creating-adaptive-businesses

Sticking to principles key to Lean and Agile success

Most management movements start with strong principles and implementation methods typically flow out from those bedrock foundations.

The challenge is to consistently hew to those principles as methods develop and not to fall into rote strategies.

That noted, Lean and Agile fell into that trap.

The problem it seems came from an unexpected direction – the Lean movement itself.

Instead of moving forward towards an adaptive organisational frontier, it settled for traditional operational efficiency goals.

As a result, Lean and Agile were not seen as a strategy to design, build, and operate adaptive organisations. It was relegated to the process improvement department using simplistic tools with management settling only for driving down costs, looking for efficiency gains, and hoping for a little more customer engagement.

While Lean has always been about continuous value creation ‘on-demand’ for customers and continually innovating new services and products for them, most organisations that adopt Lean are content to focus simply on removing waste from their processes.

Since 2005, a great deal has been learned about designing adaptive organisations. New methods and frameworks have replaced old ones in the search for adaptability.

Implementing lean

It has also become clear that now more than ever organisations are calling out for new designs and approaches to people management and a complete rethink about the kind of skills that need to be built into their workforces.

Organisations need a challenge: to think about adaptability and continuous value creation and what they might achieve strategically and, just as crucial, to consider what might happen to their business if their competition gets there first.

t5Customers have a distinct ability to pull organisations ahead of their competition. This form of adaptability requires a rethink about the way work is structured and measured and the way in which staff is incentivised and focussed.

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Rolls Royce’s adaptability crisis prime for a Lean solution

I read the recent news about Rolls Royce $1 billion loss with some interest.
The loss is seen, in part,  as relating to a drop in demand for aircraft engines. It’s the biggest financial dip the company has seen since 2000.

The business news reports detailed company plans for digging themselves out of the hole toward profitability but it was the comments by recently appointed CEO Warren East that caught my eye.

West noted that the company’s inflexibility was at the core of the legendary auto maker’s woes. He further added that inflexibility made the company unable to respond quickly to changing market demands.

“The fixed costs in this business are simply too high, so that small, relatively modest changes in the top line driven by market conditions just make too big an impact on our profit,” he said. “It’s up to us to be more able to deal with these situations.”

To my experienced ears, that is the sound of a company ready for a Lean solution.

Lean processes excel at sending customer data directly to the decision makers allowing for updates based on current market data. It seems clear that Rolls is currently unable to do this and are literally paying the price for it.

Implementing lean

The key issue is adaptability and today’s businesses are seeing it as the key factor in staying competitive. Unsurprisingly, it’s big firms like Rolls that are finding it a tough challenge. Their decision making is likely very structured and despite the veneer of professionalism, the structure is part of the problem. Decisions need to be made quickly and recommendations cannot survive the studied pace of a corporate reporting structure.

For Rolls Royce’s sake, I hope that CEO East’s views on the need for adaptability make their way through to a Lean conclusion.

Their current plight is a familiar one but It’s not a fatal one. Not with Lean as a likely solution.

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Lean: the importance of flow

It’s all about the flow.

In Lean, ensuring a smooth flow of work is a key goal and the corollary of that is the matter of errors and how to manage them.

The main error types to focus on to improve flow are:

  • Rework Errors
  • Errors that increase delays
  • Unclean work (incomplete work provided by another department)
  • Non-standard work – The current process was not designed to deal with this type of work
  • Large batched non-automated work – Test with small batches first, increasing production only when proven to be error free. A Lean ideal is always a batch size of one.

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During their day-to-day work Managers and their staff need to actively identify and remove the causes of errors in the flow of work. This is a behavior that requires staff, upon identifying errors caused by other departments, to contact them immediately to resolve the errors.

The person causing the error may be completely unaware they have caused problems and would continue to do so save for the notification. notified. If the error cannot be corrected easily, then it may become a candidate for a more general discussion an operational review.

There are a number of Lean Methods available to surface errors during daily work. The best, specific method for a team to utilize is determined during the implementation of visual management in the work environment.