In this episode of the podcast, the topic is "Post Lean." Our guest is Frode Odegard, Chairman and CEO at the Post-Industrial Institute. In this conversation, we talk about the post-industrial enterprise going beyond digital and higher-order organizations.

If you like this show, subscribe at augmentedpodcast.co. If you like this episode, you might also like Episode 102 on Lean Manufacturing with Michel Baudin.

Augmented is a podcast for industry leaders, process engineers, and shop floor operators, hosted by futurist Trond Arne Undheim and presented by Tulip.

Follow the podcast on Twitter or LinkedIn.

Trond's Takeaway:

Lean is a fundamental perspective on human organizations, but clearly, there were things not foreseen in the lean paradigm, both in terms of human and in terms of machine behavior. What are those things? How do they evolve? We have to start speculating now; otherwise, we will be unprepared for the future. One of the true questions is job stability. Will the assumptions made by early factory jobs ever become true again? And if not, how do you retain motivation in a workforce that's transient? Will future organizational forms perfect this task?

Transcript:

TROND: Welcome to another episode of the Augmented Podcast. Augmented brings industrial conversations that matter, serving up the most relevant conversations on industrial tech. Our vision is a world where technology will restore the agility of frontline workers. In this episode of the podcast, the topic is Post Lean. Our guest is Frode Odegard, Chairman and CEO at the Post-Industrial Institute. In this conversation, we talk about the post-industrial enterprise going beyond digital and higher-order organizations.

Augmented is a podcast for industrial leaders, process engineers, and for shop floor operators hosted by futurist Trond Arne Undheim and presented by Tulip.

Frode, welcome to Augmented. How are you?

FRODE: Pretty good.

TROND: Yeah. Well, look, talking to Norwegians living abroad that's become a sport of mine. You were born in Norway, software design from there, became an entrepreneur, moved to Silicon Valley. I also know you have an Aikido black belt; we talked about this. This could have become its own podcast, right? There's a long story here.

FRODE: [laughs] Absolutely, yeah.

TROND: But you're also the CEO of the Post-Industrial Institute, which I guess used to be called the Post-Lean Institute. But in any case, there's a big connection here to lean, which is a global community for leaders that are driving transition towards something post-lean, post-industrial, post-something. So with that context, tell me a little about your background and how you ended up doing what you're doing.

FRODE: Born in Norway, as you pointed out. My folks had a process control company, so that was kind of the industry I was born into was industrial controls, which included visiting factories as a child and installing process control systems. So I was doing, you know, circuit board assembly at age eight because when you grow up in a family business, that's what you get to do. And I quickly gravitated towards software. I think I was 13 when I was working on my first compiler.

So my first passion was really programming and language, design, implementation, and that sort of got me interested in theoretical computer science. So very far from what I do today, in some ways, but I think theoretical computer science, especially as a software architecture and all that, teaches you how to think and sort of connect the dots, and that's a good life skill.

At 17, I started a software company in high school. And when I was 22, I immigrated to the United States after some trips here. I was on a Standards Committee. I was on the Sun User Group board of directors as a European representative. It was a weird story in itself, how that happened. So yeah, 1990, 1991, I'm in Silicon Valley.

TROND: So you jumped ship, essentially. Because, I mean, I've heard a lot of people who come to the U.S. and are inspired, but you just basically jumped off the airplane.

FRODE: Yeah, I like to say I was here as an entrepreneurial refugee. Things are different now in Norway, but for a long time, they had strange taxation rules, and very difficult to start companies and scale them. But also, they didn't really have the fancy French word. They didn't really have the milieu. They didn't have a community of people trying to build companies in tech. So tech was very much focused on either military applications, that was its own little industry and community, or the energy industry, the oil industry in particular.

TROND: All of that seems to have changed quite a bit. I mean, not that you or I, I guess, are experts on that. As ex-pats, we're outside, so we're looking in, which is a whole other story, I guess. But I'm curious about one more thing in your background so Aikido, which, to me, is endlessly fascinating, perhaps because I only ever attended one Aikido training and, for some reason, decided I wasn't going to do it that year, and then I didn't get back to it.

But the little I understand of Aikido it has this very interesting principle of using the opponent's force instead of attacking. That's at least what some people conceptualize around it. But you told me something different. You said there are several schools of Aikido, and one of them is slightly more aggressive, and you belong to that school. I found that quite interesting.

FRODE: [laughs] Now I'm wondering about my own depiction of this, but the Aikido that I study is known as Iwama-style Aikido, and it's called that because there was an old town in Japan, which has been absorbed by a neighboring city now, but it was called Iwama, and that's where the founder of Aikido moved during the Second World War, and that's where he sort of completed the art. And that's a long technical story, but he included a fairly large weapons curriculum as well. So it's not just unarmed techniques; it's sword-knife stuff.

And it's a really beautiful art in that all of the movements with or without weapons are the same, like, they will follow the same principles. In terms of not attacking, of course, on a philosophical level, it calls itself the art of peace. In a practical sense, you can use it offensively to, for example, if you have someone who is grabbing your child or something like that, this person is not attacking you, but you have to step in and address the situation, and you can use it offensively for sure.

TROND: Very interesting. I was going to jump straight to what you're up to now, then, which is, I guess, charting this path towards a different kind of industrial enterprise. And you said that you earlier called your efforts post-lean, and now you're calling them post-industrial. It's this continuity in industry, Frode. Tell me a little bit more about that.

FRODE: I think a good way to think about approaches to management and understanding the world around us is that various management practices, and philosophies, and ideas, and so on, have been developed in response to circumstances that were there at the time. So if you think about Frederick Taylor and the problems that he was trying to solve, they initially had a lot to do with just getting work organized and standardized.

And then, in 1930s, you start seeing the use of statistical methods. Then you start seeing more of an interest in the psychology of work and so on. And lean kind of melts all of these things together. A great contribution from Toyota is you have a socio-technical system and organizational design where you have a new kind of culture that emphasizes continuous learning, continuous problem solving using some of these ideas and tools that were developed much earlier.

Now, in the post-war years, what we see is information technology making business more scalable, also contributing to complexity, but certainly making large companies more scalable than they would have been otherwise. And what we see in the mid-1990s leading up to the mid-2000s is the commercial internet, and then we get smartphones. That's the beginning of a new kind of industrial landscape. And what we see then is instead of an increasing tendency towards centralization in firms and business models, you start seeing this decoupling and decentralization. And what I discovered was that's actually a new thing for the human species.

Ever since the invention of agriculture 10,000 years ago and then cities in the Bronze Age a little over 5,000 years ago, and then the industrial revolutions, we've seen a culmination of improved mastery of the world, adapting the world to our needs, which is technology and increasing centralization. You had to move to where the work was, and now we're sort of coming out of the pandemic (Let's hope it doesn't come back.) that has accelerated in the pandemic, so you have this decentralization, decoupling.

And this continuity and the way I started using the term post-lean, and we can jump back and forth as you'd like, it was just because a lot of the assumptions behind the lean practices and how those practices were implemented were based on the idea that you had organizations that lasted a long time. You had long employee tenures. You had a certain kind of a...I don't like this term, but a social contract between the firm and workers and managers and workers. And they would come and do their work on-site in person at the factory, and this world is kind of disappearing now.

And so there's all of this work now being done. I think manufacturing labor forces peaked at a third of the workforce some decades ago. But now it's down to about 11%, even though manufacturing as a share of the economy has remained fairly constant since the 1940s. It's gotten more productive. So there are also all these new jobs that have been created with people doing different kinds of work, and much of that work is knowledge work.

And a lot of these industrial-era management practices and ideas have to be changed for knowledge work. And so that was sort of my initial discovery. That happened in the early 2000s. I started a company in 2004, which was called initially Lean Software Institute. I wanted to basically take these ideas and adapt them to software development. And that was generalized for knowledge work in general. And because we have big clients like Lockheed Martin in the aerospace defense sector, we rebranded the company to the Lean Systems Institute.

And so for ten years, myself and a small team, we did organizational redesign work looking at not just workflow but also a bunch of these other factors, which we can talk about, that you have to take into consideration like knowledge management and so on. And then it was about 2014, 2015, when I discovered, hey, even though we kind of extended lean to look at all these other things, there's this decentralization happening. And maybe we should fundamentally revisit what firms should look like and how the external landscape outside the organization changes the way we think about designing companies.

TROND: Yeah. I found it interesting, obviously, that you started from the software angle. And you told me earlier that, in some ways, your kind of Lean efforts are almost in parallel to, I guess, what could be called the lean movement, although there's such a variety of lean practitioners out there. They're obviously not all in the manufacturing industry. That's the whole point. Toyota managed to inspire a whole host of other companies that had nothing to do with automotive and nothing to do even with any kind of basic manufacturing.

And I guess the software industry is no different; you know, the industry as such was inspired by it. And as you said, Lockheed Martin, and perhaps not only for their manufacturing side, were inspired by it when running their software or other types of maybe even office-based knowledge work.

So as you're coming to these realizations, what sorts of things is it that you then start to think about that are the same and that are different in terms of the classic assumptions of lean, as you know, reducing waste or improving a process in a specific way with all the assumptions, so stable labor force like you said.

FRODE: In that initial period from 2004 to 2014, that's when I really worked on adapting lean to knowledge work. And so you could see some people were trying to reduce knowledge work to kind of a simplified version of itself. They were trying...and so I call that the reductionist approach where they then could count documents as inventory, and they could have a Kanban system and all of that. And the agile movement in software became very enthused about doing just that.

And I think what we did was we went the opposite route, so we took an expansionist approach. So we said, well, we got to keep adding practices and models to the original lean to deal with not just the value stream architecture of an organization but also its structure, so organization architecture, how it manages information, and the shape of that information, where it's stored, and how it's designed. And it's also that's information architecture.

And, of course, what we know from wonderful people like Melvin Conway, who discovered that there's a direct relationship between your technology architecture and the shape of the organization, is we really need to also take into consideration what we then called product architecture. Because if your product architecture, and your organization architecture, and your workflow, your value stream architecture is mismatched in product development as well as in manufacturing, that leads to huge misalignment. And that's a cause of massive inventory problems and so on.

And then the last of the five dimensions that we have in this model, which we call the lean systems framework, was a way to look at an organization's culture. So there are values that you explicitly promote, so we call them the organizational ideals. And then you have the actual behaviors that don't always live up to the ideals. And then you have people's beliefs about the past, the present, and the future, so we call all of that social architecture.

And I think the last bit of work we did in this model, which is a pretty rich model or a metamodel of organizations, is we added the way to look at leadership styles and leadership effectiveness as a function of character and competence of perceived effectiveness. So this was used in a bunch of mostly large organizations over a period of 10 years, and Lockheed was able to get a 72, 73 production in lead time, largest subcontractor in the Future Combat Systems. I think that's the biggest defense project in the history of the United States. [laughs] It was canceled by Congress in the end, but yeah, they got some great results.

And a lot of that was because workflow bottlenecks were caused by these other problems in these other four dimensions that had to be addressed, so that was kind of our initial realization. And then there's that big break where we look at decentralization, and how is that causing us to revisit the assumptions about organizational design? So it's not like we get new dimensions of organizational design as much as starting to think about what's the ideal design. And those answers turn out to be very different than they have been up till now.

TROND: So that's interesting. So both...you were kind of discovering some...maybe not weaknesses, just, you know, some social change that was happening that is affecting organizations nowadays, you know, in America or anywhere else trying to implement lean principles.

But also, what you were saying about the agile movement and what's happening in software industrial organizations that it doesn't reflect what needs to be happening in industries across the board and perhaps not even in their own organizations because it is, I guess, if I paraphrase you a little bit, the agile principles they are very valid for achieving a very smooth software development process. But they're not so valid for a lot of other aspects having to do with social and organizational phenomena that you also need to take into account eventually.

So, I mean, if that's correct, it's interesting, right? Because everybody obviously focuses on what they are doing. So the agilists, I guess, they're optimizing a software development process. The lean folks, the classic lean folks, are optimizing a production line. But today's knowledge work is, I guess, over these years also, Frode, it has changed a bit.

FRODE: It has changed, and there is more machine systems, software systems. We have more tools, although we're still in the early stages of what's going to come with the use of AI to make knowledge work more productive and so on. But I think one thing that's important, because I don't want to throw anyone under the bus here, is practitioners. There's a lot to be learned from practitioners.

Often, they're kind of apologetic, "Oh, I'm not doing the pure X, Y, Z method. We have to adapt it a little bit." Well, guess what? That's what Toyota did. And so what happened is a lot of western companies they were just trying to copy what Toyota did without understanding why those things work there. And it's when you can adopt it, so that's also sort of martial arts. --

TROND: That's actually a fantastic point, Frode, because if you're very, very diehard lean, some people would say, "Well, lean is whatever Toyota does." But on the other hand, for Toyota, lean is whatever Toyota does, right? And it seems to have worked for them. That does not even mean that Toyota would tell you to do exactly what they are doing because they will tell you what makes sense for your organization. In a nutshell, that seems to be –

FRODE: And I was there. I mean, I was, you know, I remember one time I was really thinking about standardizing work. And I was reading about the history of all this and reading about Frederick Taylor and the very early days of all of this. And I was coming up with a checklist for housework. I was trying to implement standard work for housework. And guess what? It didn't really work. My girlfriend was upset. [laughter]

TROND: Implementing standards for housework. I like it.

FRODE: Yeah. I mean, if you see something that needs to be cleaned, just clean it. I was like, "No, no, we need a checklist. We need your exit and entry conditions."

[laughter]

TROND: You should work at ISS, you know, the big cleaning professionals company.

FRODE: There you go. And people have done that, right? But I like to tell this joke about how do you know the difference between a terrorist and a methodologist? And the answer is you can negotiate with a terrorist.

TROND: Yeah, that's right.

FRODE: So the methodologist believes that his or her methodology is the answer to all things. And so what we were trying to do with the Lean Systems Framework was not to say, "Ah, you know, all this lean stuff is invalid." We were trying to say, "Well, the methods that they had and the practices that they had that were available to us via the literature...because we never went to visit Toyota. We talked to a bunch of companies that were doing a lot of these things, and we were familiar with the literature.

But we realized there's a whole bunch of other things that are not being addressed, so we have to add those. And that's why I called it the expansionist approach as opposed to the folks taking the reductionist approach, which is we have to shoehorn everything into making it look like manufacturing. But, you know, product development is not manufacturing. And Toyota's product development practices look nothing like their manufacturing processes. It's completely different. And that's a much less well-known area of lean...although the Lean Enterprise Institute has published good stuff on this book. Lean product development is completely different from lean production. And that was not as well-known and certainly not known by the people in the agile world.

Our attitude was always, well, the circumstances change or even from one company to another, the tools might have to change. And so the skill you want to develop in our case as researchers, and advisors, and teachers, or in the case of practitioners, as leaders, or implementers, is keep learning about what other people are doing and what works for them and try to understand what the deeper principles are that you then use to construct a solution that's appropriate for that situation. That's really all it is.

TROND: That's fabulous. So tell me then, apart from Lockheed Martin, what are some of the other organizations that you've worked with? How have they thought about these things? I mean, how does your community work? Is it essentially, I mean, before COVID at least, you met, and you discuss these things, and you sort of reflect on how they show up in your organizations and discuss best practices. Or do you kind of write papers together? How does this knowledge evolve in your approach?

FRODE: It's important to point out here, like in the history of the company, which has been around now for (I'm feeling old.) 18 years, so after the first ten years, there was a big break because that's when we started working on okay, well, what comes after even the expansionist version of lean that we were doing, which was called the Lean Systems Framework? And that's when we started working on all of this post-lean stuff.

And so the companies we worked with in the first decade were the likes of AT&T, and Sony, and Lockheed, and Honeywell, and mostly large companies, a few smaller ones too. But they had a lot of problems with complexity. And often, they were doing a combination of hardware and software. And they were in industries that had a lot of complexity. So in 2014, 2015, there was a big shift where I'd spent about six months to a year reading, talking to a bunch of people, trying to come up with what was going to be the next new thing.

And that was kind of the journey for me as a founder as well because I felt like I'd done all this organizational redesign work, soup to nuts. And it wasn't just Kaizen. We did Kaikaku, which is much less known in the lean world, and that's radical redesign, basically. And we did this working on a board C-level with a lot of companies.

TROND: Tell me more about Kaikaku. Because, like you said, it's not a vernacular that's really well-known outside of the inner circle of lean, I guess.

FRODE: Yeah. So Kaikaku is where you look at an organization, and basically, instead of thinking about how do we put in mechanisms to start improving it incrementally, you say, "Well, there's so much low-hanging fruit here. And there's a breakthrough needed in a very short time. And we're just going to put together a design team, basically, a joint design team, and essentially redesign the whole thing and implement it. So it is a radical redesign. It hasn't been; at least, at the time we were doing it, there were not a lot of details available in the literature.

And you heard stories like Ohno-san would walk into a factory and just say, "Well, this is completely unacceptable. Move this machine over here, and this machine over here. And can't you guys see..." So we didn't do it that way. We didn't tell the clients what the answer should be. We taught them. We had the executive spend a week with us learning about the Lean Systems Framework, and they mapped out the organization they had. And then, basically, we facilitated them through a process that could take sometimes a few weeks designing the organization the way it should be. And then there was an implementation project, and they put it in place, so...

TROND: But Kaikaku basically is a bit more drastic than Kaizen.

FRODE: Very much so.

TROND: Yeah. So it's like a discontinuous sort of break. It's not necessarily that you tell people to do things differently, but you make it clear that things have to be different maybe in your own way. But you're certainly not going for continuous improvement without any kind of disruption. There will be disruption in Kaikaku.

FRODE: I mean, it is disruption. And if you think of the Fremont Factory Toyota took over, that was a reboot. [laughs] And so now --

TROND: Right. So it's almost as if that's where you can use the software analogy because you're essentially rebooting a system. And rebooting, of course, you sometimes you're still stuck with the same system, but you are rebooting it. So you're presumably getting the original characteristics back.

FRODE: So I think of it as sort of a reconfiguration. And in the case of the Fremont factory, of course, there were a bunch of people who were there before who were hired back but also some that weren't that we tend now to avoid just because the knowledge people had was valuable. And in most cases, the issue wasn't that people were malicious or completely incompetent. It was just that the design of the organization was just so wrong in so many ways. [laughs]

And what we had to do, it was more of a gradual reboot in the sense that you had to keep the existing organization running. It had customers. It had obligations. And so it wasn't a shutdown of the factory, the proverbial factory, it wasn't that. But yeah, after I started looking at the effects of decentralization and starting to question these assumptions behind lean practices the way they had appeared in the mainstream, that was around the time, early 2015, I started to use the term post-lean.

It wasn't because I thought I had all the answers yet or certainly, and still, I don't think I do. But it was clear that there was an inheritance from lean thinking in terms of engaging people in the organization to do things better. But the definition of better I thought would change, and the methods I thought would change. And the assumptions behind the methods, such as long-lasting organizations, long employee tenures, tight coupling between people in organizations, organizations taking a long time to grow to a large size, and human problem solving, which already was being eaten by software back then or elevated, I should say, by software, all of these assumptions needed to be revisited so...

TROND: They did. But I have to say, what a gutsy kind of concept to call it post-lean. I mean, I co-wrote a book this year, and we're calling things Augmented Lean for the specific reason maybe that we actually agree with you that there are some things of lean that are really still relevant but also because it takes an enormous confidence, almost a hubris, to announce something post a very, very successful management principle.

FRODE: It was the theoretical computer scientist in me.

TROND: [laughs]

FRODE: So I thought that surely from first principles, we could figure this out and not that it would be the same answer in every situation. But I think it was also, at that point, we had a decade of field experience behind us in doing customized organizational redesign with clients in many different industries. So we knew already that the answer wasn't going to be the same every time. And in a lot of the lean Literature, the assumption was that you weren't really going to dramatically change the organizational structure, for example, which we had a lot of experience with doing.

And we already had experience with teams of teams, and just-in-time changes, and reconfigurations, and so on because we thought of organizations the way software people think of organizations which are, you know, they're computational objects that have humans, and then there are social, technical objects. And they're reconfigurable. And I think if you grew up in a manufacturing world, the shape of the organization is sort of attached to... there are physical buildings and equipment and all of that. So --

TROND: And this is so essential to discuss, Frode, because you're so right. And that's a real thing. And that's something we write about in our book as well. There is a very real sense that I think, honestly, the whole manufacturing sector but certainly the first automation efforts and, indeed, a lot of the digital efforts that have been implemented in manufacturing they took for granted that we cannot change this fact that we have infrastructure. We have people; we have machines; we have factories; we have shop floors. All of these things are fixed. Now we just got to figure out how to fit the humans in between, which is how they then interpreted waste, being let's reduce the physical waste so that humans can move around.

But really, the overall paradigm seems to have been, and you correct me if I'm wrong, but it seems to have been that the machines and the infrastructure was given, and the humans were the ones that had to adapt and reduce all this waste. And no one considered for a second that it could be that the machines were actually wasteful themselves [laughs] or put in the wrong place or in the wrong order or sequence or whatever you have. But with other types of organizations, this is obviously much easier to see it and much easier to change, I mean, also.

FRODE: Yeah, yeah, absolutely. And software is an example of this because now we take for granted that a large percentage of the population works from home and don't want to go back. But if you are part of that 10%, 11% of the population working in a factory and you have to show up at the factory because that's where the machine is that goes ding, that, you know, [laughs] it's not work that requires only a low level of education of course. That hasn't been the case for a while. And these are people with master's degrees. And they're making sure all of this equipment runs. This is fancy equipment.

So what we learned in that 10-year period was this is not just about workflow. It's a five-dimensional model, so there's workflow, organization structure, and knowledge management, the technology, architecture, the product you're making, and the culture. And all of these are five axes if you will, So 5D coordinate system and you can reconfigure. You can make organizations into anything you want.

Now, the right answer might be different in different industries at different lifecycle stages of companies. And basically, our thinking was that we weren't going to just teach our clients or even help our clients. We certainly weren't going to just tell them the answer because I always thought that was a terrible idea. We were going to help them redesign themselves for their emerging landscape, their emerging situation, but also help them think about things, or learn to think about these things in general, so that if their landscape changed again, or if they merged with another company, then they had the thinking skills, and they understood what these different dimensions were to be able to redesign themselves again.

TROND: That makes a lot of sense.

FRODE: That's kind of the whole –

TROND: I just want to insert here one thing that happened throughout, well, I mean, it was before your time, I guess. But remember, in the '70s, there was this concept among futurists, Toffler, and others that, oh, we are moving into a service economy. Manufacturing the real value now is in services. Well, that was a short-lasting fad, right? I mean, turns out we are still producing things. We're making things, and even the decentralization that you're talking about is not the end of the production economy. You produce, and you are, I mean, human beings produce.

FRODE: No, I never thought that we would see the end of manufacturing. And the term post-industrial, he was not the person that coined it, I think. It was coined 10 or 20 years earlier. But there's a book by Daniel Bell, which is called The Coming of Post-industrial Society, where he talks about both the sociological challenges and the changes in the economy moving to a more service-based knowledge-based economy. Of course, what happened is manufacturing itself became more knowledge-based, but that was kind of the whole idea of what Toyota was doing.

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TROND: So, Frode, tell me a little bit about the future outlook. What are we looking at here in the lean post-industrial world? What will factories look like? What is knowledge work going to look like?

FRODE: Yeah, so I think what we're going to see is that companies that do manufacturing are slowly but surely going to start to look like other kinds of companies or companies that do knowledge work. The content of manufacturing work has become more and more filled with knowledge work already. That's a process that's been going on for decades.

As manufacturing technology improves, I think after many, many generations of new technology platforms, we are going to end up in a world where basically any product that you order is going to be either printed atom by atom in your home or in a microfactory, if it's a big bulky thing, in your neighborhood where you can rent capacity in a just-in-time basis.

That's not going to happen overnight. This is going to take a few decades. But you can easily see how this kind of mirrors what happened to old chains like Kinko's and so on where if you needed something to be printed, I mean, I remember there were printers. [laughs] And then you had to go to the equivalent of a Kinko's, and you could, you know, if you wanted to print 100 copies of a manual back in the day when we still did that, you could get that done, and that was surely more efficient than doing it at home.

And in your home office or at your office, you would have a laser printer. And now we have a $99 inkjet printer, or you just might get it included when you order your laptop, or you may not even care anymore because you have a tablet, and you're just looking at it on the tablet. So there's this phenomenon of some of the things getting smaller and almost disappearing.

Now what has happened...this was underway for a while, but the relationship between people and companies has increasingly become more loosely coupled. So a big part of the post-industrial transition is that individuals are empowered, and organizations now become more of a means. They're not institutions that are supposed to last for a long time. I think that ideal is fading. And so they're in a means to an end to produce economic value.

And every investor will agree it's just that they're going to be much more reconfigurable, a lot of management work. There's managing resources, tracking progress, tracking inventory, communicating with customers. A lot of that stuff is going to be eaten by software and powered by AI. That doesn't mean people go away. But I think that a lot of the repetitive management administrative work, much more than we can imagine today, will be eaten by software and AIs.

TROND: But one of the consequences of that surely, Frode, is somewhat risky because there was a certain safety in the bureaucracy of any large organization, whether government or private, because you knew that, yes, they might be somewhat stiflingly and boring, I guess, or predictable, whatever you might want to call it, but at least they were around, and you could count on them being around.

And if you wanted to know what approach was being applied, if you had experienced it once, you knew it. And if you were a government, you knew that this is the GE Way or this is the whatever way, and it was stable. But what you're charting here is something where the only stability might be in the configuration of machines but even that, of course, you know, evolves really rapidly. And even the algorithms and the AIs and whatever is put into the system will evolve. And then, the humans will move around between different organizational units a little quicker than before. So where do you control [laughs] what's happening here?

FRODE: So one of the things to keep in mind...I'll answer this from a technical perspective but also from a sociological perspective. So I'll take the latter first. So we are used to a world of hierarchies. So from the invention of agriculture, that's when silos were invented. The first organizational silos were actually centered around corn silos [laughs] and so a shared resource, right? And we need governance for that, you know, who gets the corn and how much your family's already had enough this week and so on.

And then, in the Bronze Age, you see more specialization of labor and more hierarchies. So the pyramids were built by determined organizations. [laughs] so just like Melvin Conway would tell us. And the same happened with The Industrial Revolution. So you had management; you had oversight. And then as we are thinking about this matured, you know, we developed this notion of organizational values. So that had to do with the day-to-day behavior so people, including managers, and how they should treat their people and what the employee experience should be like.

And then kind of management is about organizing people or organizing people and resources to pursue short or long-term objectives. So, what happens if the AI goes crazy? What happens if there's a bug in the software if there is a flaw? On the technical side of this, what I would say is just like we have people who are concerned about safety with robots, industrial robots in factories, you're going to have people who look at the same kind of thing in organizations. You're also going to have AI watching AIs. So you're going to have a lot of software mechanisms that are there for safety.

People also have the option to leave. The threshold for quitting your job now and you log out from your current employer if you're sitting in your home in the Caribbean somewhere [laughs] because you can live wherever you want and logging in somewhere else and taking a job, that threshold is lower than ever. So organizations have an incentive to treat their people well.

TROND: Well, the interesting thing, though, is that Silicon Valley has been like that for years. I mean, that was the joke about Silicon Valley that you changed your job faster than you changed your parking space.

FRODE: [laughs]

TROND: Because your parking space is like really valued territory. It's like, okay, here's where I park. But you might go into a different part of the office building or in a different office building. So this has been part of some part of high tech for the industry for a while. But now I guess you're saying it's becoming globalized and generalized.

FRODE: Yeah. And part of it it's the nature of those kinds of jobs, you know, of doing knowledge work that's where you're not tied to equipment or location as much. Now, of course, in Silicon Valley, you've had people go back and forth about, and not just here but in other innovation hubs too, about the importance of being together in the room. You're doing brainstorming. You are talking to potential customers. You're prototyping things with Post-it Notes. People have to be there.

And I think there's an added incentive because of the pandemic and people wanting to work from home more to develop better collaboration tools than Post-it Notes on whiteboards. But the last data we have on this is pre-pandemic, so I can't tell you exactly what they are today. But the employee tenures for startups in Silicon Valley when we looked last was 10.8 months average tenure. And for the larger tech companies, you know, the Apples and the Googles and so on, was a little bit more than two years so between two and three years, basically.

And so because more jobs in the economy are moving into that category of job where there's a lower threshold for switching, and there's a high demand for people who can do knowledge work, you're going to see average employee tenders going down just like average organization lifespans have been going down because of innovation.

TROND: Which presumably, Frode, also means that productivity has to go up because you have to ramp up these people really fast. So your incentive is Frode started yesterday. He's already contributing to a sprint today, and on Thursday, he is launching a product with his team. Because otherwise, I mean, these are expensive workers, and they're only going to be around for a year. When is your first innovation?

FRODE: It depends on where the company focuses its innovation. And this will not be the common case, but let's say that you are developing a whole new kind of computing device and a whole new operating system that's going to be very different. You have to learn about everything that's been done so far, and it takes a lot to get started. If what you are doing is more sort of applied, so you're developing apps to be used internally in an insurance company, and you're an app developer, and you know all of the same platforms and tools that they're already using because that was one of the criteria for getting the job, yeah, then you ramp up time is going to be much shorter.

All of these companies they will accept the fact, have had to accept the fact, that people just don't stay as long in their jobs. That also gives some added incentive to get them up and running quickly and to be good to people. And I think that's good. I think it's nice that employers have to compete for talent. They have to have to treat their people well. I think it's a much better solution than unions, where you would basically try to have a stranglehold on employers on behalf of all the workers.

And the less commoditized work is, the less standardized the work is in that sense. The less business models like those of unions, whether they're voluntarily or involuntarily, because the government sort of makes it easier for them to set up that relationship and sort themselves.

The thing that surprised me is that now and as we're coming out of COVID, unions in the United States are making somewhat of a comeback. And I'm sort of scratching my head. Maybe this means that there are a lot of companies where they have scaled because of IT, Amazon being an example. They wouldn't have been able to scale the way they have without information technology. But they haven't yet gotten to the point where they have automated a bunch of these jobs.

So they've hired so many people doing soul-sucking repetitive work, and they're doing their best to treat them well. But the whole mentality of the people who have designed this part of the organization is very Taylorist. And so people are complaining, and they're having mental health problems and so on. And then yeah, then there's going to be room for someone to come and say, "Well, hey, we can do a better job negotiating for you." But gradually, over time, fewer and fewer jobs will be like that.

One of the sort of interesting aspects of the post-industrial transition is that you have industries...well, some industries, like online retail on the historical scales, is still a young industry. But you have industries that when IT was young, you know, I think the oldest software company in the U.S. was started in 1958. So in the aftermath of that, when you started seeing software on mainframes and so on, what software made possible was scaling up management operations for companies. So they made them more scalable. You could open more plants. You could open more offices, whether it was manufacturing or service businesses.

And this happened before people started using software to automate tasks, which is a more advanced use. And the more complex the job is, and the more dexterity is required, physically moving things, the higher the R&D investment is required to automate those jobs. The technology that's involved in that is going to become commoditized. And it's going to spread.

And so what you're going to see is even though more people have been hired to do those kinds of jobs because the management operations have scaled, fewer people are going to be needed in the next 10-20 years because the R&D investment is going to pay off for automating all of those tasks. And so then we're going to get back to eventually...I like to think of Amazon as just like it's a layer in the business stack or technology stack.

So if I need something shipped from A to B or I need to have some sort of a virtual shopping facility, [laughs] I'm not going to reinvent Amazon, but Amazon has to become more efficient. And so the way they become more efficient is drone delivery of packages and then just-in-time production. And then, they take over everything except for the physical specifications for the product to be manufactured.

TROND: It's interesting you say that because I guess if you are Amazon right now, you're thinking of yourself in much wider terms than you just said. But what I'm thinking, Frode is that I'm finding your resident Scandinavian. I'm seeing your Scandinavianhood here. The way you talk about meaningful work, and knowledge work, and how workers should have dignity and companies should treat people well, I found that very interesting.

And I think if that aspect of the Scandinavian workplace was to start to be reflected globally, that would be a good thing. There are some other aspects perhaps in Scandinavia which you left behind, and I left behind, that we perhaps should take more inspiration from many other places in the world that have done far better in terms of either manufacturing, or knowledge work, or innovation, or many other things. But that aspect, you know --

FRODE: It's a big discussion itself. I mean, I was kind of a philosophical refugee from Norway. I was a tech-oriented, free-market person. I didn't like unions. I didn't like the government.

TROND: [laughs]

FRODE: But at the same time, that didn't mean I thought that people should not be treated well that worked into the ground. I thought people should just have healthy voluntary sort of collaborative relationships in business or otherwise. And I've seen technology as a means of making that happen. And I have no sympathy with employers that have trouble with employees because they treat people like crap. I think it's well deserved. But I also have no sympathy with unions that are strong-arming employers.

TROND: You have just listened to another episode of the Augmented Podcast with host Trond Arne Undheim. The topic was Post Lean, and our guest was Frode Odegard, Chairman, and CEO at the Post-Industrial Institute. In this conversation, we talked about the post-industrial enterprise.

My takeaway is that lean is a fundamental perspective on human organizations, but clearly, there were things not foreseen in the lean paradigm, both in terms of human and in terms of machine behavior. What are those things? How do they evolve? We have to start speculating now; otherwise, we will be unprepared for the future. One of the true questions is job stability. Will the assumptions made by early factory jobs ever become true again? And if not, how do you retain motivation in a workforce that's transient? Will future organizational forms perfect this task?

Thanks for listening. If you liked the show, subscribe at augmentedpodcast.co or in your preferred podcast player, and rate us with five stars. And if you liked this episode, you might also like Episode 102 on Lean Manufacturing with Michel Baudin. Hopefully, you'll find something awesome in these or in other episodes, and if so, do let us know by messaging us; we would love to share your thoughts with other listeners.

The Augmented Podcast is created in association with Tulip, the frontline operation platform that connects people, machines, devices, and systems in a production or logistics process in a physical location. Tulip is democratizing technology and empowering those closest to operations to solve problems. Tulip is also hiring, and you can find Tulip at tulip.co.

Please go ahead and share this show with colleagues who care about where industrial tech is heading. To find us on social media is easy; we are Augmented Pod on LinkedIn and Twitter and Augmented Podcast on Facebook and YouTube.

Augmented — industrial conversations that matter. See you next time.

Special Guest: Frode Odegard.

In this episode of the podcast, the topic is Lean Manufacturing. Our guest is Michel Baudin, author, and owner of Takt Times Group. In this conversation, we talk about how industrial engineering equals the engineering of human work and why manufacturing and industrial engineering education needs to change because it has drifted away from industrial work and a future where manufacturing is not going away.

If you like this show, subscribe at augmentedpodcast.co. If you like this episode, you might also like Episode 84 on The Evolution of Lean with Professor Torbjørn Netland from ETH Zürich.

Augmented is a podcast for industry leaders, process engineers, and shop floor operators, hosted by futurist Trond Arne Undheim and presented by Tulip.

Follow the podcast on Twitter or LinkedIn.

Trond's Takeaway:

Lean manufacturing might mean many things, but industrial work has largely been a consistent practice over several hundred years, which is not necessarily a bad thing. Having said that, if we want to go about improving it, we might want to stay pretty close to the workforce and not sit in statistics labs far removed from it. Efficiency is tied to work practices, and they cannot be optimized beyond what the workforce can handle or want to deal with. As we attempt to be lean, whatever we mean by that, we need to remember that work is a thoroughly human endeavor.

Transcript

TROND: Welcome to another episode of the Augmented Podcast. Augmented brings industrial conversations that matter, serving up the most relevant conversations on industrial tech. Our vision is a world where technology will restore the agility of frontline workers.

In this episode of the podcast, the topic is Lean Manufacturing. Our guest is Michel Baudin, author, and owner of Takt Times Group. In this conversation, we talk about how industrial engineering equals the engineering of human work and why manufacturing and industrial engineering education needs to change because it has drifted away from industrial work and a future where manufacturing is not going away.

Augmented is a podcast for industrial leaders, process engineers, and shop floor operators hosted by futurist Trond Arne Undheim and presented by Tulip. Michel, welcome. How are you?

MICHEL: Fine, thank you. How about yourself?

TROND: Things are good. Things are looking up. I'm excited to talk about lean manufacturing with you, having had such a rich, professional background. Michel, you're French. You originally, I think, were thinking of becoming a probability researcher, or you were actually, and then you went to Japan and studied Toyota. You have had this career in English, German, Japanese sort of consulting all the way back from 1987 onwards on exciting topics, lean manufacturing, and especially implementing it, right? The real deal.

You've authored at least four technical books that I know about. And I think you listed probably a while back, having written 900 blog posts. You've been very busy. You are the owner of the Takt Times Group, which is a consulting firm on lean manufacturing. And you love math, but you have this very interesting attitude, which we'll talk about, which is math is great, but it's not always the best communication tool. Tell me a little about that to start off. You're a probability researcher that doesn't use math; I think that's fascinating.

MICHEL: I use it, but I don't brag about it with people that it turns off. So I have to be in the closet for this because people who work in manufacturing usually focus on concrete things, things that they can see and touch, and abstraction is not something that they respond well to. So whenever you explain a principle, my approach is to state this principle and then dig into some very specific examples right away; otherwise, I'm losing the people I'm talking to. But anyway, that's what I've had to do.

TROND: So, did I capture your background okay? I mean, you've had a very international life so far. I hope it's been enjoyable and not just professional because you've spent your time in Germany, and Japan, and in the U.S., So you're really enjoying the different kinds of manufacturing environments. Or is it that you just want to be close to where it's all happening?

MICHEL: I've enjoyed living in many different countries. And so you mentioned I'm French. I was born and raised in France, but I'm an American citizen, and I spent most of my life in the U.S. I think of myself as being part French, part American, part German, part Japanese. Because when I'm in a country, I tend to immerse myself in the culture; I don't stay aloof from it.

TROND: Well, I'm curious about that because in the abstract... so if we are in the world of math, then you could maybe say that efficiency techniques are global; that was the idea. Some people have that idea, let's say, that efficiency is a global thing, and there's one thing called efficiency, and everybody should just learn it because then it's all better. It seems to me that because you spent a lot of time in three different places, it shows up differently.

MICHEL: I don't use the word efficiency so much because it's limited. There are techniques to improve manufacturing performance in every aspect of it, efficiency only being one of them, and these techniques are pretty universal. Now, when you're trying to help people in different countries, it's a postulate. You have to postulate what works in one place will work in another. So far, I haven't found any reason to believe otherwise.

I have encountered many people who are saying things like, "This is country X, and these techniques don't work because our people are from country X." It's one of the most common techniques to refuse to implement anything new. The fact is the Toyota Production System wasn't supposed to be applicable to American workers until Toyota applied it with American workers in its joint venture with GM in the early 1980s at NUMMI specifically. It became a showcase.

Later, Toyota opened its own factory in the U.S. in Georgetown, Kentucky, and applied the system there. And then, a few years later, it opened its own factory in France, and it worked with French workers. So it's really the idea that this only works in certain cultures or this only works in Japan. It's just the reality is different. It works pretty much everywhere.

TROND: Well, that's fascinating, though, because, like you said, you have immersed yourself in these different factory and industrial cultures, if you may, and you are implementing lean in all of them or advising on lean methods. Why don't we start with that, then, perhaps? Tell me a little bit, what is lean to you?

MICHEL: Lean to me...and I use the term less and less because I think over the past 30 years, it's lost a lot of its meaning. When it first came out, it was the latest in a number of labels that have been applied to the same thing. In the early 1980s, you talked about just-in-time then there was world-class manufacturing. A number of different terms were used and never really caught on. This one caught on.

And the way I took it, I took it to mean generic versions of the Toyota Production System. There are very good reasons why you can't call what you're proposing to a company that makes frozen foods a Toyota Production System. There are also very strong reasons why you can't even go to a car company and do this. It's very awkward for a car company to openly admit to be using a competitor's system. So you have to have a label that refers to the content but doesn't refer to where it's coming from.

TROND: So for you, at the basic level, if you strip away everything, it still is essentially the Toyota Production System, and lean is just to you, I'm just paraphrasing, it's a convenient wrapping for a way to explain it in a way that's non-threatening. But it is essentially the lessons from the Toyota Production System from a while back.

MICHEL: That's the way I took it. That's why I adopted this label in the early 1990s, but a lot of time has elapsed since then. Because it became popular, very many people started using that label. And the content they were putting under it was pretty much...they were attaching this label to whatever they were doing. It has lost a great deal of its meaning which is why at this point, I rarely refer to it.

TROND: So you're saying a lot of people are attaching lean to whatever they're doing, I mean, understandably so, Michel, right? Because it's become a very successful term. It sells books. It sells consulting. It does refer back to something that you think is real. So can you understand why people would do this if you are in consulting, or even in teaching, or you work in an industry, and you're managing something, why people would resort to this label?

MICHEL: First of all, consultants have to have a brand name for what they're selling. It was useful. As a brand name, you have to call what you're offering by a given name, and clients look for this. It's a keyword they look for, and that's how they find you. So it's really necessary. I'm not criticizing consultants for using that.

TROND: No, no, I understand it. And, I mean, you're also a little bit in a glass box in the sense that you are within the general tent of lean yourself. So I understand that. I fully understand it.

MICHEL: What happens when it's successful is that more and more people jump on this bandwagon and say, okay, I'm going to offer a lean. When you look at what they're saying, it does not reflect the original content. By about 2000s, it had evolved into...what most consultants were offering was drawing value stream maps and organizing Kaizen events. Those two keywords are absent from the Toyota Production System.

TROND: Can you explain...so this is interesting. Because I was going to ask you exactly this, what are the types of elements that you react to the most that you feel is really...because one thing is to say it diverged from the original content, but if it is kind of a valuable extension of something...but you're saying value streams and the Kaizens, the Kaizen practices they have very little to do with the Toyota Production System in your reading.

MICHEL: That's right. The value stream mapping is a new name for a technique that they call; I mean the translation of the original name is, Materials and Information Flow Analysis (MIFA), Mono to Joho no Nagare in Japanese, flow of materials and information. So that's one idea.

And there is a particular graphic convention that has actually evolved from Toyota that became the value stream mapping graphic convention, but it never was in the Toyota context. Mike Rother's own admission (He wrote Learning to See, which promoted this technique.) said it was not an important topic at Toyota. It has some uses, but if you go on factory tours in Japan, you don't see a lot of value stream maps.

And so it's been taken...it was a specific tool for a specific purpose like figuring out how to work with a particular supplier. And then it was made into this supposedly all-powerful analytical tool that is the first thing that you have to do when you go into a factory is map its value streams, so that's taking a very small part of what Toyota does and make it into this big thing.

As for Kaizen Events, it's actually an American invention. It's something that came out of...in the early 1990s; there were a number of executives who were frustrated with the slow pace of lean implementation with other methods. So they came up with this format they called the Kaizen Blitz, that became the Kaizen events. It's also traced back to some Japanese consulting firms, which found this particular format as a convenient way to make good use of a trip from Japan to the U.S. They would organize one-week events at their clients because it was a good way to justify essentially the cost and the trouble of flying over.

TROND: I'm going to go with your story here. So let's say these two are kind of examples for you of things diverting from the original content. Why don't we speak about what the original content then is for a minute? What is the core of the Toyota production method or of lean in its original form for you?

MICHEL: Well, the Toyota Production System is something I'm very interested in and still studying. And it's not a static thing. It's something that, for example, the first publication about it was from the early 1970s, an internal document from Toyota with its suppliers. And then there have been many, many other publications about it through the decades. And it's changed in nature, and the concepts of manufacturing have evolved.

By definition, the Toyota Production System is what Toyota does. They're very good at making cars. And so it's always important to try to keep up with what it is they're doing, knowing that there is a 5 to 10-year gap between the time they come up with new concepts and the time that the rest of the world gets to know about them.

And so, in the early 1990s, there were essentially concepts of how to organize production lines, how to lay out production lines, how to design operator workstations. And there were concepts on how to regulate and manage the flow of materials and the flow of information between stations and lines and between suppliers and customers. And there was also an approach to the management of people and the whole human resource management aspect of hiring people for careers, having career plans for everybody, including shop floor operators, managing to improve the operations based on this infrastructure.

So it's a very rich concept, and it encompasses every aspect of manufacturing, logistics, and production control, all the way to accountability. So it's compared with other things like the Theory of Constraints or TPM that are much more limited in scope. There is an approach to quality that Toyota has. The quality improvement is not all of the Toyota Production System. It's a complete system for making a product covering all the bases.

TROND: Let me just pick up on one thing, so you're saying it's a complete system. So one thing you pointed out was the HR aspect, and hiring people for careers is one thing, but you also said the career plans for shop floor operators. So I took two things from that, and I was going to ask about this because this has been used as one example of why you cannot implement the Toyota Production System in the same way in different countries, namely because that is one aspect of society that a company doesn't fully control because it is regulated.

So, for example, in Europe and in France, which you know, really well, and Germany, you know, employment is regulated in a different way. If a company was going to have the same HR policy in three different factories in three different countries, they would have to have, first of all, obviously, follow the national regulation. But then they would have to add things on top of that that would, you know, specific employee protections that are perhaps not part, for example, of U.S. work culture. So that's one thing I wanted to kind of point to.

But the other thing is interesting. So you said career plans for shop floor operators meaning Toyota has a plan for even the basic level worker meaning the operators, the people who are on the floor. And that seems to me a little bit distinct. Because in the modern workplace, it is at least commonly thought that you spend more time both training and caring about people who are making career progression.

And you don't always start at the bottom. You sort of hope that the smart people or whatever, the people who are doing the best job, are starting to advance, and then you invest in those people. But you're saying...is there something here in the Toyota Production System that cares about everybody?

MICHEL: Yes. But let me be clear about something. The way Toyota manages HR is not something that there are a lot of publications about. There's probably a good reason for this is because they probably consider it to be their crown jewel, and they're not that keen to everybody knowing about it. A lot of the publications about it are quite old. But there's nothing in the regulations and labor laws of any country that prevent you from doing more for your employees than you're required to.

TROND: That's a great point. That's a great point.

MICHEL: So there are laws that forbid you from doing less than certain things, but they're not laws that prevent you from doing more. There is no rule that you have to offer career plans for production operators because there's nothing preventing you from doing it. In a completely different situation, a large company making personal products ranging from soap to frozen foods...I won't name what the company is, but they have a policy of not being committed to their workers. Essentially, if business is good, you hire people. If there's a downturn, you lay people off.

They wanted to migrate from the situation where you have a lot of low-skilled employees that are essentially temps to a situation where they have higher level of qualification and fewer people. So the question is, how do you manage the transition? The way this company eventually did it in this particular plant was to define a new category of employee like, say, technical operator.

And a technical operator will be recruited at higher a level of education than the general population of operators. They will be given more training in both hard skills and soft skills and the specific processes they're going to be running, and some additional training on how to manage the quality of these processes, that sort of thing. But at the level of a production operator, they will be put in charge of these processes. And this small group would be separate job categories than the others. And gradually, this evolves to a situation where you only hire into this group. You don't hire any more of the traditional operators.

And then, you provide a transition path for the other operators to become members of that group so that over a period of time, gradually, the general population of less skilled, less stable operator shrinks. And you end up over a number of years with a situation where all of the operators that you have are these highly trained operators who are there for the duration. So that's one kind of pattern on how you can manage this kind of transition.

TROND: Super interesting. Can I ask you a basic question? So you've been in this consulting part of this venture, you know, of this world for a long time. Where do you typically start? When do you get called, or when do you sign up to help a company, at what stage? What sort of challenge do they have? Do you visit them and tell them they do have a challenge? What is the typical problem a company might have that you can help with or that you choose to help with?

MICHEL: There are a lot of different situations. One particular case was a company in defense electronics in the U.S. had a facility in Indiana, and they were migrating all this work to a new facility in Florida. What they told me...they called me in, and they told me that they wanted to take the opportunity of this move to change the way they were doing production. Generally, my answer to that would be, well, it's really difficult to combine a geographical change of facility with an improvement in the way you do the work. Normally, you improve first where you are. You don't try to combine transformation and migration.

TROND: It's a funny thing, I would say. It seems like the opposite of what you should be doing to try to make one change at a time.

MICHEL: But there were several circumstances that made it work. You can have general principles, and when you're in a real situation, it doesn't always apply. One is the circumstances under which they were doing this migration was such that the people in the old plant were in an environment where there was a labor shortage, so none of them had any problem finding jobs elsewhere if they didn't want to move to Florida. If they wanted to move to Florida, they could, if they didn't want to move to Florida, they had to leave the company, but there were plenty of other companies hiring around.

And so there was not this kind of tension due to people losing their jobs and not having an alternative. And then, the transition was announced way ahead of time, so they had something like a 15-month period to plan for their transfer. And to my great surprise, the operators in the old plan were perfectly...were very helpful in figuring out the design for the new lines and contributed ideas. And there was no resentment of that situation.

TROND: In this particular example and in other examples, to what extent is production, you know, process redesign a technology challenge, and to what extent is it a human workforce challenge? Or do you not separate the two?

MICHEL: I try not to separate the two because you really have to consider them jointly. A technical solution that nobody wants to apply is not going to be helpful. And something everybody wants to apply but that doesn't work, is not going to be helpful either. So you have to consider both. And in this transition, by the way, between these two plants, most of the labor difficulties were in the new plant, not in the old one, because this plant became a section of the new plant. And none of the other lines in that new plant did anything similar, so it stood out as being very different from what all the other lines did.

What all the other lines did is you had a structure that is common in electronics assembly where you have rows of benches at which people sat and did one operation, and then the parts were moved in batches between these rows of benches. And instead of that, we put cells where the parts moved one at a time between different operations. And it was also organized so that it could be expanded from the current volume of work to higher volume of work. And so a lot more went into the design.

I was a consultant there, but I don't claim credit for the final design. It was the design of the people from the company. They actually got a prize within the company for having done something that was exceptionally good. And when I spoke with them a few years later, they had gone from having something like 20% of the space used for production in the new facility to having it completely full because they were able to expand this concept.

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TROND: Michel, I know that you have a consulting life and a consulting hat, but you also have a teaching hat and a teaching passion. Why did you write this recent textbook which is coming out on Routledge this fall, I believe, with Torbjø Netland from ETH? It's an Introduction to Manufacturing but with a very specific kind of industrial engineering perspective.

You told me when we talked earlier that there's a really specific reason why you wrote this textbook, and you have some very, I guess, strong views or worries about how manufacturing education, but perhaps the way it's taught really needs to change. And you feel like some schools are drifting away from the core. What's happening there?

MICHEL: Well, industrial engineering as a discipline is about 100 years old, take or leave a decade or two. It started out as...the way I describe it is the engineering of human work in the manufacturing environment. And it expanded to fields other than manufacturing, even at the time of pioneers like Frank and Lillian Gilbreth.

For example, we know the way operating rooms in hospitals work with the surgeon being assisted by nurses who hand all the tools to the surgeon; that particular form of organization is due to Frank and Lillian Gilbreth, industrial engineers who looked at the way operating rooms worked and figured that you really don't want to leave a patient with his belly open on the table while the surgeon goes to fetch the tool. You got to have some people giving the tools to the surgeon so that the surgeon can keep operating on the patient.

It sounds obvious now, but it wasn't obvious in 1910. And so they were immediately some applications outside of manufacturing, but the bulk of the work was on manufacturing. And the way it's evolved, especially in the past few decades, is that it's gotten away from that focus on human work. And when you look at the research interests of the academics in this field, you find that it's completely dominated by operations research and math.

TROND: So we're back to the math. [chuckles] So I find it fascinating that...well, you obviously have a deep insight into it, so you are sensitized to the challenges of overfocusing on one technical discipline as kind of the mantra and the fodder, I guess, the research data for all kinds of processes. I mean, why is math such a big problem, and what do you mean by human work in industrial manufacturing? Because to many people, the advanced work right now is about digitization, digitalization, and it has to do with machines and computers, and one would assume with big data or at least with data. Are you arguing against that trend?

MICHEL: No. I mean, if you ask the question of what is human work? The classical answer that I would give is what happens when the guy picks up the wrench. That's one answer. But what happens when the operator sees an alarm message on the control screen of a machine, that's a different answer, a more modern answer. So you had people with the torque wrench applying the right torque to a bolt manually, and then the torque wrench would tell him when the torque was achieved. That's one form of human work.

But monitoring and looking after multiple machines that are connected and have a central control system is also human work. You also have people doing it. And they have to feed these machines. They have to make sure that the machines have the right kinds of tools and dyes available to them. They have to maintain these machines. They have to program these machines, and they have to monitor them during production. And one particular problem with automatic systems is micro stoppages. Are you familiar with that term?

TROND: Well, explain it to all of us, micro stoppages. I mean stoppages, obviously, anything that stops the production line, whether it's a minor, major, I mean, that would be what I think you are saying.

MICHEL: Well, if it's a big problem, the operator doesn't solve it. The operator calls maintenance, and maintenance sends somebody to solve it. Micro stoppage is a problem that's small enough for the operator to deal with. And so, in daily life or in any office life, one very common micro stoppage problem is the copier, right? You tell the copier to print 20 collated copies of a document, and you walk away expecting to find these 20 copies ready when you come back. It doesn't happen because there are some paper jams and so you have to clear the paper jam and restart.

You have a lot of things like that in production where parts jam and shoots and stop coming down in automatic system. You have all sorts of issues like this which cause production lines to stop in a way that the operator can resolve in half a minute or a minute and restart. What these things cause is that you have to have an operator there.

And so if you really want to have an automatic system that are fire and forget...when you press a button, you move away to do something else while the machine goes through an automatic cycle. When that automatic cycle is finished, you come back. Micro stoppages prevent you from doing that. And they're very difficult to avoid, but they're a major problem, even today.

TROND: Michel, I wanted to keep talking about the educational part. But before that, I just wanted to benefit from your experience here and ask you a much more basic question which is so you're writing this textbook about the future or introducing prospective students to industrial engineering and manufacturing.

My question is, historically, factories were a very, very big part of manufacturing. Nowadays, meaning in the last few years after the pandemic and other things, a lot of us start to spend a lot more time on an issue, which I'm assuming you have spent a lifetime working on as well, which is supply chain which goes far beyond the factory because it's not located in any one factory, if anything, it's a system of many factories, and it's obviously the supplies of material flows into the factory.

And the reason I'm asking you about this is in thinking about the future, which I'll ask you about in a second, a lot of people are sort of factory of the future, this and that. And there are visions about how this is going to change. But it strikes me that manufacturing is and has always been so much more than the factory. What are the components that you really worry about? So, humans, you worry about humans. And you worry about materials. And then you obviously have to worry about the physical infrastructures that are regulating these things. What else goes into it on the macro level? What is this book about, I guess?

MICHEL: We're talking about supply chains as well because, as you mentioned, they're a very important part of manufacturing. And when you design a manufacturing system to make a product, you have to make decisions about your products, about components of your product, and what you make in-house, and what you buy from the outside.

And there's a major difference between supply chain issues relating to customers, on one hand, the suppliers on the other. It's not just suppliers; it's both sides, incoming supply chain and the outgoing as well. One major difference with what happens in the factory is that you don't control what other people decide, what other organizations decide. So when you manage a supply chain, you have to manage a network of organizations that are independent businesses.

How do you get this network of independent businesses to work with you, to cooperate with you, to make your manufacturing successful? That is a big challenge in supply chain management. Inside a factory, that's an environment you control. It's your organization. What management says is supposed to go; it doesn't always, but it's supposed to go. And you have a lot more control over what happens inside than over what happens in the supply chain.

And how much control you have over what happens in the supply chain depends greatly on your size. For example, if you're a small customer of a special kind of alloy that only has one manufacturer in the world, you're a very small customer to a very large manufacturer, a metals company. You're not in a position of strength to get that supplier to work with you.

If you're a car company making 10 million cars a year and you're dealing with a company that is making forgings for engine parts, you have a lot of control. You have a lot of influence. You represent a large part of their business. They can't afford to lose you. You can't afford to lose them. You can replace them if they don't perform. They can't afford to lose you. They might go out of business if they did. So it's a very different kind of position to be in.

And so when you deal with that sort of thing, you have to think through, what is my position with respect to suppliers and customers? Where is it? Where's the driving influence? And it's not always...power in a supply chain is not always resident with the company that does the final assembly of consumer products. In electronics, for example, semiconductor manufacturers are much more key than people who assemble computers.

TROND: I wanted to ask you a little bit about the trends and how these things are evolving in the next decade and beyond that. And one example you gave me earlier when we talked was pilots and jetliners because manufacturing in...well, the aviation industry is an example of an industry that, yes, it has an enormous amount of high tech. It's a very advanced science-based development that has produced air travel. But yet these pilots...and I experienced it this summer, a pilot strike stops everything.

So the role of people changes as we move into more advanced manufacturing. But people don't always disappear. What do you see as the biggest challenge of manufacturing and the role of manufacturing in the emerging society? What is going to happen here?
MICHEL: What I think is going to happen is that in many countries, the manufacturing sector will remain a large part of the economy, but as economies advance, it will have a shrinking share of the labor market. So it's a distant future, maybe like that of agriculture, where 2% of the population does the work necessary to feed everybody else.

And manufacturing is now about 10% of GDP in the U.S., 20% in Germany and Japan, about 10% in England, France, Italy. In China, we don't really know because they don't separate manufacturing from industry. And industry is a broader category that includes mining, and it includes road construction, et cetera. They don't separate out manufacturing, but really, it's a big sector of the economy.

And so it can remain a big sector, that's not a problem. But you have to think through a transition where the number of people that you employ doing this kind of work goes down, their level of qualifications go up, and the nature of the work they do evolves towards telling machines what to do and maintaining machines. So telling machines what to do can be programming machines when you develop processes, or it can be scheduling what work the machines do.

TROND: Is that incidentally why you have gone into teaching in a kind of an academic setting or at least influencing curriculum in an academic setting so much that you see a role here in the future? Beyond what's happening in factories today, you're quite concerned about what might happen in factories ten years from now, 20 years from now when these students become, I guess, managers, right? Because that's what happens if you get education in management at a good school, reading your hopefully great textbook. It takes a little time because you trickle down and become a manager and a leader in industry.

So I guess my question then is, what is it that you want these people to know ten years from now when they become leaders? What sort of manufacturing processes should they foster? It is something where humans still matter for sure, and machines will have a bigger part of it. But there's things we need to do differently, you think?

MICHEL: The airline pilot metaphor, you know, you have this $300 million piece of equipment. And how much money you make from operating it depends on these two people who are in the pilot's cabin. You have to pay attention to the work of people. And in most factories, the work of people today is an afterthought. So you put in machines. You put in production lines without thinking how will people get from the entrance of the building to where they actually work?

TROND: I was going to say it's a fascinating example you had with the airline industry in the sense that, I mean, honestly, even in the old industrial revolution, these machines were expensive, but I guess even more so. I don't know if you've done any research on this, but the amount of dollars invested per worker presumably has to go up in this future you are talking about here where we're increasingly monitoring machines, even these perhaps in the past viewed as low-skilled jobs or operator jobs.

I mean, you are operating, maybe not airplanes, but you're operating industrial 3D printers that cost hundreds of thousands of dollars with presuming error rates that could be catastrophic, either for you, for the production line, or for the product you're making.

MICHEL: Or photolithography machines that cost millions.

TROND: Right. But then that begs the question for me, Michel, how on earth is it possible? If you are right about this that education has been somewhat neglected and skills has been neglected, how's that even explainable? If you are a responsible factory manager or executive of a large manufacturing firm, how could it have gotten...and I'm obviously paraphrasing here. I don't know if you think it's that bad. But how could it get this bad that you actually had to come out and say it's a massive problem?

MICHEL: What happens is that you hear a lot about systems thinking, which, to me, it's pretty obvious there's more to a factory or more to a manufacturing system, to supply chain than the collection of its components; it's pretty obvious. And when you change the way a supplier delivers parts, it has an impact over what happens at the assembly workstations where these components are being used, for example.

You have to think of the whole as a system. And you have to think about whenever you make any changes to it; you have to think through how these changes affect the whole. What's happening is that there has been a great deal of specialization of skills; I'm not talking about factory workers here. I'm talking about engineers and managers that have been put into silos where they run production control. They become production control manager in the factory. Their next career move is to become production control manager in the factory of a different company.

TROND: So here's my open-ended question to you; you're sort of saying that industrial engineering, in one sense, needs to go back to its roots where it was. But the other side of the coin here is you're also talking about a world that's changing drastically. So my question is, the industrial engineer of the future, what kind of a person is this ideally, and what sort of skill sets and what sort of awareness does this person have?

MICHEL: The skill sets that this person should have are both technical and managerial. It's management and technology considered together. So they may not be able to write code, or they may not be able to design how to cut a piece of metal, or how to tweak the electrical properties of a circuit, but they know the importance of these things. They've been exposed to them through their education and career. And they have an appreciation for what they are.

So, for example, one particular task that has to be done in every manufacturing organization is technical data management. You have to manage the problem definition, the process definitions, which machines you use to do what, down to the process program that these machines run. All of this is data, technical data that has to be managed, put under revision control. And you'd expect someone with training in industrial engineering to understand the importance of revision control on this.

If you change something to the cutting program of a milling machine, you may affect what happens elsewhere. You may affect the mechanical properties of the product and make it difficult to do a subsequent operation later. And that's why before you implement this change in production, you have to have a vetting process that results in revision management. So I would expect an industrial engineer to understand that.

TROND: Well, you would expect an industrial engineer to understand that, but, I mean, some of the challenges that come from these observations that you're making here they impact all operators, not just engineers. And they certainly impact managers because they are about this whole system that you are explaining. So it sounds to me that you're mounting a pretty significant challenge to the future manufacturers, not just in skills development but in evolving the entire industrial system.

Because if we're going to make this wonderful spacecraft, and solve the environmental crisis, and build these new, wonderful machines that everybody expects that are going to come churning out every decade, we certainly need an upskilled workforce, but we need a whole system that works differently, don't we?

MICHEL: Yes. Can I give you a couple of examples?

TROND: Yeah.

MICHEL: One company outsourced the production of a particular component to a supplier then there were technical problems with actually producing this component with the supplier. So the customer company sent a couple of engineers to the supplier, and they found some problems with the drawing that had been provided to the supplier. And they made manual corrections to the drawings, the copies of the drawing in possession of the supplier. And it worked. It solved the immediate problem. But then, at the customer company, they didn't have the exact drawing. The only place with the exact drawings was at the suppliers. And a few years later, they wanted to terminate this supplier.

TROND: Aha.

MICHEL: You can see the situation. You want people to be able to understand that you just don't do that sort of thing.

TROND: Right. So there are so many kinds of multiple dependencies that start to develop in a manufacturing production line, yeah.

MICHEL: And then you find a company that's a subcontractor to the aircraft industry. And you find out they route parts through a process that has about 15 different operations. And the way they route these parts is they print a traveler that is 50 pages long, and it's on paper. And the measurements they make on the parts that they're required to make by their customer they actually record by hand on this paper. What's wrong with this picture?

TROND: So yeah, multiple challenges here.

MICHEL: Yes.

TROND: Are you sensing that these things are fixable? Are you optimistic in terms of this awareness of all aspects of the systems changing both among managers and next-generation industrial engineers, and perhaps even among the operators themselves to realize they're getting a more and more central role in the production system?

MICHEL: I won't try to prophesy what will happen to industry as a whole but what I'm confident about is that the companies that know how to address these problems will be dominant. Those are the sort of basic mistakes that really hurt you and hurt your competitive position. So there will be a selection over time that will eliminate people who do these kinds of mistakes.

TROND: Michel, I don't want to put you on the spot here. And you have spent your career researching and tracking Toyota as an excellent, excellent manufacturer that has graciously taught other manufacturers a lot. And also, people have copied and tried to teach them Toyota methods, even if Toyota wasn't trying to teach everyone.

Are there any other either individual companies or things that you would point to for the eager learner who is trying to stay on top of these things? I mean, so lean, obviously, and the Toyota Production System is still a reference point. But are there any other sources that in your career or as you're looking at the future where there is something to learn here?

MICHEL: Oh yes. Toyota is a great source of information, but it's by far...it's not the only one. One of the key parts of Toyota's management system is Hoshin Planning. Hoshin Planning didn't come from Toyota; it came from Bridgestone tires. And so that's one case where a different company came up with a particular method.

Honda is a remarkable company as well, so there are things to learn from Honda. HP was, under the leadership of its founders, a remarkable company. And they had their own way of doing things which they called The HP Way. Companies have recruited a lot of people...electronic companies have recruited a lot of people out of HP. And you feel when you meet the old timers who have experienced The HP Way, they feel nostalgia for it. And there were a lot of good things in The HP Way. They're worth learning about. So I also believe that it's worth learning about historical examples because history is still with us in a lot of ways.

The Ford Model T plant of 100 years ago was a model for a lot of things at the time. It also had some pretty serious flaws, namely, its flexibility. And you still see people putting up the modern-day equivalent of a Model T plant with new products and new technology but without thinking about the need. That particular plant may have to be converted in the not-too-distant future into making a different product. So it's always worth looking at examples from 100 years ago, even today, not for the sake of history but because, in a lot of ways, history is still with us.

TROND: Well, on that note, history is still with us; I thank you for this, Michel. And I shall remember to forget the right things, right? So history is still with us, but [laughs] you got to know what to remember and what to forget. Thank you so much.

MICHEL: Culture is what remains once you've forgotten everything.

TROND: [laughs] On that note, Michel, thank you so much for your time here and for sharing from your remarkable journey. Thank you.

MICHEL: You're welcome.

TROND: You have just listened to another episode of the Augmented Podcast with host Trond Arne Undheim. The topic was Lean Manufacturing. Our guest was Michel Baudin, author, and owner of The Takt Times Group. In this conversation, we talked about how industrial engineering equals the engineering of human work and why manufacturing and industrial engineering education needs to change because it has drifted away from industrial work. And indeed, we are looking at a future where manufacturing is not going away.

My takeaway is that lean manufacturing might mean many things, but industrial work has largely been a consistent practice over several hundred years, which is not necessarily a bad thing. Having said that, if we want to go about improving it, we might want to stay pretty close to the workforce and not sit in statistics labs far removed from it. Efficiency is tied to work practices, and they cannot be optimized beyond what the workforce can handle or want to deal with. As we attempt to be lean, whatever we mean by that, we need to remember that work is a thoroughly human endeavor. Thanks for listening.

If you liked the show, subscribe at augmentedpodcast.co or in your preferred podcast player, and rate us with five stars. If you liked this episode, you might also like Episode 84 on The Evolution of Lean with Professor Torbjørn Netland from ETH Zürich. Hopefully, you'll find something awesome in these or in other episodes, and if so, do let us know by messaging us because we would love to share your thoughts with other listeners.

The Augmented Podcast is created in association with Tulip, the frontline operation platform connecting people, machines, devices, and systems used in a production or logistics process in a physical location. Tulip is democratizing technology and empowering those closest to operations to solve problems. Tulip is also hiring, and you can find Tulip at tulip.co.

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Augmented — industrial conversations that matter. See you next time.

Special Guest: Michel Baudin.