The Role of Lean in Business Execution
Organizations need to learn how to link policy deployment with project execution methodologies like Six Sigma, and operational improvement processes like Lean, with measurement frameworks, like the Balanced Scorecard to create an integrated cycle of Business Execution, writes Paul Docherty, CEO and founder of i-nexus. Here's how the parts fit together.
Often when I meet clients or present at seminars, I am asked to define Lean. I’m very happy to give my own spin on a text-book definition but if given the opportunity to do so I prefer to define what Lean does for an organization as part of an overall business improvement system. In this context, Lean helps an organization to achieve improvement in three ways, by reducing waste, by reducing variation and by reducing complexity.
I would say Lean’s main focus is on the reduction of waste, and obviously the improvement of flow. Although Lean does impact on variation and complexity, on the whole I would say that Six Sigma, Design for Six Sigma and other redesign methodologies more predominantly address the issues of complexity and variation. So, I look at Lean as part of an overall approach which helps to address the three major constraints on organizations. This is a view of Lean formed in reaction to multiple experiences but its foundation lies in my first encounter with lean before I recognised it by that name.
How Perception of Lean Has Changed
My perception of Lean methodology evolved significantly during my time working at a company called Marconi in the 1990s where I implemented Manufacturing Resource Planning (MRP2). Reduction of time and the implementation of Kanban were part of our overall production management approach. This gave me an initially narrow view but I soon started to learn about the concepts of the wider Toyota Production System and consequently I became responsible for implementing something similar at Marconi. This growing impression of the bigger picture of enterprise Lean taught me about the interdependency between concepts for daily management, like Deming’s PDCA cycle, and longer range ideas for objective realization and policy deployment, like Hoshin Planning.
At Marconi, I subsequently went on to become Head of Operational Excellence and it was in this role that I really firmed up my view of how all of these methodologies and tools fit together. The project I drove was very Six Sigma focused and large in scale – in the order of hundreds of belts. I wish I knew then what I know now – that no one methodology in isolation will be effective. It took me a year before I realised that our Six Sigma approach needed to be combined with Lean, and that then further methodologies needed to be built-in to create complete alignment.
Role of Lean in Business Execution
My experience at Marconi and the deep knowledge gained during my time as Head of Operational Excellence has really helped to shape the direction for i-nexus and created an infrastructure that supports organizations in achieving their goals. When I first start to discuss challenges and requirements with new clients, this is where I see a big missing link in their organization. The most effective organizational infrastructure needs to recognise the importance of cascading goals through Hoshin Planning, of driving projects at different levels, of interpreting progress and of forecasting success. And as well as being recognised, these elements of execution need to link together.
I have worked with more than 100 global companies over the past ten years and this has enabled my view to evolve further. I now firmly believe that organizations need to know how to link policy deployment with project execution methodologies like Six Sigma, and operational improvement processes like Lean, with measurement frameworks, like the Balanced Scorecard to create an integrated cycle of Business Execution.
To make an analogy, I believe that i-nexus Business Execution software is doing for strategy and objective realization what MRP2 did for the automation of the production cycle. Ten years ago, no one would have considered using ERP to close the loop in the production cycle – now they could not imagine doing without it. I will be bold and say the same thing will be true for Business Execution.
Today people are managing the deployment of strategy and goals through spreadsheets and individual strategic planning and appraisal cascade documents, as well as using all sorts of different methods to capture KPIs. There is a lot of heavy lifting involved in trying to understand all the information and everything is completely fragmented which means people have no way of knowing whether work throughout the organization is actually driving and delivering against the set objectives. Business Execution helps to close up the planning and execution cycle, turning Lean and Six Sigma into critical tools in the execution process.
This article is based on an interview with Paul Docherty in the July/August 2011 edition of Lean Management Journal. www.leanmj.com