Guest post by Art Byrne, author of The Lean Turnaround and it’s companion The Lean Turnaround Action Guide: How to Implement Lean, Create Value and Grow Your People.
I have always implemented lean from the position of CEO and as a result I have always seen it as an incredible strategic weapon that used correctly provides any company with an unfair competitive advantage. As a result I am surprised to learn that most people don’t see it this way. They see lean as just “some manufacturing thing” or as a collection of tools that can be pulled out of the drawer and used to fix the occasional problem. Perhaps I can help to clarify this.
Growth Comes With Delivering Value
Lets begin by understanding that the only way that any company can grow and create wealth for all its stakeholders is by consistently delivering more value to its customers than its competitors can over long periods of time. This value can be defined in many ways. Having a totally unique product or service of course would be a wonderful place to be. For most companies, however, the product or service are pretty comparable and it is other factors that determine value. Things like ease of doing business, responsiveness to the customer, short lead times and rapid response, exceptional quality, customization and of course low cost all become extremely important. Even in cases where a company has the best product but is not good at all these other things you will see customers doing everything they can to reduce or eliminate their dependency on this supplier.
In order to consistently deliver value to your customers you first have to improve your own value adding activities so that everything can be done faster with better quality and lower costs. To achieve this you must first remove the waste from all of your value adding activities on a continuous basis. The purpose of any company should be to constantly improve how it does everything in every part of its business. To deliver value to your customers your focus has to be on your processes not on your results. Great processes will deliver great results not the other way around. And this of course is where a lean strategy comes in. The lean approach will allow you to see the hidden waste that you can’t see now and give you the ability to quickly remove it. As all of your associates become proficient in using a lean strategy to solve problems you will get better and better until you have a lean culture that will self perpetuate itself. At that point you will be very hard to beat.
Lean Should be Your Core Strategy
A lean strategy should be at the core foundational level of everything you do. You should come in to work everyday with the thought that everything is a mess and that you need to take quick action to get better. But don’t get confused. Having lean as your core strategy, (I.e. what you are all about) doesn’t mean you have to stop doing all the things that you consider strategic today. To the contrary you still want to do those things it’s just that with lean underlying everything you have a much better chance of success. For example, most people take their value adding activities for granted, “we have always done it that way”, or “we can’t reduce the lead time below 6 weeks”. With things like this as a given they try to create their strategy around their own problems. With lean as your core strategy however that six week lead time will be down to two days and if all your competitors stay at six weeks you will gain market share and grow at their expense. The rest of your strategy can stay the same but by improving your value adding you have opened up new strategic opportunities that you didn’t have before. Lean needs to be your core strategy too. In my previous company, The Wiremold Company, we increased our enterprise value by just under 2,500 percent in a little over nine years using this approach. You can do the same thing if you make the switch to a lean strategy.