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Jeff Liker

Dan Jones: How can a CIO help a Lean Transformation?

By Jeff Liker, - Last updated: Friday, September 6, 2013 - Save & Share - Leave a comment

It is difficult to give specific answers to this question without knowing more about the type of organisation we are talking about, without being able to directly observe how the value creating work is carried out today and how management resolves problems and makes major decisions. But then it is not in the spirit of lean to give answers, which might or might not be taken up by the recipient. Instead it is much more helpful to ask relevant questions that will hopefully prompt the right thinking that in turn leads to the right actions.

The first question is what kind of lean transformation are we talking about? In my view there are three elements to a lean transformation: –

1. Grow the business by creating new value (products, services and knowledge) that help customers to better meet their needs, solve their problems and manage their lives.
2. While at the same time using less resources, cash and capital by integrating activities into new value streams and progressively removing all the obstacles to the flow of value creation (design, production, delivery and support).
3. Achieved by developing new scientific, problem solving capabilities in every employee to improve their work and manage their value streams, as well as developing the right new technical capabilities.

In other words a lean transformation is about creating a virtuous circle from practicing the use of scientific thinking through doing repeated experiments to solve today’s problems in order to learn how to solve tomorrows’ problems and continuously improve the flow of value and time to market. Without understanding the importance of developing these problem solving capabilities, lean transformations are unlikely to fulfil their promise.

It is interesting that the same scientific approach to learning through repeated experiments is also increasingly important in shaping new technical capabilities, whether it is sensing what works for customers or finding better ways of managing the software development process. It even helps to define more clearly the key questions we need to answer in the future. It also takes us beyond imposing command and control systems that seek to “optimise” the use of resources and to automate “broken” processes.

Perhaps the area where IT is creating the most significant new capabilities is in defining value for customers. We can now know precisely who are customers are, what they do rather than what they say they will do, how they search and purchase products and services from us and we can even embed feedback into our products to tell us exactly how they are using them over time.

As the early pioneers of what we now call Big Data have learnt the key step is analysing this data to reveal underlying clusters and patterns that can be turned into new products, new business models and new capabilities we can offer our customers. “Power by the hour” is transforming aero engine design, knowledge of customer purchase preferences is transforming convenience and on-line retailing and driving new within-the-day distribution systems and mobile money looks as though it will transform financial services.

But maybe the biggest step forward is creating a two way dialogue with key customer groups. Directly observing the processes and experiences of these key customers is one thing, being able to create opportunities to experiment with new things with them is another. The Lean Startup movement is showing us to the power of carrying out many small experiments to test ideas and learn what works and what does not, rather than presenting customers with a big batch of new features once in a while. All kinds of frequent “validated learning” will become an increasingly important capability for development teams in the years ahead.

When it comes to linking activities together into value streams all the experiences suggest that lean teams should first work through the problems of creating the stability necessary to link steps together directly or through pull systems. Planners on the other hand need to simplify the flow of information back from customer demand to every upstream step, eliminating the system generated noise from existing systems warring against each other to “optimise” individual activities and/or to produce to forecasts many months out. As teams learn how to do this they become true “experts” in the way their value streams flow and are well able to work as informed customers with IT to develop new systems that enhance rather than interrupt this flow.

The way IT manages its own software development and maintenance also has a critical bearing on how the core value streams flow. There is good evidence that the right combination of agile, scrum and lean startup techniques can remove much wasted effort and reduce lead times to develop new software and to respond to change requests for existing systems. More informed customer specifications and short work cycles including testing help to match capacity with demands on the software pipeline. This is probably where IT can make the biggest impact on the rest of the organisation and eliminate many of the past frustrations with IT.

When it comes to developing problem solving capabilities within IT perhaps the most significant thing a CIO can do is get a Sensei to help him or her to learn to use the A3 process to address their own problems. This would send a very powerful signal to the rest of the Department. With practice this will become a habit and a natural way to develop these skills in subordinates. It will also over time give them a significant advantage over others in being able to demonstrate that they can combine lean and IT.

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