Define the Process – Understanding Lean

My experience in manufacturing gave me such a vivid view of how to continually improve a system. When you look at a manufacturing floor, everything is just so visible. Many times within seconds you can diagnose the bottleneck that is holding the system back. When you are making something on a manufacturing floor, you can literally see places where defects pile up or bottlenecks happen. Years ago, in the process of managing my plant, I started studying the Toyota Production System, which many now call “lean manufacturing”.

Lean principles can be applied outside manufacturing to knowledge work. This is important because the process of creating a service that your customer consumes is sometimes very hidden. This creates problems because it is very hard to improve something that you can’t see.

The way you expose knowledge work is by creating process documentation. Once created, these processes will expose all sorts of ways to improve your system. I’ve found four key principles from my work in lean manufacturing that can be used to improve the output of knowledge work in your company:

Value

Value starts with the customer’s needs and thus we can’t design any sort of product or system without a deep understanding of the customer. Communication with the customer is thus both the end of the journey, but also the start. Understanding what creates value for the person consuming your product or service requires empathy for the problems they are having. It requires getting into their shoes. For some of my customers, they have a decent amount of turnover in their organization. My team ends up being a critical extended knowledge base of how they do things related to marketing or how their business processes run. We sometimes train their employees on best practices based on our experience working with them. Our documentation involves our customer’s processes and because of this, we create a ton of value for them.

Key take away: Know your consumer’s problems better than they do.

Pull

Value is not pushed through the system but pulled by the customer. Pushing value in means that you try to guess what the customer wants. This guessing might be applied to the quantities the customer will order or in trying to guess what features they want. Pull means that when the customer orders something, you make it just-in-time. Pull means that you are creating work that your customer is asking for. It means that you know their problem may be better than they do and you have communication systems that integrate them into the process of creating this work. Pull connects value creation directly connected to the person(s) consuming it.

Key take away. The consumer should be pulling value from your work.

Flow

Value creation must move in the smallest increments possible through the system as it is pulled by the customer. Think about a widget being made. In manufacturing, as widgets go down the line, employees at a station work on batches together. In lean manufacturing, you are always trying to decrease this batch size. In knowledge work, your widget is the output of your time. You want to decrease your batch size of time before the consumer can utilize or provide feedback on your output. An example might be entering transactions into Quickbooks weekly instead of monthly so that you have better financial performance metrics to review. Another example might be sending previews of work to your client in daily or weekly increments versus monthly. This creates more immediate feedback from the person consuming the information and reduces problems down the road where the deliverable is not what was being expected. A recent (research project) found that decreasing batch size like this in knowledge work increased productivity by 20% and at the same time increased the quality of work.

Key take away: Integrate the consumer of your work into the process as soon as possible.

Waste

Waste is anything that doesn’t add value to the customer in the system is waste and must be removed. Lean defines seven wastes— overproduction, waiting, transportation, processing, excess inventory, movement, defects, and underutilization. Each of these wastes are activities that the customer isn’t paying for. In other words, they don’t add value to the product your customer is consuming. If you have members of your team underutilized and sitting around, it’s not like you can charge the customer for that time. Or if your flow is set up so that customers only consume your service at the very end and you haven’t involved them in the process, there is a high likelihood that something was done wrong. This is called rework and you will have a hard time charging the customer for that time.

Key take away: Eliminate work that isn’t creating value for the consumer.

In each of these principles, I used the word consumer. The reason for this is that at the end of the day, your knowledge is consumed by someone. This person might be an employee, a customer, or maybe even your customer’s customer. By thinking through who is consuming your work output, you are constantly evaluating how to better create value for that person, no matter where they are in the value chain. Understanding how to eliminate waste as value is pulled through your system will transform how you do business. The result will be a company that spends less time creating knowledge output that your customers will pay more for.

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