The festive season is fast approaching and all of our clients are busy preparing their budgets and talent plans for 2014. Whilst top talent acquisition is high on the agenda for next year, CIOs are also mindful of performance and finances. Having recently assisted two major household names to build winning Lean processes throughout their IT organisations, I am delighted that Gary Sage (CxO advisor and Transformation Director) has agreed to share some of his insights into creating a Lean environment by reducing waste.
For 2014, why not try ‘The Muda Diet’...
If your company suffers from big fat bloated sluggish projects, the Muda Diet can get you Lean and save you money (and maybe it’ll help lower your blood pressure too.) I promise Muda is not another acronym, it is a Japanese word, and it translates to ‘futility, ineptness, inactivity, indulgence’ - for the purposes of this discussion – Muda means any activity in your process that does not add value to your end user, so lets call it ‘wasted effort’. Let’s briefly deal with the definition and etymology of Muda. The notion of Muda and the seven wastes originated in Japan, enumerated in the 1940s by the Toyota Corporation's Taiichi Ohno, the seven wastes formed the core of the Toyota Production System, which was to morph and become branded in the USA as Lean manufacturing in 1988. The term Lean was first used in John Krafcik’s 1988 article, "Triumph of the Lean Production System," published in the Sloan Management Review. Lean is not a new idea anymore; like post-agilism, it is correspondingly not exclusively focused on any single industry or discipline anymore. Lean involves eliminating waste throughout the entire organisation – right across the value chain, from purchasing, manufacturing, research & development, sales, IT, and especially across administration and leadership processes. Waste, in Lean thinking, is defined as: all activities that do not add or contribute to value. Waste elimination is an effective and well-proven way to create or restore profitability in any business. In the production of a goods or service, any business process exists either as pay-side (contributes to value) or waste. Wise CIOs and CTOs know unquestionably, that they can achieve far greater efficiencies through the application of Lean. Compared to the traditional blunt instrument style ‘cost cutting’ challenges, where arbitrary percentile constructed diktats are handed down to achieve cost savings, Lean is different. Lean is founded on continuous improvement, it provides a focused and empirical approach, measurable and measured in every way – depending on the maturity of your waste ‘space’, savings can be huge because you are eliminating waste system wide not ‘cutting costs short term just to make the numbers’. Where Lean principles are well applied, they will have a truly significant impact on the whole organisation's performance and bottom-line. To break out of a narrow frame requires options, and one of the most fundamental ways to do this is to find somebody who has solved the problem to kickstart your Lean initiatives. Everyone benefits from Lean principles, whether you are a project manager, program manager, portfolio manager or strategic planner, CIO, CTO, COO, CFO, CEO or business architect, I hope these upcoming articles will be informative. Most mature organisations today have ‘tiger’ teams who are constantly providing Lean oversight and intervention programmes because the ultimate goal is 'fire prevention' as opposed to 'fire fighting'. Before we begin to explore the magic of Lean waste management, we need to take into account that we all work in some form of system and we need to account for variables and influences. Lean waste elimination is not a zero sum game, treat it as an expedition, and treat each waste elimination progression as a series of experiments, where each step results in a better way to do project management. In the narrative of Lean, Muda represents one of the three ‘M’s of Lean and has been given the most attention. The other two ‘M’s which we may briefly discuss later are ‘Mura’ – which symbolises inconsistent or non-compliant work practice; and ‘Muri’ – which symbolises any activity requiring unreasonable stress or effort from people, materials or equipment.
So, where do we start?
Dysfunctional projects often produce 168 hours a week of overwhelm, so deciding where to start can present a challenge – however, a good way to start is to identify small wins first and act. In order to act on what can change immediately, simply categorise your wastes into two types.
- Category 1 waste: Non-value-added tasks which may seem to be essential. Business conditions need to be changed to eliminate this type of waste.
- Category 2 waste: Non-value-added tasks which can be eliminated immediately.
Quick and lasting wins start with tackling category 2 waste, quick wins here will build accountability and a culture of credibility. Most organisations, whether big or small find it worthwhile hiring an interim expert to establish and lead the first Lean ‘drive’ - someone who can unemotionally assess your vision, strategy, financial goals, and if necessary even your suppliers, and establish, craft and align a Lean initiative that works for you. The more you learn about waste, the more you will realise how much we can learn from Lean teachings and how they apply to project management practice. Typically, people go about their activities day-in and day-out without addressing the bigger system picture. Lean fully addresses the complete end-to-end process with the view of enhancing cycle time and quality. Once you are aware of these wastes you will become more sensitive to the issues manifested in your organisation – having a systematic way to categorise what needs to be tackled should enhance the overall productivity of your teams. To paraphrase Eiji Toyoda the mission of Lean is “to provide faithfully what the customer wants; when the customer requests it; in the correct amount and in the expected order, without defects, at the lowest possible cost. OK , now that we have completed the background bit let’s categorise the 7 wastes. At this stage please don't get too hung up and agonise over what category your waste falls into, the goal is to identify waste, and deal with it. So, if the category fits, 'wear it'.
1) Transportation waste (Handovers)
Example: Having single pieces of equipment for a project delivered to a central warehouse when the supplier is able to drop-ship to the precise location where equipment is needed.
2) In Process Inventory (Partially done work)
Partially done work surfaces a double waste whammy, because the costs are incurred without the opportunity i.e. You can't parlay partially done work into ROI. Big burn with no immediate return!
3) Motion waste (Multi-Tasking, Rework, Task Switching)
Motion waste is probably the most confusing waste. Often confused with the waste of transportation, the waste of motion is any movement of people, stuff or information that does not add value to the product or service. Team members moving from one task to another without completing the first task properly resulting more wastes - such as defects and rework.
4) Waiting (Delays)
Waiting surfaces a huge productivity cost and it is is a major source of frustration for customers. Irrespective of where the waiting occurs; in the manufacturing area, the doctor’s office or the airport.
Delays introduce discontinuity and become the root cause of additional wastes.
5) Over production (Extra Features)
Often called the mother of all wastes. Where too much 'just in case' becomes 'waste of time, space, opportunity and effort.' When a company produces way more than it needs to supply.
In the IT world excess features are those not needed by customers, and the costs of unneeded features trigger discounting in sales negotiations. Result, a triple whammy; you pay to build something that nobody wants, you discount the package price (because the customer refuses to pay for said feature) , then you give the feature away (which devalues the overall package).
6) Over-processing (Extra Processing, Rework)
Perhaps the most elusive waste to see and understand is over-processing – doing more than a customer asks for.
Extra processing in manufacturing is the need to rework a feature due to poor quality control and can be significant in many organisations, this waste can lead to a whole production line stoppage. In software development this waste can be likened to 'scope creep'.
Last, but not the least of the seven traditional wastes, is the waste of defects. A defect is any work that violates the level of functionality that the customer has requested.
Of all the wastes, defects is clearly the most obvious one. The costs and repercussions resulting from defects varies. Defects found early on in the delivery life-cycle are less costly to resolve; the most expensive defects come from returns or ‘fixes' when applications are already in-production.
Now, to close off this article let’s finish with what Six Sigma identifies as The Eighth Waste – Skills
Often when focussing on eliminating the seven wastes, organisations miss a core aspect of Lean that is bound to the core Japanese philosophy – respect for people. In other words, a company’s most important assets are its employees. To that end, Lean practitioners sometimes add an eighth waste to the list – skills. This waste occurs in a company that does not fully leverage the gifts and talents of its people - this is a double edged sword, skilled employees that don't feel valued will leave, and conversely burdensome employees can poison a successful business. In our next article in this series we will delve deeper into Waste No. 1: Transportation waste and we will discuss some ways to identify and deal with it.
If you would like to discuss how you can create a lean environment within your organisation please contact our team at Jenrick IT on 01932 245 500.