Identified and generally accepted as a primary Lean principle is the importance of identifying value from the Customer’s perspective (see www.lean.org). The corollary of this principle and its primacy along with other Lean principles and practices is that Lean thinking views creating value for the Customer the purpose of an enterprise.
It’s important to recognize that there is a widely accepted view regarding enterprise purpose opposed to Lean, which is that the purpose of a business enterprise is to earn a profit for its Shareholders. While both Customers and Shareholders need to benefit from the performance of the enterprise identifying from which perspective value is created has an impact on enterprise performance.
While creating value from a Customer perspective encourages Lean thinking, creating value from a Shareholder perspective encourages its opposite, Bulk thinking. For Shareholders this presents an investment paradox similar to the resource efficiency paradox identified by Niklas Modig (@LeanOnMyself) and Pär Åhlström in their book This is Lean (www.thisislean.com).
The paradox is that Bulk thinking in the enterprise leads to behaviors that create illusions of profitability while detrimental to the health of the enterprise and wealth of shareholders. These behaviors include standard cost accounting, large batch production of goods and services in search of suboptimal economies of scale, unneeded work to create illusionary resource efficiency, and costly controls designed to ensure compliance with standards without engagement of the people that understand the problems these standards raise.
These Bulk thinking behaviors not only require more effort to deliver the value the Customer desires, they also diminish the long term profits available to Shareholders.
So is capitalism flawed? No, what is flawed is the Bulk thinking focus on return on capital rather than creating more Customer value with less effort as the path to superior enterprise performance, and as a consequence greater investment returns. Investors and investment managers need to acquire the ability to distinguish between Lean thinking and Bulk thinking to more effectively employ capital.
Look to the outstanding productivity differences between Lean operations and Bulk operations to understand the substantial investment opportunity a focus on Lean thinking offers and why Bulk thinking investors are missing opportunities.
Back to the investment paradox. Capital is better served by financing enterprises, be they companies or projects, led by people that implement Lean thinking behaviors throughout the enterprise, recognizing that increasing Shareholder value is a consequence and not the purpose of a high performance enterprise. So in the important arena of enterprise purpose Lean thinking trumps Bulk thinking for Customers and Shareholders alike.