Lean Reborn as a Catalyst to Growth

Why Lean is imperative when looking at growth?

Published: 25 Nov 2014

Why Lean is imperative when looking at growth?

One might find it astonishing that the Lean philosophy and methodology, dedicated to continuous improvement, hasn’t really changed for the past 15 years. After it merged with the quality oriented Six Sigma, it became an integrated methodology, known as Lean Six Sigma; however, quite commonly referred to as “Lean” by most today.

After a great expansion of implementation from Asia to the US, Europe, Middle East and emerging countries, Lean has grown beyond production processes and been increasingly applied to support functions and service industries. This is the demonstration of its flexibility. Results are as impressive with transactional processes often linked to “services” and even cognitive processes in case of “unitary decision making” such as investment banking, legal proceedings or also medical interventions.

However, it is frequently quoted that Lean has reached a cliff: 80% of companies acknowledge that their Lean initiative did not achieve the expected target”.

One could now consider: How is it possible to keep the momentum of a Lean initiative? What are the rising trends in operational excellence to help companies outperform their competitors? Where should top management focus these initiatives? What is new?

Let’s analyse the situation further

The origin of Lean emanated in “process waste” and “defects” elimination and its application has predominantly focused on cost cutting, rather than part of a growth strategy, focussing on service levels and competitiveness.

During a recent conversation with an industrial director, it was noted that their employees had been engaged in a program whereby increased effort had led to a significant improvement in productivity. As a consequence, the annual plant shutdown period was extended by an additional 2 weeks (compared to normal), resulting in shorter working time and a temporary reallocation for many employees. Despite the success of the project, in terms of financial benefits, the impact on mindset was catastrophic.

Looking at 60 global companies and institutions that utilise Lean for transformation across a range of activities, one can see emerging areas of focuses, in addition to the traditional objectives such as customer satisfaction, cost reduction or capacity increase:

  • Staff engagement is clearly key for industries with high attrition and absenteeism levels, such as services and retail
  • Flexibility is a growing aspect in the IT industry with increasing need to improve their agility
  • Standardization becomes key in the service industry as customers expect the same experience in any agency and can now share their perception with others.

Figure 1: Objective focuses by industry area

There is a shift on the objectives of Lean programs and on the way companies communicate around it. Lean brings many benefits that have a positive impact on employee engagement and sustainable business practices: from carbon footprint reduction, to safety improvement, sales increase, or even improved employee well-being.

Leveraging Frost & Sullivan business insight into the trends that will have a lasting and profound impact on companies and governments in the next 5 to 10 years, 3 major transformational shifts have been identified. These will redefine Lean and assist companies with developing and delivering high value to their customers.

Transformational shifts:
  1. A vast amount of data is available to quantify customer satisfaction and process performance
  2. Wellbeing in the workplace is becoming more important to attract and retain the best employees
  3. New collaborative tools bring new ways to involve team members and replicate successes, globally

Transformational shift 1 - A vast amount of data is available to quantify customer satisfaction and process performance

Mr Deming highlighted: “We can only improve what we can measure”. Furthermore, with the increase in connectivity and data availability, there are consequently many opportunities to learn from new data sources and improve new processes. New data sources are often centred on customer interactions or process performance, so companies should not miss this opportunity to learn and grow.

Smart technologies are powerful assets that companies can leverage in order to support their Lean initiatives. Increasingly, smart sensors are entering processes, creating valuable data accessible everywhere in real time. With the right system to collect and analyze the generated data, this technology can bring about tremendous value: from providing much more meaningful data, to improvement projects, to real time supply chain flows reallocation. Indeed, Big Data capability can assist companies with understanding their customers, processes and behaviours with much more accuracy. Internet of Things (IoT) will bring about new business models, all relying on robust processes.

On an operational level, smart devices can bring visual management to new levels with instant updates, mobile access to your KPIs for on-the-field decision making. The continuous data update and accessibility can tremendously shorten decision cycles and make companies much more agile in a rapidly changing and disruptive environment.

For example, Walmart handles more than 1 million customer transactions per hour, generating more than 2.5 petabytes of data. This gigantic quantity of data is a goldmine for any Lean practitioner, but without powerful tools to analyse it, it is worthless.

In a nutshell, Industry 4.0 and Digital Transformation are new fuels for Lean.

 

Transformational shift #2 - Wellbeing in the workplace is becoming more important to attract and retain best employees

Generation Y is in itself a huge trend that companies should be prepared for: they want to feel good at work and are ready to change company if their expectations are not met. Satisfaction can mean many things: from more meaningful work, stable yet flexible hours or a better work environment. Companies and public entities are confronted with this new trend and must react quickly to win the talent competition.

In the public sector, Lean programs were launched 4 to 6 years ago with an objective to help civil servants deal with individual workload. Agent satisfaction is at the core of these programs, with a primary focus on pain points in processes, which results in easier and faster ways of working: efficiency is improved, lead times are reduced and citizen satisfaction increased.

Lean is about developing people, by positioning them as the experts of their own work and giving them the possibility to change what they think is going wrong. The involvement of employees in improvement projects is another important facet of the collaborative approach, and a chance to engage people should not be missed, in a constructive motivational manner.


Transformational shift #3 - New collaborative tools bring new ways to involve team members and replicate successes, globally

Lean programs are also about bringing people together to solve operational issues with the premise that more diverse heads are always better than one. Digital collaborative tools – like internal social media, mobile video conferencing, and online document sharing and editing can strongly increase the number of people included in resolving problems. Moreover, the new generation of workers and forward thinkers will benefit from the positive impact of social tools.

Many companies have already implemented internal social media tools to enhance collaboration; Lean initiatives should be leading the way in utilising them! From a public social network standpoint, the number of groups dedicated to business improvement and operational excellence are countless. One can derive great expertise from them, and thousands of people are sharing experiences and best practices with the world. The key would be keeping control of the level of detail of matters shared outside the organisation.

Of course, the common way of using Social Media tools is also to better connect and interact with your customer to offer a greater service and anticipate their needs. This will bring opportunities to learn more about what your customers have to say, interact and gather Voice Of the Customer data in a way that is much richer than focus groups and surveys. Finally, it is a way to combine qualitative information and sample size.

The last way of leveraging social media is for the deployment of your programs. Once you have piloted an improvement and you see results you want to replicate in other sites, collaborative tools, again, can assist with creating the link between business units, or operation sites, to share experiences.


New tools, new skills?

At the junction of these opportunities, the role of the Lean Practitioner has to evolve. They are not just method specialists and recognized change agents, but must now support the convergence of technology, human networks and strategy to deliver lasting results.

Figure 2: The new Lean practitioner

And due to the diversity of skills required, these practitioners most likely are a multi-skilled team rather than individuals focussed on a narrow skill set.

 

What does the future look like?

Trends and transformational shifts are giving Lean a new pulse, with technology maturity feeding it data, knowledge and people synergies.

New technologies are now mature enough and can very well support the Lean effort. Every Chief Process Officer or Transformation Director must understand the impact digitization has on their companies and how they can leverage it.

More than ever, people need to put their ideas and connections to positive contribution. Long transformation programmes lasting 3 to 5 years will die as companies suffer from huge change fatigue. Businesses need to adapt much faster, applying the 80/20 rule and reaping business benefits much faster.

Lean is one of the rare tools that can be used to deliver quick and sustainable results in a collaborative way, in many contexts. It is, thus, becoming a driver of Growth, once the focus is clear and the skills are available. It can support the re-design and implementation of a business model such as new store formats, new services, low cost, or the review and pilot of a market entry strategy, typically in emerging countries’ test markets.

Think Growth, think Lean .The foundations are in place. You are the catalyst.

Contact us to discuss further:

Arnaud Bossy: arnaud.bossy@frost.com
Donatien Gamba: donatien.gamba@frost.com 

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