A recession is a good time for lean. Organisations can either postpone
lean and resort to traditional cost cutting, or they can accelerate and
redouble their progress with lean. I doubt the former will last the course.
But the latter stand a good chance of surviving and laying the foundations
for future prosperity as they turn the tables on their competitors. There is
no time to lose and no more time for excuses! So how should we make
best use of this important moment? Here is my five point action plan for
turning this recession to your advantage.
First correctly
define the business problems
you are trying to solve
right at the top. In this case business problems are about closing
performance gaps in order to survive and to take market share from
competitors in challenging times. These gaps are now almost certainly
bigger than they were. I recently asked the CEO of a large multinational
why he wanted his company to go lean. He gave me a very general
answer about rising input prices and squeezing margins. However the
potential of lean is best understood in relation to specific value streams.
So what are your main value streams creating value for customers and
what are the key support value streams that enable them to flow? From
examples elsewhere what is the potential for significantly improving their
performance – getting new products to market in half the time, producing
30% more with existing equipment and no additional capital, meeting
every delivery on-time and in full and with no invoice errors, responding
to customer problems in hours rather than weeks, reducing length of stay
in a hospital by half, compressing the supply chain from 200 days to 20,
eliminating 80% of errors and effort to process approvals or payments in
the back office, getting changes to the IT system in days rather than
many months etc.? What improvements in which of your value streams
with which customers and suppliers will make the biggest contribution to
closing your performance gaps? What are your vital few projects – you
cannot do everything?
Second give strong value stream managers end-to-end responsibility for
each of these
value stream projects. Their role is to gain agreement on
the right things to do for their value streams from all the functions and
departments involved who retain the authority over their resources).
They also co-ordinate the implementation using all the lean visual project
management tools and surface conflicts between functional and value
stream objectives.
Third establish a
Lean Council
(like Toyota’s Quality and Cost Councils)
of key function heads and value stream project leaders to initiate all cross
functional projects, co-ordinate them, review progress and resolve
conflicting agendas. They should also have responsibility for developing
the lean experts to support these value stream projects and for spreading
lean knowledge through networks of peers, workshops and an intranet
data base of projects.
Fourth
prepare for the future
now by getting a high potential group to
think outside the box and make the currently impossible possible using
lean. This means thinking back from
the customer’s use of the product or
service and exploring alternative routes to market. It also means
challenging the design of the product or service, the right-sized tooling to
make it, the right IT systems to run it in the right location with a co-located supply base.
Fifth use these value stream projects to teach everyone how to see the
right things to do using
A3 planning. This is also a great opportunity to
teach line managers how to use visual management to track progress in
real time and to respond quickly to problems. It is also a great opportunity
for line managers to develop the capabilities of their staff to diagnose and
solve problems – by using
A3 thinking. This means asking the right
questions to help them learn rather than telling them what to do!
None of these steps are easy but they are all focused on solving the most
important problems facing the business while developing the capabilities
to sustain and significantly improve this performance into the future. This
path will also begin to make sense of some of the apparent paradoxes of
the lean management system pioneered by Toyota.
Yours sincerely
Professor Daniel T Jones
Professor Daniel T Jones
