Lean management, after enabling outstanding company performance when incorporated at the centre of a corporate transformation, seems to have exhausted its potential.
Even in companies for which lean once transformed ways of working, the limits of what can be achieved have almost been reached. Many companies have developed ‘lean fatigue’, and managers have become frustrated with results that are increasingly incremental.
Executives have undoubtedly heard many variants of the declaration: “We’re through with lean ” it’s time to go digital!”
The idea of doing away with lean and trying something new that offers potential for radical improvements has refreshing appeal. However, although digital can appear to be an unrelated replacement for lean, abandoning one in favour of the other can end up being risky.
Eschewing lean principles entirely can even affect the success of a digital transformation project. We propose implementing a digital transformation with lean principles at the heart of the project.
The potential of digital technologies to transform performance is widely recognized. However, most companies struggle to find the right approach to effectively grasp the benefits of this digital promise. Indeed, choosing from among the plethora of new options provided by digital technologies is a real challenge.
Typically, it is unclear where to start and how to prioritize a company’s efforts and resources to drive tangible results. While some companies have been able to achieve radical performance increases of up to 50 per cent or more, many have become stuck in situations in which initiatives happen in silos, efforts lack coordination, and successes are limited or even non-existent.
Recent experience has shown that integrating lean principles into digital transformation can be a highly effective way of achieving radical simplification of the process. It allows companies to identify and apply the most effective levers for the digital journey.
In this article, we therefore explore the challenge of building digital transformation on the foundations of lean management. Starting from traditional lean excellence, we will indicate how companies can select the right technological building blocks based on their specific value creation potential. Subsequently, we will illustrate how to use lean principles to radically simplify the value stream and explain why digital ‘shortcuts’ typically fail. Finally, we will highlight the need for a new, combined lean/digital capability which paves the way for sustainable competitive advantage.
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Bernd Schreiber is a Partner in the Frankfurt office of Arthur D. Little and leads the Global Operations Management Practice. Yong Lee is a Manager in the Frankfurt office and a member of the Global Operations Management Practice. Willem Romanus is a Principal in the Brussels office and a member of the Global Automotive & Manufacturing Practice.
Experts from Arthur D Little will be at Electrify Europe in Vienna this month. Sebastian Pfanner will present Demystifying the Hype About Blockchain, while Engin Beken will present Acing the Challenge of Digital Transformation. To find out more and register, click here.