Thursday, May 15, 2008

The Power of Leverage

The great Greek mathematician and engineer, Archimedes (c. 287 BC – c. 212 BC) once remarked on his work with levers, provided he had a lever big enough, just “Give me a place to stand on, and I will move the earth”. This boastful claim was based on his experimentation of the power of leverage.

A lever helps us multiply force to gain a mechanical advantage, or more simply, the ability to do more with less. With the length of the lever and a properly placed fulcrum (the support point for the lever to raise or move), we gain an advantage in our effort.

Based on this power, not only can we leverage our effort, we can leverage practically anything like money, knowledge, and contacts. Leverage make things works for us and we get more output with less effort. As simple as this notion sounds, many of us tend to stumble over what this means and how it works. Sometimes we are quick to take effort away and expect more results without changing the method or tool which only results is in us working harder. From a lean application, the power of leverage to do more with less is deeply embedded in our thinking.

What does Toyota use as leverage? At a glance, there are many ways Toyota creates leverage including their quality, reputation, brand name, cash flow, innovation and design. But their greatest asset is their people and Toyota uses this strength as their largest lever of all.

One powerful example of Toyota’s leverage with their people is by teaching, coaching and expecting everyone to be problem solvers. More problems are solved in a shorter period of time. By comparison, many companies fail to match Toyota’s problem solving skill not in intelligent levels but because we making problem solving an exclusive activity of managements and engineers.

People create, innovate and experiment. People learn and think. People create value. Robots and machines do not. Like Toyota, we say that our people are our greatest asset yet we are also quick to cut headcount to make our quarterly or year end numbers. With each headcount reduction and layoff announcement, we proclaim a cost savings. But all we are really doing is shorting our lever.

BONUS:Check out this cool example of the power of leverage by Wally Wallington.

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