Why Learning Is Central to Sustained Innovation

Many managers think they can create better products just by improving the development process or adding new tools. But it’s skilled people, not processes, that create great products.

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We frequently visit companies where managers say they want to improve their product development capability. They want to learn how lean principles and practices can improve their ability to innovate while reducing costs and improving quality. When we inquire about their approach to human resource development, we often hear, as one vice president of product development recently told us, that “of course, people are our most important asset. So we recruit and hire the top people from the best universities and get out of their way.”

However, the only things many companies actually do under the heading of people development is to have an annual training-hours target and a travel budget for sending employees to conferences. If managers really thought that people were their greatest asset and that it’s the energy and creativity of employees that drives innovation, why do companies do so little? Why doesn’t growing and developing people excite them just as much as installing new additive manufacturing equipment or the latest cloud-based collaboration tool?

In studying manufacturing over the past two decades, we have learned that operational excellence is not achieved by just applying so-called “lean” practices to every process. More than anything, it requires cultivating an aptitude and an expectation for continuous improvement within every employee.1 Similarly, we learned from studying lean product development that people, not processes, make great products. (See “About the Research.”) We frequently encounter managers who think improvements in the development process will pay off in better products. But better products don’t just appear out of thin air: They are created by developers working with better knowledge and supported by good design processes.

The final design, including the product, manufacturing, and supply chain specifications, is the product of a complex network of interrelated technical decisions. How developers interact in the decision-making process — everything from framing problems, choosing ideas, and negotiating constraints to testing prototypes — is what shapes the product. In more transactional systems such as manufacturing or accounting, good processes usually produce a good outcome. What’s important in lean product development isn’t just whether you follow the right steps but how the work is done. Indeed, there are plenty of cases where companies followed “good” processes but had terrible results.



1. M. Ballé, G. Beauvallet, A. Smalley, and D.K. Sobek, “The Thinking Production System,” Reflections 7, no. 2 (2006): 1-12.

2. “Lean product development” is also referred to as “lean product and process development” to highlight the innovation involved both in new products and in the manufacturing systems needed to produce them. We use the shorter phrase in order to avoid confusion between manufacturing process and development process. Some similarities can also be found in the work on “lean startups,” in which rapid learning techniques are applied to help entrepreneurs create new products or services with less waste and better chance for success.

3. J.P. Womack, D.T. Jones, and D. Roos, “The Machine That Changed the World” (New York: Rawson Associates, 1990).

4. See D.K. Sobek II, J.K. Liker, and A. Ward, “Another Look at Toyota’s Integrated Product Development,” Harvard Business Review 76, no. 4, (July-August 1998): 36-49; and J.M. Morgan and J.K. Liker, “The Toyota Product Development System: Integrating People, Process, and Technology” (New York: Productivity Press, 2006).

5. See, for example, A.C. Ward and D.K. Sobek II, “Lean Product and Process Development,” 2nd ed. (Cambridge, Massachusetts: Lean Enterprise Institute, 2014); R. Mascitelli, “Mastering Lean Product Development: A Practical, Event-Driven Process for Maximizing Speed, Profits and Quality” (Northridge, California: Technology Perspectives, 2011); D.G. Reinertsen, “The Principles of Product Development Flow” (Redondo Beach, California: Celeritas Publishing, 2009); T. Schipper and M. Swets, “Innovative Lean Development” (New York: Productivity Press, 2010); and M.N. Kennedy, “Product Development for the Lean Enterprise” (Richmond, Virginia: Oaklea Press, 2003).

6. J. Shook, “Managing to Learn” (Cambridge, Massachusetts: Lean Enterprise Institute, 2008).

7. By “developer,” we mean any person who plays a substantive role in the development of new products, including but not limited to marketers, product engineers, industrial designers, production engineers, prototypers, test engineers, and purchasers.

8. E. Ries, “The Lean Startup” (New York: Random House, 2011).

9. R.W. Revans, “Action Learning: New Techniques for Management” (London: Blond & Briggs, 1980).

10. S. Spear, “Learning to Lead at Toyota,” Harvard Business Review 82, no 5 (May 2004): 78-86.

11. M. Ballé and P. Handlinger, “Learning Lean: Don’t Implement Lean, Become Lean,” Reflections 12, no. 1 (2012): 17-31.

12. A. Ward, J.K. Liker, J.J. Cristiano, and D.K. Sobek II, “The Second Toyota Paradox: How Delaying Decisions Can Make Better Cars Faster,” Sloan Management Review 36, no. 3 (spring 1995): 43-61.

13. Ward and Sobek, “Lean Product and Process Development.”

14. B.M. Kennedy, D.K. Sobek II, and M.N. Kennedy, “Reducing Rework by Applying Set-Based Practices Early in the Systems Engineering Process,” Systems Engineering 17, no. 3, (autumn 2014): 278-296.

15. Morgan and Liker, “The Toyota Product Development System.”

16. For a thorough discussion of the power of experimentation, see S. Thomke, “Experimentation Matters” (Boston, Massachusetts: Harvard Business Press, 2003).

17. F. Ballé and M. Ballé, “Lean Development,” Business Strategy Review 16, no. 3 (autumn 2005): 17-22.

18. S. Thomke and T. Fujimoto, “The Effect of ‘Front-Loading’ Problem-Solving on Product Development Performance,” Journal of Product Innovation Management 17, no. 2 (March 2000): 128-142.

19. Ward and Sobek, “Lean Product and Process Development.”

20. Morgan and Liker, “The Toyota Product Development System.”

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Comments (2)
Great update, gents, thanks much - I look forward to more based on what you discovered in the recent study visit to Toyota with Jeff Liker.

One question: how much of Toyota PD success should be credited to the large efforts they've put toward modularity and commonality?

Ok, two questions: beside Toyota who else spends about $1,000,000 per hour 24-7-365 on R&D?
Stefan Solender
Instead of focusing on “lean practices", focus on "lean principles" and the problem is solved! There is a lean priciples called "amplify learning" and "empower the tema" what will take care of the problem of not investing in the emploeeys.

But it is always bad to implement practices without knowing why, knowing the values and principles behind.