Last week I (Doc Hall) went to the 10th Lean Accounting Summit. Having attended most of the first nine, I saw many familiar faces, although the majority of attendees were first-timers. The objectives of lean accounting are to align cost systems with the actual flow of operations and to issue timely cost reports that better relate activity observed to obtaining higher profits, or at least avoiding losses.
When everyone frames success as improving profitability, the end objectives of lean accounting are not in question. Once into its logic, financial attendees readily grasped the restructuring of cost measurement systems. However, implementation was an issue. In a company, shifting cost structures from measuring performance of separate functions to measuring the performance of processes flowing across functions implies organizational “culture change.” Therefore many presentations emphasized leadership of culture change to support workers managing and improving process flows.
People rarely, if ever adopt a new culture quickly, and if deeply entrenched assumptions have to be reframed, very slowly. Even then, with the best of intentions, old habits linger on, like the usual fate of New Year’s resolutions. If it can be done, immersing people in new environments shortens transition, as has been known for centuries through military training and religious cloistering.
But in open societies, change battles status quo “framing,” a term identified with George Lakoff, a professor of cognitive science and linguistics at Berkeley. Lakoff contends that, except for logic about physical phenomena, human thought is based on conceptual metaphors that frame a person’s core values interpreting a chaotic world. Accepting a new framework depends on presenting it so as to migrate existing frameworks, helping people work through their doubts and fears. For that reason, persuasion depends less on facts than on attaching new ideas to existing core values.
Despite counterarguments, Lakoff’s concepts of framing have influenced recent advertising and political messaging. Weaning people off established frameworks takes more ingenuity than defending a status quo.
But back to the Lean Accounting Summit: Almost every attendee framed the ultimate success of both a company and a lean initiative as increasing a company’s top line, its bottom line, its capital value, or all three, and in dollars. Alternatives such as corporate social responsibility were add-ons – good if the company can afford it. This system of arm’s length financial success does not encourage collaboration between companies.
In order to be consistent, a framework that deems success as top-line, bottom-line growth also relegates lean to a cost reduction program that engages workers. Seeing lean as a revolution in the concept of a work organization is inconsistent with this framework. Despite emphasizing leadership and culture, few in the lean community sense how deeply process excellence deviates from business-as-usual “instincts.” When the chips are down, business-as-usual still sees employees as expenses to minimize. Consequently when those currently in control of a company revert to a business-as-usual framework, lean initiatives go dormant. (Even the concepts of “control” clash.)
Lean and quality frameworks upend business-as-usual concepts of organization inside companies. Compression Thinking opens a much bigger divide outside companies, between a company and its effects on all stakeholders, one of which is the environment. Spanning this divide has presented a quandary to environmentalists. To get business attention, they often translate environmental crises into externalized costs – monetary valuations. But after filtering environmental waste through a business framework, companies cut it as long as it benefits the bottom line or enhances a green image for customers.
Business pioneers going further extract their minds from a monetary framework. Like Ray Anderson at Interface, they re-frame the primary mission of the company as working in harmony with nature. However, they must deal with a transactional economy, so profitability is a constraining necessity, a conflict that won’t go away.
This divide splits into many other divisions. Does a framework of thought consider the world to be finite and limited, or capable of unlimited growth? Must a company give a customer whatever they want, minimally considering long-term consequences? (Many tenants of our economic faith are hidden so deeply that we do not think about them.)
But business culture is not the only one struggling to re-frame future success. For example, many participants in the Climate Change march were protesting economic unfairness as much as environmental degradation. Unfairness was more personal and immediate. The New Economy Coalition posits that without addressing wealth issues even local programs to right the environment stir little passion. Mixing social factors into an already wicked problem is analogous to upending a company culture to sustain trust by the workforce and other stakeholders when executing a lean initiative.
Dealing with Compression is a complex, nebulous objective, and for local change as well as global. People want to focus on specific projects that they can start doing right away, like becoming a grid-free community. But a grid-free community can be vulnerable to storms, floods, fire, crime, water shortages – and paralyzing dissention if its projects do not weave all these possibilities into its evolution. A lot of separate projects that look good alone may not work as an integrated picture. In addition, localizing economies in this way portends big changes in business models, as noted by Paul Hawken.
Some are tempted to put excess faith in a new technology, 3D manufacturing for instance. It promises customized products with less waste – if 3D is accompanied by simple version 360° design reviews, lifecycle analyses, robust software, and so on. That is, one must anticipate the consequences of full processes using 3D or any other technology. Success in this sense calls for a lot of heavy duty re-framing.
Changes of the magnitude expected with resource shortages and a myriad of environmental threats cannot be precisely forecasted, but so much is lined up against business-growth-as-usual that wise leaders should prepare to deal with whatever comes. That begins by framing challenges as not just trying to make current business models resilient to unfavorable changes, but developing new ones to help all communities become more resilient in all ways.
In our circumstances, visualizing a depressing future is easy. If you can stand it, just read the scenario spun in the Oct. 22 blog by the Archdruid. By comparison, challenging ourselves to live better using much less is a bright light. On a large scale, our challenge is whether civil societies can muster the will to become resilient, or as has happened many times before, we revert to behaviors that drive us into some new form of dark ages.