Michael Sandel on continuous improvement

Michael Sandel, the Harvard political philosopher who has spent the last forty years arguing that there are categories of decision that markets are not the right instrument to make, is not a writer most operations practitioners would expect to find on the reading list of a Lean practice. The connection, however, is direct, and is the question this Field Note exists to articulate: should a continuous-improvement suggestion that does not have an obvious business case be implemented anyway? The Lean canon’s official answer is yes, sometimes, with provisos. Sandel’s work supplies the framework that makes the answer make sense.

The dominant Western management instinct is to require a business case before any change is made. The instinct has obvious operational virtues — it disciplines decision-making, it focuses scarce capital on the highest-return uses of it, and it produces a record by which improvement can be audited. The instinct also has a structural failure mode that Sandel’s work identifies clearly: a great many of the changes that produce the best operations are not amenable to the business-case framing. The discipline of 5S did not arrive in any operation that successfully implemented it via a calculation showing the return on a sorted toolbox. The discipline of andon did not arrive via a spreadsheet showing the value of a stopped line. The recognition that operators’ suggestions matter did not arrive via a measurement of the suggestion-implementation ratio.

Sandel’s argument across his various Reith Lectures, TED talks, and books — What Money Can’t Buy (2012) is the most accessible — is that the question to ask before deploying market-style reasoning is whether the domain in question is the kind of thing markets get right. Some are; many are not; the operations on which the rest of the firm’s value rests are typically a mix. The Lean version of the argument is that some improvements should be made because they are the right thing to do — because the operators are people, because the discipline matters, because the visible workplace is more humane than the invisible one — and the financial return follows the cultural change, not the other way around.

The practice’s experience, across nearly a decade of engagements, is that clients who insist on a business case for every Lean intervention will achieve about a third of the gains that clients who occasionally suspend the business-case requirement will achieve. The arithmetic is brutal but consistent. The reason is that the engagements that produce the largest cumulative returns are the ones in which a culture of seeing the work clearly takes hold, and that culture is mutilated by a disciplinary framework that asks every cleaning, sorting, and standardising activity to justify itself in dollars before being permitted.

Sandel’s contribution to the Lean practitioner is to supply the philosophical vocabulary by which this position becomes defensible to the chief financial officer. Not everything a firm should do is a transaction. The operations on which the rest of the value rests are not, in general, transactions.

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