Consider this sporting analogy. To perform at an optimal level, an athlete must be lean. If he or she is carrying unnecessary fat then he or she will be sluggish: this will have a detrimental impact on their performance. At the same time the athlete must not be too thin as this will make them weaker and less energetic than is required, which will also significantly impair performance. A world-class athlete strives to have exactly the right amount of body fat required to deliver optimal performance and so increase the likelihood of them beating the competition.
But as well as the appropriate body fat, a world-class athlete has the optimal amount of muscle required to succeed in their chosen discipline: not too much and not too little – and in all the right places.
Unfortunately, few organizations can be favourably compared with a world-class athlete. Although there are exceptions most companies and public-sector bodies carry too much fat, and indeed many may legitimately be described as obese.
Furthermore, most do not have organisational muscles of the appropriate size or in the right places – that is being worked in the areas that deliver the most value to customers and stakeholders. From the perspective of the efficiency/effectiveness balance a “Lean” organisation has the right body-fat percentage (which powers the efficiency performance dimension) and appropriately defined muscle, (the driver of the effectiveness side of the high performance equation).
In essence “Lean” refers to a way of working that through systematic approaches identifies and eliminates waste from a process. In the simplest terms it means delivering the same, or more often than not enhanced, value to the customer with reduced effort and resources.
I would strongly recommend that organisations deploy both a strategic performance management system and Lean in the implementation of strategy and the realisation of efficiency and effectiveness gains. However, this does not imply equality. Rather Lean must be deployed in support of the strategic objectives that appear on a strategy map or plan-on-a-page .Therefore build your one-page strategy framework before thinking about Lean projects and interventions.
When organisations identify the strategic priorities that become the objectives within the plan-on-a-page, they can check that the aligned strategic processes are Lean, and if not launch the appropriate “Lean” initiatives.
But note that Lean is not a single approach or methodology. Rather, Lean can be understood as an umbrella term that encompasses a broad grouping of interventions deployed for waste elimination and process improvement purposes. Approaches such as “value stream mapping,” which analyse the flow of materials and information currently required to bring a product or service to a consumer; “kaizen,” a philosophy or practice focusing on continuous improvement in manufacturing activities or business activities in general and the Toyota Production System (that works systemically to eliminate waste, make to use and crucially has the people who know the work solve the problems).
Perhaps the most popular of Lean approaches in recent year has been Six Sigma which, as part of a wider process improvement methodology has a goal of reducing error rates to 3.4 per million opportunities. Consider a goalkeeper of a soccer team who plays 50 games in a season and who in each game faces 50 shots from the opposing team. A defect can be described as when the opposing team scores a goal. Therefore, a goalkeeper that performs to a Six Sigma standard would concede one goal once every 147 years!
One criticism of Six Sigma, and indeed Lean deployment more broadly, that I and many others have voiced is that the projects are typically implemented bottom-up. As a result organisations spend a lot of effort on Lean projects that look at tiny areas of their business. This way they pick the lowest hanging fruits but often miss the big opportunities.
I would caution against deploying Six Sigma or other Lean approaches simply as a cost cutting tool. This will not deliver long-term success and instead might lead to the undermining of strategically critical processes.
The implementation of Lean must be in support of clear strategic goals. Once these goals are articulated and agreed by the senior team, then the principles of Lean thinking can be applied to ensure the processes linked to these high-level priorities are delivered in the most effective and efficient manner.