Lean Horizons Consulting

Lean Enterprise Transformation Since 2001

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Balanced Scorecards vs. Strategy Deployment

Mark DeLuzioThe original intent of the Balanced Scorecard attempts to identify targets (both financial and operational) that are strategic in nature. However, most companies that I am familiar with misuse this tool, and tend to merge daily management measures (KPI’s – Key Performance Indicators) and strategic measures together. This often leads to confusion over what is truly strategic and where management needs to focus its attention, as well as confusion as to where to best deploy its resources.

I like to think of measurements as either Daily Management as measured by Key Performance Indicators (KPI’s) and Strategy Deployment (SD) measures that are tied to the strategies of the company. I think that all functional departments should develop their own KPI’s to monitor and improve their specific functions.

Strategy Deployment targets however, are cross-functional and need to be worked on by multi-functional teams. These are the measures that are found in the “Target” section of the SD Matrix. Also, SD targets are set to “breakthrough” measures requiring the focus on the fundamental processes that deliver the desired, repeatable, consistent, breakthrough results. I feel that the Strategic Deployment process does a better job at identifying the underlying business processes that need to be implemented/changed/improved. True sustainability is had by focusing on repeatable business processes that drive breakthrough results.

 

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Lean Principles in Information Technology

Jorge BarronLean Principles have been applied over the years in many different sectors delivering substantial results. Today there are many success stories almost in every business activity, however throughout my years of experience implementing Lean in different countries, mostly in the US, Lean has not yet been widely utilized in the IT world. Enterprises that have adopted “lean” are slowly and limited in their incorporation of Lean principles to the IT/business software applications.

One of the biggest challenges faced by IT has been to convey the business value of IT in terms of alignment with overall business strategy and defining the value provided to business processes as part of the software development and implementation process.

Lean can be effectively applied to IS/IT following the same principles applied in other business areas. When analyzing an end to end software development life cycle, Value added in software development and applications represents only 1% to 5% of total Lead Time in respect of value added processing/touch time.

Here are some examples of MUDAS in the IT environment:

  • Transportation: unnecessary information transfers, creating excessive hand offs among different stakeholders.
  • Over Processing: using different platforms and manually processing reports.
  • Waiting Delays: Decisions are made almost constantly in every software development project, this is one of the biggest Mudas in IT, and if developers are not available it will cause a big delay impacting total development lead time.
  • Over Production: Over generation and creation of non-value added reports not aligned to the business needs.
  • Motion: Multiple uses of screens and navigations, including back and forth from manual to electronic reports.
  • Inventory: Unnecessary data storage using valuable memory/assets with no value added information.
  • Defects: excessive reprocessing and rework loops. Too much development time spent is rework.

The following Lean principles are key to keep in mind in software development:

  • Design MUDA free applications
  • Build in Quality at the source
  • Deliver fast and efficient value added information
  • Optimize the whole. Lean principles deliver on their potential when backed by effective leadership and changes in behavior.

I would be interested to know your thoughts about the current challenges you are facing with IT and how you are responding to this issue.

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Mark DeLuzio Interviewed on The Lean Nation

Lean Horizons President and CEO, Mark DeLuzio, was interviewed on The Lean Nation radio show with Karl Wadensten on April 12, 2011.  If you missed the broadcast, you can click below to listen to the podcast.

Click here to listen to Mark DeLuzio on The Lean Nation.

The Lean Nation is on 790AM (Citadel Broadcasting, ABC Affiliate) in Providence, RI every Tuesday from 3-5pm.  The show features real world examples and actionable advice from lean and business thought leaders on how to reinvent yourself into a lean operation in business and in life.  The show’s host, Karl Wadensten, is the president of VIBCO, a Rhode Island manufacturing company, which has created a Lean Revolution using lean methodologies based on the Toyota Production System.

 

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How do You Apply Lean Growth Solutions to Drive Sustainable Competitive Advantage

Roger BurghallSuccessful, profitable innovation (the lifeblood of any company) means developing the right products for the right markets at the right times. For technology-driven product companies, the last remaining areas of competitive differentiation lie in their product planning and the ways they innovate. Innovation is imperative for these companies.

That’s a huge challenge because today, half the R&D dollars that companies spend yield no return at all. Why? Because they: lack market knowledge; mis-reading customer needs; portfolio misalignment; poorly managed requirements; Incorrect timing. And the list goes on.

Sustained profitability in hyper-competitive markets requires companies to balance product innovation investments, cost efficiency, visibility, and predictability. It’s a very complex product management processes. So how can you consistently bring winning products to market faster and more profitably? By applying Lean Growth solutions aligning your product portfolio with customer needs and your company’s strategy and by tying product planning to execution.

I would be interested to know if you are facing similar challenges and how you are responding to the need for rapid exploitation of products to generate a sustainable competitive advantage.

 

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What Should we do First, Lean or Six Sigma?

Mark DeLuzioI continue to be asked: “what should we do first, Lean or Six Sigma?” Here is our position on this subject:

  1. Six Sigma is a problem solving tool. Problem Solving is a subset of Lean (which is comprised of many tools), and it makes no sense to build a culture around a tool like Six Sigma. Lean culture should be developed around Lean principles, and never around a tool.
  2. Many companies try to solve all problems using the Six Sigma process. This is inappropriate. When the only tool you have in your tool box is a hammer, all of your problems look like nails.
  3. We believe that a large majority of all problems can be solved using basic problem solving methodologies. There is no need for an elaborate approach like Six Sigma for most of an organization’s problems.
  4. The Six Sigma methodology is usually a long, drawn-out process, where projects can take 6 to 9 months. Lean is much quicker in terms of results. Lean zealots have the view of not letting “perfect” get in the way of “better”.
  5. Lean rests on the input of the all associates within an organization. Due to the complexity of Six Sigma, not all associates can meaningfully participate in the process. I have seen Six Sigma “cliques” form in an organization, which is rather elitist and dysfunctional.
  6. By starting with Six Sigma first, there is a danger of improving a process that should not exist in the first place. Lean is all about process improvement, creating flow, etc. and many times help identify processes that are non-value adding and should be eliminated. Why improve a process that should not exist in the first place?

So, where does this lead us? I firmly believe that Six Sigma works nicely within a Lean transformation, but the key is to use the right tool at the right time. I would be interested on your opinion, your successes and your challenges.

 

 

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Lean Horizons to Celebrate 10 Years of Consulting

Lean Horizons Consulting will be celebrating it’s 10th year of consulting in May, 2011!

Lean Horizons started in 2001 with just four consultants, who were led by the company’s President and CEO, Mark DeLuzio.  Today Lean Horizons is a global company serving markets in North and South America, Europe, China, and India.

One of our customer success stories comes out of Lean Horizons’ work with GE Money.  Lean Horizons was tasked with improving a non-manufacturing process, where a highly complex consumer finance dealer enrollment process was becoming a barrier to completing new transactions.  Lean Horizons deployed their proprietary suite of Lean assessment processes, diagnostics, and waste removal techniques in order to rapidly quantify dealer enrollment breakpoints and lost-profit sinkholes.

By deploying the complete suite of Lean tools, disciplines and practices, GE reaped a $200 million annual benefit and removed critical bottlenecks from their growth road map.

This is just one of the many success stories that Lean Horizons’ customers has been able to achieve over the past decade.  We look forward to helping many more customers build their own success stories.