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Angelo Lyall

Six Sigma

How to Succeed with Lean

To do things right, first ask if you’re doing the right things

Published: Thursday, May 5, 2011 - 04:30

It seems the most popular way to improve a process these days is by applying the glorious "Lean Toolkit." Many companies focus on learning and implementing process improvement practices introduced by Toyota without realizing the same success that Toyota achieved. How can it be that so many firms are implementing Toyota's lean teachings, and so few are achieving the significant results that they seek?

The popular approach

Let's start by looking at the modern firm that implements lean tools and techniques in hopes of experiencing the types of outcomes that were achieved by Toyota decades ago when the Toyota Production System was first introduced to the world (and later marketed by others as the Lean Toolkit). Figure 1 shows the flow of process improvement execution that many firms employ.


Figure 1: Common process improvement flow

Adhering to this approach, firms are able to improve how well they execute their processes. But why do these firms fail to meaningfully change their business so often? The simple answer is that although this approach to process improvement can be an effective method for "doing things right," it neglects the prerequisite question, which is, "Are we doing the right things?" The distinction is that while a firm may improve its processes and excel in its execution given its current process configuration (i.e., value chain), without preceding process improvement efforts with strategic decisions, these improvements in execution may not contribute to the firm achieving its desired competitive position. This approach, which doesn't consider strategy, is a product of the lean toolkit, not the Toyota Production System. When the lean toolkit is applied in this manner, firms often fail to achieve the business outcomes that they desire from their efforts. The result is shown in figure 2.


Figure 2: Results of lean toolkit incorrectly applied

If this is the case, then how do firms improve processes to successfully enable the needed strategic capabilities and strengthen their competitive position?

The correct approach

Toyota, as well as other organizations that have experienced positive business outcomes as a result of process improvements, have a key factor in common. Their process improvement initiatives are a tactic that is part of a governing strategy to improve their competitive position, and that strategy is the product of market knowledge. Figure 3 shows how firms that meaningfully improve processes use market knowledge and strategy to guide and focus improvement efforts.


Figure 3: Using market knowledge and strategy to guide improvement

Successful businesses realize that continuous process improvement is critical for their sustained success; it must fit within a larger process, which is business development. By understanding their market environment, successful firms are able to make important strategic decisions that set the direction for some period of time. Based on the direction set by those decisions, processes must be appropriately configured, managed, and improved. To do this, Toyota uses a systematic method of defining the current state and the target state, and then works to close gaps between the two. This approach to process improvement enables the capabilities that are needed to support the company's strategy and, ultimately, offer competitive products and services to the marketplace.

The simple lesson is to do what's right, not what's easy. It is critical that businesses enable a capable marketing function and allow competent strategies to govern the focus of their improvement efforts. By doing these things, improvement efforts truly affect the business in contributing to the firm's competitive position—and therefore their profit and sustainability. Without these things, improvement efforts can wind up being genuine yet disastrously misguided activities that consume time and resources without having the desired results.

Discuss

About The Author

Angelo Lyall’s picture

Angelo Lyall

Business Economist Angelo Lyall is a partner with Anderson Lyall Consulting Group, a Toronto-based consulting and advisory firm that helps firms develop their competitive advantage. He draws upon his background in economics and competitive strategy to help firms build profitable competitive strategies, business models and marketing plans, as well as to gain valuable market knowledge. Lyall helps companies understand and gain new insights into their business environment in order to create or strengthen competitive advantages. He has advised clients in the manufacturing, service, and distribution industries on issues of competitive strategy, marketing, pricing, and customer profitability.

Comments

A Minor Suggestion

Angelo


I like most of the article though I would make a suggestion, to improve the order and add a feature.



  1. Market Knowledge

  2. Strategy Development

  3. Enable Support Systems to Implement Strategy

  4. Develop Culture to Support Strategy and Continuous Improvemt

  5. Configure, Manage and Improve Processes

  6. Competitive Products and Services

When you follow this order you do not risk losing momentum, which is critical to long-term success.


 


Robert Drescher


www.elseinc.com

Your article is incomplete...

examples please?

Examples As Requested

Dave,


Thanks for your interest in the article, and for taking the time to inquire.  The article is not incomplete in a sense that I have forgotten anything that I wish to have included, but I understand your confusion and have written a simple example below that described more explicitly, what my article aims to convey.  My apologies for not being more clear.  Specific examples of each case are limitless, as all businesses fall under these scenarios.


 


Firm A is dedicated to continuous improvement.  It dedicates time and resource to reducing wastes such as motion, defects, waiting, etc. that reside within its processes.  After some time, the firm finds itself more capable of executing many of its current processes.  They feel that significant improvements have been made.


 


Firm B and Firm C are also dedicated to continuously improving their operations.  Based on what they have learned through their marketing efforts, Firm B has decided to pursue a Cost Advantage strategy, while Firm C has chosen to be a Benefit Advantage provider. 


 


Firm B focuses their improvement initiatives on configuring their set of processes to allow for a uniquely low cost structure on top of the pre-canned cost reduction tools.  By doing this, Firm B advances its strategic position as a Cost Advantage Provider.  Firm B is able to offer industry leading prices because their improvement efforts have been guided by their strategic intent.


 


Firm C focuses its efforts on improving their benefit provision, keeping in mind that each benefit must truly be valued by customers and should generate its own ROI.  Common cost reduction tools and best practices may be applied as well, however they are not the element that will give rise to the Benefit Advantage that Firm C seeks.  By focusing improvement effort and resources on enabling the capabilities needed to offer the most valued benefits to profitable market segments, Firm C advances its strategic position as a Benefit Provider.  Firm C is able to offer the most relevant and profitable benefits to the marketplace because its improvement efforts have been guided by their strategic intent.


 


Firm A had genuine intentions and dedicated effort and resource, but is left behind, as their improvement efforts neglected to support a strategic intent, leaving Firm A in neither a Cost Advantage or Benefit Advantage position.  Firm A succeeded in improving their capability to execute their existing processes (better at doing the things they were already doing), but failed to ensure that they were doing the right things to begin with (right processes/building blocks, and capabilities to support strategy).  Without any strategic advantage, Firm A experiences lower profitability and questionable sustainability.


 


I hope this addresses your concerns.  Thanks again.


Angelo Lyall


 


 


Angelo Lyall Kaizen Solutions Inc. Corporate Coach & Partner angelo@kaizenimprovement.ca www.kaizenimprovement.ca