Five steps to make your business lean and return to growth
Some organisations will recover from the global downturn faster than others. That's because they are using lean techniques that CIOs everywhere should learn from, says Heather Colella of analyst firm Gartner.
Last year, as the recession continued to take its toll around the globe, Gartner studied companies worldwide with a track record for emerging from difficult times in a more competitive state than when they entered them. In doing so, we identified several attributes that were shared by these leading organisations.
Organisations with a track record of emerging more competitively from recession do so through a relentless focus on their external customers.
These organisations institutionalised and used management tools, such as balanced scorecards, to track market indicators. They assessed shifts in their industries more rapidly and took action before other companies.
They implemented scenario planning to forecast and manage risk and questioned everything, including the business model of the organisation. They were quicker than most companies to change when opportunities were identified.
Customer loyalty levels
Furthermore, they looked to their customers for answers, believing that, if they improved the way they handled customer needs in difficult times they would build a level of loyalty that would make them an exclusive provider of services all the time.
Crucially, these companies shed unnecessary work and non-essential businesses to create the funds required to focus on customers, their business model and business strategy.
Many believe that 2010 will prove to be the year many businesses return to growth. The speed with which those organisations actually recover will vary by geography, industry and competitive positioning, but lean techniques will play a role in accelerating their future business growth.
More CIOs are adopting lean techniques in their IT organisations to help reduce waste, increase agility and customer value. Lean techniques that are well applied can accelerate a return to growth.
Enterprise CIOs can accelerate a return to growth for their organisations by developing an enterprise-wide approach to lean that suits the business. They should capitalise on the strengths of individual lines of business to gain short-term benefits and, by closely linking lean activities to business outcomes, focus particularly on those outcomes that get the organisation closer to its external customers.
The adoption of lean is a mindset of continuous improvement, as well as a process - a series of steps. The following five principles of lean are used to help drive customer value:
- Understand value streams. What the customer values and how that value is delivered to the organisation, ultimately results in profits.
- Flow activities clearly from start to finish, without interruption.
- Produce what customers order. Do not build solutions or provide features that exceed business requirements or what the customer will buy.
- Eliminate waste from the processes that deliver value.
- Continually improve the value stream through further elimination of waste.
Lean can be implemented at two levels: transformational lean and focused lean, which are differentiated by their time scale and scope. While transformational lean has an enterprise-wide impact and affords sustained improvement, focused lean has a shorter-term impact leading to a more focused performance improvement.
Research shows there is a nonrecurring benefit of about 10 per cent for those organisations that implement lean in a focused way, while transformational lean - a culture of continuous improvement - benefits accrue...