Augmented 113
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Trond: Welcome to another episode of the Augmented podcast. Augmented brings industrial conversations that matter, serving up the most relevant conversations on industrial tech, and our vision is a world where technology will restore the agility of frontline workers. In this episode, the topic is the business model of Lean, and our guest is Jim Huntzinger, president of Lean Frontiers.

In this conversation, we talk about what lean business models mean, and what the difference is between value stream costing and product costing, lean coaching, Toyota Kata, and how to conduct process and product development in tandem. Augmented is a podcast for industrial leaders, for process engineers, and for shop floor operators, and hosted by futurist Trond Arne Undheim and presented by Tulip.

Jim, how are you? 

Jim: Good, good. How are you? 

Trond: Yeah, I'm excited to have you on the podcast. Let's, uh, talk a bit about business models around lean and, uh, what's happening in the lean space that's, uh, a focus of yours. What I understand is, you know, you started as an engineer from Purdue and you went to Milwaukee School of Engineering, so strong engineering background over time.

I'm sure there's a lot in between, but you became a serial author of various books related to lean, which we'll talk about. And you're now the president of Lean Frontiers, which you know, is your own firm here where you deal with, uh, building best practices around lean. I'm curious, first of all, you know anybody in Manufacturing, there's always a pretty good reason why that's your choice because you started as an engineer, but you're now deeply involved with lean and consulting around lean.

How'd that happen for you? 

Jim: Yeah, I went to Purdue, came out as an engineer, and uh, took a position with a company called Aisin Seiki as a transplanted North America to support the Toyota plants in North America. And at that time it was, um, the GM Toyota Joint Venture in, uh, California. The Nummi plant, Toyota in Canada.

And then originally the plant in the United States was the Georgetown, Kentucky plant was the only one they had at that time. And it actually hadn't gone online yet. And we were, Aisin Seiki was a Toyota Group company and obviously we're supplying parts into those plants. Uh, brake components. Oil pumps, water pumps, you know, you sort of a variety of brake components.

I took the position for a couple reasons, not because it had anything to do with Toyota. I took it because my part of the plant wasn't built yet, so I was gonna go through a plant startup. So that's what interested me. And I certainly had an interest in, in Manufacturing, particularly machining and assembly, which is what, what it was.

So with doing that, I. Started off and actually spent, uh, nine weeks in Japan going, getting trained on, um, the different products we'd be Manufacturing, machine tool builders that would be supplying, us the different Aisin plants where the different products are being manufactured in Japan, and also some training on the Toyota production system again.

Toyota production system had, you know, actually a little meaning to me at that time. We went through that process and I went through a, a plant startup, like I said, literally from the plant being built to the machines, coming over to ramping up the lines, to ramping up production with Toyota. But I had an interest in getting more involved in the process development, the machine development and everything to go with it from the Manufacturing lines, which obviously the Japanese engineers did that. And we kind of picked up the baton as stuff was brought over here and ramped the plant up. And I left there after a couple years, then went up to Wisconsin to work for Briggs and Stratton a small engine manufacturer.

And, uh, one of the reasons they hired me, cause supposedly I knew something about this thing called the Toyota Production System. But on my second day at Briggs, it dawned on me that the rest of the manufacturing world didn't work like this place I had just left. And I realized, oh my gosh, that's why they hired me, cause I'm supposed to know something about that.

So in many ways my real training happened while I was at Briggs, this was before the internet or before there were seminars, there certainly wasn't internet, access, even books. I guess. There was a few, few of the one original ones that were translated from Ohno and Shigeo Shingo were floating around. So we really had to do it kind of by, in a way, by the seat of our pants, the true learn by doing.

And, uh, I certainly had some, uh, like background from Aisin and which actually helped me in many ways, more than if it would've been for Toyota, one of the plants, because we manufactured smaller components. So from a tangibility standpoint, that related more to what we were doing at Briggs with the small engine components and all that.

So that was actually a kind of unknowingly lessons I brought with me at that time. So we just really, from the ground up, did a lot of implementation. Even to this day, probably just in size, the biggest implementation I've seen or gone through, and particularly at a time, this would've been 30 plus years ago, when there just wasn't any places to go to for real resources.

So we truly did it by learn by doing, by running experiments like in the Kata community and things like that. Like, running experiments, try trying it out, the scientific method and just trial and error as we learned and, and grew with what we did. 

Trond: One of the things that you landed upon after a while is you took a specific focus in ROI or specifically the way that these processes were and were not counted in the accounting system, but also generally weren't kind of structured in a way that you found useful.

How did you stumble upon that perspective? 

Jim: As we were making changes, obviously in the shop, I mean, pretty massive changes. Briggs is very high volume. The different models range from low volume, would've been 300,000 a year, to different engine models that were over a million a year. So we had significant volume and manufactured all our components going through that process.

The executive management wanted us to do an ROI on all the physical changes we were making, which I had no interest in cause I had enough work to do. I didn't need to do something like that. And obviously this was getting into their accounting system, which I had even less interest in that. But nonetheless, we were required to do it.

So I did it. And as I was going through that, calculating out what the ROI was basically calculating through our system, the internal costing that we did, I realized all the information was incorrect. And so I dug into how it was calculated, which even more so, I realized it was incorrect and why it bothered me so much as a Fortune 500 company, all our business decisions were based off that information and it was not correct. 

Trond: Hmm.

Jim: So I got engaged with one of the divisional accountants actually, that we're doing a lot of the changes cause you know, he's one leading up the ROI for their division. His name was Jeff. And I said, you know, Jeff, we're having to do this calculation, but this information's incorrect.

And he just goes, well I know Jim, but you know, corporate wants to do this, we need to do it. Yeah, Jeff, it's incorrect. And he was actually very open. We had tons of conversations going through the process and he had already grasped that with the changes we were making, the traditional, internal, you know, accounting costing system wasn't cutting it.

And just through a lot of dialogue, him and I have, he just started kind of contemplating what to do about that. And he would ask me what I thought, you know, again, I'm coming from an engineering background, not an accounting background. I'd kind of give him my opinion and thoughts and that. And one day I'm in there talking to him, he said, Jim, let me show you something. And he showed me something on his computer and was kind of walking me through it and I said, yeah, that looks like it makes sense to me. Now, ultimately what it was is what we'd call today, value stream costing. I'd say our technical term for back then was Jeff spreadsheet.

So basically what he had created based on him and I's discussions was a, a spreadsheet which actually captured direct cost. And what it was reflecting was the physical changes we were making in a shop where before it was all allocation, all types of allocation processes. On labor hours and machine hours and all this allocation, which is what caused the incorrectness.

And that's what I discovered when I was calculating, uh, component costs. It was showing me ones that I knew were significantly lower volume and much more complicated, showing those as costing us less to manufacture. That was my key, and I knew that simply was not true, what the actual costs were, I didn't know at that time, but I knew that conclusion was not true.

So with what Jeff did, With the spreadsheet was basically what we would call value stream costing today. So that's what we began using and we could do very deep, you know, component specific or even product number specific costing up to department, up to what we would call focus factory back then, which what we call value stream today.

And we could make changes to any of the minor allocations we did literally within minutes. Where before it was almost like an act of God to make those changes. So that's kinda what got me going on that, so when I got my master's degree, you mentioned Milwaukee School of Engineering, I took the thesis route and basically my thesis was a write up about this process of what we kind of developed and discovered.

Trond: Hmm. Yeah. I wanna dive more into this, but it's just so interesting that you took an area that, that you weren't interested. 

Jim: Yeah. 

Trond: And because it has so, so many flaws, you were able to do something about it. I wanna dive back into value stream costing, but just curious, how is the situation now? If you look around various plants in the Midwest or wherever it is, is product costing still the default and you're still on the selling side of, uh, trying to introduce value stream costing, or, or has the battle been fought out already?

Jim: No, it's still, most places do not use good costing methods, and one of the main reasons why is if you look into our, our university system and what they teach, most people will get most of their coursework in financial accounting, not as many in cost accounting. Cost management, but either one is the cost management.

They're still using those traditional allocation methodologies and they just by default will give you incorrect information, and that hadn't penetrated our university system. So that's what people are getting trained on. Most companies are still using that, so they get in there with other people that have been trained in past decades on that.

So it's just a real uphill battle, even in the lean community to really get significant changes made in that manner. Because just the existing systems that have been around for, uh, decades, although, but if you go back about a hundred years, and I did that. Part of my research when I was doing my thesis was, well, who came up with these ideas and why?

But I discovered back, going back a hundred years ago, there was a good number of people at that time and, and pretty much all of them were engineers because those were the guys that actually did the original methodologies for how you calculate costs. And there's a number of them back then that did what we would call today, essentially value stream cost. They understood the errors of the allocation process. 

Trond: So do you have any explanation from your work in terms of how the accountants or economists or whoever it was got the upper hand and, and kind of brought it all into product costing? 

Jim: Not exactly. There's some speculation. We have, I think, strong speculation and certainly I believe it has, it had an influence. If not most of it, certainly an influence. If you look at the way going into the business schools as what we might call the MBA programs developed, really didn't develop till after World War II, prior to World War II. They weren't so predominant, but a lot of the original costing was done at the company level and not taught through university systems.

And then as you see, that proliferation of the MBA program, World War II and post World War II, a lot of that curriculum was developed by people that did not have that background. Not that there wasn't allocation prior to that. There certainly was in organizations, but it just manifested, and then that was a lot of the financial people and financial accounting became predominant.

The problem with financial accounting, not that it's necessarily a problem, is it looks at the aggregate. And what you're doing with really managerial accounting or costing is really more granular. So you can certainly take the granular and run it up to get a good, accurate aggregate, but you can't take an aggregate and drive it back down to get good granular costing if you're making, you know, individual decisions like that.

And that's one thing if you look at even Toyota. Toyota, we use financial accounting, of course, to give out information, public information, which they need to and legally must from a financial accounting. What they don't do is allow that information to go back into the plant for that level of decision making.

Trond: Hmm. Yeah, I mean, what you're saying makes a lot of sense. So then there is now when you wrote the thesis on it, right, lean accounting. Yeah. Tell us then, how did you go from a thesis to then making a business out of this and starting to teach the these kinds of things. 

Jim: Yeah, so as I worked on a thesis, I, I got to know a number of pioneers, I guess in that area. Again, what we call lean accounting today. A number of them were CFOs of companies that did some original pioneering work just in lean overall, but certainly in the lean accounting field, several economic and and accounting professors that also kind of did some work in that. So they helped me out with my thesis.

After I got done with my thesis, I thought, oh, you know, okay, great. You know, I fulfilled my thesis requirements, so that's good. But okay. I've wrote some paper on this. I kept thinking there's gotta be something else I could do with this. And I don't know if you're familiar with AME, Association of Manufacturing Excellence?

Trond: Sure. 

Jim: So at one of the AME conferences, Quite a few years ago, one of the founders of it who's been a good friend and mentor of mine, Doc Hall, I saw him at the AME conference. And by then there were certainly lean things going on at conferences. AME had a lot, but more around general, more around Manufacturing.

And I just said, Hey Doc, do you think it's possible to do a, a lean conference on a specific subject, let's say accounting? And uh, Doc kind of said, yep, I think you could. I think you should. Why don't you go do that. And I guess I was foolish enough in a sense to go do it and I knew nothing about conferences and we went from the idea to actually Lean Accounting Summit in about four months and ended up with over 300 people at it.

So it was a success from that standpoint, but I still didn't see it as a business, but I thought, Hey, that went well. I should do it again next year. So we did it again the next year and we got over 400 people. And, uh, same thing. I thought, well, that went well, we should do it again third year. And at that time I also researched training with industries and we also did a Training Within Industry, TWI, summit in that third year.

And also the Lean Accounting Summit for a third year had over 500 people Lean Accounting Summit, and by then it was just consuming so much time. That's when I realized this isn't just an event, I'm doing it each year. It's really developed into a business that's consuming my time, and eventually Lean Frontiers evolved out of that just because eventually with doing a variety, we kept kind of doing some more and more summits.

We kind of needed a management organization over those summits. So that's how Lean Frontiers evolved. Very organicly. 

That's 

Trond: fascinating. I'm just curious, when you were planning your small first year event, what went into your head then? What, what were you telling people about, you know, you should come to this event?

Were, were you just simply presenting your stuff or were you inviting others to come and share their knowledge? 

Jim: We invited others. So the people, all these CFOs and several of them were out of some of the early, um, case studies out of the book Lean Thinking. Wiremold, uh, Danaher, LandTech, the CFOs from them were the pioneers in there.

They'd all helped me with my thesis. So when I came up with this idea, I guess encouraged by Doc Hall, I just called them on a phone and said, Hey, I have this idea what do you think? All of them said, Jim, just tell me what you want me to do and I'll, I'll be there and I'll do it. So we had some of the original pioneers in it.

We had, uh, some original companies that were pioneering in this area as well. They came and presented, and a number of them, as I talked to them, they would go, um, well, gosh, Jim, we're only about four or five months into this. And I'd always go, well, that's four or five months more than anybody else out there, so you guys are on the cutting edge. So that's kinda how that got going was uh, that wasn't so much me as it was just the folks that had helped me. And then some of the companies I was able to meet that were doing some of the early pioneering work. 

Trond: So in the early days, was this mostly a CFO game or people who were actually in charge of accounting or is part of your point here to try to interest others, including engineers and operations people in this process. Cause I'm, I mean there I, I'm sensing something a little bit more subversive than just counting things differently. I mean, it, it leads to different outcomes also. 

Jim: Yes, originally starting out it was, it was, uh, it could be, you know, divisional accountants. It could just be, you know, accountants that were in companies that were doing this lean thing. A lot of it Manufacturing, and we had a number of people there that showed up that said, I don't really know anything about the, in accounting in this case, I don't really know anything about this, but our company's doing lean stuff, so I figured I should come and learn.

What it means for me. And we also got a lot of the, just the general continuous improvement people that one of their hurdles was always the accounting of their organization. So they were trying to come and learn what do I need to tell them to do other than just, you know, kaizen, your accounting process.

So one, one of the things that came out of it was we would say, are we doing lean accounting or accounting for lean? Cause a lot of, we said we're really doing accounting for lean. So not just at making improvements, which they could do in their accounting processes, but really how do you restructure your accounting and your finance of your organization so it promotes and supports these physical changes you're doing in your organization from a lean operation and functionality standpoint. So we had a, we had a pretty good mix of people. 

Trond: Hmm. I wanted to skip a little back to what most people consider core to lean and what you're actually teaching around this now.

So lean coaching for you these days, does it start with these accounting principles or does it start from the basic concepts of sort of like less waste or some sort of organizational principle? Where, where do you start when you introduce these topics today? 

Jim: If you go with an individual company, I would always say this, it depends. It kind of depends on where they're at, what their needs are, you know, understand what your strategic objectives are, understand where your gaps are. Just like any good analysis of an organization, you really need to do that first. You shouldn't necessarily do lean or any of the other things for the sake of it. You should be doing it so you're meeting your, your organizational objectives. You should be doing it for getting your people developed so they can have better skills. And skills is a big part of it. To help meet those corporate objectives. You don't just put a pull system in for the sake of a pull system. You do it because it's meeting some operational, some strategic needs.

So really trying to get organizations to evaluate where they are, what their objectives are, what their mission is, and try to start where your biggest gaps are, no matter where they are. So they really gotta do that assessment first to get going. And I'll also tell them, you know, if you make some mistakes along the way, that's okay, as long as you are continually doing the analysis, really the scientific method. And reflecting as you go to make those proper adjustments. 

Trond: Hmm. There are a lot of acronyms in Lean though, and they seem perhaps attractive because they are Japanese acronyms that sound very fancy. You've made some of your own, or there's this TWI, Training Within Industry. That's one acronym that you use. What's that all about? 

Jim: So, TWI, so so it stands for Training Within Industries, what that is was a, uh, program that was set up during World War II to help organizations as basically, we sent all the boys overseas. So we had this huge pull out of Manufacturing and this huge influx of you, you know, that's where Rosie the Riveter comes in.

Influx of green people into Manufacturing is okay, we have the biggest demand on manufacturing in in US history. How do we get them ramped up when we have this biggest demand? When we have so, Non-experienced people in there. And one of the programs they put together was, um, Training Within Industries. And what that was, was mostly for frontline, um, supervisors.

How do they train these people in their operations to get them ramped up as quickly, conscientiously and safely as possible to get the output that was needed for, you know, the war effort? And it was a huge success. So they developed three main, um, programs, job instruction, which is how do you train people effectively, job methods, which was how do you make improvements, you know, at the shop floor level, it was kind of really, how do you make people into good industrial engineers without them going through industrial engineering programs.

And the third was job relations, was how do you deal with people problems? I mean, organizations are people, so you are certainly gonna have people problems. So how do you deal with those and those programs are extraordinarily successful during the war, and uh, how they became part of the lean aspect is during the occupation of Japan.

We sent many programs over there to help them rebuild, you know, the country as a whole, their industrial base, and TWI was one of those programs that came over to Japan and Japanese industry, and it ended up in the early, very early 1950s coming into Toyota through their training department at that time, for those familiar with Taiichi Ohno, who is the guy that kind of gets the credit for developing the Toyota Production System.

He was trying to implement flow production modeled after the early Ford Motor Company without much success for quite a while. But until TWI came in, that's when he really started making traction within Toyota to get these flow methods developed and functioning and thriving in Toyota. So this TWI gave people the skills to be able to do that.

So if you look at Toyota, they're famous for Kaizen, famous for their standard work. Those originated out of the TWI programs. 

Trond: Yeah. And then there's a third concept of katas, right, which...

Jim: Yes.

Trond: They're a little odd to me because they refer to a way to practice scientific method. And you've mentioned that concept a couple of times, but so much of what you're preaching and what you were just saying about Training Within Industry has to do with people who in no way, are trained in scientific methods than, you know, much less, certainly not even trained in Manufacturing methods.

How did that even get conceptualized then as a sort of a scientific method when the challenges were even just getting people used to working? I mean, you were talking about a whole new population that didn't even have experience in a workplace, presumably many of them. 

Yeah, it's fundamentally because of this. 

Jim: So if you look at the TWI programs, the three, like I said, job instruction, job methods, job relations, they called them the J programs cause they all start with job. All those are based on a four-step methodology. And that four-step methodology is based on a scientific method. So the scientific method is embedded in that skill that you're teaching to, in this case supervisors for the improvement, for instruction, for, you know, resolving people problems.

So that's how that started doing. Now also, that's also why it made sense to Taiichi Ohno when it came in through their training department, cause his background was engineering and all that. So it was very rational. It made sense to him to help his people get the skills in order to get these things from a flow standpoint in place.

Now tying Kata into it. So when Mike Rother did his research on, uh, what he calls Toyota Kata, and Kata is just a Japanese word for like a, a repeating pattern, a repeating behavioral pattern. So Mike went into these companies that are practicing, you know, the Toyota production system, and he would see this pattern repeating.

And even in Mike's writing, he'll say now every place he went into wasn't doing it in the exact same way. So he came up with the steps for, you know, the improvement kata and also the coaching kata, cause he'd see those patterns being utilized and he had to narrow it down because he, you know, he couldn't say, well, depending on the circumstance, there's a whole bunch of different ways they do it, but they're using this basic methodology so he had to articulate it so people can grasp it, understand it, and practice it.

But when you look at what he was observing, it was a lot of behavioral patterns. Not exclusively, but a lot of them had evolved over the decades at Toyota from the TWI programs. As people moved up into ranks and used it for bigger projects or used it for other things, other just the frontline supervision, they were using that same basic pattern, that four step methodology of solving a variety of different problems.

In a way, that's what Mike was observing, then had to codify it in a way he could go out and explain it to people. 

Trond: That's so fascinating. And you, you said also that Taiichi Ohno, who obviously by so many people now in Japan and here, is viewed as this genius that came up with all of these things. Of course, he was synthesizing and building on other bodies of knowledge, including from the US. There's this interesting interplay I find between Ford and Toyota. And Toyota on Ford and, but you said he struggled. What explains his breakthrough? Was it truly understanding that people learned through behavior patterns more than they learned through their head, basically? 

Jim: Yeah, and I, you know, obviously never met the guy, so what, what was his true thinking was at time? But if you just watch what he did, he was working to try to implement flow production, you know, we could say one piece flow as we call it today. And that originated in the early Ford Motor Company, really going back to their Highland Park plant in the early part of the 20th century where they made the Model T. And that was in a sense, the model they were trying to emulate.

Now, the difference Japan and even Toyota specifically had is, the Ford Motor Company had less mix. There was some level of mixing with the Model T, but it was high volume and low mix. Well, Toyota was dealing with low volume and very high mix, but he still felt that that flow model, one by one manufacturing, was a key, trying to get productivity improvements is what they were trying to achieve. But he struggled with it. He'd worked on it in their machine shops, and really struggled with it. He had, uh, put some of his engineers in charge, you know, just more rational thinking tried to do, because it's just like any of the rest of us to try to change a culture is a difficult thing.

So you need some type of structure that helps you do that, and that's what he grasped onto when he saw TWI come in through their training department, on this is something rational. This is something I could use to get people to, you know, without just yelling at them and beating them over the head. Something that's rational.

I can train people to do that they could begin doing on their own accord. And it was successful. And there were other, there were other dynamics going on. I don't wanna say it's exclusively TWI but that was a big factor because if you look at their, their Kaizen process, their standard work, it is the TWI programs.

And also too, that whole team environment, you know, from a leadership standpoint, it's, if you look at it in the way they resolve problems, it's the job relations model. 

Trond: Well, going to that point, you have yourself had some success building a community around these practices. Where do you see the lean community evolving as we are, I think, in a pretty interesting industrial epoch just right now with, uh, lots of challenges. Some people have said we need to find the lean of lean, right? We're in hard times again, arguably, right? So inflation, other things, pressures, there's pressure on globalization, so that, that means pressure on the supply chains.

There is, uh, you know, a plethora of new technologies, although Industry 4.0 hasn't exactly delivered as quickly as most people were hoping for. So I mean, I can name a plethora of issues that are facing the sector. Yet there's this, perhaps also self-confidence that, you know, finally, maybe this is manufacturing's decade.

I'm sensing that as well. What does that do to the community? What are you sensing now? I mean, is it a, an optimism? Is there a sense of purpose? Again, where are we with the people in Manufacturing who, who want to set new trends and move forward? Is there an optimism there or is there a wait and see? What's going on?

Jim: I think there's some level of optimism. I know when we get environments with, with the way the economy is now, you know, people lose a bit of that steam just for obvious reasons. But I think there is in the, I'd say overall Manufacturing, and particularly in the United States, there has been a big move over the last number of years, and there's a fellow by the name of Harry Moser who's done a lot of work in this area. It's called Reshoring. So to bring Manufacturing back. So we have brought a lot back, and that's a good thing to bring the Manufacturing back. I, I always say this, the most effective way should be and is, is to manufacture in whatever market you're selling into. So if you're, you know, selling into, you know, the United States or even North America, you should be manufacturing here because there are just physical costs from shipping things overseas, and to be closer to the market you're supplying is always a better way to go. There's always exceptions out there. It's not a hundred percent black and white, so to bring things back. So there's, I think, a certain optimism. We've had a lot more Manufacturing come back within the lean community.

I'd say there's the, in the last number of years, there's been a lot of work and a lot of, uh, enthusiasm around kata and kind of underneath that is TWI and also just coaching. How do we make a good coaching culture for continuous improvement. But underlying that is, well, it gets back to the skills, the skills of TWI, the skills of kata, in order, so you do have an organization with people that you develop that can take on these tasks and challenges and be successful with it. Notwithstanding some of the important things, like back to the lean accounting thing, you still need some of those structural things in your organizations that help drive people to do that, to be successful, to help you account better.

For what your success is and just for the company beneficially overall. And one thing to look at, I won't go down this route too far because it'd be a whole different subject matter and discussion would be from a, from an economic standpoint. 

Trond: Mm-hmm. 

Jim: So when you have something like inflation, inflation should never occur. So inflation is a monetary phenomenon, but if you have productivity improvement going on, which we do in the United States and probably even North America overall, our productivity always improves. If your productivity is always improving, you should never have an inflationary economy because what's productivity? Well, you're getting more out with less or more out with the same. Well, that by default means costs are going down on the products of goods and services. So there's certainly, we continue to do that and there's certainly things from a lean, back to the lean business model, which I know you started with.

The lean business model is the most effective way, even if you're in service, it isn't just manufacturing. Anywhere there's people and processes to make you more effective, more product. So any organizations that are doing that, you should be, be able to do better for the organization and ultimately the cumulative of that, you should be doing it better for the economy.

So hopefully people do have an enthusiasm and there is an enthusiasm on these skills and helping your helping organizations become better at it. And within the lean community. It'd just be nice to propagate that out further. Cause if you look at the number of companies that are really practicing a good lean business model, here we are 30 years down the road from kind of when this started, it's still the minority and it's still the exception of the rule. It'd be nice to get it to be the rule, not the exception. 

Trond: So sort of rounding off here, what are you excited about? What are you worried about in, in terms of where your set of issues are going?

I mean, you said early here when I asked you about lean accounting that the battle's not over. So what would be the game changer there, for example? And then are there things that you're looking at to try to get a sense of where we're we're going here? 

Jim: Kind of what we just talked about, it's exciting to see that people are excited and interested in actuating on things like getting these, these skills in the organization.

If you go back when Lean started on, we weren't aware of these skills, so a lot of people struggled. They knew where they needed to get to, they just didn't really know how, and having these skills helps with the how to get there. Probably one of the things that now compared to going back 15 years ago is a lot of those more infrastructural things like accounting, still they need to change in order to incent the organization to do the right things.

But a lot of those things still, again, are the exception of the rule. It's really two sides of the same coin. You certainly need those infrastructural things to change. You know, accounting management systems, things like that. But in order to do that, you need the underlying skill set so people know the, how do we go about getting there.

And then you need the support and vision of organizations and, and leaders and organizations to get their organization, which really means their people, to get them there and help them to get there. And obviously just, you know, any organization that's, um, always easier said than done. 

Trond: Well, fascinating stuff. You've done a great job here. I think, uh, explaining to me what the rationale is behind Lean Accounting and, and why it's important. So it seems to me that there's some work to be done still, but uh, definitely it seems to tie the objectives of a lot of these lean processes and tie it down to actually measuring the progress that you want to achieve anyway.

So it seems to me that people who are interested in lean should engage with the metrics part of it too in order to get the benefits they're aiming for. So, thanks Jim. This was, uh, fantastic. 

Jim: Thank you for the discussion. I enjoyed it. 

Trond: You have just listened to another episode of the Augmented podcast with host Trond Arne Undheim.

The topic was the Business Model of Lean, and our guest is Jim Huntzinger, the president of Lean Frontiers. In this conversation, we talked about what lean business model means and what the difference is between value stream costing and product costing. We also cover Lean Coaching, Toyota Kata, and how to conduct process and product development in tandem.

My takeaway is that the lean business model is attractive to many Manufacturing firms and still elusive to some of them, despite many examples of the principles in action popping up constantly. The business community should still spend more time on the interface between tech, logistics, and IT, and how all of that might interface with lean accounting, strikingly what we might think of as lean companies don't necessarily use lean practices across their business.

Thanks for listening. If you liked the show, subscribe at Augmented podcast or in your preferred podcast player and rate us with five stars. If you like this episode, you might also like a bunch of episodes we have done. Just type lean into the search bar on AugmentedPodcast. com. Hopefully you'll find something awesome in these or in other episodes.

And please if you do, message us, we would love to share your thoughts with other listeners. The Augmented podcast is created in association with Tulip, the Frontline Operations Platform that connects people, machines and 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.

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