In the 1980’s, a massive paradigm shift hit factories throughout the US and Europe. Mass production and scientific management techniques from the early 1900’s were questioned as Japanese manufacturing companies demonstrated that ‘Just-in-Time’ was a better paradigm.
The widely adopted Japanese manufacturing concepts came to be known as ‘lean production’. In time, the abstractions behind lean production spread to logistics, and from there to the military, to construction, and to the service industry. As it turns out, principles of lean thinking are universal and have been applied successfully across many disciplines.
Lean principles have proven not only to be universal, but to be universally successful at improving results. When appropriately applied, lean thinking is a well-understood and well-tested platform upon which to build agile software development practices.
Call a doctor for a routine appointment and chances are it will be scheduled a few weeks later. But one large HMO in Minnesota schedules almost all patients within a day or two of their call, for just about any kind of medical service.
A while ago, this HMO decided to worked off their schedule backlogs by extending their hours, and then vary their hours slightly from week to week to keep the backlog to about a day. True, the doctors don’t have the comforting weeks-long list of scheduled patients, but in fact, they see just as many patients for the same reasons as they did before. The patients are much happier, and doctors detect medical problems far earlier than they used to.
The idea of delivering packages overnight was novel when Federal Express was started in 1971.
In 1983, a new company called Lens Crafters changed the basis of competition in the eyeglasses industry by assembling prescription glasses in an hour.
The concept of shipping products the same day they were ordered was a breakthrough concept when LL Bean upgraded its distribution system in the late 1980’s.
Southwest Airlines, one of the few profitable airlines these days, saves a lot of money with its unorthodox method of assigning seats as people arrive at the airport.
Dell maintains profitability in a cutthroat market by manufacturing to order in less than a week. Another Austin company builds custom homes in 30 days.
The common denominator behind these and many other industry-rattling success stories is lean thinking. Lean thinking looks at the value chain and asks: How can things be structured so that the enterprise does nothing but add value, and does that as rapidly as possible? All the intermediate steps, all the intermediate time, and all the intermediate people are eliminated. All that’s left are the time, the people and the activities that add value for the customer.
Lean thinking got its name from a 1990’s best seller called The Machine That Changed the World: The Story of Lean Production . This book chronicles the movement of automobile manufacturing from craft production to mass production to lean production.
It tells the story of how Henry Ford standardized automobile parts and assembly techniques, so that low skilled workers and specialized machines could make cheap cars for the masses.
The book goes on to describe how mass production provided cheaper cars than the craft production, but resulted an explosion of indirect labor: production planning, engineering, and management.
Then the book explains how a small company set its sights on manufacturing cars for Japan, but it could not afford the enormous investment in single purpose machines that seemed to be required. Nor could it afford the inventory or large amount of indirect labor that seemed necessary for mass production.
So it invented a better way to do things, using very low inventory and moving decision-making to production workers.
Now this small company has grown into a large company, and the Toyota Production System has become known as ‘lean production’.
“The mass-producer uses narrowly skilled professionals to design products make by unskilled or semiskilled workers tending expensive, single-purpose machines. These churn out standardized products at high volume.
Because the machinery costs so much and is so intolerant of disruption, the mass-producer adds many buffers – extra supplies, extra workers, and extra space – to assure smooth production…The result: The customer gets lower costs but at the expense of variety and by means of work methods that most employees find boring and dispiriting.” 
Think of the centralized eyeglasses laboratory. Remember that Sears used to take two or three weeks to fill orders from its once-popular catalog. Recall the long distribution channel that used to be standard in the computer market. Think dinosaurs. Centralized equipment, huge distribution centers and lengthy distribution channels were created to realize economies of scale. They are the side effects of mass-production, passed on to other industries.
What people tend to overlook is that mass-production creates a tremendous amount of work that does not directly add value. Shipping eyeglasses to a factory for one hour of processing adds more handling time by far than the processing time to make the glasses. Adding retail distribution to the cutthroat personal computer industry means that a manufacturer needs six weeks to respond to changing technology, instead of six days. Sears’ practice of building an inventory of mail orders to fill meant keeping track of stacks of orders, not to mention responding to innumerable order status queries and constant order changes.
“The lean producer, by contrast, combines the advantages of craft and mass production, while avoiding the high cost of the former and the rigidity of the later… Lean production is ‘lean’ because it uses less of everything compared with mass production – half the human effort in the factory, half the manufacturing space, half the investment in tools, half the engineering hours to develop a new product in half the time.
Also, it requires keeping far less than half the inventory on site, results in many fewer defects, and produces a greater and ever-growing variety of products.” 
While on a tour of a large customer, Michael Dell saw technicians customizing new Dell computers with their company’s ‘standard’ hardware and software. “Do you think you guys could do this for me?” his host asked. Without missing a beat, Dell replied, “Absolutely, we’d love to do that.” 
Within a couple of weeks, Dell was shipping computers with factory-installed, customer-specific hardware and software. What took the customer an hour could be done in the factory in minutes, and furthermore, computers could be shipped directly to end-users rather than making a stop in the corporate IT department. This shortening of the value chain is the essence of lean thinking.
Companies that re-think the value chain and find ways to provide what their customers value with significantly fewer resources than their competitors can develop an unassailable competitive advantage.
Sometimes competitors are simply not able to deliver the new value proposition. (Many have tried to copy Dell; few have succeeded.)
Sometimes competitors do not care to copy a new concept. (Southwest Airlines has not changed the industry’s approach to seat assignments.)
Sometimes the industry follows the leader, but it takes time. (Almost all direct merchandise is shipped within a day or two of receiving an order these days, but the Sears catalog has been discontinued.)
eBay is a company which pretty much invented ‘lean’ trading by eliminating all the unnecessary steps in the trading value chain. In the mid 1990’s, basic eBay software capabilities were developed by responding daily to customer requests for improvements. 
Customers would send an e-mail to Pierre Omidyar with a suggestion and he would implement the idea on the site that night. The most popular features of eBay, those which create the highest competitive advantage, were created in this manner.
Digital River invented the software download market in the mid 1990’s by focusing on ‘lean’ software delivery. Today Digital River routinely designs and deploys sophisticated web sites for corporate customers in a matter of a weeks, by tying the corporation’s legacy databases to standard front-end components customized with a ‘look and feel’ specific to each customer.
In the mid 1990’s, Microsoft implemented corporate-wide financial, purchasing and human resource packages linked to data warehouses which can be accessed via web front-ends. Each was implemented by “a handful of seasoned IT and functional experts… (who got) the job done in the time it takes a … committee to decide on its goals.” 
In each of these examples, the focus of software development was on rapid response to an identified need. Mechanisms were put in place to dramatically shorten the time from problem recognition to software solution. You might call it ‘Just-in-Time’ software development.
The question is – why isn’t all software developed quickly? The answer is – rapid development must be considered important before it becomes a reality. Once speed becomes a value, a paradigm shift has to take place, changing software development practices from the mass production paradigm to lean thinking.
If your company writes reams of requirements documents (equivalent to inventory), spends hours upon hours tracking change control (equivalent to order tracking), and has an office which defines and monitors the software development process (equivalent to industrial engineering), you are operating with mass-production paradigms. Think ‘lean’ and you will find a better way.
There are four basic principles of lean thinking which are most relevant to software development:
The first step in lean thinking is to understand what value is and what activities and resources are absolutely necessary to create that value. Once this is understood, everything else is waste.
Since no one wants to consider what they do as waste, the job of determining what value is and what adds value is something that needs to be done at a fairly high level.
Let’s say you are developing order tracking software. It seems like it would be very important for a customer to know the status of their order, so this would certainly add customer value. But actually, if the order is in house for less than 24 hours, the only order status that is necessary is to inform the customer that the order was received, and then that it has shipped, and let them know the shipping tracking number. Better yet, if the order can be fulfilled by downloading it on the Web, there really is not any order status necessary at all.
To develop breakthroughs with lean thinking, the first step is learning to see waste. If something does not directly add value, it is waste. If there is a way to do without it, it is waste.
Taiichi Ohno, the mastermind of the Toyota Production System, identified seven types of manufacturing waste:
Here is how I would translate the seven wastes of manufacturing to software development:
Extreme Programming (XP) is a set of practices which focuses on rapid software development. It is interesting to examine how XP works to eliminate the seven wastes of software development:
XP advocates developing software for the current need, and as more ‘stories’ (requirements) are added, the design should be ‘refactored’ to accommodate the new stories. Is it waste to refactor software? Shouldn’t developers “Do It Right the First Time?”
It is instructive to explore the origins of the slogan “Do It Right the First Time.”
In the 1980’s it was very difficult to change a mass-production plant to lean production, because in mass production, workers were not expected to take responsibility for the quality of the product.
To change this, the management structure of the plant had to change. “Workers respond only when there exists some sense of reciprocal obligation, a sense that management actually values skilled workers, … and is willing to delegate responsibility to [them].”  The slogan “Do It Right the First Time” encouraged workers to feel responsible for the products moving down the line, and encourage them to stop the line and troubleshoot problems when and where they occurred.
In the software industry, the same slogan “Do It Right the First Time,” has been misused as an excuse to apply mass-production thinking, not lean thinking to software development.
Under this slogan, responsibility has been taken away from the developers who add value, which is exactly the opposite of its intended effect.
“Do It Right the First Time” has been used as an excuse to insert reams of paperwork and armies of analysts and designers between the customer and the developer. In fact, the slogan is only properly applied if it gives developers more, not less, involvement in the results of their work.
A more appropriate translation of such slogans as “Zero Defects” and “Do It Right the First Time” would be “Test First”. In other words, do not code unless you understand what the code is supposed to do and have a way to determine whether the code works.
A good knowledge of the domain coupled with short build cycles and automated testing constitute the proper way for software developers to “Do It Right the First Time”.
    The Machine That Changed the World, by Womack, Jones and Roos,1990.
 Direct from Dell, by Michael Dell with Catherine Fredman, Harper Business, 1999, p 159.
 Q&A with eBay’s Pierre Omidyar, Business Week Online, December 3, 2001.
 Inside Microsoft: Balancing Creativity and Discipline, Herbold, Robert J.; HBR, Jan 2002.
Next month, in the second part of this article, we will explore:
I am Mary Poppendieck and these are my agile-thoughts
© by Mary Poppendieck. Published in OOPSLA Onward! 2002
Mary started her career as a process control programmer, moved on to manage the IT department of a manufacturing plant, and ended up in product development.
She considered retirement 1998, but instead found herself managing a government software project where she first encountered the word “waterfall.”
When Mary compared her experience in successful software and product development to the prevailing opinions about how to manage software projects, she decided the time had come for a new paradigm. She wrote the award-winning book “Lean Software Development.” Then, “Implementing Lean Software Development: From Concept to Cash,” “Leading Lean Software Development: Results are Not the Point,” and “The Lean Mindset: Ask the Right Questions.”
As a popular writer and speaker, Mary continues to bring fresh perspectives to the world of software development.