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LeanIntent Framework—How It Works

 

How It Works





Value Creation

A lean intelligent enterprise is first and foremost about creating and delivering value.

Value is created by the producer, but it can only be defined by the ultimate customer. — James Womack & Daniel Jones



Organizational Levels

Lean is a set of values whose goal is to redefine an organization's systems to more effectively respond to changing customer and market needs while delivering lasting value. The "How It Works" model view of LeanIntent considers how lean works as it relates to a continuous cycle involving all the three levels of an enterprise. This view is organized into three categories which can be viewed by selecting the tabs above.

 

How 


The categories and their topics are:

  1. Enterprise
    • A Lean Enterprise
    • Mission & Purpose
    • Elastic Strategy
    • Corporate Growth
    • Planning Horizons
    • Governance
    • Supporting Business Functions
    • Internal Value Streams

  2. Business Units
    • Lean Business Units
    • Work Priorities and WIP
    • Tools & Delivery

  3. Value Streams
    • Value
    • Flow
    • Demand


Enterprise

 

How It Works

 


Demand drives where a company is; goals and strategies guide where a company is going. — Colin O'Neill

 



A Lean Enterprise

The term "lean" imparts the image of a strong, lucid, energetic, and successful entity. It takes work to keep the human physique in good shape, and the benefits of a healthy lifestyle, like that of a healthy organization, are well worth the effort. What makes an enterprise lean? A culture of respect, organizing around and managing to value streams, commitment to improved performance and productivity, evolution through incremental (or radical) improvement, and customers elevated to partner status.




Mission & Purpose

A lean enterprise knows its value streams and strives to optimize the value they create from end-to-end, to improve customer satisfaction, shorten time-to-market, cut costs, and reduce waste. It does this through effective integration of lean practices into its culture. Most lean techniques are not new—what’s new is the recognition that an enterprise cannot be lean without understanding, managing, and organizing around its value streams, thus inspiring systems thinking. Lean is most successfully implemented by understanding the “whole” rather than just implementing bits of lean without a holistic context. LeanIntent is designed to provide a holistic view of lean across all philosophies and schools of thought.




Elastic Strategy

Enterprises need strategies for becoming lean. A clear purpose; dedication of time, money, resources, and effort; and most of all, setting the course from the top-down. To do that, executive leaders need strategic lean tools, not tactical ones. Strategies must support and direct enterprise lean initiatives. Executive leadership are active participants, not observers, and their performance should be tied to the performance of the lean management system (LMS) (Mann 2015, 20).

In his book, Good To Great, Jim Collins determined that the most successful executive leaders created “innovative, wealth-creating plans” for the long term, with built-in mechanisms to flex and adapt to the changing nature of value from the customer’s perspective (Collins 2001). These plans are channeled via a “bias for action.” In the military, this is known as “mission command” or “commander’s intent.”

Intention is a very powerful lean construct—senior leaders set the intention for the company to create a lean mindset, culture, and approach, which is communicated in the bias for action. Ensuring that a company’s employees are properly trained and empowered leads to enterprise-wide distribution of risk as actions are executed.




Corporate Growth

Companies grow by investing capital in new products & services, initiating mergers & acquisitions, expanding markets, and improving operations. These funded investments are typically identified and managed in an enterprise portfolio, which is a list of things an organization can do to expand and flourish. In a lean intelligent enterprise, allocation of capital to both growth and upkeep is managed within its portfolio. Lean organizations fund their business units, specifically the value streams within the BUs, as profit centers. Profits of each value stream inform the size of OpEx and CapEx budgets allocated to it. Supporting business functions are financed through these value streams (using charge-backs, resource funding, or other mechanisms) for the contributions they make to the creation and delivery of value. There are very few cost centers in a lean enterprise.




Planning Horizons

A lean organization makes almost all its decisions from an economic perspective. This does not mean that all things can be reduced to a monetary amount; rather, it's the relative economic value of one thing over another. Short, mid, and long-term planning exercises should continually reevaluate and compare initiatives using value analyses to determine the composition of their forecasts and roadmaps.




Governance

The expanse of lean governance can be reduced to one word—discipline. Lean requires a disciplined culture that thrives on improvement changes. In lean, it’s okay to make a mistake as long as the root cause that led to the mistake is found and corrected. This approach fundamentally changes to the way companies staff, manage, and train their intelligent workforce.

A disciplined culture is not the same as a controlled culture—in fact, it's the opposite. In their book Extreme Ownership Willink and Babin contend that the discipline possessed by Navy SEALs is what allows them to deal with brutal situations in the heat of battle, and by relying on their training, empowerment, and moral courage (Willink and Babin 2015).

Remember that we can't improve what we can't measure, so it’s necessary to establish appropriate lean goals and measurements across the enterprise to determine if your transformation is succeeding, and what parts are not working so well. Lean metrics are focused on three primary areas: 1) how much value is being created by each value stream (aggregated to business unit and enterprise levels), 2) how well-disciplined are value streams in terms of their lean behavior, and 3) how much improvement has been made relative to a benchmark and/or previous measures. Benchmarking at the start of a lean transformation is a noble goal, but often hard to do. Wherever in the lean journey benchmarking takes place is better than nothing.




Supporting Business Functions

In a lean enterprise, business functions are not the principle organizational constructs; rather, business units and their value streams are. Through the employment of small lean teams in service to value streams, and transforming into communities of practice (CoPs) or centers of excellence (CoEs), supporting business functions directly engage with business unit and value stream representatives to assist and add value to products and services being created and delivered.




Internal Value Streams

Sometimes value streams do not deliver products or services directly to end customers of the enterprise. These are known as "internal value streams" or "supporting value streams." Their purpose is to enable customer-facing value streams (also known as "primary value streams") in the pursuit of optimal value creation and distribution.



Collins, James. 2001. Good to Great: Why Some Companies Make the Leap...And Others Don't. HarperBusiness.
Business Units

 

How It Works

 


 

If you do what you’ve always done, you’ll get what you’ve always got. — Henry Ford

 



Lean Business Units

Lean enterprises are composed of business units (BUs), which in turn are made up of myriad value streams. Business units are pseudo-autonomous profit centers that work for the benefit of the larger entity. Each BU maintains its own portfolio of new work and normal upkeep (keeping the lights on, so to speak). Its portfolio represents a subset of the enterprise portfolio, with perhaps more granular initiatives and budgeted line items.

 

But the majority of the work within a BU is performed by its value streams—there is very little overhead here. BUs leverage the enterprise's supporting business functions, or sometimes they own those functions outright. A lean BU typically manages its vendors and supply chain on behalf of its value streams so as to gain economies of scale and optimize all stages of value creation. Employing lean strategies to supplier relationship management and supply chain management, while exercising a "just-in-time" (JIT) mindset, provides effective oversight of the supply end of extended value streams. When vendors and other parts of the supply chain are included in the value stream, they may be required to “lean” their operations or face dismissal.

 

The demand end of an extended value stream is also managed at the BU level, but for different reasons. Often organizations elect to provide consistent customer and distributor experiences, so aggregating representation through a single customer or distributor entity within the BU makes sense.

 



Work Priorities and WIP

With ongoing global demand for new and better products, enterprises often venture into new markets. Without thoughtful validation and prioritized needs, some organizations inundate their workers with too many new products and feature requests, causing intelligent workers to lose the larger perspective and purpose needed to keep them focused on the attainment of strategic objectives. The result is worker frustration due to a mixed message of attempting to stay within the guidelines of strategic intent while the organization is pursuing customers and markets that appear enticing, yet are not always validated against strategy.

Inadvertently overextending intelligent workers can be rectified by creating a pull system that only flows prioritized needs to the capacity of a value stream, thereby limiting work in process (WIP) and optimizing resource utilization. With efficient management of a BU portfolio, an organization achieves the highest (optimal) productivity with limited resources by employing the principles of small teams, small batches, and continuous flow of validated, prioritized work.

Lean implementations cut across all functional and organizational areas of an enterprise. Because a transformation affects everyone, conventional management systems must be converted to lean management systems (LMSs) (Mann 2015, 10), and each BU should employ an LMS. For a business unit to be truly lean, all of its workers, managers, and executives should be trained in relevant lean concepts, tools, and techniques, and a lean culture should be cultivated across a BU as well as company-wide.




Tools & Delivery

Adopt just enough appropriate lean tools and methods and no more (too many tools results in degraded lean behavior). Deliver new (or immature) products and services early and often to satisfy customers' needs, grab market share, and collect valuable feedback.

Value Streams

 

How It Works

 

Waste is everywhere; it doesn’t take much effort to find and fix it, just a bit of lean thinking. — Colin O'Neill

 



Value

Enterprise lean is not only about efficiency, or head count reduction, or lowering costs; it’s primarily about value—the value of customers to the company, the value of employees and suppliers, and the value products bring to customers' lives. But drivers of value change over time, so organizations should review their customers’ definitions of value on a regular basis.

Value is created and delivered via value streams, which are persistent activities organized in a continuous, sequential, cross-functional, serial flow across the organization. Because value streams are the principal value-generating mechanism of any lean enterprise, their importance should not be underestimated. In their seminal Harvard Business Review article on lean thinking, James Womack and Daniel Jones stated “As we envision it, the lean enterprise is a group of individuals, functions, and legally separate but operationally synchronized companies. The notion of the value stream defines the lean enterprise” (Womack and Jones 1994).

Because value streams are supported by most, if not all, business functions (see diagram below), global alignment and holistic optimization are significantly more valuable than local pockets of efficiency. Function-focused organizations traditionally have a local bias because compensation and performance are often tied to one business function operating more efficiently than another. This approach sets up undesired competition between organizational components that in and of themselves do not create value; it is only when each function collaborates within the context of an enterprise’s higher goal (creating value via a value stream) that their true contribution is realized.

 

Value Stream Supporting Functions

 

The lifecycle of every product is contained within a value stream, from idea, to the beginning of the supply chain, through development and launch, then order, delivery, and customer support. There are two aspects to value stream flow: materials and information. The second aspect, information, is as important as the first and is the key to the successful movement of product and service delivery to customers of an intelligent enterprise.

 



Flow

The nirvana of a lean intelligent enterprise is the achievement of "sustainably shortest lead time" for its value streams. This goal is achieved by optimizing the continuous flow of activities, materials, and information. The major activities of a generic value stream are illustrated in the graphic below:

 

Value Stream Flow

 

Value streams are fundamentally demand-driven. When work is brought to a value stream, it must be validated, prioritized, sequenced, and ready to be "in play." When capacity is available, the business unit or groups of value streams will participate jointly in face-to-face planning sessions to determine how much work can be assimilated by that unit within a specific implementation cycle. Lean teams stand ready to plan the work that is accepted into the production timebox to determine levels of effort required to understand, design, produce, and deliver some units of value (delivered either internally for subsequent packaging, or released directly to distributors or end customers). These same product/service teams typically provide support for their deliveries, although that is not always the case.

 



Demand

The demand side of an extended value stream is one of the most important aspects of a lean enterprise; this is where producer and consumer intersect. Understanding the true desires of customers and distributors ultimately drives demand for an enterprise. Leading corporations are often successful because they extensively interface with their customers and are skilled in uncovering latent customer needs. Establishing "voice of the customer" programs that embed product/service representatives in customer domains reaps voluminous rewards. Knowledge of a customer's definition of value, and what they consider minimum viable product (MVP), is fed back to the BUs and value streams where appropriate adjustments to activities, materials, and information flows are made.

 

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