Digital Transformation

How Lean Thinking Makes Digital Transformation Successful

“Going digital” has never been cheaper.  Long gone are the days of high entry costs.  The technologies that enable business transactions are plentiful and getting less expensive to acquire.  Business models have evolved to the extent where it is as easy to lease or buy per use a digital system without high upfront costs.  But do all these changes mean that it is getting easier and easier to go digital?  From the technology perspective it certainly is and from a customer perspective there is except for a few communities, there’s an expectation and understanding that many services will be digital.  

From an internal business perspective, the picture is less clear.  Many companies and organisations either don’t or can’t make the digital transition.  Or they try and fail.  Certainly, making a digital transformation is complex.  That’s why many large companies turn to external consultancies to enable them to make the necessary changes.  Taking a wider view, I would argue that any technology change to a business process needs to be managed to ensure you get the outcomes you want.  

What is Digital Transformation?

Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers.”

Digitisation certainly changes what’s important in an organisation.  For instance, with a digital process data quality (business and customer master data), its management is much more critical than in manual systems.  The changes brought about will also profoundly affect how functions and departments interact as process become more cross organisational.  The nature and volume of customer demands on the organisation changes.  Customers find it easier and faster to buy sales should increase.  These are just a few areas that will require people-based approaches to enable your people to become more adaptable and capable to meet the challenge of making the digital change a success.  This where Lean thinking and tools can help you bridge the gap.

Digital Transformation Examples

A few years ago, I was involved in leading a CRM rollout in a large corporation.  Thinking back, the change was very significant.  The “cloud based” CRM had to be backed into the existing ERP (SAP) system.  Of course, this had a very significant impact on the way external sales and customer service worked together.  Recognising the challenge their digitisation drive would bring, the company started a Lean for Office rollout to run in parallel with the technology change. 

Being at the centre of the management of the rollout program, I’ll never forget the difference in the reaction in the days after the CRM system was introduced between the teams that had been in inducted and trained in Lean thinking and those that were not.  The Lean trained teams simply picked up the new systems with all its issues and carried on working.  It was a whole other change adoption story for the teams without Lean and Continual Improvement capabilities.    

Like many legacy system integrations, there were usual “how do you get the elephant to talk to the gorilla” type problems.  The difference with the Lean trained team was that they were just more able to come-up with work arounds and test improvements in the software than the team that were not Lean inducted.  Simply put, they were more innovative, agile, and prepared to change and adapt.

So, what is it in teams that use Lean thinking and tools that makes the difference?  What does a heathy improvement culture look and feel like?

Value Stream Mapping and Digital Transformation

Why Value Stream Mapping is Important

As a first step in preparing your team for digital we recommend working with them to make a Value Steam Map (VSM) of the As-Is process.  A value stream map differs from a standard process map in that it shows both the physical and data flows in a process.  Furthermore, it enables many other factors than the flow sequence to be captured and analysed by the team.  For example, VSM gives insight into bottleneck stages and throughput times.  As such, it is more focused on what your customer experiences.  All the insights can then by captured into a set of “just do it now” and “project” type improvement actions that your team can act on directly to simplify and streamline your processes.

Benefits of Lean Daily Management

Another key output of the VSM session are the visual performance indicators we need to know whether we are winning or losing.  These are an essential building block of what comes next.  Our experience is that many organisations have regular team meetings.  But these tend to focus on coordination of actions rather than improving the team’s own and business process.  The difference with a Lean “Daily Management” meeting is that the emphasis is on what your current performance (based on data) and what do we need to do to bring it to your target condition.  This gap analysis starts you thinking and learning about improvement actions with knowledge of the impact.  In determining the measures, we look for a balance of measures with impact on customers, quality, business, and internal process performance.  

Implementing the Countermeasures

The improvement actions your team put in place are referred to as “countermeasures”.    We use this term to indicate that we are making changes for the better rather than seeking “fixes” to problems.  In this way, everyone on your team is involved in developing improvements.  Of course, the right understanding of team dynamics and appropriate leadership is essential to ensure that this phase of making the organisation ready for digitisation is successful.  The “daily” team meeting needs to be structured.  But the atmosphere must be akin to a sports team working together on how to win in the next phase of the game. 

With a sound knowledge of your own process and regular structured meeting to improve, your team is in a good position to make continual improvements and adapt to changes in technology and customer demand.  Once these are in place, there are several other Lean tools that can make a big difference to the effectiveness of the digital transformation.

Lean Tools List

In non-manufacturing environments, it is often difficult to achieve a smooth flow of work due to the variability and complexity of each transaction and the rate of customer demands.  Most people working in office environments are multi-tasking and handling unplanned interruptions.  Imagine for a moment a “sales desk” answering customer enquiries and managing various sizes and types of customer orders.  On a micro level, no two days will be the same.  The challenge here is to achieve the right balance between workload and resources.  Add to this, environment technology change and it is easy to see why going digital does not always bring the benefits expected.  A Lean approach that helps bring order to these situations is called “Backlog Management”.   

Backlog Management

Backlog Management is a step-by-step approach to raising customer service levels.  It involves first setting agreed service standards.  It is surprising how many organisations don’t have consensus on what good service looks like.  A typical target might be all customers request for quotations are completed and returned within three days.  Just knowing the current level of performance against a set condition will give a performance gap.  The next step is analysis of the nature of customer demand and how that work is managed by the team.  Often teams discover that not all customer demand is equal.  Some tasks are complex and difficult whilst many are simple and easy.  Understanding this means time can be spent on different types of tasks and estimates of the resources needed to complete all the tasks can be made.  Often at this stage the work can be divided in different streams.  This goes a long way to making the workload visible and seeing the different queues of work that need to be done.  This then feeds forward into what gets managed in the team’s daily management improvement meeting. 

Team Training

Another Lean tool is Team Training.  We encourage teams to build a simple matrix of who can do each of the tasks that need to be done.  It quite common to find that the backlog results from a limited number of people in any team having the capabilities and resources needed to meet the customer demand.  Setting aside time for the right training will enable that the right resource is available to meet the demand.   Simply keeping a register of who can do what is an essential step to improving customer service. 

Standard Work

To enable the training to be done to the right level, it is important that all the tasks have a “Standard Work”.  This describes how the task is done and what is important in getting it right.  Standard Work has other benefits besides enabling people to perform the task correctly.  It is a key enabler to allow resources (people) to be moved between tasks without the need for long learning cycles.  With digitisation, the structure and nature of tasks will change substantially.  So, good standard work allows people to take up new tasks quickly.    One area that is often overlooked is that there must be standard work to manage the work itself.  In the Lean approach, we want to minimise the time spent on scheduling and planning. This will free up resources to do the work that the customer wants doing.  It is important therefore to have standard work to manage the flow of work.  If you get the resourcing right vs the service level, then simple systems such as First in First Out (FIFO) can be used for scheduling and controlling the work.

Total Preventative Maintenance and 5S

Lean techniques such as Total Preventative Maintenance (TPM) and 5S are also relevant to digital and other types of data intensive work.  The aim of TPM is to ensure that every piece of equipment is available and capable of producing products to the right standards when required.  Again, the approach is like any Continual Improvement.  Essentially you set a performance standard that is needed and measured against those standards and “countermeasure” the gaps.  5S is more often associated with bringing order to the physical world in which work is done (i.e., setting things in order cleaning etc.).  The aim of 5S is to make abnormalities easier to see and act upon.  The very same approach is applicable to the data and information that is essential to a successful digital transformation.    

Finally…

For any process change, the choice of technology and process to be used are the main determinants in making a successful digital transformation.  Lean thinking and approaches, if implemented alongside the digital transformation, significantly reduces the amount of “change management” effort that is necessary to make the transformation. 

We at LeanTeams don’t claim to be experts in digitisation as such.  However, we can help you build the capabilities and resources in your organisation that will enable the successful adaption and integration of new technology, including digital.

We hope you enjoyed reading about how Lean Thinking can make Digital Transformation successful.  You may also be interested in reading our articles on 9 signs your business processes are broken and why companies are turning to online experiential learning for training & development.  All our blogs are available to read here.  Please connect with us on Linkedin and Twitter.

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