Lean 911

Mark DeLuzio, the Father of Lean Accounting, tells his experience and observations on how traditional cost accounting will derail a Lean Transformation. In many organizations, Lean transformations don't fail on the shop floor—they fail in the finance office. In this episode, "The CFO vs. Lean: The Fight That Gets Lean Leaders Fired," we examine a pattern that plays out in companies across industries: Lean improvements begin to transform operations, but traditional cost accounting systems tell leadership the exact opposite story. As inventory falls, batch sizes shrink, and flow improves, the accounting system often reports declining "efficiency," higher unit costs, or unfavorable absorption variances. The numbers appear to signal failure—even when operational performance is clearly improving. When executives rely on these metrics, the Lean initiative becomes the scapegoat. Too often, the Lean leader is blamed for results that are actually caused by outdated financial measurement systems. In this episode, we unpack the structural conflict between Lean principles and traditional cost accounting, explore why CFOs frequently defend these legacy systems, and explain how perfectly "correct" financial reports can lead companies to make deeply wrong decisions. Most importantly, we discuss how organizations can realign finance with Lean thinking so the transformation—and the people leading it—don't become casualties of the numbers.

In this episode, you'll be able to take away why many "logical" workplace measures and incentives can drive behavior that conflicts with Lean principles, and why comparing work decisions to everyday home-life decisions can make Lean concepts easier to understand and teach. You will hear about various examples, including grocery shopping and volume discounts, which highlight purchase price variance and excess inventory. You will explore the concepts of push versus pull using the supermarket and kanban approach. You'll gain insights into utilization and overall equipment effectiveness (OEE) and understand how "banking" uptime can lead to overproduction and unmet demand. Additionally, you will investigate changeover strategies using a multi-part thermoforming case, illustrated through a barbecue analogy comparing hot dogs and hamburgers. Finally, you will discover why oil leaks and poor visual management are perceived differently in the workplace compared to a car context, including the use of dashboards, warning lights, signs, and scoreboards. Timestamps: 01:31 Lean Accounting Origins 04:20 Buying in Bulk Trap 06:31 Pull Systems Grocery Lesson 08:05 Utilization Incentives Myth 11:27 Absorption Accounting Reality 12:44 Changeover Barbecue Analogy 17:52 SMED Rethink Changeovers 18:40 Fix Leaks Like Cars 21:38 Visual Management Everywhere 25:16 Bring Lean Home and Work

A shop floor comment stops everyone in their tracks: the work finally matches what the customer actually needs. That is the spark behind Accidentally Aligned, and it opens a bigger issue most leaders dodge: alignment does not come from posters, audits, or a new playbook. It comes from how leaders behave when the process is broken, and the numbers are ugly. Mark and today's guest, Jason Neal, get into the messy middle of transformation: earning trust at the Gemba, protecting dignity when tempers flare, and dealing with the damage caused by "Lean policing." They also tackle a practical trap that shows up everywhere: leaders say they want engagement, then they take away overtime without replacing it with a better system. The result is predictable. So is the fix. If you are trying to keep momentum after the first wave of kaizen, this episode gives you language and moves you can use on Monday morning. Timestamps: 00:06:48 - Accidentally aligned with the customer voice 00:10:24 - Respect for people when the process fails 00:22:38 - Trust as the foundation for Lean sustainment 00:22:51 - When the Lean office becomes an audit function 00:23:37 - Losing credibility by switching to policing behavior 00:25:33 - Stopping disrespect before it becomes normal 00:34:54 - Turning overtime into kaizen time without breaking trust 00:35:12 - Why cutting overtime first backfires

Most Lean efforts do not stall because people hate improvement. They stall because the system was never built to support it. This episode gives you a fast, practical lens for evaluating whether your organization is built to sustain improvement. You will learn how to recognize common traps that keep Lean efforts stuck, why certain measurement habits create the wrong behavior, and how to distinguish capability building from project theater. By the end, you will have a sharper way to assess your structure, roles, support functions, and operating rhythm, so you can stop guessing and start fixing what is really holding you back. Timestamp highlights 00:02:03 - Calling Lean a "program" is a red flag 00:05:09 - Under-resourced Lean office becomes admin, not a capability builder 00:08:43 - Lean leaders too low in the org cannot move mountains 00:09:55 - Combining Lean with a line role guarantees Lean loses 00:12:03 - Lean office should develop problem solvers, not rack up project points 00:18:36 - Lean audits signal inexperience and tool worship 00:22:54 - One standard problem-solving method beats a mix of A3 8D and random playbooks 00:28:32 - Hino Motors got nine implemented suggestions per person per month by building in time and support 00:32:14 - Value streams in name only when functions still control decisions and measures

Mark DeLuzio discusses how the 2-Bin Kanban is meant to ensure the operator does not run out of parts.  Find out why it should not be used to structure your primary Kanban system.

Mark DeLuzio discusses the confusion that exists in the Lean Community, and the Lean Consulting industry and academia are primarily to blame. Returning to Lean Basics and ignoring distractions like Kata, Gemba Walks, Lean certifications, and other consulting “innovations,” which are designed to sell books and consulting services.

Mark DeLuzio discusses the absence of engineers from the Gemba in both manufacturing and design. He also discusses the sin of engineering, which he calls "Catalogue Engineers."  

Mark DeLuzio discusses how the TPS House is not a set of tools, but a way of thinking, and that the tools of Lean support these principles. Starting with the tools before understanding the principles has proven to be the downfall of many companies starting a Lean transformation.

Mark DeLuzio discusses the dangers of cost-based pricing as well as the various issues encountered when doing so. He introduces the merits of market-based pricing instead.

Mark DeLuzio discusses the dangers of focusing on the lagging indicator of productivity and suggests we turn our attention towards improving our processes, which will, in turn, drive improved productivity.

Mark DeLuzio discusses the institutionalized waste of Mura and Muri, and if left unchallenged, it will derail a Lean transformation.

Mark DeLuzio discusses the errors made when architecting the Danaher Business System and the things he would do differently today.

A lean office can either accelerate transformation or quietly undermine it. The difference often comes down to trust, leadership alignment, and a clear sense of purpose. Drawing on his time as the architect of the Danaher Business System, Mark shares hard-earned lessons about what makes a lean office succeed and where so many stumble. From CEOs treating their lean teams as spies to audits that destroy credibility, he explains the traps to avoid and the principles that matter. You’ll hear why capability-building should be the core "product" of any lean office, how to prioritize resources around strategy, and why reporting directly to the CEO is so important. This episode is packed with practical insights for anyone running or working with a lean office, whether you're starting fresh or trying to course-correct.

Many Lean transformations commence without understanding why, and the communications to employees are poor or nonexistent. Mark DeLuzio talks about this failure mode and why it is essential to answer the question, “What’s in it for me?”

Mark DeLuzio discusses the rules and mindset needed to be an effective critical thinker, which is essential to effective problem-solving. Every Lean coach needs to know how to solve problems effectively. Unfortunately, this knowledge is not widespread. Learn the skills required to take your problem-solving abilities to the next level.

If your Lean transformation feels like it's stuck, your compensation system might be part of the problem. In this episode, Mark tackles a question from Finland about how incentives influence behavior, often in ways that completely undercut Lean principles. He shares how traditional pay structures and metrics, especially those tied to cost and output, often reward the wrong actions. You'll hear examples from the shop floor to the C-suite, including a mining company that saved money on parts but paid the price in lost production. Mark draws on his experience leading the Danaher Business System to explain why companies need to rethink how they measure success. He breaks down what a healthy compensation structure looks like in a Lean environment, how to align cross-functional teams around shared goals, and why hitting 75 percent of a breakthrough can be a win worth celebrating. This episode speaks to anyone who’s trying to make Lean work while fighting against legacy incentive systems. Mark offers a grounded look at how misaligned rewards can quietly unravel even the best improvement efforts, and what it takes to turn that around.

Mark DeLuzio discusses the intangibles that made all the difference to the success of the Danaher Business System. He also discussed the main ingredients of DBS, the 5Ps: Purpose, Principles, People, Plan, Process.

Some metrics were never meant to survive in a Lean world. OEE and absorption accounting might sound smart on paper, but they push the exact behaviors that wreck flow, bury quality issues, and inflate inventory. The result? A system that looks efficient but delivers chaos. Mark DeLuzio breaks down how these outdated measures keep companies locked in batch production and bad habits. He shares firsthand stories from the factory floor and the boardroom, including a jaw-dropping moment with a CFO who learned the hard way that ROI is not a reason to keep machines running at all costs. This episode is for anyone tired of playing metric games that look good in reports but hurt performance where it matters. If you’ve struggled to explain why certain KPIs feel off in a Lean environment, you’ll walk away with clear examples and a smarter alternative to measure what actually matters.

Replay from our live April 7 webinar. Most Lean initiatives stall because leaders chase tools instead of building capability. In this rare unfiltered session, Mark DeLuzio teams up with seasoned transformation veteran Mark Forkun for a blunt conversation on the realities of Lean, why most organizations fake it, and what it takes to get results that last. From the hidden failure of matrix org charts to the silent sabotage of cost accounting, this webinar replay is a wake-up call for anyone tired of surface-level improvement. You'll hear how Toyota's true strength isn't what's on the walls, but what's in the minds. You'll also get hard-won insight on problem solving, value stream management, and the dysfunction of Lean "audits" that create motion without impact. Plus, Mark Forkun shares a preview of his new book and the habits he believes matter most for sustaining Lean results. Timestamps 00:02:10 Why there’s no silver bullet in Lean 00:04:30 What you don’t see is what matters — Culture, mindset, and invisible systems > visible tools. 00:07:40 Value stream management vs. functional silos 00:13:00 How Lean accounting drives better decisions — Traditional cost systems sabotage transformation. 00:24:00 Cost of poor quality is hidden everywhere — Why finance must stop tracking irrelevant metrics. 00:25:10 Lean ≠ TPS 00:33:00 Standard work and problem solving 00:47:00 Philosophy and principles lead the way 00:54:00 Why Gemba boards fail and audits backfire — Most Lean efforts are theater, not transformation. 01:00:00 Tech without waste elimination = faster waste — AI and ERP as enablers, not solutions.

In this episode, Mark DeLuzio talks about Lean Horizons' Managing Director Jon Boucher discussing the span of control necessary for problem-solving. In particular, Mark and Jon address the following: What is span of control, and why is it important for any lean journey Problem Solving – What is the definition of a problem? What is meant by standards? How do you begin, how deep do you go, and what is the timeline? What is the purpose of a line? (to expose the problems) Who "owns" problem-solving? What is the role of the operator?