Lean thinking: Creating the…
In last year’s publication, Forecasting the Future: Community Services in Queensland 2025, one of the seven themes emerging – alongside the greater outcomes focus and the need for increased collaboration and cooperation – was the need to focus on productivity.
The authors kindly helped us with their definition of productivity:
Focus on the efficient delivery of goods and services to achieve the desired outcome.
For many that sounds awfully like a cost cutting agenda. In fact, in many parts of the world (including Australia) productivity has historically been narrowly defined as reducing cost.
Not very motivating, is it?
But it needn’t be interpreted like this.
The reason productivity will be one of the key challenges in 2017 and beyond is the simple balance between supply and demand.
We need to deliver services more effectively (as well as efficiently) simply to allow our capacity to train and retain good people. If we don’t, we can’t meet the ever-increasing demands on our services.
Continuous improvement – or productivity – is not mainly about cost cutting, it is about delivering value.
Professor Peter Hines is the pioneer of Lean business system thinking.
This way of thinking involves a sustainable, whole-of-business approach to improvement.
It has shown if you apply continuous improvement across your whole business, your bottom line will see twice the impact achievable by focusing on cost reduction alone.
Organisations that use continuous improvement purely for cost reduction are often frustrated with the inertia and lack of engagement of a workforce.
Cost cutting through budgetary strangulation doesn’t work; it never has.
It is evidence, at best, of a management team without the skills to run the organisation and often is an avoidance of the accountability of the leader to deal with the longer-term issues.
A recent article in the Financial Times by Sarah O’Connor describes a hotel productivity initiative where the cleaners’ targets for the number of rooms to clean was raised.
As a result, the cleaners just skimped a little on each room in order to meet their targets.
But the hidden damage was in employee stress because of the unsupported pressure they were put under.
The article concluded that sustainable productivity was about working smarter, not harder.
This is where the concept of Lean thinking comes in.
The most fundamental principle of Lean thinking is that value can only be defined by the customer – yes, in the Community Services Industry, that often needs careful defining but it can be done.
Usually everyone in an organisation (especially a community focused one) wants to do the best for their client / customer.
If it is clear what clients value, then the organisation can focus on the activities that deliver that value.
If we focus only on the activities that really add value, that usually leaves out a lot of other stuff.
The thing to realise is that the 'other stuff' may be well-intentioned but in the eyes of the customer they aren’t the most important things.
Reducing time and effort on these unimportant things frees up capacity.
The more resolute you are, the more freed-up capacity you can find.
This also means no one department on its own can determine value.
This helps overcome silo thinking, or disjointed services being provided to clients.
Providing a rehabilitation service for someone with a disability needs to be considered in conjunction with what happens when they go home to their family. There is a need for a whole-of-system approach.
The concept of Lean thinking is often misunderstood.
Up to the early 2000s many considered Lean only applicable to manufacturing industries such as cars.
But Lean is now embedded in the philosophies of retailers, banks and other service businesses, emergency services, and increasingly healthcare.
Where truly embraced – and understood – from the senior management through the entire workforce, organisations have shown long term and sustainable excellence.
From the basic principles of Lean, several other methodologies for improving and transforming organisations have evolved using – at their heart – the same principles, including:
- six sigma
- systems thinking
- design thinking
- enterprise excellence.
The same principle of client-defined value is at the heart of these methodologies, as is the use of visual tools that lead to clear, prioritised, management decisions.
It is the underpinning simplicity and common-sense that makes Lean thinking so powerful.
It frees up capacity to focus more on adding value.
So, why isn’t everyone applying it?
Creating and sustaining a Lean organisation
While the core principles of Lean are simple, it doesn’t mean that organisations can immediately make the change.
Peter Hines developed the Lean Business Model® to help organisations identify the elements they needed to address on their Lean journey.
Most publications (and courses) on Lean talk about tools and techniques – such as problem solving, process mapping and prioritising.
The Lean Business Model® identifies the need for an organisation to cover much more.
An organisation needs to have a shared purpose and strategy.
It also needs to look at the big picture in terms of the client journey with a focus on key business processes which include the extended enterprise (i.e. other service providers and stakeholders such as regulators).
But at the base is genuine sharing with all people in the organisation.
In the Lean Business Model®, it is the vertical axis that increasingly dominates – strategy and strategy deployment, defining the purpose, value stream management all focus on key processes, but to make them happen there is a need to engage and develop your people.
[Above: The Lean Business Model®]
Increasingly Peter Hines’ research focus has been on why Lean initiatives often fizzle out and how to make the continuous improvement a sustainable way of life.
He uses the well-known iceberg analogy.
Peter and his colleagues were finding that there was too much focus on the tools and techniques (i.e. the project work) and not enough on strategy and alignment, leadership and behaviours, and engagement – all factors that sit below the waterline but that are fundamental enablers.
[Above source: P. Hines, P. Found, G. Griffiths & R. Harrison, Staying Lean, 2008]
In one piece of research, several organisations who were at various points of their Lean journey were analysed to see what the most important factors were in their success (or failure).
The observations are quite telling:
10 reasons for failure
1. Lack of a clear executive vision
2. Lack of an effective communication strategy
3. Failure to create and communicate a real sense of urgency
4. Poor consultation with stakeholders
5. Lack of structured methodology and project management
6. Failure to monitor and evaluate the outcome
7. Failure to mobilise change champions
8. Failure to engage employees
9. Absence of a dedicated and fully resourced implementation team
10. Lack of sympathetic and supportive Human Resources policies.
None of these factors are to do with what happens above the water, but all are about the setting of culture.
In my experience, success and (certainly) sustainability are shaped almost entirely by the attitude of the senior leadership of the organisation.
Without the understanding and true commitment of senior leadership to ongoing continuous improvement, the skepticism and disengagement when faced with change will remain.
A superhero (command and control) leadership style just doesn’t work here; the leaders have to change as well.
Leadership traits such as:
- openness (e.g. telling it straight)
- showing vulnerability (e.g. asking for help)
- and demonstrating accountability (e.g. sharing what you have committed to) allows other people in and a sense of ownership over the process.
- Have a clear vision
- Include in this vision who your key stakeholders are and your core purpose
- Understand what your key stakeholders really value
- Don’t assume, ask them and their representatives
- Define what you need to do in a very small number of key indicators.
- Focus on understanding how and where you deliver value to clients
- Prioritise improvements on the biggest impact (on value)
- Break down silos by looking at the bigger picture and the end-to-end process.
- Change is uncomfortable for all. Change done with people produces long term results. Change done to people creates change fatigue, skepticism and apathy
- Get everybody to own their improvement agenda, don’t leave it to external consultants
- Expect to develop yourself and accept the initial discomfort this brings
- Celebrate real success and give credit to those who have made the change possible.
Don’t miss Professor Peter Hines when he visits Brisbane on Friday 24 March 2017 for a morning seminar on Lean thinking. More details on the CSIA website soon.
Make sure you or representatives from your senior leadership team come along.
The CSIA, in partnership with S A Partners, are investigating ways to bring you more on Lean thinking and productivity during 2017. Watch this space for more details.
- Productivity is not directly about cost cutting but about freeing up capacity to do more good, better
- It starts at the top with the senior leadership team, but it spreads over time to everybody
- It doesn’t matter where you currently are on your journey to Enterprise excellence, there is always a next step if you apply a continuous improvement philosophy such as Lean thinking
- Improvement comes from within the organisation, not from external consultants. Support in training and coaching is different and allows continued ownership
- Ensure your journey to Enterprise excellence (whether you call it Lean or not) is made up of the three key elements:
- Lean Thinking – James Womack and Daniel Jones
- Creating a Lean Business System – Peter Hines
- Applying Lean in the Public Sector – Peter Hines
Jon has built on his wide industry experience as a business leader to act as a trusted advisor to CEOs and senior executives. He is a leading authority in Joined Up Leadership and in his mentoring, facilitating and speaking he draws from many of the world’s foremost business thinkers to promote those ideas based on core principles, common sense and simple models.
He is a Managing Consultant in Queensland for S A Partners, the company founded by Professor Peter Hines. As an Insurance business leader in the 2000s, Jon was one of the pioneers of the application of Lean thinking in the insurance sector.
He is also a Queensland Chair at The Executive Connection (TEC).
What Jon does:
- Runs CEO peer group meetings for TEC. Members, with a wide diversity of business models, continue to provide and resolve real world issues every month. Jon is always looking for members to complement his two groups
- Mentors business leaders on a regular basis; business owners, corporate leaders and CEOs of not-for-profit organisations
- Leads a range of workshops in the area of Lean leadership. As a pioneer in the adoption of Lean in service businesses, he continues to seek out and support business leaders of organisations committed to Enterprise excellence
- Facilitates strategy formation and implementation workshops. Engaging with an executive team to join up the strategic objectives to purpose and core values.