The Lean Question

If a firm’s output can be defined by a production function, perhaps of the Cobb-Douglas variety, the Lean question becomes a very simple one: in the short run, what is the optimal combination of inputs that yields the desired output?  As such, the problem is one of constraint maximization.

In every Lean application, a practitioner needs to be able to show how their Lean interventions are maximizing the constraints imposed by the production function. If they can’t, they are guessing and don’t truly understand the system which they are trying to improve.

A simple example: if a firm’s production function is given by Y=AL^{\alpha}K^{\beta} \,, then a Lean solution should be able to show how total factor productivity (A) is being improved to produce more output (Y) with the same inputs of L (Labour) and K (Capital).

Unless this can be shown, it is unlikely there will be measurable impact on a firm’s bottom line from a Lean effort.

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