The list of challenges facing corporate leaders today is lengthy. It includes globalization, rapidly shifting market dynamics, fallout from the European debt crisis, and a potential slowdown in Asia. It is unclear how these economic trends will play out and what impact they will have on industries and countries. Companies will also be faced with unexpected turbulence, whether in the form of adverse changes in their business or the arrival of tough new competitors. All this makes it more critical than ever before for corporate leaders to closely scrutinize the cost side of their income statement.

This is one of the great barriers to lean implementation: Concepts of lean are both counterintuitive and counter-cultural. Hence, if you wish to be a lean leader, you must go back to the basics and make sure you have a clear understanding before you are able to teach others.

By now, the functional model has become the conceptual core of nearly all organizational structures, public and private. It is so ingrained in the daily activities of most companies that it is rarely questioned. But it is obsolete.