Get Lean with Generative AI

Applications like ChatGPT and Midjourney are not just consumer applications; they represent a paradigm shift in how we (humans) interact with technology. Generative AI apps have captured the global imagination, not just because of their novelty but because of their broad utility. Anyone, from a digital artist to a software developer, can harness their power to communicate, create, and innovate.

But, as with any emerging technology that storms onto the scene, the question facing business leaders is how to drive meaningful and durable value with this new superpower. Business leaders must understand not only the capabilities of GenAI but also its potential to redefine efficiency and productivity across industries. That's precisely where we can take some inspiration from the Lean methodology.

Lean: From Toyota's Floor to AI's Core

Lean methodology, originally emanating from Toyota Motor Corporation 's production floor, is a time-tested approach to optimizing business efficiency. It covers eight distinct "wastes" that organizations should strive to identify and eliminate. These wastes range from overproduction to defects and the often-overlooked waste of unused talent. But of course, finding a problem is one thing; solving it is another. Enter Generative AI.

Generative AI is not your everyday algorithm. Unlike traditional AI models that often serve singular, predefined tasks, generative models are designed to create. These models learn from existing content to produce new outputs, mirroring the training data without mimicking it. Whether it's images, music, text, or even 3D product designs, this new AI capability transcends industries and job functions, making it a promising ally for companies seeking greater efficiency.?

?Initiating the Lean Journey: Go to Gemba

The concept of "Gemba" in Lean practices is pivotal. Translating to "the actual place" in Japanese, Gemba signifies the epicenter of value creation within an organization. To truly embark on a Lean optimization journey, companies must immerse themselves in Gemba, delving deep into the heart of their operations. This immersion can be approached through three distinct yet interconnected lenses: the customer lens, the operations lens, and the data lens.

Customer Lens: At its core, every business exists to serve its customers. By adopting a customer-centric perspective, companies can gain insights into the real-world implications of their operational inefficiencies. This lens allows businesses to understand not just the overt needs of their customers but also the latent desires and pain points. For instance, while a customer might complain about late deliveries, the underlying issue might be an inefficient inventory system or a convoluted supply chain. By truly understanding the customer's journey and experience, businesses can pinpoint areas of waste that directly impact customer satisfaction and loyalty.

Operations Lens: This is the traditional Gemba walk, where leaders and teams physically (or virtually in some modern contexts) walk the floor, be it a manufacturing facility, a college dining hall, or an e-commerce distribution center. By observing processes in real time, inefficiencies, redundancies, and bottlenecks become apparent. This hands-on approach ensures that businesses don't just rely on reports or second-hand information but witness the ground reality of their operations. It's here that the most tangible and immediate opportunities for waste elimination and process improvement can be identified.

Data Lens: In today's digital age, operations generate vast amounts of data. This data, when analyzed correctly, can offer a goldmine of insights. By adopting a data-centric lens, companies can identify patterns, trends, and anomalies that might not be evident through mere observation. For instance, while the operations lens might identify a bottleneck in a production line, the data lens can pinpoint the exact times when these bottlenecks occur, their frequency, and even potential causes. This quantitative approach ensures that Lean optimization efforts are not just based on intuition but are backed by hard numbers.

Lean Waste Reimagined with AI

1. Transportation:?In the world of logistics, Generative AI can envision optimal paths, virtually simulate material movement, and even automate logistics-related data tasks. Imagine a supply chain where routes evolve in real-time, informed by current conditions (e.g., weather, traffic) and vast historical datasets.
2. Inventory:?Overflowing warehouses aren't signs of abundance but inefficiency. Predictive analytics backed by Generative AI can align production with demand, and its generative design capabilities can lead to products that resonate more with market needs, thereby reducing stockpiles.
3. Motion:?From designing efficient workspace layouts to automating repetitive tasks, Generative AI ensures that every movement counts. Generative AI can draft virtual models of workspace layouts, curating environments where every step and turn is justified (or automated).
4. Waiting:?Downtimes can stall operations, but what if we could predict them? Generative AI models can anticipate bottlenecks or machine downtimes, creating real-time rescheduling strategies to ensure resources align seamlessly and tasks flow unhindered.
5. Overproduction:?By optimizing production schedules based on real-time demand forecasts, Generative AI ensures that businesses produce just what is needed when it's needed. Real-time monitoring with large language models can draw deeper connections to explain leading indicators which may signal future problems.
6. Extra-processing:?By tailoring production processes to specific customer requirements, Generative AI ensures that businesses deliver exactly what the customer desires, no more, no less. A key value-add for knowledge workers is the ability to generate first drafts of documents, emails, and reports.
7. Defects:?Generative AI can identify and proactively address defects in products or processes by analyzing patterns. Generative AI can spotlight potential pitfalls before they escalate into costly defects. Engineering "co-pilots" can augment your best coders and testers to fix defects before they hit production.
8. Underused Talent:?The gravest waste is not tapping into the potential of our teams. Generative AI can play a pivotal role in talent management, ensuring skills are aptly matched with tasks and creating/optimizing training material.

AI is Not a Fad; It's the Future

Generative AI is not just another technological fad; it's a transformative force poised to redefine the very fabric of business efficiency. While it may be hard to keep up with all the latest innovations with AI, we can use proven business frameworks like the Lean Methodology to chart a low-risk and high-value course in adopting this emerging technology. Here are three simple steps (inspired by Lean Startup) to get started:

1. Learn:?Get your entire team educated on the power of AI – the basics of how it works and what it's capable of doing. Knowing is half the battle.
2. Measure:?Investigate operational areas for the 8 Lean wastes. Get granular so you can solve problems iteratively and estimate the quantitative impact to expect once they are optimized.
3. Build:?Start building Generative AI solutions, but do so iteratively, learning from each cycle and refining the approach. Remember that you don't have to build everything yourself; off-the-shelf solutions may provide a faster path to value with less long-term maintenance costs.

The fusion of Lean thinking and Generative AI offers a blueprint for the next era of business efficiency. Don't stick your head in the sand, thinking the GenAI boom will blow over. While it's good to gain inspiration from how other companies creatively apply Generative AI in their business, don't wait for your competitors to deploy AI-based solutions first. Seize the moment and find a lean path to value with AI today.

Preview: Beyond Efficiency With Lean + GenAI

I’ll cover more about using the Lean Methodology to source AI Opportunities soon, but here’s a sneak peek into my latest thinking.

The modern business landscape often pigeonholes Lean as merely a tool for operational efficiency. This perspective, while not entirely incorrect, is just the tip of the iceberg. Lean, when understood and applied holistically, is a potent catalyst for growth and innovation.

Vanguard for Growth: The true essence of Lean lies not just in doing things efficiently but in doing the right things. It's about aligning every facet of an organization—from product development to customer service—with what truly matters: delivering value to customers. When businesses shift their perspective from Lean as a tool to Lean as a philosophy, they unlock avenues for innovation and growth previously unseen. Here are five areas I'll explore in my next post.

1. Features as a Service
2. Dependability as a Competitive Advantage
3. Accelerating Product Launches (time to value)
4. Amplifying Sales and Marketing
5. Reallocate Resources for Growth