A Slip of Change
Lean's revolution ran on a slip of paper. Circularity's will need one too, and the place to find it is the last moment of a product's first life.
Since the Letter began, we’ve described circularity transformation as the next logical step after Lean. Lean is remembered as an economy-sized project carried out by armies of experts. That memory obscures the simple idea at its heart, and the simple tool that made it work.
Christian Rishel
The tool was a slip of paper in a vinyl envelope. Lean worked, in large part, because it could be brought down to that level of focus.
So here is the question for circularity: what goes on its slip? Here's an idea. Circularity's slip is a stamp of custody, the mark that a producer stayed with its customer from the factory to the product's last moment, and on to the next owner. Finding it means starting where Toyota's pioneer started: at the end.
Lean fit on a slip of paper
Taiichi Ohno called it kanban. He took the idea from American supermarkets, where he observed that a shelf is restocked only after a shopper takes something off it. In his factory, a later process went back to an earlier one and withdrew only what it needed. The kanban traveled with the parts and carried the essentials: what to pick up, where to move it, how many to make.
Christian Rishel
The slip itself held information. The rules around it gave that information force. Nothing was made or moved without a kanban. A kanban was always attached to the goods. Fewer kanban made the whole line more sensitive to trouble. Read in that context, a piece of paper became an order, and Ohno called it one: a work order. He described kanban as "the autonomic nerve of the production line."
Any single kanban carried only the basics. But no kanban worked alone. Each one moved in concert with all the others, and taken together the slips were the system in motion.
They solved overproduction by making it impossible to miss. Every map of a system has a field of play, the space where its parts move and meet. Let's call it the substrate. Ohno’s genius was to make the system’s substrate and the physical one the same thing: the shop floor. Every kanban had its container, and every container had its place. When there was no empty cart, Ohno wrote, there was nowhere to put a finished unit, so overproduction was “automatically checked even if someone wants to make more.” No one had to consult a digital twin to see a surplus building. The interface to the system was the factory itself. If a surplus had no slip, it had no place to stand. It could not hide.
It also grew from the end. Toyota began with the link between final assembly and machining in 1950 and worked backward, one process at a time. By 1962, kanban was company-wide.
When Lean was exported, it traveled as a program: a cross-enterprise change event with charters, training and maturity assessments. Somewhere along the way, the simplicity of the kanban slip went missing. Today "kanban" mostly means a board of sticky notes. The export copied the scale of the change and lost the small part that made it work.
The next transformation will look big too
Circularity is on the same path. It will be treated as a monolithic change event, and this time it will be wired to the most powerful computing ever built. There will be plenty for AI to do.
One reason is reverse logistics, perhaps the most important new capability a circular economy requires. Forward supply chains already produce a mountain of data. Add a return flow of repairs, refills, resales and recoveries, and that data grows and compounds.
For the evidence-based manager, the temptation will be to dig into that mountain and find the measures of success there. Goodhart's Law warns against exactly this: "when a measure becomes a target, it ceases to be a good measure." A number chosen because it is easy to find, and then managed toward, loses its information value.
Ohno's example offers a simpler test. If what circularity tracks can't be captured on a slip of paper, we haven't taken the process apart far enough.
Start where the product ends
Another key to Ohno's success was his choice of starting point: the end of the line. He went as close to the customer as he could while staying within his value chain's sphere of influence, and pulled everything else from there.
Circularity's end reaches further. Lean worked inside a value chain with fixed boundaries. Lean 2.0 has no fixed boundaries. Anywhere your product is, so is your interest, if not your responsibility. Your value chain exists within and beyond the four walls of your enterprise. The third customer matters as much as the first. The product's last moment is as much a part of the customer experience as the day it leaves the factory.
The Last Moment of Truth (LMOT) is where a product's first life ends and something must happen next.
Christian Rishel
Here is the reality a mountain of data hides. When logistics runs in two directions, the people at the end of the line change roles. Consumers and other end users stop being passive recipients of logistical services and become active participants in them. When we introduced the Robot Milkman, we put the condition plainly: "somebody has to want it back."
Christian Rishel
A system with participants at both ends has to be organized around the moment they meet. That is why the LMOT is the place to begin, and why circularity's slip starts there.
A stamp of custody
So what goes on the slip? A stamp.
Think of a passport. Each stamp records a crossing, and each one says someone was responsible for the traveler at that border. Circularity's stamp marks custody of the product's customer experience. At no point in the product's life is that experience left uncurated. The producer is a partner in the customer's enjoyment at every stage, up to and including the product's disposition at the last moment.
The form the stamp takes is a greenfield opportunity for designers and entrepreneurs. The fact of it is the innovation. A producer that commits to stamping every stage of the journey has to design a product, a service and a business simple and transparent enough to stand behind at each one. The stamp is a forcing function.
It is also distinct from the digital material passports the circular economy already discusses, which record what a product is made of and where its materials should go. The two are complementary. A material passport describes the object. The stamp records the relationship.
Winning, then, looks like this: an unlimited number of stamps while the product sparks joy, and frictionless disposition when it stops. The name we've given to the conditions that make the Circular Century aspirational is the Three Filaments, and that is a good place to start the journey: the Joy Test tells you when stamps should accrue, and when the last moment has arrived. the Sufficiency Frame frees the customer to let go without guilt; holding on past joy just to collect stamps would be hoarding. And the Quality Cascade carries the product to a next owner who is glad to have it, where the first stamp on a new page is waiting.
Like Ohno's kanban, the stamp informs an object's position in a system. Lean's kanban succeeded by carrying enough information to place a part correctly at a given time. Circularity's stamp will succeed by making every onboarding of a product as joyful as the last, and as the next. In circularity, the system is indistinguishable from the product's journey across customers and iterations.
There is a second meaning in the title of this letter. A slip is also a cutting: a small piece of a plant that roots and grows. Ohno's slip carried the system's DNA. Its simplicity let it reproduce across every process at Toyota, and then across the firms that supplied it. Circularity's stamp has to do the same across every owner a product will ever have.
What the stamp does not yet give us is the whole method. It is the instrument the method's loop will run on. Whether Circudynamics can close the larger loop, from sensing what people want to building it, is a question this season will score in public before it ends.
The takeaway
If it won't fit on a slip of paper, you haven't taken it apart far enough. Start at the last moment, and work back.
Next week: A Measure of Change.
💬 Discuss: mention @christian@circudyne.com on Mastodon
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