This post is a continuation from my previous post, “Why Continuous Improvement Is Not Enough,”  which helps to better understand how we arrived at where we are with continuous improvement.  The world is changing rapidly, and the need for improvement is higher than ever before.  Most organizations need to quickly evolve to a higher order of strategic improvement.  They must learn how to become innovative, more responsive, and emotionally and culturally connected to these inevitable disruptions and change.


There are new forces driving a more holistic, higher order, enterprise-wide, digitally-enabled, and culturally connected approach to strategic improvement.  The largest opportunities are enterprise-wide, where the core business processes are rapidly evolving to a much higher level of human and digitization content.  Customer and market preferences are a moving target with many more unknowns.  The dynamics of how organizations work across the global supply chain are changing dramatically.  The Amazon, Home Depot, and other e-commerce tigers are changing the rules about how all organizations must conduct business to compete . . . or survive.  The thinking and approaches that got us here are no longer robust enough to take us where we need to go. Period, end of story.

Accept it, and radically improve how you improve.  Stop mimicking the Toyota Way and step up in Your Own Way – It’s the only option for future success (By the way, exactly what Toyota did 70 years ago).  This next evolution requires an enterprise-wide business systems approach, the successful integration of digitization and emerging technologies, and much more daily leadership and attention to talent and cultural development.  Most organizations must quickly evolve to this higher order of strategic improvement – One that is enterprise-wide, better aligned to business strategy and operating results, systematic, technology-enabled, and culturally grounded for quick response and sustainable success.  We do not want to throw away the past but integrate these new requirements, recognize past barriers, build upon previous successes, and achieve new breakthroughs in the strategic improvement journey.


Introduction To The Lean Business System Reference Model™

The diagram below provides a concept overview of the Lean Business System Reference Model™. Our reference model serves as a guide and playbook for creating a higher order paradigm of Lean and strategic improvement in general. The reference model provides the adaptive leadership guidelines, overall architecture, operating processes and sub-processes, cultural development best practices, and key performance metrics of a holistic XYZ Business System. Obviously there is a wealth of detailed operating system design criteria, best practices experiences, and “how-to-do” guidance behind this overview chart.

The reference model is named “Lean” but it is a practical guide for any major transformation initiative because it integrates all of the formal critical success factors, totally integrated processes, and best practices working harmoniously and continuously to achieve breakthroughs in operating performance.

Simplified Understanding

  • The reference model is not an ad-hoc, sequential collection of improvement activities or more tools, techniques, and updated jargon.
  • The reference model is a proven guide for designing (“in your own way”) the systematic architecture of leadership, infrastructure, digital technology integration, and behavioral/cultural development to achieve higher order improvement and sustainable success
  • The reference model is named “Lean” but it is a practical guide for any major transformation initiative because it integrates all of the formal critical success factors, totally integrated processes, and best practices working harmoniously and continuously to achieve breakthroughs in operating performance. Regardless of the labels (e.g., Lean, TPS, OpEx, Business Transformation) the architecture incorporates the same success-enabling elements.
  • The world of strategic improvement is evolving very quickly from a “manufacturing excellence” approach, to a bolder, higher order “enterprise-wide cultural and digital process excellence” approach.  Behind KATA’s deep rooted meaning are continuously developing patterns of evolutionary thinking. This does not happen in “copy and mimic” improvement environments.

A major objective of the reference model is to guide organizations away from the superficial mimicking of other organization’s improvement efforts or the perceived Toyota way – and think, innovate, and become the next Toyota in their own way. The reference model concentrates on precisely adapting, expanding, and aligning improvement to today’s global business and economic needs. It goes much deeper into the enterprise and extended enterprise opportunities for global improvement, the enabling patterns of behaviors or “kata” attributes of cultural development, and the integration of emerging digital technology.

Most Lean consultants, experts, and practitioners agree with the first part of the above underlined statement (culture), but they have a difficult time wrapping their arms around the  emerging digital technology part of the statement. Many view technology negatively as “Oh no not another Y2K/ERP fiasco.”  Several have grasped and benefitted from the compatibility of Lean + emerging digital technology such as the cloud, mobility, business analytics, real time performance dashboards, digital andons and kanbans, predictive and preventive CI countermeasures, and the like. Make no mistake about it – Digital technology is rapidly becoming a major differentiator in strategic improvement.  It’s not a replacement for the tough work of improvement by any means and it’s not the next golden egg. However, refusal to embrace and connect digital technology and improvement will leave organizations in a serious competitive disadvantaged state. It’s about people engagement to adapt the right technology applications that take improvement to the next levels of excellence. People are the heart and soul of transformation and the organization’s greatest asset.


Kata: A systematic global cultural development process where patterns of behaviors, values, and codes of conduct are routinely practiced through continuous structured means and deliberate actions, until the protocols become second nature with little conscious attention.  Behind KATA’s true meaning are continuously developing patterns of evolutionary thinking.


Why Is A Reference Model Helpful?

The reference model is an architectural framework of integrated concepts, principles, frameworks, processes, an expanded body of improvement knowledge, and best practices that is used as a guide to communicate, educate, and create a shared understanding of a holistic, higher order, enterprise-wide Lean Business System.

A true Lean Business System is a fine-tuned network of integrated and interdependent sub-processes working together. The Lean Business System Reference Model™ helps organizations to adapt the architecture, sub-processes, best practices, and underlying patterns of behavior to their own operating environments. The intent of our reference model is a design guide for Lean Business System success, and also a cultural transformation guide to keep the continuous in continuous improvement.

Purpose of the Lean Business System Reference Model™

The Lean Business System Reference Model™ provides a working framework for designing, developing, and implementing best practices relative to adaptive systematic improvement. This reference model provides the total architecture and sub-processes for creating a for real, forever Lean Business System. It serves as the organization’s relentless, never-ending operating system of improvement, and includes guidance and best practices around adaptive leadership, strategy alignment, sustainable infrastructure, digital technology integration, talent management, and cultural development. The reference model is a guide to adapting and architecting an organization-centric and culturally grounded Lean Business System. It provides the detailed architecture, sub-processes, and best practices for both the visible (operating system, principles, methodologies, tools) and invisible (leadership, communication, human capital development, behavioral alignment and cultural development) sides of adaptive systematic improvement.

Need for a Reference Model Approach

This is not a replacement for Lean, TPS, Six Sigma, or any other CI labels. And it’s not the replacement of Lean with more Y2k or ERP technology fiascos. It’s a logical means of “improving how we improve” upon enterprise-wide CI with the right leadership, infrastructure, sustainability best practices, cultural acceptance, and superior (validated) operating performance.
The reference model is a guide and roadmap that helps organizations to implement and sustain a superior, enterprise-wide, digital technology-enabled, and culturally grounded Lean Business System . . . “In their own way.”

The Lean Business System Reference Model™ helps organizations to design, integrate, adapt, and systematize high velocity and high impact improvement in a variety of different industry environments, business requirements, cultural situations, and industry segments. It helps organizations to implement and sustain a superior, enterprise-wide, digital technology-enabled, and culturally grounded Lean Business System . . . in their own way. Think of it as a the next logical evolutionary addition beyond the Toyota Way and Toyota Kata, both an important part of a holistic, enterprise-wide Lean Business System.

Lean Business System (LBS) Analytics

LBS Analytics® is the assessment and evaluation criteria in the Lean Business System Reference Model™. We have developed an evaluation software solution as part of the reference model to help executives, change leaders, and strategic improvement practitioners think through the design, architecture, implementation, and sustainability requirements of a higher order, enterprise-wide, technology enabled, and culturally grounded Lean Business System. Below is a graphical example of one of the largest detractors of success: Misalignment of business strategy and improvement strategy.  The example shows that the organization’s current focus of improvement is in manufacturing while the largest strategic opportunities and needs are within other work/value streams of the organization.

We provide a Strategic CI Assessment to our clients, using the reference model to help clients evaluate current CI performance and develop the right road map toward a higher order model of strategic improvement and value contribution. Clients can also use the reference model and do this on their own. LBS Analytics® incorporates over 600 best practice evaluation points and 50 graphical analytics, and is very useful in pointing out gaps, root causes of underperformance, and missed opportunities with an organization’s Lean and other strategic improvement initiatives. No it’s not an exhaustive 600 question exercise.  We use relevant sections over time based on our clients current conditions and needs.  LBS Analytics is the ongoing analytics and performance measurement piece of our reference model.  The analytics and graphics are used and interpreted for your own organizational situations – In your own way. The analytics model has been architected to provide significant value to organizations in three major areas of their Lean and strategic improvement initiatives:

  • As a reference guide for the initial design, architecture, implementation, and ongoing sustainability of a for real Lean Business System. The application provides an effective roadmap of critical success factors for creating a holistic, enterprise-specific, technology-enabled, and culturally grounded XYZ Business System for any organization in any country; and
  • As an assessment and corrective action process to baseline, evaluate, and understand gaps in current performance of an existing Lean Business System relative to leadership, strategy and execution, cultural development, desired performance, and best-in-class performance. The application generates visual analytics that display the relative strengths, weaknesses, and improvement needs across many critical success factors in an adaptive systematic process of improvement and in the existing Lean and strategic improvement initiatives.
  • As a continuous improvement and sustainability guide to measure relative progress against previous assessments, across different business units, or periodic comparisons to best-in-class performance (which is always being updated, it’s a living reference model).

Collectively the assessments generate very objective and pragmatic guidance, with pointed prescriptive and graphical analytics for developing a for real, higher order XYZ Business System. The largest value of LBS Analytics® is its ability to help organizations discover a new and superior paradigm of Lean and strategic improvement, and identify millions of dollars in new improvement opportunities.

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Nobody can downplay the tremendous success of The Toyota Way for the past 70 years. I’ve been admiring the achievements of Toyota and hundreds of other great organizations for nearly four decades . . . And I’ve also seen a lot of CI programs (and companies) come and go during this time. We’re out of time.
This is an exciting time. Customers, global market dynamics, and digital technology are literally shifting the CI paradigm to a higher order model. Keep in mind that global market dynamics, digital technology, and human potential is transforming the way organizations improve very quickly – In fact quicker than ever before, with greater opportunities for success. Toyota or no other organization holds the keys to the future possibilities of strategic improvement: You do – If you choose, innovate, and act accordingly for the next decades. Check out this recent post for a 150 year old lesson about Lean.

Toyota or no other organization holds the keys to the future possibilities of strategic improvement: You do – If you choose, innovate, and act accordingly for the next decades.

The Lean Business System Reference Model™ is not another new spin or rehashing of Lean. It is a structured design and operating guide, and a collection of best practices to achieve a culturally connected, daily “business system” approach to improvement. The reference model is a very practical and useful framework because it presents a true, higher order Lean Business System as an integrated system of leadership, strategy, critical processes of improvement, people and cultural development, and performance into a unified structure. There’s no new branded buzzwords, knock-offs of other programs, or jargonese – Just practical “how to” guidance, design criteria, templates, performance metrics, and best practices based on years of experiences with hundreds of different organizations.

The Lean Business System Reference Model™ can help any organization around the globe to develop an exceptional core competency of improvement and a higher cultural standard of excellence throughout the total value chain: customers, stakeholders, the enterprise, supply chain and other trading partners.

The philosophy of improvement is universal, but the correct path to adaptive systematic improvement is very different in different industries, operating environments, and cultures. Like all reference models it evolves every day as we acquire new knowledge through our own experiences and the successes of others. However, the reference model is a bold step to the next evolution of enterprise-wide, technology-enabled and culturally-powered Lean.

If you are interested in achieving greater benefits from your Lean, TPS, or other improvement initiatives, please contact us to discuss your current status and assessment needs.

Terence T. Burton is President of The Center for Excellence in Operations, Inc.

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