Lean Strategy - Development & Deployment
Glasgow, 12th January, 2009
Alistair Black, Founding Director of Business Base, outines a "best practice" approach to introducing Lean as a strategic tool.
The Business Case
There are a host of obstacles facing the aspiring Lean business. Lack of a common vision, a suspicious workforce, failure to see the bottom line improvements, lack of resources and difficulty in maintaining the gains are amongst the most common problems. By studying the methods of those that have made the changes and stayed the course, it is possible to identify steps that can increase the chances of success, and these steps can be linked by way of a Lean Strategy.
Development of the Strategy
Strategic planning is not easy. It is not simply creating a wish list of targets that the business would like to meet; rather it is a compelling business case made by the senior management team for following a course of action, involving a number of parallel and complimentary activities which, combined, will bring about superior long-term value creation. So it should come as no surprise that a strategic approach to Lean and Continuous Improvement can make the difference between minor short-term gains and long term value creation. Developing a road-map for continuous improvement and aligning it to the overall strategic goals of the business ensures that improvement activities are focussed on delivery of the company’s strategy, essentially making “strategy” everyone’s job and something that the business does every day.
By following a clear, methodical process, a business can ensure that the commitment, priorities, resources, know-how and performance measures required are all in place, raising the likelihood of successful implementation. These steps are discussed below.
Step 1 – Leadership Vision and Commitment
It is essential that the leadership team shares a common sense of purpose and resolve when it comes to making a compelling business case for change. If anyone in the senior team is less than 100% committed, it will quickly become evident to the rest of the organisation and this will stop the initiative in its tracks. Investing the time to discuss and agree on the need for Lean, and ensuring that any doubters are brought on side will pay dividends in the future even if the first reaction is that we ought to “just do it”.
Step 2 –Strategy Alignment
Once the decision is made and the commitment given, the next responsibility of the leadership team is to identify the critical processes which the business must excel at in order to deliver the strategy and to compare this to the current level of performance. For Lean organisations, this means looking at the business from the customers’ perspective, understanding what represents excellence – and therefore value - to its customers. It must be recognised that Lean by itself will not bring about successful strategy execution; rather it is one of a number of steps that the business will need to take. However, thinking Lean ensures that we don’t lose sight of the most important aspect: customer value creation.
Step 3 – Setting the Priorities and Committing the Resources
The outcome from Step 2 is a list of processes that the business has identified which need to be improved. It is usual for the list to be extensive, especially for those businesses who are undertaking this exercise for the first time, and it is unlikely that there will be sufficient resources to address everything all at once. As such, the activities need to be prioritised before any projects can be launched and resources committed. This again is where a focus on customer value creation can help; those with the highest value creation impact should be at the top of the list. With regards to the resources required, the biggest commitment will be training the workforce in Lean tool and techniques and then allocating sufficient time to undertake the projects.
Step 4 – Developing the Performance Measurement Framework
The stage is set: there’s senior management commitment, a clear understanding of which critical processes need to improve to meet the business strategy and which activities should be addressed first. Now comes the difficult part; how to turn thoughts into action. We need to change the way that people think, act and make decisions so that they are motivated to achieve and then maintain the improvements that have been defined. To do this successfully requires redefinition of business performance metrics to drive this behaviour; failing to change these metrics can actively encourage anti-lean behaviour. This isn’t simply a case of defining a whole host of new “KPI”s. A lot of deliberation needs to be given to the selection of measures and how they combine to create a solid framework for motivating improvement. There is a huge amount of wasted effort in businesses that have inadvertently created conflicting measures, meaning that target A can only be met if target B is missed!
This is the feedback loop. Lean enterprises often refer to the visual workplace, and for the performance measures to act effectively, it is vital that they are reported and displayed to the workforce. The format and content of these reports is important too, as they need to be effective in getting the message across and letting people see the results of their efforts and identifying the areas that are pulling down overall performance. Ultimately, everyone in the business should be able to give the same answer to the question – “how well are we doing…at what is important?”
Summary
Developing a Lean strategy is not a guarantee that Lean will work for your organisation, but based on the experiences of others it can greatly increase the chances of success. Nor is it a one-off process. Continuous improvement is, as the name suggests, an ongoing initiative, and as such, the Lean strategy must be regularly reviewed and refreshed to ensure that it constantly identifies and addresses the top priority actions. Success is contagious; get some wins under your belt, and you will always be hungry for more.