The Lean Mindset is a collection of research results and case studies from companies applying lean in product development and delivery. A lean mindset according to Mary and Tom Poppendieck is about “developing the expertise to ask the right questions, solve the right problems, and do the right thing in the situation at hand”.
InfoQ interviewed Mary and Tom about improving product design and delivery using mental models, incentives and reciprocity, investing in employees and delighting customers.
InfoQ: Your book the lean mindset describes a mental model of how to design and deliver amazing products that delight customers. Can you explain what you mean with that?
Mary & Tom: The success of a company depends on its customers – if there are no customers, there eventually will be no company. Creating products and services that attract customers has never been easy, but it’s perhaps more difficult today than it used to be. Technology has given us a world of well-informed consumers, complex products, and a shortage of the bright, dedicated workers needed to design and deliver great products. To thrive in this changing marketplace, companies need to get smarter about the way they design products and services.
Getting smarter means rethinking the organization’s work systems – the way people work. Unfortunately, many organizations are still using work systems that were designed a century ago for manual work, mechanical products, and local markets. That’s not the world we live in today, and those work systems aren’t so effective anymore.
The Lean Mindset presents a different way of thinking about how organizations work. It is based on the premise that the most successful companies will be those that engage the hearts and minds their workers and focus their creative energy on delighting customers. This is best done in the context of an overriding purpose, well-designed products, and workers who think for themselves.
A lean mindset is not a set of rules, but a way of thinking about – a mental model of – what motivates workers, why customers buy products, what efficiency really means, why a long term perspective is essential. It is a mindset that seems counterintuitive when compared to traditional work systems, but one that is commonly found in today’s most successful organizations.
InfoQ: Can you explain some of the problems that many organizations have with incentives?
Mary & Tom: All organizations use incentives to drive the way decisions are made, and people respond strongly to the incentives they find in their work environment. In healthy cultures, incentives communicate the message: “We trust you to do good work so the organization can accomplish its worthy purpose and you can be proud of your contribution.” But all too often, incentives communicate a different message: “We know that your goal is to further your own best interests, so we use incentives to make sure that it is in your best interest to focus on what’s good for the company.” These two messages represent two very different views of what motivates people. They harken back to the old Theory X vs. Theory Y debate. Theory X stated that people are fundamentally lazy and need to be bribed to work hard, while Theory Y held that most people want to do a good job and help their company be successful.
A good way to convey the Theory Y message is with incentives such as stock options. A good way to send the Theory X message is with individual incentive pay systems, which telegraph: “We don’t really expect you to work hard unless you are paid extra to do so.” When you think about it, this is a pretty insulting message for people who simply want to do a good job.
Research on motivation has found that individual pay incentives do not work for jobs that require collaboration. This seems obvious; think of a basketball team – if individual team members receive a big bonus every time they score, the overall team score will drop because players will focus on scoring rather than positioning the ball for someone else who might score more easily. Research also shows that incentives are not a good idea for jobs that require cognitive skill (rather than mechanical skill); in fact, for tasks that involve creative thinking, larger rewards often lead to lower performance.
Why is this? Why would incentives degrade performance of those doing intellectually challenging work? One reason might be the fact that extrinsic incentives often crowd out intrinsic incentives. For example, children who love to read will read less if they are paid to read. When work is rewarding all by itself – and intellectually challenging jobs can be very rewarding – then adding external incentives drives out the motivation inherent in the work itself. So workers who love their job will gradually lose their passion if incentive pay crowds it out.
Another research finding is that unfairness demotivates much faster than money motivates. So if an incentive pay system is perceived of as unfair by anyone it affects, the system will probably decrease performance and possibly even lead to gaming behavior. The problem is, devising an incentive system that everyone perceives of as fair is almost impossible – especially when intellectual work or collaboration are involved. Managers who design these systems find that it takes a vast amount time, but in the end there are always people who feel the system is not fair.
You can’t buy hearts and minds, you have to inspire people. This is why organizations with an inspiring purpose have a distinct advantage in attracting the best and brightest workers. And having attracted highly motivated people, they don’t waste their time trying to replace that motivation with incentives – what a waste that would be!
InfoQ: Why does reciprocity, treating your employees well which results in employees treating the company well, tend to work better then incentives?
Mary & Tom: In 2001 all the planes in the US stopped flying for three days, and for months, many people were afraid to fly. Every single airline in the country except one laid off workers. The exception – Southwest Airlines – didn’t consider laying off workers. They said: “What, get rid of our most valuable assets? Why would we do that?” Southwest employees know they are part of the company family and are not going to get kicked out of the family when, through no fault of their own, the company falls on tough times. In 2001, the grateful employees worked hard to help their company maintain profits so it could continue to afford to pay them. Southwest got back onto financially solid ground much faster than the other airlines.
Another big “R” word in addition to “Reciprocity” is “Respect.” When companies (like Southwest) show respect for their people, they treat them like adults, help them reach their full potential, train them to be problem solvers, make it possible for them to take pride in their work. Contrast workers who are treated with respect and workers who are chasing incentives (yes, we do mean to imply that incentives signal a lack of respect). Which group do you imagine would turn in the best performance – consistently over the long run?
Netflix hires only “fully formed adults” and then treats them with respect. The company does not bother with performance appraisals, vacation policies, or expense policies, they simply expect employees to act in the best interests of the company. Not only does this work very well, it takes a lot less time and energy to administer than an individual incentive pay plan.
InfoQ: You also mentioned that reciprocity stimulates cooperation. Can you give some examples?
Mary & Tom: Reciprocity and cooperation are two sides of the same coin, they are both about people helping each other out. In the latest (Jan–Feb, 2014) Harvard Business Review, Teresa Amabile and co-authors published the article “IDEO’s Culture of Helping.” In it they explain how IDEO attributes its astounding success to a cultural trait of the company – “colleagues support one another’s efforts to do the best work possible.” In this article, Amabile notes: “On a daily basis, the incentive to help comes from the simple gratitude it produces and the recognition of its worth.” It works both ways; cooperation stimulates reciprocity and reciprocity stimulates cooperation.
InfoQ: In your book you mentioned several examples where investment in employees paid off. Why is that the case, and how can organizations invest in employees?
Mary & Tom: Let’s first talk about why companies should invest in employees. Today’s products are complex – whether we are talking about a hospital loaded with high tech medical devices or a large software systems or a mobile phone that can make cheap calls from Brazil to London while surfing the net in the background. These kinds of complex products require smart employees who keep up with the latest trends in their fields and collaborate easily with experts in other fields. If you don’t have smart employees, you will soon be out of business. Investing to help those smart employees reach their full potential is the best way for wise business leaders to achieve long term success. You don’t buy dedicated employees, you attract them to your company, develop their capabilities, and inspire them to do their best work to help make the company successful.
Here’s an example: In the same (Jan–Feb, 2014) Harvard Business Review quoted above, there is an article about Envision, a Chinese company founded in 2007 to “help solve the challenges of a sustainable future for mankind.” Envision decided to compete on technology rather than the cost of labor. The founder, Lei Zhang, knew that he had to attract highly capable people who could collaborate across continents and technologies. Zahng’s figured that if people felt their work was meaningful and the company made a strong investment in their on-going development he could attract and retain the best and brightest technical people in the world. And he has been amazingly successful in doing so. Envision’s revenue has doubled every year since its founding.
InfoQ: In your book you describe the growth mindset, the eagerness of people to learn and develop themselves. How does a growth mindset support a lean mindset?
Mary & Tom: One of the primary elements of lean is constant problem solving and constant improvement. The idea of a growth mindset is that you do not to expect to be perfect – you expect you will have to work hard. My granddaughter, who earned a black belt in Taekwondo, understands this very well. She knows she will never be perfect, and she enjoys the challenge of constantly improving.
Some organizations look for a silver bullet to solve their problems, and they never realize that real progress comes from constantly challenging the status quo and taking the next step toward success in a journey that never ends.
InfoQ: Some different ways to organize coaching are for instance to have managers coach their employees or to have independent full-time coaches. What are the advantages and disadvantages of these approaches?
Mary & Tom: Personally, we don’t see independent full time coaches as a good long term option for companies, because in our opinion, the primary job of line managers is coaching their teams. When a big change is in the works, an outside coach can be a good idea, but over the long term, the best coach for employees is their manager. This is in line with the ideas of the lean authors we have studied, although it does not line up with some of the agile literature. Probably the best books on this subject are “Managing to Learn” by John Shook, and “Creating a Kaizen Culture” by Jon Miller, both of which we strongly recommend.
InfoQ: Several cases from Ericsson Networks are described in your book. One thing that they have in common is setting up interdisciplinary teams with much freedom to organize their work. Did that involve a culture change?
Mary & Tom: Changing from functional to interdisciplinary teams involved a substantial change, although Ericsson was already organized into reasonably sized cross-functional business units, and the reorganization took place within these business units. Since Ericsson has always had a product focus, the idea of product teams was not too far from their underlying culture.
The idea that the teams would have freedom to organize their work was not really a cultural change either. In Sweden, managers do not expect it is their job to tell teams what to do, they expect teams to collaborate to solve problems. This has been part of the Swedish culture for a long time. We know this because Mary worked at 3M, which inherited much of its culture from people of Scandinavian heritage living in Minnesota in the early 1900’s. At 3M, it was very clear that teams were expected to organize their own work.
Finally, the Swedish culture has a great respect for the engineering profession, so it is no surprise that Ericsson managers respected engineers and expected them to think for themselves.
InfoQ: You state that "The best way to be productive is to be sure first of all that you are doing the right things". Many organizations struggle to find out what these "right things" are. Why is it so difficult?
Mary & Tom: Our design feedback loops are far too long. It’s really that simple. We think we know what the right thing is, spend an inordinate amount of time doing it, and find out we were wrong. We may only be just a bit wrong, but it doesn’t matter – once the product is done, if it’s wrong it will not delight customers. It’s pretty arrogant to think that we know exactly what customers want – and all the evidence says that no matter how brilliant we are, our guesses are likely to be dead wrong.
But we have these hero-based processes which say that someone guesses, their guess is deemed correct, and the rest of the team doesn’t get to question that. We need processes which assume that we do not know what the right thing is so we get the whole team – people with various types of knowledge and skill sets – involved in discovering what the right thing is.
There is no sense using agile processes if we don’t use them to drive the feedback loop all the way to the market down to as short a loop as possible. And that’s what is happening with continuous delivery. That’s why continuous delivery is the software engineering processes of the future.
You can download an excerpt from the book, 'The Lean Mindset: Ask the Right Questions', authored by Mary and Tom Poppendieck, published by Addison-Wesley Professional, Sept. 2013, ISBN 9780321896902, Copyright© 2014 Poppendieck.LLC; For more info, please visit the publishers webpage on The Lean Mindset.
About the Book Authors
Mary Poppendieck has led teams implementing various business solutions, ranging from enterprise supply chain management to digital media. Mary is the president of Poppendieck.LLC, which specializes in bringing lean techniques to software development.
Tom Poppendieck, an enterprise analyst, architect, and agile process mentor at Poppendieck.LLC, currently assists organizations in applying lean principles and tools to software development processes.
