Last week, my colleague, Elliott Weiss, took me to a plant operated by Danaher Corporation, where a small group of our students had joined kaizen (continuous improvement) teams among the front-line managers at the plant. What I saw was inspiring about Danaher, Darden, and the future of manufacturing. These teams were rearranging the process flow—literally building new work benches and shifting the production line—all with the aim of ferreting out the unnecessary inventory, floor space, and motion, and all the while enhancing safety and product quality. One team worked through the night to get the line ready for the workers the next day. Kate Ryan (D’11) wrote to me afterward, “Each group reached the goals that they set at the beginning of the week, and I think that the new processes will help the factory. It was a fantastic event that was both a great learning experience and chance to network with Darden alumni. I never expected the event to be as fun as it was.”

Kate and her classmates were doing this without pay and on vacation time. Yet she said it was fun. There is hope for the future of American manufacturing here. I’m inviting Elliott and all these students to lunch—along with part of Darden’s leadership team—to celebrate this and aim to get more of it into Darden’s “high touch” MBA experience.

I believe that at the heart of this is a story about leadership development and the leadership of change. The Washington Post asked a group of panelists including me to reflect on this question: “Last year was a tough one for many organizations, with fewer employees required to do more with less. How can leaders of such organizations motivate their people as they head into 2010?” So my comments in today’s Post argue that doing more with less is significantly a matter of leadership, of framing the possibilities or alternatives for an enterprise. Today, the only way forward for many organizations is to think lean, to use resources more sparingly while achieving equal or better results. But fundamentally, lean thinking isn’t about cutting costs or people. Rather, it is about getting the waste or “stuff” out of our lives and operations: unnecessary meetings; approvals in triplicate; oversized inventories; delays of all kinds; bloated expense accounts; and the notorious three-martini lunches.

Anything that does not add value to customers is waste, and the Japanese have an evocative word for it: muda. Getting the muda out of our lives and work places can actually make for more satisfying work and higher morale: fewer “redo’s,” less bureaucracy, lower frustration, greater identification with those we serve; and a stronger sense of belonging to a high-performance organization. Early January is a wonderful moment, a time of New Year’s resolutions, to get rid of the muda around us.

The evidence is that lean thinking is an effective approach to raising quality and reducing cost and time. The folks at Danaher described to me some very significant improvements in performance achieved through lean thinking. The ascent of Toyota to world-class stature was attributed to its lean manufacturing practices—see the classic book, The Machine that Changed the World. In the service sector, major hospitals (such as Virginia Mason in Seattle and Parke Nicollet Health Services in Minneapolis) are employing lean practices to gain significant improvements in performance. Even in higher education, there are exemplars: the University of St. Andrews says that “Lean strengthens [its] processes, frees staff time & resources and builds a culture of continuous improvement.”

Public universities are at the forefront of the need to do more with less. The University of California system is the poster child of the new conditions: less money available yet the public demands greater access and more services. The attendant riots, sit-ins, and picketing are but symptoms of the larger stress on higher ed. What can we do?

A year ago, I launched a lean thinking initiative at the Darden School—I met with the faculty and staff at three points in the year to discuss the consequences of the economic crisis around us and our need to “reinvent, renew, and re-imagine all that we do.” Our leadership team read and discussed classic books on lean thinking and case studies of successes. I facilitated three focus group meetings with front-line supervisors and employees to discuss ways to “go lean” in travel planning, student services, and external relations. We called on the expertise of some of our alumni and members of our faculty. We invested prudently in new technology and ran a special pilot program with the Amazon Kindle. Our students got into the act with projects around environmental sustainability (yes, that’s lean thinking too.) Our faculty embarked on a deep review of our full-time MBA program.

One year into it, the net effect of our lean initiative has been to generate some five dozen kaizen (continuous improvement) projects. For instance, Randy Smith, Darden’s Chief Technology Officer said that his team is looking to automate the “routine repetitive work so that the staff of our business-owner partners can engage in higher level work.” So far, our kaizen projects have generated some small early wins; more wins are in prospect. More importantly, our lean initiative has generated increased self-reflection about the way we do things. We have a different mindset as we head into this year’s planning and budgeting cycles. In any event, the gains will begin to accumulate, to build on one another and to suggest opportunities for further improvements in quality and cost.

The dire challenge posed by the financial crisis and our experience in responding to it offers at least three lessons.

Leadership. Going lean is not an exercise to be relegated to the time-and-motion experts. Leadership is indispensable. The leader (at the top, middle, or at the front line of the organization) has to set the tone of lean thinking–it can’t just be about cost cutting; it must be about transforming the organization for high performance; it can’t just be thinking about doing with less money, it must be about working differently. If all you want to do is cut costs, then you don’t need a leader; you need a technician. This is the central difference between the lean thinkers and the cost-cutters.

Harness the network. As the saying goes, there is more knowledge in the network (such as your community or the Internet) than in the heads of the few people immediately around you. The best ideas come from people distant from the CEO (such as the front line). Therefore the leader must learn to listen well. Going lean isn’t simply a matter of a top-down directive. This means that the senior leader has to engage in outreach and facilitation with a cross-section of people. As we teach at Darden, the term, “leader,” isn’t reserved for the supremo at the top of the organization—leaders can be found throughout organizations. You must lead from where you are, wherever you are. From there you must work the network.

Patience and persistence. Lean thinking entails a culture change within an organization, and culture change takes time. Tangible progress may not be immediately visible. The best lean operators are relentless in their pursuit of muda—and over time they show dramatic advantages in quality and cost over their competitors.

Darden has embarked on a process that will take years. The early results are encouraging. A skeptic might say that any significant benefits are uncertain and off in the future. But I don’t think that higher education has any better alternative than to go this way. Public financial support is on a long-term decline; students and other stakeholders demand higher access and performance; the only solution is to think lean. I can’t guarantee that, as Kate Ryan said, this will be fun—but it’s vastly more attractive than the alternatives.