Building a Lean Service Enterprise

Reflections of a Lean Management Practitioner

Debashis Sarkar

• Publisher: Productivity Press
• Year: 2016
• eBook ISBN:
  9781351722254
• Topic: Betriebswirtschaft
• Subtopic: Leadership

This book provides an assorted set of reflections/lessons from the "trenches" of Lean service and brings to fore leadership challenges, new tools, and the known-unknowns (insights that very few know but many in journey of Lean transformation need to know). Lean has the ability to address a wide range of problems faced by service companies, such as: complexity reduction, sales force productivity enhancement, operations risk control, cost leadership, combining scale with flexibility, service excellence and improving employee morale and involvement. Many of the principles discussed in the book are based on the author's first-hand experience in Lean implementation.

1

 

How Engaged Is Your CEO and Top Management?

 

So, you have been appointed to catalyze a Lean journey? But, do you know why there is this sudden interest? Is it because this is supposed to be the current fad or because there is a genuine need? Have you spoken to the chief executive officer (CEO) and others in the senior management team to get a pulse of their mind? It is well known that it would be futile to embark on a Lean transformation journey without the required sponsorship of management. I have seen organizations struggle despite spending tons of money on training and certification. This is because of lack of commitment from top management. I have come across leaders who will make tall claims about Lean in public platforms of power, but when it comes to spending time to understand Lean projects, they make themselves invisible.

A CEO hired a Lean expert to embed Lean thinking in a shared service center. (Shared service centers are entities wherein similar services or processes that were done in various parts of the organization are hubbed for deriving efficiencies from economies of scale, enhancing quality, and improving scalability.) The reason he did this was not because he believed in its power, but because it was something nice to have. This is something he picked from a shared service forum in which members from other companies had claimed that Lean is a must for making processes efficient and effective. The expert was more of a trophy hire for him, which he used to showcase to his bosses from the corporate office. This was to show how forward-thinking and committed he was to process improvement. For him, this was another of the things he thought he needed to do before he was elevated to another role in the group. However, when it came to really understanding what Lean could do and how he could really leverage it for better efficiencies, he was quite indifferent. The Lean expert tried hard to engage him, but this leader did not bother. The Lean expert tried hard to engage other senior leaders in the shared service center, but all resisted any form of change. Meetings were held to review some of the Lean projects initiated by the Lean expert, but they were more of a ritual. The Lean expert raised critical issues concerning inefficiencies, but the CEO kept quiet. All the other leaders joined together against him as they did not want anyone to bring out inefficiencies that plagued the processes. This charade of Lean implementation went on until the Lean expert left the organization frustrated. He gradually took all the team members he had hired to implement the Lean agenda. By then, the CEO also had another job outside the company, and he moved on. The sufferer in this whole thing was the organization.

TABLE 1.1
CEO Engagement on Lean Efforts

A Lean Change Agent should always ascertain the engagement levels of the CEO and senior management. I have seen various levels of CEO engagement in Lean efforts. Table 1.1 summarizes these.

I would suggest before you decide to take a role in embarking on a Lean transformation that you obtain a sense of the engagement levels of your CEO and top management levels. You will have to put in place required strategy to take them on board.

2

 

Spend the First 90 Days to Understand the Needs of the Company

 

Just because you are made responsible for Lean deployment does not mean you immediately begin to act. Without really understanding what the company needs, I have seen Lean Change Agents holding training sessions and start working on a few projects. This is not the right strategy to follow. My view is to take up the role for Lean deployment and to step back and understand what the company needs under its current context. Remember, Lean cannot be implemented for the sake of Lean. It has to positively impact organizational performance. I would suggest spending at least the first 90 days walking around the company and understanding what the key issues faced by the company are. There could be issues that are quite obvious, and there could be those that are not so explicit. Walk around the length and breadth of the company, talk to all and sundry.

As a matter of fact, before you take up the role, you should talk to the chief executive officer (CEO) or someone in top management to give you the liberty of ABWA: ascertaining by walking around. Talk to all-level employees, from those reporting to the CEO and those in the front lines and shop floors. Chat with outside stakeholders, such as nonexecutive directors, customers, vendors, analysts, and regulators (if possible). Go through the annual reports and type of claims that have been made. Read what the outside world says about the company. If possible, reach out to one or two of the biggest critics of the firm. Also, reach out to one or two of those who have good things to say about the company. Spend time with customers to understand what the current issues and what their expectations are. With the finance folks, understand issues concerning profit and loss. What does the chief financial officer (CFO) or the CFO’s team members think should be done to better the performance of the firm? Get a sense from the shop floor workers and front liners on what the key things are that need to be done to improve organizational performance.

Having completed the 90 days of ABWA, I would suggest you list the top three Focus Areas that you believe need to be addressed wherein Lean can be of help. Make a presentation of your findings to the top management, which includes the CEO and direct reports. Obtain their views if your understanding of the issues aligns with what they think are important. See if the issues that you have raised align with the Strategic Objectives of the company. If they do not, it could mean any of the following:

• The Focus Areas you have chosen are wrong and hence do not align with the Strategic Objectives.
• The Strategic Objectives are wrong and do not align with reality.
• The Focus Areas are correct and the current Strategic Objectives are also correct; all that needs to be done is to make sure the Focus Areas are a part of the Strategic Objectives.

The first 90 days encompass one of the finest learning times for a Lean Change Agent. The agent gets to understand the organization and this helps create the subsequent agenda of Lean deployment. From my experience, an expert Lean Change Agent will always bring out issues that were not known to the company. This agent gathers from observations and conversations. At times, this can surprise the CEO and top management as they tend to think they do not know what is happening in the firm. Little do they realize the value that a Lean expert brings from his or her experience.

When you highlight the Focus Areas, do not list them around functions such as people, process, technology, vendors, risk management, finance, and so on. This can make the respective functional owner look small in front of others, which no one would like. This can also pit one senior leader against another as there are always political overtones in a senior management team, and there are issues that a Lean Change Agent as a newcomer will never get to know.

Instead, talk in terms of the “end-to-end process,” which includes not one but multiple functional owners. Figure 2.1 shows a typical Focus Area that was presented by a Lean Change Agent after the agent’s ABWA. The list was whole-heartedly accepted by the top management team, and the first phase of Lean deployment saw multiple functional owners sponsoring the execution. As you can see, multiple functional owners agreed to sponsor the first phase of deployments. In areas where the entire bank was affected, it was decided to do pilot tests in specific business areas.

FIGURE 2.1
Focus Areas in Symbiosis bank after 90 days of ABWA.

These Focus Areas are critical as they are going to set the tone for Lean deployment later. My personal view is you should pick up the areas that have the maximum impact within a short period of time.

3

Should You Board the Ship?

Transforming an organization through Lean was Tim Noble’s passion. He had been a successful change agent and had made a reasonable name for himself. He was working for an organization that did not seem to have used his talent to the fullest. He quit his last job out of desperation although he was paid well—his skills were not used. He had joined this organization with a lot of hope, but things did not turn out the way he wanted. He was told that he would be leading a major Lean transformation in a mortgage business and working toward embedding both efficiency and effectiveness, which could help to differentiate the organization in the marketplace. All these were promises made by the chief people officer (person responsible for human resources in a company) and the chief executive officer (CEO). Tim was doing well in a well-known manufacturing company, but the compensation levels and the pitch made by the CEO made him leave his job and join the mortgage company. He had spent nearly 10 years in the manufacturing company, and his Lean efforts there paid dividends. The vice president of manufacturing was committed to Lean, and Tim had all the support needed to embed Lean thinking across the organization.

He spent 2 years in the mortgage business but hardly managed any traction. The same was true for the Lean journey that was promised to start; he could not do even one meaningful project. All that Tim could do was map processes in the organization and some small local Lean process improvements. Since his was a high-cost hire, there were repeated murmurs in the company concerning the type of value that he was adding and if it was commensurate with the money he was being paid. In all his performance reviews, he was told that he was not adding value. Finally, after 2 years, he was told to leave the company as they did not see value in his work.

What happened to Tim Noble is representative of what happens when Lean Change Agents make the wrong decision in choosing which organization to join. In this case, there definitely were issues not only concerning inability to influence the organization but also concerning the challenge faced when a leadership “talks” about but is indifferent toward deployment. Also, challenges in service companies can be quite different from those in manufacturing companies. This is because “Lean” as a concept is still alien to many service companies despite “Lean for service” being on the horizon for more than a decade. Tim Noble would have fared much better had he stayed in the manufacturing company and not jumped ship. I have seen Lean Change Agents making wrong choices like Tim that they later regretted.

So, what should a Lean Change Agent do when making a decision whether to join a new company? The change agent should ask the 11 questions in Table 3.1; the responses in Table 3.2 should help the agent decide whether to sign up for a role or not.

In the mortgage company Tim had joined, if he had administered these questions, he would have received the responses shown in Table 3.2.

Tim Noble was a great tools person, but one thing he was not very good at was influencing skill. He was successful in the previous manufacturing company as he worked for a strong leader who was committed to Lean thinking. At the mortgage company, he was suddenly exposed to a set of leaders who did not know what Lean was all about and who had to be taken on board. The job was not that of a tool expert but of someone who could influence. Tim Noble could not ascertain the type of challenge that was in his new job. If he had a sense of the 11 questions, things could have been different.

TABLE 3.1
Questionnaire: Taking Up a Lean Leader’s Role

...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• Preface
• Notes to Readers
• Author
• Chapter 1 How Engaged Is Your CEO and Top Management?
• Chapter 2 Spend the First 90 Days to Understand the Needs of the Company
• Chapter 3 Should You Board the Ship?
• Chapter 4 Before Embarking on a Lean Effort, Pause to Understand the Type of Problem That You Are Trying to Solve
• Chapter 5 Just Knowing Tools Does Not Make You a Lean Change Leader
• Chapter 6 Know the Building Blocks
• Chapter 7 “Influence”: Least Discussed Yet the Most Important Quality of a Seasoned Lean Change Leader
• Chapter 8 Engagement: Where to Begin?
• Chapter 9 To Whom Does the Lean Change Leader Report?
• Chapter 10 Trigger Signs of Upcoming Change by Embedding New “Ways of Working” for the Leadership Team
• Chapter 11 Do You Know What Constitutes a Great Lean Team?
• Chapter 12 A Person Keen to Be Popular Should Not Become Involved in Lean Efforts
• Chapter 13 It Makes Sense to Define Lean Differently
• Chapter 14 How Aligned Is the Top Management on Organizational Outcomes?
• Chapter 15 Do You Know the Building Blocks of a Holistic Lean Transformation?
• Chapter 16 Do Not Forget the 15Cs of Lean Transformation
• Chapter 17 Let Us Not Think of Lean as a Cost-Cutting Endeavor
• Chapter 18 It Helps to Adopt a Quiver Approach in a Lean Transformation
• Chapter 19 Let a Road Map Guide Your Deployment
• Chapter 20 Observe, Observe, and Observe
• Chapter 21 Lean Need Not Necessarily Be Called Lean
• Chapter 22 Service Guarantee Can Be a Good Aspiration to Have in a Lean Transformation Journey
• Chapter 23 Getting Top Management Commitment Is Necessary but Not Sufficient
• Chapter 24 Creating a Sense of Urgency Is a Prerequisite for Successful Lean Deployment
• Chapter 25 Do Not Forget to Include Those Below Top Management
• Chapter 26 Is Lean Applicable in Your Organization?
• Chapter 27 Service Processes Are Quite Different from Those That One Sees in Manufacturing
• Chapter 28 Do People Know Why the Organization Is Embarking on a Lean Journey?
• Chapter 29 Why a Common Understanding of Service Is a Must in Lean for Service
• Chapter 30 Who Are the Custodians of Your Process?
• Chapter 31 Just Not Larger Projects
• Chapter 32 White Spaces: A Great Lean Opportunity
• Chapter 33 Does Your Organization Have a Standard Approach to Solve Problems?
• Chapter 34 Shun Verbosity and Long Presentations: Adopt A3 Thinking
• Chapter 35 What Metrics Should You Have?
• Chapter 36 Is Employee Attrition a Problem in Your Company?
• Chapter 37 Inventory in a Services Organization Can Be of Various Hues
• Chapter 38 The Functional Crevices Provide a Great Lean Opportunity
• Chapter 39 MIS Reports, MIS Reports, and More MIS Reports
• Chapter 40 The Role of the Lean Team Should Change over Time
• Chapter 41 Make Customers Service Themselves
• Chapter 42 Encourage Team Members to Report Problems
• Chapter 43 Processes Should Positively Affect the Key Stakeholder
• Chapter 44 Do Not Forget to Ascertain the Health of Lean Adoption
• Chapter 45 Embed a Regime of Reflection
• Chapter 46 As You Negotiate the Lean Journey, Do Not Forget Those Who Could Derail the Efforts
• Chapter 47 Not Only Visual Tools but Also a Holistic Visual Management System
• Chapter 48 It Helps to Ascertain Effectiveness of Visual Management
• Chapter 49 Ohno’s Wastes Are Applicable to Service Organizations
• Chapter 50 Are You Aware of Wastes of Business Acquisition?
• Chapter 51 Be Careful about the Service Recovery Process
• Chapter 52 Multiskilling Is a Good Capacity Optimization Technique
• Chapter 53 Building a Pull System in a Service Enterprise
• Chapter 54 Know the Little-Known Law
• Chapter 55 Use Little’s Law to Create Pull in Transaction Processing
• Chapter 56 Do Not Standardize All Processes in a Service Company
• Chapter 57 Make the Process of Cross-Selling More Efficient and Effective
• Chapter 58 Practice Pull-Based Sales
• Chapter 59 Do You Know the DEB-LOREX™ Model for Lean Transformation?
• Chapter 60 Make a Deep Assessment of Lean Enterprise Using the DEB-LOREX™ Index
• Bibliography
• Index