Hybrid models for the 21st century

Hybrid systems have the best of each of the reference models for each particular situation

To understand the reasons for the emergence of this new revolution popularly known as ‘lean 4.0’ or ‘industry 4.0’ it is necessary to consider the factors which have determined the evolution of the main working models from the more traditional craft systems to the latest trends in management systems. Historically, the main drivers for change have been the need for higher production volume combined with increasing product variety. According to these two parameters we can establish the following stages in industrial development:

  • Craft production (1800-1900). It is a manual process in which the artisan assumes control and development of the entire process, from start to end. By its very definition, it has clear limitations both in terms of production capacity and repeatability of the products manufactured.

  • Mass production (1900-1985). It was mainly Henry Ford who showed the world with his assembly line the benefits of the division of labour and the specialisation of personnel in the development of some of these elementary tasks. The application of the system was extended to all sectors, achieving the production of large volumes of products and services at a reduced cost.

  • Mass customisation (1985-2010). Mass customisation is a concept first introduced by Stan Davis in 1987 and further developed by Joseph Pine in his book ‘Mass Customization’. Broadly speaking, it consists of developing processes so that the product is customisable according to the client’s needs without increasing product costs.

  • Lean 4.0 (2011-…). Under the umbrella of this ‘Lean 4.0’ future, many and varied concepts are embraced whose approach in the real world leads to possible situations which, on the other hand, probably do not provide any value to the client (connecting equipment to the network, asset maintenance, etc.). From our point of view, ‘lean 4.0’ proposes a management model which aims to go a few steps further in product customisation, selecting the optimal point in the value chain for customisation and production, thus ensuring reliability and delivery times even closer to the client’s needs without increasing costs or waste.

Human organisation

Obviously, for the correct application of each work model, it is necessary to establish a specific organisational scheme, a human structure which enables the implementation and development at a practical level of the operating premises for the model concerned.

In this sense, the organisational scheme typical of the period characterised by artisan production is a model centred on the artisan themselves. The entire management of the production process is centred on the person who possesses the necessary knowledge to transform raw materials into a finished product from start to end. The productive capacity of this model is directly proportional to the number of artisans and their individual skills.

The industrial revolution entailed a technological change which completely modified the production models of the time. In this evolutionary process which transformed a model centred exclusively on the figure of the craftsman to one aimed at mass production, the need to design a human structure became evident which would unequivocally explain the roles and functions to be carried out by each of the people who made up the company. To a certain extent, it was necessary to group people into sections or departments specialising in certain operations (sales, engineering, etc.) following the same scheme applied in the production area (machining, finishing, etc.).

One of the first examples of human and functional organisation was developed and applied in both the military and civilian organisations by the Scottish engineer Daniel McCallum. His tree-like organisational scheme was consolidated years later by the theories of Peter Drucker and diligently applied at General Motors. The good results achieved by the automobile giant between the 1920s and 1960s made it a benchmark for the mass production model to the point that it was the company to imitate both economically and in terms of management systems. For this reason, in the vast majority of Western companies, the organisational charts are very similar to each other and share a scheme very similar to the one developed by General Motors in its golden age.

The functional organisation chart is the most efficient organisational format for a mass production oriented model, as it favours people’s specialisation in a reduced number of operations and integrates them into departments or sections. For the correct management of each department, departmental objectives are determined which, if correctly defined, help to optimise each of the stages that make up the internal process. Unfortunately, it is very common for these objectives to be out of sync with the client’s needs, to the point that there are highly efficient processes which are nevertheless incapable of satisfying clients’ needs.

The model focusing on internal efficiency is valid as long as we are in a seller’s market, an environment in which the supply side has the levers of control over material flows in terms of volumes, batches and product variants. However, this model, which was applied systematically throughout the 20th century, begins to show its weaknesses when the control of flows is in the client’s hands: when the product evolves in a very short time or when demand is unstable. In this environment, the model shows its weaknesses in terms of excess inventories and a high volume of obsolete products.

The costs of overproduction became commonplace in many sectors from the 1980s onwards, largely due to the rapid evolution of some sectors, e.g. consumer electronics, which launched new versions every year, making all available products obsolete.

Mass customisation represents an evolution of the previous model which aims to maintain low production costs and high efficiency, combined with the flexibility needed to provide the products and services the client requires.

The new model was successfully applied in some sectors, proving in many cases the increased benefits it could offer. However, its correct implementation requires a new human organisation capable of responding to the client’s needs quickly and effectively. It is not only a change in the production environment, but also affects the entire organisation: in the same way that a hierarchically organised organisational chart efficiently adjusts to a mass production model, mass customisation requires a process-oriented structure that delegates autonomy and decision-making capacity to those functions which develop a process from start to end.

Process management is the organisational model created to respond to the organisational needs of mass customisation. It is a management model that moves all the functions of the hierarchical organisation chart down to the process level, modifying the decision-making structures to bring them to the operational level, to the level of the process itself.

Similarly, a ‘lean 4.0’ approach requires this fully process-oriented organisation that, going one step further, is able to launch each of the operations that make up the process at the optimal time to meet the client’s needs (when the information is available, the needs are known, etc.).

Digital organisation

As a conclusion to this historical comparison between production models and their correlation with organisational models, we can state that those organisations wishing to obtain results with the implementation of one or the other model must make a prior effort to adapt their organisational structures. Otherwise, the model will not be functional.

At the moment, there are many companies that, while maintaining their operations structured around a hierarchical organisation chart, are trying to implement a model aimed at customisation, lean management or even a ‘lean 4.0’ approach. Many organisations face a change of production model without adopting the necessary changes at the organisational level, which is a clear indicator of failure in the model’s implementation.

Although there is currently insufficient data on the levels of failure of the implementation of a ‘lean 4.0’ model, we can refer to the ‘lean’ management model, which already has more than sixty years history: Many companies all over the world have worked on the implementation of improvement programmes during the last few decades without obtaining tangible results.


In this regard, an article in ‘The Economist’ magazine published in 2000 revealed that only 20% of the companies which had initiated an improvement programme had achieved the expected benefits.

Ten years after this first article, an Accenture study carried out on a sample of executives from a hundred large American companies showed that the situation remained the same: half of the organisations surveyed had implemented various continuous improvement programmes in 2010, and stated that the improvements obtained had a minimal impact on the company’s results.

This is why copying or adopting a particular model without modifying leadership structures appropriately through holistic insight is the most direct route to its failure to be implemented. The benefits of a given model are only realised if the whole organisation is transformed by adopting the appropriate structures.