From the Lionesses of Africa Operations Dept
We ended last week by introducing the term ‘Lean organisation’. To create more value for customers with less resources. What you are aiming for is to provide perfect value to the customer through perfect value creation with zero waste. As we pointed out ‘perfection’ cannot be attained, but by aiming for perfection, so we get incredible results…
First thing to understand about a ‘Lean’ Transformation, is that this is all about maximizing value for the customer and as we shall see this also brings in other aspects of your business. Any that don’t bring value to you (and as a knock-on to the customer) is going to be looked at fiercely. Sadly this is often seen as being all or mostly about cutting costs or slashing of budgets. Cutting costs is often a by-product, but this is not the driver, creating value is the driver. Being nimble and lean is the oil.
In fact you will begin to recognize that much of what we have written about in the past months since March and Covid-19 hit is all about creating a Lean Organisation, because ‘Value’ has been one of the major themes running through all of our blogs.
Interesting fact from our ever eager to share Head of Finance: ‘Lean’ was first introduced by a chap called John Krafcik in his 1991 book “The Machine That Changed the World: The Story of Lean Production”. What is John up to now? He is in charge of Google’s self-driving car project as CEO of Waymo (part of Alphabet Inc)…
Let’s get the truth out early. According to McKinsey, 70% of transformations fail. 70% !!
This is mainly because there is little or no buy in from the Board, Management or Employees…(sometimes all three!).
These three are essential, it is so easy to drop back into old ways if their interest wanes.
So let’s start.
What are you trying to do? Or to put it another way as we asked in our guide to Pitch Books - what is the central Problem that you are Solving to create a product that your customer wants to buy? The solution to this is what the customer pays good money for, so it simply has to offer great value, or the customer will never pull out the cash… This is not only about manufacturing industries, but all industries, so in the Service sector or SaaS, what problem are you solving?
Then drill down, what is the actual part the customer is most interested in? Within the larger solution you have designed, there will be really important bits for the customer and there will be parts they couldn’t care less about. Drill down and find that part, that is the gold the customer is actually willing to pay for. In Google’s self driving cars, is it the automatic parking in which case perhaps one needs to look at all four wheels being directional so the car can slip in sideways to a tight parking slot, or is it the ability to switch off on long journeys, in which case our new BFF John should consider putting large beds in the back of the car…
(hmmm - suddenly travelling by train seems quite attractive!).
Having found the value, what is the process you go through to create that value, and here is where we start to drill down into your company. Let’s optimize those valuable resources that you have.
How do we start that process?
Create a workflow of the entire process from start (when the raw materials arrive in your factory), to the sale when the customer pays, to the complaints and returns process, to the warehouse and all those dark areas where long dated unsold stock is hiding…
Once this is mapped you will clearly be able to see who ‘owns’ various processes and is responsible for measuring, evaluating, and improving each individual process that leads to the value that the customer enjoys and wants. This brings you closer to choosing the bottleneck that has to be solved, made more efficient or leaner. Remember the Lion thinks he’s in charge as the Lionesses hunt and bring back food, but over 100 metres (for some even 20 metres!), he has no chance against the lean Lionesses. Yes, we know who’s really the Boss!
So by mapping your processes you begin to see where you have to concentrate first:
Improving productivity
Reducing delivery times
Eliminating project delays
Increasing profit
Increasing customer satisfaction
Improving quality
Managing complexity
…are all the typical areas management battle with daily. There is no way that you will be able to solve all of these in any one transformation whilst bringing along your Employees, Management and Board. Yet each will be a problem to a larger or lesser extent (if you are honest with yourself of course!), so you will have to choose which to hit first. Sit with your management team and go through each of these pain points or bottlenecks to show them where the problems lie and then either agree with them which will be tackled first or make an executive decision based on your view of how urgent the issue is.
Then present this to your wider employees. One maybe two at the most as it is so difficult to get the message through to the wider team if you are running around trying to solve everything. Remember 70% fail because there is a failure of ‘buy-in’ and too many balls in the air as you try to juggle 5,6 or 7 transformations will simply be too much and you will end up with an office of headless chickens running around….
Why present to the employees? You are creating ‘transparency’ at this stage that must continue to run through the entire process. The more information people have, the more chance of their buy-in and also support when things don’t go according to plan (which happens….a lot). And here is the best bit about ‘Lean’ Organisations, by bringing in more people to the process, you start to create a feeling of shared leadership where your employees receive more responsibilities and they themselves will then seek continuous improvement. How cool is that!
Terrible of course if you are a micro-manager and trust no one, but then one day you will wake up and find you have no employees as no one can handle that management style for any length of time!
You also then open up the possibility (as we have stated before) that there may be some bright idea lurking deep within your employees that will make all the difference. If you are driving a fork-lift truck around a warehouse everyday, there is a large chance you would come up with greater efficiencies, but all too often their voices are not heard.
Having created this workflow and decided on which process to hit first, go through this and eliminate waste. A great example of this is our essential fight against paper! If everything is paper driven because your Bookkeeper loves files and paper trails, and your warehouse manager will not release goods without the order in triplicate on paper, time to convince them of the savings in time, effort and money through going paperless! There are some excellent systems out there to manage the flow from customer giving the order to delivery and sign off. Indeed as we discussed last week, so much of this will probably already be available on your expensive accounting system that with only a small investment in handheld devices for your warehouse will allow not only less cost through paper wastage but a far greater speed on orders from clients as they swing effortlessly through sales to back office to warehouse to delivery driver - all beautifully documented, all perfect (because the customer has entered the order - so can never complain if sales got it wrong). This is not written hurriedly down on the hoof by sales who mis-heard the order and then left it on their desk under the pile of other ‘Urgent-To-Do’ items…or left until the end of the day in the warehouse and then claimed it was received at 4pm, when it was actually sent through at 11am…
This will transform your employees’ lives as their jobs become far less cluttered and far safer (no more calls from the customer saying they wanted something else and you must have mis-heard them). It will transform your life as efficiency increases and costs (in paper, but importantly also errors) drop, and will certainly add far greater value in the form of speed and efficiency to your customer. How’s that for a quick win for Lean!
One last point, please make sure the process does not take over. Always keep the end result (in our example above, to speed up the ‘sales to delivery’ process whilst increasing checks and cutting out errors) in mind. Spending huge amounts of time and effort in finding the perfect solution, for example the most advanced, ergonomically designed, complete with furry dice and go-faster stripes, hand-held device for your warehouse team, will distract, whilst costing in time, effort and money. You are the only one not paid 9-5, distractions and detours are great for employees, terrible for you and the company.
As Jeff Bezos said in his letter to shareholders here:
“Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right. Gulp. It’s not that rare to hear a junior leader defend a bad outcome with something like, “Well, we followed the process.” A more experienced leader will use it as an opportunity to investigate and improve the process.
The process is not the thing. It’s always worth asking, do we own the process or does the process own us?”
Or to put it another way… is the tail wagging the Lioness, or the Lioness wagging the tail?
Stay safe!