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Michael Balle

Michael Ballé: IT needs to turn its purpose on its head first

By Michael Balle, co-author of The Gold Mine and The Lean Manager - Last updated: Friday, September 6, 2013 - Save & Share - Leave a comment

True, I can’t think of any lean transformation I’ve witnessed firsthand where IT is part of the solution, not part of the problem – apart from a few specific examples I’ll address further on. I’ve been wondering about that, and if we take a careful step back, there is a possible structural reason for this.

To my mind, the deep value change that lean thinking involves is the following. Senior managers believe their job is to 1) set strategy or dictate policy, 2) organize the business to realize this strategy and 3) implement the necessary systems to support this organization. Typically, the head of a manufacturing company will decide he or she want to address such and such market segments with global products. Then they’ll decide they need common core development processes for their engineering centers across the globe. So they’ll implement an IT system, which will set a project workflow system across the board. This sounds perfectly reasonable (unless, of course, you’ve already survived an SAP implementation at gemba level, and bear the scars to show it).

Where does lean fit in? the middle to senior management generation now in charge has grown up around notions of employee buy-in and continuous improvement. It’s also hard to avoid the incontrovertible evidence that brilliant strategies, gutsy reorganizations and wall to wall IT systems seldom deliver the expected results, so many managers add a fourth chunk to their toolkit with 4) a continuous improvement program to get shop floor buy in and hopefully attenuate the side-effect of their strategies.

I don’t know them first hand, but from reports I’ve read, one such immensely successful case is Amazon. The brick and mortar strategy is set by the very top, with giant distribution hubs organized across markets (I often wonder how come I purchase a product from the US and it gets to France via Deutsche Post). The distribution centers are driven by massive IT systems, and have modest kaizen efforts to “involve” employees and sort out a number of gemba problems created by strategy, structure and systems.

True lean thinking turns this on its head. TPS’ core assumption is that if you work hard at improving radically safety, quality, flexibility and productivity, by involving every one every day in solving problems, you’ll make the right strategic, organizational and system choices. This is a very strong assumption, and at the heart of the lean “transformation.” For a CEO who’s not done it before, it’s a huge leap of faith. And indeed, I’ve personally witnessed many absurd political fights because one guy “gets” this, and has the corresponding results (typically, higher profitability than other similar businesses with less customer and employee burning fires), whilst his boss still comes up with the policy of the month that needs to be implemented right now – whether it makes sense or not.

As you can well imagine, if you try to improve safety, quality, flexibility and productivity right NOW! IT is unlikely to appear as a solution, more part of the problem since, first, it was the main way of implementing the previous approach of strategy and organizations, and secondly any change will take eighteen months, thank you very much. All in all, in my experience, we’ve learned to leave IT well alone and do things with bits of paper and whiteboards and deal with the IT systems as we can.

A typical instance is starting a pull system, where we’ll identify the 10% SKUs that make the 50% of volume (excel) and pull them out of the MRP (yes, we do) and level them by hand (excel again). Then – shock horror – we schedule them through the plant with cardboard kanban cards and, well, ignore the IT system (which, unexpectedly makes the financiers very unhappy because it screws up the reporting – their job is not to make money, but to know precisely who the losses can be attributed to).

Having said that I can think of three specific exceptions where IT was tackled upfront:
1. An equipment manufacturer selling all over the world that identified (correctly) a major quality crisis (from poor designed) and started by creating a web-based system so that any one could see quality problems as they appeared from customer complaints, with simple data cruncing to put it in context. This turned out to be an essential part of the transformation they then did (doubling their sales volume on mature markets in the eight years I’ve known them)
2. A B2C business where they used IT to level demand to suppliers as soon as they (finally) understood the problem, in the first couple of years.
3. A high tech firm that realized early one that its main quality problem was the product instability due to the software embarked in is complex machines, and so focused on lean and agile problem solving to stabilize the code itself, not a simple endeavor and still a work in progress.

These are very specific cases where the planets aligned to involve IT. First, the effort to improve safety, quality, flexibility and quality surfaced IT-dependent problems early on and second the IT guys took up the challenge rather than hunker down and get on with their usual three years backlog and legacy issues.

To conclude, there definitely is a critical role for IT in the any lean transformation, but I’d be very cautious about what advice to give to a CIO wanting to contribute. First, if you don’t fundamentally understanding lean’s turning on its head of main business values, your ideas are probably going to do more ill that good, as you’re likely to want to use IT to support a “lean” organization that exists only in your mind. Second, there’s probably not much in it for you other than blood, toil tears and sweat. As Pierre Masai, CIO of Toyota Europe told us at the previous Lean IT summit, first we need to realize it’s not IT AND the business, but that IT is the business, which means understanding the business’ challenges, and using IT to support kaizen. A steep mental change indeed!

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