- The customer’s perspective
All activities must be tested to ensure that they add value for the customer. Double-checking to be sure that they do reminds the organization of its purpose and ensures that processes are efficient. A car manufacturer or a retailer that fails to add value finds that its customers go elsewhere. But in government departments and other public organizations, putting customers first (even if you could identify them) may be more difficult.
One reason is a lack of competition. Customers of the government—job seekers or patients, for example—usually have no choice of provider. The demands of the customer, who may never even appear in the office, rarely come into focus. Much of the public sector remains supplier led, not customer led. But this norm could be changing. In the United Kingdom, for example, the government is introducing reforms that would allow people to choose where they go for medical treatment. Funding would follow the patient.
Still, most public organizations do not have the agility or frontline empowerment to respond to the changing demands of their customers. Systems committed to universal access, such as the United Kingdom’s National Health Service (NHS), do not have the luxury of refusing to serve a particular segment.
Defining value for customers in the public sector can also be elusive. Costs, quality, and lead times are all important considerations in a lean system, but social value and the equitable provision of services are more difficult to measure. In health care, for example, how can a government balance the desire to give current patients the best possible treatment with the need to deliver care to people still on the waiting list?
One way to identify—and then focus on—the customer is to discuss these issues with the staff, ensuring that any improvement effort is framed with the customer very much in mind. Even in processes such as the criminal-justice system, counting the accused person as the customer is necessary to reframe and challenge traditional ideas and approaches.
- Defining and managing end-to-end processes
The developers of a lean system identify end-to-end processes from a customer’s perspective and then design and manage the system to keep information and materials flowing smoothly through those processes. However, the old guard sector managers sometimes lack the skills, experience, and mind-set to take this approach.
As in the private sector, the only way to understand and manage a process is to see how it works. Yet public-sector managers don’t always see themselves as supervising or managing an “operation,” and it is unusual for a single person to be responsible for an entire process. In addition, top-down targets tend to focus on a single part of the operation, to the detriment of the process as a whole. One mail-sorting facility, for example, set a target for dealing with incoming mail. The target diverted attention from outgoing mail, which sat in out trays for over two days.
A similar charge has been leveled at the requirement that 98 percent of accident and emergency patients in the United Kingdom must receive treatment within four hours. The risk is that local hospitals may merely shift the problem elsewhere—for example, by admitting patients to a holding ward to circumvent the four-hour deadline.
Compounding these difficulties is the growing propensity of governments to use outsourcing as a cost-cutting measure without always considering the impact of the outsourced service on the overall process flow. Outsourcing the work of hospital orderlies or transportation and logistics in a supply chain may reduce the fixed and variable costs of that particular activity. Yet these moves may drive up total costs and reduce the quality of service. Simply going for savings in one part of an organization may fail to improve its overall performance.
For all these reasons, senior executives must learn the details of any process for which they are accountable. In many cases, senior managers and executives are flying blind or, at best, relying on data and reports that fail to capture the complexity of the system and the experience of those working within it. To lead an organization that constantly strives to improve, the chief executive of a hospital, a social-service agency, or a prison must therefore spend at least one day a week on the “shop floor.”
As work flows cut across organizational boundaries, it may be necessary to involve other departments or government agencies, possibly with different or even conflicting incentives. Consider the process of a trial. An effective process must deliver the defendant and all the relevant case information to court at the right time. At a minimum, the activities of the arresting officer, prison officials, prosecutors, victims, witnesses, and defense lawyers must be coordinated. Failures of coordination are common, leading to postponements, delayed judgments, and high opportunity costs.
To overcome such difficulties, decision makers should develop a shared understanding of the process. For the military repair shop mentioned earlier, this meant involving more than ten departments and other stakeholders in a steering group and ensuring that the goals of the transformation process reflected their varied desires. But competing interests sometimes impeded the overall process, underscoring the need for changes extending well beyond the gates of the repair depot.
- Exposing and solving problems
A key characteristic of a lean organisation is its ability to improve itself constantly by bringing problems to the surface and resolving them. Here the “old guard” sector often finds itself in a weaker starting position, with gaps in skills and entrenched mind-sets.
In a lean system, the surface-and-solve dynamic works in much the same way as lowered water levels expose sandbars in a river. For ships to navigate it without running aground, the sandbars must be dredged and the cycle repeated continually.
Many organisations keep their “water levels” high and deal with problems only if they break the surface. Such a system masks underlying problems. Rather than removing them, managers in the “old guard” enterprise are often tempted to add something to the system. Many organisations around the world have, for example, tried to improve their processes by installing expensive IT systems. Some have delivered benefits; however many have been expensive failures. Huge benefits probably would have been more likely even without the new IT systems if senior managers had tackled the underlying process problems. McKinsey analysis has repeatedly shown that most benefits from IT investments go to organisations that use IT to improve already well-managed processes.2
Moving from putting bandages over problems to solving them is particularly difficult in civil-service organisations because of a skill gap. Except in the military, operations management has not traditionally been a career path leading to the top tier of public service. Moreover, high-ranking civil servants tend to be organisationally and culturally removed from the delivery of frontline services, so policies are often made without a clear understanding of their effect on customers.
What’s more, government reform programs are now under increasing scrutiny, which makes it difficult to uncover problems without embarrassment. A long-tenured manager needs courage to expose the waste that lies within his or her department or the deep-seated nature of its problems, especially if they can be resolved at little or no cost. The likely response will be, “If it was that cheap to fix, why wasn’t it fixed before?”
Confronting such issues will demand brave leadership. Uncovering systemic problems within the public sector must become more politically acceptable; perhaps electorates will need to approve a “waste amnesty.”
- Developing a performance culture
When improving long-term performance is the goal, changing the process or the operating system will not suffice. The organisation’s culture must also change.
Some of these changes will be wrenching. A lean process, for example, requires a performance-tracking system that breaks down top-level objectives into clear, measurable targets that workers at every level must understand, accept, and meet.
When performance isn’t up to the standard, action is required. Tackling problems quickly and holding colleagues accountable for poor performance raises efficiency as well as morale.
To mitigate the top-down nature of target setting, managers must often make changes themselves. In so doing, they should address the long-standing complaints of the frontline staff—complaints that typically include management’s lack of engagement, a greater desire for teamwork, and the need to tackle underperformance.
Profound cultural changes generally follow and reinforce the lean transformation. The organisation’s morale rises as participants build capabilities and see others developing as well”
Applying lean is difficult in the private sector. Successful lean transformations must close the capability gap early in the process, so managers and staff can make the transition to a new way of working. Closing the gap typically involves hiring a few people with lean expertise and experience from outside the public sector to seed the transformation and build new internal capabilities.
Lean requires more than the courage to uncover deep-seated organisational problems; it may call for the ability to deal with job losses as well. Without ducking this simple truth, senior managers and leaders must outline the need for change,explaining its benefits and the logic of the planned approach. They need to tell all stakeholders, a compelling story about the impact and long-term benefits of change.
The challenge to do more with less will not go away. A lean approach, with its emphasis on lower costs but higher quality and customer service, is surely worth investigating.
- What are the seven wastes?
The seven wastes are categories of unproductive manufacturing practices identified by Taiichi Ohno, the father of the Toyota Production System (TPS). The categories are an integral part of the TPS (also popularly known as lean production).
Following are the seven wastes, as categorized by Taiichi Ohno:
- Over production — Manufacture of products in advance or in excess of demand wastes money, time and space.
- Waiting — Processes are ineffective and time is wasted when one process waits to begin till another finishes. Instead, the flow of operations should be smooth and continuous. According to estimates, as much as 99 percent of a product’s time in manufacture is actually spent waiting.
- Transportation — Moving a product between manufacturing processes adds no value, is expensive and can cause damage or product deterioration.
- Inappropriate processing — Overly elaborate and expensive equipment is wasteful if simpler machinery would work as well.
- Excessive inventory — Wastes resources through costs of storage and maintenance.
- Unnecessary motion — Resources are wasted when workers have to bend, reach or walk distances to do their jobs. Workplace ergonomics assessment should be conducted to design a more efficient environment.
- Defects — Inspecting and quarantining inventory takes time and costs money.
Lean manufacturing is based on a just-in-time model of production to avoid the waste associated with overproduction, waiting and excess inventory.
Since the categories of waste were established, others have been proposed for addition, For example, many workers’ skills and talents are not used, thus wasting valuable resource and decreasing their overall satisfaction (which in itself affects the workers’ motivation and energy and so the efficiency). The wastes identified later are:
- Underutilization of employee skills — Although employees are typically hired for a specific skill set, they always bring other skills and insights to the workplace that should be acknowledged and utilized.
- Unsafe workplaces and environments — Accidents and health issues as a result of unsafe working conditions also waste resources.
- Lack of information or sharing of information — Research and communication are essential to keep operations working to capacity.
- Equipment breakdown — Poorly maintained equipment can result in damage and cost resources of both time and money.
Although the seven wastes list was created for manufacturing, the categories can be adapted to apply to most types of workplaces.