Becoming “Lean” can be a very effective way of improving the flexibility and responsiveness that organizations need to undergo the frequent transformations needed to remain competitive.
The concept of “Lean” has been one of the most important influences on business in recent decades, originating in the Japanese manufacturing context and more recently being adapted for use by service sector industries. Basically, Lean involves the elimination of all unnecessary sources of waste (“muda”) in organizational processes to reduce costs, improve efficiency and maximize the generation of value to customers.
Some of the most recent developments in Lean include its adoption by many service sector organizations, especially in health care and the IT sector, the use of business intelligence and advanced analytics to support Lean, the development of proprietary Lean Production Programs by many multinational corporations, and the use of Lean to improve sustainability.
Becoming “Lean” can be a very effective way of improving the flexibility and responsiveness that organizations need to undergo the frequent transformation needed to remain competitive in today’s rapidly changing business environment. Conversely, most organizations need to undergo extensive organizational transformation to prepare for the effective implementation of Lean.
For successful organizational transformation, it is crucial to achieve the right balance of art and science. In Schroeder & Schroeder’s Art and Science of Transformation® framework, the “science” is defined as the use of change management tools and techniques, and the “art” as the skills and attributes needed to manage the cultural and people-related aspects of change.
Combining art and science is especially important when adopting Lean, since this approach integrates the use of technology and the inputs of people in optimal ways to improve business performance. Achieving success in Lean also depends on the ability to understand the demands and preferences of customers, since value must be defined from their perspective.
To achieve sustainable business benefits from Lean, it is essential to align organizational culture with this approach. Clear communications about this initiative and the involvement of employees in translating Lean principles to their own work will promote the development of new norms that promote the use of Lean. It is also essential to review and modify the performance management, compensation, competencies and other organizational systems to ensure that these promote the types of behaviours and attitudes associated with Lean and do not hinder its implementation.
What is “Lean”?
The concept of “Lean” has been one of the most important influences on business in recent decades, originating in the Japanese manufacturing context and more recently being adapted for use by service sector industries. At its core, Lean involves the elimination of all unnecessary sources of waste (“muda”) in organizational processes to reduce costs, improve efficiency and maximize the generation of value to customers. The application of Lean has been changing dramatically, evolving from its original emphasis on streamlining manufacturing processes to become a whole new way of thinking and operating which is relevant to organizations in any sector. One of the most important aspects of implementing Lean is changing organizational culture and mind-sets to focus on waste reduction and continual improvement; cultural change initiatives are likely to be necessary to achieve this, and are important to bring about sustainable business benefits from Lean.
Recent Developments in Lean
Lean Services: One of the most significant developments in Lean in recent years has been its spread from manufacturing to the service sector. The health care and IT sectors are leading the way in adopting Lean in this sector, but the approach is also being extensively adopted by retail and financial services firms, as well as governmental organizations and NGOs. Increasingly, researchers are documenting the benefits of Lean principles to service sector organizations, including reduced costs, improved efficiency, and greater productivity.
Business Intelligence and Advanced Analytics: Advances in technology have made vast amounts of data available to organizations for use in understanding and improving their business processes. Increasingly sophisticated tools for the purpose of analyzing this data are also available. New “agile” business intelligence systems enable firms to quickly tap into a wide range of up-to-date information about their operational processes, customers and markets. Other innovative developments being used to support Lean include “advanced analytics” and ‘telematics”.
Lean Production Programs: In the past decade many major multinational companies, such as Caterpillar, Johnson Controls, and Heinz have been developing their own proprietary Lean programs. In global automobile manufacturing, in particular, Lean Production Systems have become established operational practice. Supply chain participants are being integrated into Lean production systems, facilitated by developments in electronic and Internet based communications.
Lean and Green: More organizations than ever before are putting sustainability on their business agendas and recognize the need to do so in order to remain competitive and meet increased regulatory requirements. Customers no longer define value in terms of price and quality considerations alone, but based on whether products are developed and delivered in ways that minimize environmental impacts and respect human rights. Lean principles and programs are being used to address these issues in many industries, especially those generating high levels of pollution and waste, such as car manufacturing and construction.
Organizational Transformation and Lean
Frequent and ongoing transformation has become a way of life for most organizations in today’s rapidly changing business environment. Limited organizational changes are no longer adequate; there is often a need to adopt new business models or carry out extensive restructuring involving all parts of the organization. Becoming “Lean” can be an effective way of improving the flexibility and responsiveness that organizations need in this environment, and for reviewing and improving organizational processes in the holistic and systematic way required for effective transformation. Conversely, most organizations need to undergo extensive organizational transformation to prepare for the effective implementation of Lean.
Lean and the Art and Science of Transformation
For successful organizational transformation, it is crucial to achieve the right balance of art and science. In Schroeder & Schroeder’s Art and Science of Transformation® framework, the “science” of transformation is defined as the use of change management tools and techniques, and the “art” of transformation as the important skills and attributes needed to manage the attitudes and behaviours of people to bring about a successful transformation. This is especially relevant when adopting Lean, since this approach integrates the use of technology and the inputs of people in optimal ways to improve business performance.
In the Art and Science of Transformation® framework, we define successful transformation as the organizational changes necessary for a firm to pursue its fundamental purpose most effectively at any given time, within the scope of its core values. To fulfill its role as a strategic guiding principle effectively, fundamental purpose must always be defined in terms of the human needs and combinations of needs that the organization is ultimately concerned with meeting. Adopting Lean is a highly effective way of achieving strategic transformation since Lean is focused on maximising value as defined from the customer perspective.
Combining Art and Science for Lean
When adopting Lean, there are two crucial ways in which art and science need to be combined. First, an organization requires knowledge and understanding of proven tools and methods of Lean, such as Kaizan, Kanban, Six Sigma or 5s. But there is also a need to determine the ways in which human input can be used to maximize value and reduce waste in business processes and how this input can be combined with automated processes for optimum impact.
Second, as in any organizational transformation, there is a need for best practice change management tools and techniques, including budgeting, risk analysis, and work scheduling to ensure that the initiative is properly planned and implemented. But this expertise must be effectively combined with the successful management of the people and cultural aspects of change. People management skills, including leadership, communications and negotiation skills are crucial to secure the necessary commitment and input of internal and external stakeholders.
The Science of Lean
A systematic approach is fundamental to Lean, which is basically concerned with designing systems that enable people to work most effectively and reduce waste. Lean relies heavily on the use of process maps and other visualization methods.
Another important aspect of the science of lean is its heavy focus on the use of information and analytical techniques for improving business performance, including established systems, such as Kaizan and Six Sigma, and the use of statistical and mathematical methods.
The Art of Lean
There are a number of reasons for the importance of people in the success of Lean. First, Lean processes are concerned with combining the inputs of people and technology in the most efficient ways. Operational data and Lean systems provide the material and infrastructure for reducing waste and generating value, but it is through human insights and interpretations that the optimal ways of doing so are identified. Achieving success in Lean also depends on the ability of the organization to understand the demands and preferences of its customers or clients, since value must be defined from their perspective.
To achieve sustainable business benefits from Lean, it is also essential to align organizational culture with this approach. First, information about the Lean initiative and their role in it must be communicated clearly to staff throughout the organization using a range of formal and informal methods. Second, team meetings or workshops should be used to involve employees directly in identifying how they can contribute to Lean in their own areas of work. This will help promote the development of new norms that promote the use of Lean.
However, individual-level initiatives are not enough to promote sustainable culture change; over time, culture becomes institutionalized and ingrained in the very fabric of the organization, shaping its structure and systems and in turn being reinforced by these. For effective implementation of Lean, therefore, it is also essential to review and modify the performance management, compensation, competencies and other organizational systems or “change shaping” levers to ensure that these promote the types of behaviours and attitudes associated with Lean and do not hinder its implementation.