiel Tesser co-authored and published a book entitled Lean Blockchain Systems Thinking: Reinventing Value Streams with John Dennis. This book shows that blockchain, together with Lean and Systems Thinking, can provide multiple advantages for societies and the environment and can be used effectively to meet sustainable development goals (SDGs).

When I spoke with Machiel in July, I asked him: “What are the benefits of combining Lean, Blockchain, and Systems Thinking?" Here is his complete answer:

Blockchain and Lean: Building the Lean Internet

Blockchain and Lean are a match made for the modern era, creating a Lean Internet. Where Lean empowers us to eliminate waste and streamline value, blockchain goes a step further: it prevents waste before it even arises.

Lean lays out the philosophy and methodology, while blockchain delivers the digital toolkit: digital identities, verifiable credentials, automated rules, workflows, and consensus on standards. This makes processes instantly verifiable, compliant with regulations, and building blocks for an intention economy.

What was once theoretical is now tangible: in the U.S., the GENIUS Act is shaping a robust framework for stablecoin issuance and programmable finance. In the EU, MiCA and eIDAS 2 have come into full force (since December 2024), providing regulatory guardrails for digital assets and trusted digital identities.

Now, blockchain and crypto aren’t speculation or hype; they’re legally programmable and digitally enforceable.

Lean workflows in Real-Time

Workflows become pull-based and real-time, backed by quality proofs from the source, just like Lean Kanban: only what’s needed, when it’s needed. Smart contracts automate verification and trigger actions instantly, eliminating manual or paper processes, reducing errors, carbon emissions, and admin overhead.

Continuous, Network-Wide Improvement

Direct feedback loops and transparency cultivate a shared understanding of the network’s intent. It brings stakeholders onto the same page who are willing to improve the system rather than just their own parts. 

Identifying and solving problems together aligns perfectly with the continuous improvement ethos of Lean. By making performance and objectives visible, stakeholders can respond quickly and collaboratively, making progress proactive rather than reactive.

By targeting root causes, not just symptoms, and listening to every voice across the network, this approach shifts us from reactive fixes to proactive systems design. It’s an inclusive, holistic transformation: the true promise of a Lean, a programmable internet, reinventing value streams.

Do you agree with Machiel's perspective? Has blockchain been integrated into your Lean initiative? If so, what have been the results?

Performance-Measurement Systems -- What are the Common Design Mistakes?

In October, Dennis Sherwood published a book entitled Strategic Thinking Illustrated: Strategy Made Visual Using Systems Thinking -- His book is about the behavior of systems. Systems are important, for we interact with them all the time, and many of the actions we take are influenced by a system – for example, the system of performance measures in an organization influences, often very strongly, how individuals within that organization behave. Systems thinking, the main subject matter of this book, is the disciplined study of systems, and causal loop diagrams are a very insightful way to represent the connectedness of the entities from which any system is composed, so taming that system’s complexity.

When I spoke with Dennis this month, I asked him: “What are the most common mistakes made when designing performance-measurement systems?” Here is his complete answer:

Let me choose just one. The BIG ONE. Unintended consequences.

A (real) example. A number of years ago, the UK government was becoming increasingly concerned about how long people had to wait in the reception area of hospital Accident and Emergency Departments until they were seen by a nurse or a doctor. To address this, they introduced a performance measure that at least 98% of those arriving must be satisfactorily treated and discharged, or transferred elsewhere within the hospital, within 4 hours.

That all sounds eminently sensible, and the intention was to act as a spur to hospitals to speed things up. 

Not long after this performance measure was introduced, a story appeared in a national newspaper with this opening paragraph:

"Hospitals were last night accused of keeping thousands of seriously ill patients in ambulance 'holding patterns' outside accident and emergency units to meet a government pledge that all patients are treated within four hours of admission."

It turns out that the "4-hour clock’" only starts running when the patient arrives at the front desk of the hospital. So if the patient is still in the ambulance, that doesn’t count… 

The "holding pattern" enables the hospital to meet its performance measure, but with two "unintended consequences." From the patient’s point of view, nothing has changed, nor has the government’s objective been met. And as a by-product, whilst the ambulance is acting as an "external waiting room," it remains stranded, and can no longer fulfill its primary purpose.

Not only did the performance measure not drive the intended outcome, it made matters worse by reducing ambulance capacity. Oh, dear.

This is by no means uncommon. Performance measures are introduced to influence behaviors so as to achieve some intended result. The problem, however, is that those behaviors take place within a complex context, and unless that complexity is well-understood, it is very easy to fall into the trap that a well-intentioned intervention has an unintentional, and perverse, effect.

How can this trap be avoided?

"Systems thinking" can really help, for systems thinking is a very powerful, and pragmatic, way to tame the complexity of real systems, so ensuring that, for example, performance measures can be introduced that really work. That designs out "unintended consequences." Indeed, in my view, that term is just a mask to disguise the fact that whoever designed the performance measures that failed just didn’t understand the corresponding system. Don’t let that happen to you!

What do you think of Dennis Sherwood's answer? Has your organization ever instituted a measure or process designed for improvement that drove incorrect or "gaming" behavior? His book is available here.

Why Do Most Companies Fail When They Strive to Become More Efficient and Resilient?

At the beginning of this month, Brian Strobel published an intriguing new book entitled Pursuing Excellence: A Values-Based, Systems Approach to Help Companies Become More Resilient, which interestingly posits that a company doesn’t implement Operational Excellence as a methodology, model, or tool. Instead, a company realizes Operational Excellence. It does so by integrating effective leadership, teamwork, problem-solving, systems thinking, and continuous improvement. It achieves this by aligning strategies, empowering employees, optimizing business processes, and improving the customer experience.

When I spoke with Brian recently, I asked him: “Why do most companies fail when they strive to become more efficient and resilient?” Here is his full answer:

I think the fact that people are starting to ask questions like this proves there’s a growing recognition our previous ways of doing things aren’t working.

The way that we’ve managed our companies has remained largely unchanged since the 18^th century. Since then, different philosophies have come and gone, but the central ideas for what it takes to manage our companies have remained fairly consistent.

And our approach to achieve continuous improvement must also change.

I believe that our legacy approaches to continuous improvement, to include Lean and Six Sigma, are failing to consider the whole system and account for the leadership principles necessary for success. These previous methods placed too much emphasis on the specific improvement methodology, without proper consideration for the entire system and surrounding culture, systems and structures, values and beliefs, and the particulars of our marketspace..

As I write in my latest book Pursuing Excellence, “our companies are struggling with ways to become more competitive, to reduce costs, and the chase unobtanium in their never-ending pursuit to do more with less. But to survive, this focus on efficiency must not come at the expense of innovation, agility, and moving fast."

The world is now a new place, with new rules. Succeeding will require new ways of looking at our problems. And the lens of operational excellence can help us view these things from a different perspective.

A lens is something that bends and refracts light to alter our vision. It allows us to see things differently. The right kind of lens takes what’s already there, and through convergence and divergence, provides a different perspective to view the subject. It focuses our vision on those things we need to see with more clarity.

These ideas that make up the lens of operational excellence, as shown here, provide us the context for what must be considered as we move towards driving change with a fundamental understanding that we must have everyone aware of why we need to change. In this regard, the lens helps guide the vision for our companies to become more resilient and move closer to achieving excellence.

What do you think of Brian's thoughts? How have continuous-improvement initiatives affected your company? 

The Limitations of Traditional Leadership Paradigms

The most recent book by organization Development (OD) master practitioner Gilmore Crosby, entitled Leadership Can Be Learned: Clarity, Connection, and Results, describes how leaders can be more effective in their interpersonal, group, and large-system interactions. During a recent conversation about his book, I asked Gilmore: "What are the traditional leadership paradigms that have consistent negative effects on work culture? How can this be changed?" Here is his complete answer:

There are two prevalent paradigms that lock leadership and work culture into a limited box:

Denial about authority issues -- Everyone has them, but most don’t realize they do. We all start small and dependent, and carry emotional memories from infancy into adulthood. Having a boss, being a boss, and being in an organization all remind our brain of our early pre-cognative experiences. Wired for survival, our brain wants to protect us from experiences similar to those early moments, including the dependency and interdependency of most work. Our emotional memories (the past) intensify our reactions in the present. If one isn’t aware enough to separate the past from the present, they will be apt to blame the people they are with (the boss, the subordinates, the peers) for their own mistrust and communication gaps. Our authority issues define and limit how we lead and how we relate to the people we report to.

Lack of systems thinking -- From a systemic perspective, it’s not who is on the bus that is most important, it’s how the bus is being driven. Most leaders are trapped in a paradigm of personality theory, obsessed with getting the right people on and off the bus. Many leaders I know take pride in their ability to judge people. That of course is necessary, but without a healthy dose of systems thinking, judging (and being judged) becomes the main focus. That unintentionally drives fear and defensiveness into the culture, undermining the very openness necessary for high performance. Leaders would do well to strive with at least equal energy for creating the conditions for fostering high performance in the vast majority of the people that are reporting to them. If they are constantly changing people out, they are the problem, not the subordinates. The right driver can lift an entire system, the wrong driver can demoralize and undermine performance. I’ve seen both many times.

Practical methods for bringing out the best in yourself and in others are woven throughout my book not as a program, but rather as sound leadership practices suitable to every group in any organization.

What do you think of Gilmore's perspective? Do these leadership paradigms exist in your organization? What have been the effects?

In this video, Gilmore presents a more in-depth overview of his book:
Leadership Can Be Learned Promo from Gilmore Crosby on Vimeo.