By Chad Vincent

In today’s realm of business, companies are being urged by all stakeholders (consumers, regulatory bodies, local communities, etc.) to be more socially responsible organizations.  While this message is being heard loud and clear, some are misinterpreting the message.  Some organizations that have adopted the Lean Enterprise as a business strategy are interpreting this message as a need to be more environmentally conscientious, hence, the recent boom on the “Lean and Green” movement.  However, there is much more to social responsibility than a focus on the reduction of environmental waste.  Being environmentally friendly inherently means the reduction of “waste” in all aspects of operations including the disposal of products upon completion of a product’s or service’s life-cycle.  The reduction of waste in processes and operations will reduce the impact to the environment.

The Malcolm-Baldrige National Quality Award (MBNQA) criteria and the upcoming ISO 26000 standard define Social Responsibility to include more than environmentally friendliness.  The MBNQA criterion explains that practicing good citizenship refers to the leadership and support of resources for publicly important purposes. It is further understood that for organizations to lend this leadership and support should be done so within the limits of an organization’s resources.  The latest working draft of ISO 26000 identifies the aim of social responsibility is to contribute to sustainable development, health and the welfare of society.  Furthermore, the standard defines social responsibility as “responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that contributes to sustainable development, health and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organization and practiced in its relationships.”  To fully become a socially responsible organization, it is clear that the way of thinking must go beyond the focus of an organization’s impact on the environment.  Despite the fact that Lean Enterprise is widely associated with the environmental movement, the connection with the value of social responsibility is actually much stronger.

Some organizations easily make the connection between being environmentally friendly and the Lean Enterprise philosophy and associated tools.  This is best demonstrated and understood as a fundamental principle in the early days of the Toyota Motor Company.  Reviving itself from the ashes of World War II, Toyota had to maximize the use of natural resources that were not readily available in Japan during that time.  Therefore, a culture of waste reduction was created as a foundation for the Toyota Motor Company to reduce the impact of material shortages to keep industrial Japan alive during the rebuilding in the late 1940’s and early 1950’s.

However, Toyota understood that they as an organization had a larger obligation than preserving the resources of Japan while building automobiles.  Limiting the company’s impact on Japan’s resources, they were also obligated to the country to maximize the use of organizational resources to sustain the organization long-term.  By doing so, Toyota became a leader in corporate citizenship by providing jobs to the Japanese and supporting the local community.  Toyota achieved this through its value of social responsibility.

The connection between Social Responsibility and Lean Enterprise is best demonstrated using Principle #1 of the “14 Management Principles” described in Jeffrey Liker’s book, The Toyota Way:

Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

Organizations should create a culture with an understanding that making money is not the sole purpose of the organization.  While this plays an important role in the sustainability of an organization, many companies that have succeeded in profitability as its sole purpose have either ceased to exist or have come dangerously close to collapsing.  Companies such as Enron, WorldCom, and those associated with the current subprime mortgage and oil crises are prime examples of profitability trumping social responsibility and long-term sustainability.  Without creating a balanced approach to creating value for all stakeholders (customers, society, employees, economy, etc.) and not just shareholders, it is difficult for an organization to generate value for all parties who have a vested interest in its sustainability.

For a moment, consider non-profit organizations.  These organizations should anticipate cost, delivery, and accessibility of products, programs, and services.  This is why the adoption of Lean Enterprise and the Lean tools are becoming increasingly important to the success of these types of organizations.  The reduction of costs and the maximization of resource utilization are critical to long-term sustainability.  Non-profits operate under the constraint of a budget much like all other organizational types.  For non-profits, when the money dries up, the organization either ceases existence or must be “bailed out” by government.  This situation then creates a strain on governmental resources.  It is the non-profit organization’s duty to society to use the monetary resources in the most optimal manner to provide the maximum amount of services to its beneficiaries for the long-term time horizon.  By utilizing Lean to maximize these resources, these organizations are able to provide more services to the public.  The understanding of reducing waste in operations, overburdened resources, and process variation to ultimately maximize the capacity and capability of an organization in a non-profit environment ultimately ensures the long-term sustainability of that organization.

Understanding the results of applying Lean Enterprise philosophy and tools from a non-profit organization point of view can aid in the translation of how these same principles and tools can be utilized in the Healthcare, Manufacturing, Education, Government, and Service sectors to increase performance.  Increasing the performance of organizational resources maximizes the capability and capacity of the organization in all aspects of its existence for the “greater good” of consumers, local communities, employees, economies, and other stakeholders.  Organizations can choose how to utilize the additional capacity of resources after implementation of Lean Enterprise.  This additional capacity can be used to provide more products, services, and programs to make additional profit or become a corporate leader in social responsibility and allow those resources to support local communities.

A basic Lean Enterprise principle has been for organizations to create a focus on the customer.  However, this author believes that the true principle of Lean is to create a focus on all stakeholders.  Organizations must create a balanced focus on all those who are invested in the sustainability of the organization.  Toyota Way Principles 9, 10, and 11, are centered on “Adding Value to the Organization by Developing your People and Partners.”  These principles are all regarding the development of people, teaching others, following a common philosophy, and challenging partners and suppliers and help them improve.  Ask yourself who these “people, others, partners, and suppliers” of your organization are.  Why should the definitions of these entities be limited to your workforce, customers, and suppliers?  Broaden the scope of the definition of these to all stakeholders.  Let’s use the term local communities to emphasize this point.

Lean Enterprise can become useful in two ways to further support local communities.  The first is through the application of a Lean Enterprise within the organization resulting in a creation of additional capacity with existing resources by reducing the burden to these resources.  With less burdened resources, organizations will be able to contribute more to the local communities.  Such contributions may include improving education and health care, performing community service, improving industry and business practices, and sharing nonproprietary information.  Social responsibility emphasizes that organizations should act as a role model organizational citizen to influence other organizations, both public and private, to partner in the continuous improvement of the local community.

Toyota has an open door policy.  In other words, they welcome any and all organizations to come in and benchmark their operations.  They do so out of their respect for people with the understanding that what makes other organizations stronger will make the local, state, national, global communities stronger resulting in making them, Toyota, more sustainable.  For example, partnering with schools and school boards to improve education aids their workforce in providing a quality education to their children and the future workforce.  Furthermore, partnering with health care providers to improve health in the local community also benefits the workforce by keeping them healthier and creating long-term, loyal employees.  Partnering with professional associations to influence trade, business, and to engage in activities, such as sharing best practices, results in the improvement of operations and creating opportunities for the introduction of new technologies and innovative practices.

Non-profit organizations are partnering with other non-profit organizations or businesses to share resources results in improvement of overall performance and stewardship of public and charitable assets.  Openly sharing best practices of Lean applications between organizations results with society benefiting as a whole.

The second way an organization can utilize Lean Enterprise for the contribution of the local community is through its principle of being a teacher of the Lean philosophy to benefit all of those around them.  Teaching local organizations the benefits of a Lean Enterprise and how to apply it in their organizations will inherently allow those organizations to create more value through their operations and resources.  In the end, the entire community benefits and makes it stronger.  If local organizations are operating more efficiently, would this lessen the burden of the local community on your organization?  For instance, consider taxes within your local communities.  These taxes create revenue for the local government to provide services to the community.  If the entire community, including government agencies, were operating with high performance, then that community would require less of the monetary resource created by taxes, therefore lowering taxes.  This can stimulate growth within the community, adding to the population, and increasing the tax base.  A cycle begins and continues to improve the local community.  Now translate the term “taxes” to any and all resources used within that local community.  Toyota did and they helped rebuild a torn country into a major industrial power.

Being socially responsible also includes the anticipation of adverse effects from the production, distribution, transportation, use, and disposal of products.  It is easier to comprehend that this would mean reducing the environmental waste associated with these operations.  Removal of this waste in all aspects of the product life-cycle includes designing the product or service to minimize the waste to the environment after discarding the product or ending the service.  Consider the service and knowledge transfer industries.  Designing operations to minimize paperwork reduces waste when the service has ended and the paperwork becomes obsolete.  In today’s technological environment, paperless systems are becoming more common.

However, for those organizations that find these systems not worth the investment can reduce the paperwork through the application of Lean principles.  Designing and improving these paper systems to lessen the amount of documentation, making the documents easier to use, and reducing the complexity of forms inherently reduces errors, rework due to those errors, and waste associated with the documentation.  Combining documents into standard forms that combine information for a number of functions reduces the needs for multiple forms.  Identifying the vital few pieces of information needed to achieve the purpose of the forms reduces the work that goes into the form resulting in fewer errors, less paper documents, and reduced time.  By simplifying the documents in paper systems, the flow of the paperwork can be realized, or made visual, to stimulate improvements in the processes that utilize the documents.  The result is processes that are made simpler and reduce the burden on an organization’s resources, freeing them to create more value for the organization and society.  This is especially true for organizations within the Non-Profit, Healthcare, Government, and Education sectors where documentation plays a primary part of key processes and resources are considerably constrained.

Another aspect of social responsibility is the adverse effect of products and services where adverse effects can mean implications of defective products or services reaching the customer or society.  Mistake proofing prevents these defects from occurring.  When issues occur, organizations should have processes that reduce the response time to make those issues visible, respond to them, and correct them.  One-piece flow and visual management brings these issues to the surface, so that they may be corrected before continuing the operation.  Furthermore, if the issues escalate to the point of impacting society and consumers, the processes should be in place to make available the information and support needed to correct those issues to maintain public awareness, safety, and confidence.  That is why utilizing the Lean principles and tools are critical to removing the waste in those processes and standardizing the resolution process to decrease overall response time.  Creating a focus on the customer, these processes should be designed to assume responsibility of the response and resolution.

Value Stream Mapping (VSM) can make the process visual to gain an understanding of the process flow from the point the issue is brought to light to the point where resolution is achieved.  VSM can also make visual the communication process(es) to keep the customer, employees, and society informed of the issue and corrective action.  Swim Lane Flow Charts can be utilized to “see” the information or documentation handoffs and stimulate improvements to reduce the waste associated with the handoffs.  Standard Work can provide individuals the tool to perform these tasks in the same manner no matter what issue is brought to light.  Once everyone involved in the process(es) are performing the work the same way, those individuals can “Kaizen” (continuous improvement event) ways to improve the process(es).  In addition, appropriate measures should be created that reflect the response time, or lead-time, and delivery, of the resolution.  Lean can provide the philosophy and tools to make those improvements.

Adverse effects can also mean a negative impact to the health and safety to the workforce and local communities.  Lean tools such as 5S (Sort, Straighten, Shine, Standardize, and Sustain) create an environment where operations are organized and free of clutter, thereby making work easier to perform.  This makes the production line, service area, facility, and/or campus a safer place for employees, customers, suppliers, visitors, and other stakeholders.  It also reduces redundant purchases of resources, because you can’t find where you originally put them.  5S of processes related to emergency responses in all organizations can aid in lessening the response time to those emergencies.  Keeping areas where safety equipment and tools are stored organized, clean, free of clutter, and visual results in safer work environments.  Such areas may include eye wash stations, emergency stops for equipment, aisle ways for egress, blood borne pathogen cleanup kits, spill kits, extinguishers, etc.  Also, having these equipment and tools at the point-of-use further reduces response times.

Being socially responsible also includes responding to environmental, health, and safety issues after an accident occurs.  Lean Enterprise philosophy identifies that determining the root cause and establishing corrective action in place ensures that the cause does not occur in the future.  Utilizing Lean tools to improve the corrective action process can prevent accidents from occurring with other stakeholders.  Standardizing the reporting process can increase the quality of these reports and make them more valuable in providing information that leads to determination of the root cause.  Asking the 5 Why’s can aid in driving to root cause determination.  Mistake proofing can prevent the situation from occurring again.  Standard work can be used to correct an unsafe work process and correct ergonomic issues.  It is the deep respect for people as a principle of Lean Enterprise that drives the need to create a safe work place.  It is the social responsibility of all organizations for all employees to go home the same way they showed up to work and ensure the safety of their local communities.

This can also be translated to other industries.  The Healthcare industry can greatly benefit with the use of 5S and Visual Management in response to emergency situations.  Take the Emergency Room for instance.  Making the tools, supplies, and information visual for doctors, nurses, even patients can reduce errors, decrease response times to traumas, and prevent further injuries in chaotic situations by keeping areas free of clutter, clean, and everything in its designated area for the next person to use when needed.  Furthermore, standardizing forms and keeping them simple will reduce errors and response time.  Again, these tools can create an environment where everyone is utilizing the same process and tools that will stimulate continuous improvement.  Removal of the waste in these processes reduces the strain on the resources used, making it possible to increase the benefit to society.

The point of Lean Enterprise is to not only apply to the primary product or service processes but also to reach to all processes of the organization including those associated with the support functions, decision-making, and idea creation.  The application of Lean Enterprise can aid organizations to become more efficient in processes specifically associated their social responsibility.  For those organizations that do contribute to their local communities through charitable giving, setting up foundations, or providing volunteers, there are processes that are involved in identifying opportunities for providing these resources to society.  Whether it is a process to identify a need, determining a beneficiary of a contribution, how the contribution is distributed, or the means in which these processes are communicated, organizations must maximize these recourses to the best of their capability.  Through the application of Lean Enterprise within these processes, the perceived bureaucracy, or “red tape” as most commonly called, is decreased and the services and funds associated with those organizations will reach the beneficiaries in a more efficient time frame.

Stressing responsibilities to the public, ethical behavior, and practice good citizenship are all part of being a socially responsible organization.    Most companies have processes surrounding the reporting of ethical infractions.  Internally, responses to ethical infractions are critical to morale of the workforce of the organization.  Employees have a basic need to know that their voice is heard.  Process simplification aids in the expediency of resolutions to issues that surface.  The simplification of these processes is based in the Lean philosophy to remove the waste in the processes to identify and drive root cause, and communicate a resolution.  One way to accomplish this is through the use of Lean tools such as Value Stream Mapping to identify areas for improvement by reduction of paperwork and information transfer interactions.

Another way to achieve ethical behavior is through transparency of operations both internally and externally.  Visual Management plays a key role in this transparency.  Employees, suppliers, partners, customers, and other stakeholders have a basic need to know the state of business in which they are vested.  The philosophy behind Visual Management is to make information visual, or transparent, to stimulate continuous improvement.  Those individuals that have a vested interest in an organization will support the improvement of that business if information is shared freely.  Information sharing is fundamental to stimulating ideas between all stakeholders.  Suppliers will be more willing to work with businesses that do not tend to hide information from them.  Employees will tend to speak up if they feel that their ideas will have an impact on the business.  Local communities have a tendency to aid companies in need if they know that a company is in trouble in early stages.  It is fundamental human nature to protect the viability of groups, organizations, businesses that provide benefit to the local communities.

It is through the ideology of long-term sustainability that local communities embrace an organization.  When a local community can depend on an organization to provide jobs for the public, then that local community becomes a partnership with the organization.  The public will be more willing to work for that business and the company will find valuable resources at its front door that are willing to work for them.  However, some organizations have used Lean to reduce overhead costs by reducing the workforce.  Those organizations do not fully embrace the philosophy of Lean Enterprise.  The purpose of Lean Enterprise is to increase the capability of the organization by reducing the burden of the current resources to increase the capacity of those resources.  When the application of Lean tools exposes the additional resources through additional capacity and capability, it is the choice of the organization on how those resources are applied.

Social Responsibility, like Lean, is a choice.  Companies that truly embrace the totality of the Lean Enterprise philosophy create additional capacity in their resources not only to produce more results with those resources, but also utilize that additional capacity to give back to society.  That is the true meaning of the Lean Enterprise Organization:  All stakeholders working together to continuously improve the world and make it a better place.  Isn’t that what being socially responsible is all about?  If Toyota, one company, can change a nation, can we collectively change the world?