Lean needs Marketing, more than Marketing needs Lean!

In The Service-Dominant Logic of Marketing edited by Robert Lusch and Stephen Vargo they present the case to use SD-Logic as a foundation versus a total integrative marketing method. I believe that Lean viewed through the lens of PDCA as a knowledge creation platform can serve as the vehicle for implementation of this Logic. The principles of SD-Logic cannot be implemented in various silos of an organization, just as the basic principles of Lean cannot. It requires a cultural and fundamental shift within the organization placing the customer and user experience becoming the center.

Let me start by listing the foundational principles of Service Dominant Logic described in the before mentioned book:

1. The application of specialized skill(s) and knowledge is the fundamental unit of exchange: Service is exchanged for service.
2. Indirect exchange masks the fundamental unit of exchange: Micro specialization. organizations, goods, and money obscure the service-for-service nature of exchange.
3. Goods are distribution mechanisms for service provision: “Activities render service; things render service”
4. Knowledge is the fundamental source of competitive advantage: Operant resources, especially know-how, are the essential component of differentiation.
5. All economies are services economies: Service is only now becoming more apparent with increased specialization and outsourcing; it has always been what is exchanged.
6. The customer is always a co-creator of value: There is no value until an offering is used—experience and perception are essential to value determination.
7. The enterprise can only make value propositions: Since value is always determined by the customer (value-in-use), it cannot be embedded through manufacturing (value-in-exchange).
8. A service-centered view is customer oriented and relational: Operant resources being used for the benefit of the customer places the customer inherently in the center of value creation and implies relationship.

My premise is that if you are Lean Zealot and understand Lean as a knowledge Creation machine versus a waste reduction machine these principles are not only compatible but harmonious. There is little or no difference.

I asked Dr. James Womack this question in a podcast:

Joe: Most people don’t think of Lean as, a capturing knowledge mechanism. Do you?

Dr. Womack: Well, of course. That’s what the whole idea is. It’s an experimental process that you try things. They are right. Deming most famously captured it in PDCA. But again, Deming didn’t exactly think of science. Hey, let’s give Galileo a little bit of credit.

Now look, it’s by design and experimental process. By the way, Kaizen is nothing but an experiment. There’s a plan based on grasping the situation, I hope, which is to say what is the issue? Then you do it, and that’s to run the experiment. You can run a valid experiment because you have baseline data on how the current state works. So then you change something in a future state, and you measure the difference and decide whether that’s a good or bad result and whether to standardize it or not.

The entire idea here is to capture knowledge in books of knowledge and the product development system in a progression of A3s which, of course, we talk about a lot at LEI. But A3s are really nothing but a way to put an experiment in context. You put PDCA in context and so they become their own book of knowledge as time moves ahead. If you’re not trying to learn something and not trying to cumulatively learn something, so you don’t have to do the same experiment over and over, as I often see in companies. Well then, you need some sort of a way to write it down. To standardize it so you can sustain it as well as discover it.

I find a striking resemblance in the Toyota Supplier hierarchy (on left) depicted by Liker and Meier (The Toyota Way Fieldbook) and the Economic Pyramid model (on right) of Pines and Gilmore (The Experience Economy).

Lean offers a guiding light for implementation of Service Dominant Logic or maybe a more correct and broader term would be a Customer (User) Experience Centric Platform. This change is occurring in the market place and Lean can be part of the solution for many companies. It is a platform that is well understood and readily accepted. But with that understanding emanates a platform of internal focus based on a waste reduction mentality. This focus may actually hinder the growth of the Lean Methodology into the higher culture that it professes to emulate.