Public Sector Executive Five Lessons Of Lean July August 2009 P42 44
- 1. LEAN SIX SIGMA Five lessons of Lean Lean could help public significant commitment from PETER SIRMAN senior executives sector organisations is head of Operations Consulting, PA Consulting 4. Lean starts with a deep deliver improved Group understanding of, and services whilst meeting commitment to, customers government cost reduction targets, say 5. Lean won’t work if you don’t Peter Sirman and DAMON DERMODY free your staff to help you Damon Dermody is public sector Lean expert, PA Consulting Group improve your business If these lessons are applied correctly then, yes, Lean is capable of transforming T he release of the the lowest possible cost. organisational performance for Operational Efficiency Our proposition is that it is the better and can be successful Programme review, possible for all public sector in any public sector department. combined with departments to strive to achieve spending pressures, has pushed a balance of great service at 1. Lean is not a quick fix and Lean to the top of the public acceptable costs. To achieve this, is definitely not just a cost sector management agenda. requires a change in mindset. reduction tool In particular, it requires public The need to deliver cost savings sector managers to embrace Having spent half a century is not, however, a reason to jump integrated management systems perfecting their lean system, on the Lean bandwagon. When such as Lean. Toyota still consider themselves used for what it was intended, to be on the journey to the case for Lean is compelling In the public sector, there are operational excellence. On the - improved service at a lower unanswered questions about other hand, we have had one cost delivered by an engaged the effectiveness of Lean in client tell us, “we tried Lean last workforce. delivering greater efficiency, year, but it didn’t really work so particularly outside the we stopped”. With the government’s high large transactional process spending, rising debt and a departments. Lean is a systemic, focussed and decline in GDP, public sector disruptive change. It requires organisations are under pressure So, are all government time, patience and dedication to to reduce costs. The release departments able to achieve implement an integrated Lean of the Treasury’s Operational levels of performance and solution. Efficiency Programme review customer satisfaction and is has further intensified this Lean the right system for them There is no doubt that some pressure. too? Lean tools are good at improving process efficiency and reducing “ There are, however, perceptions In our view, the answer to both costs. Tools like seven wastes that to cut cost automatically questions is “yes” but we qualify (a method by which one means poorer service quality, this view by sharing five hard- categorises non-value adding Lean is capable a point of view echoed, in our learned lessons: activities) spring to mind. of transforming experience, throughout many Yet, using tools in isolation, organisational parts of the public sector. Yet, 1. Lean is not a quick fix and without understanding of the operational context and business performance for we who work within Lean is definitely not just a cost objectives, will often lead to the better and can enterprises would strongly reduction tool fragmented solutions. This disagree. In our world, good be successful in any public sector department “ operational management is aimed at delivering efficiency. By that, we mean we aim to 2. Lean requires change to every part of an organisation will dramatically reduce Lean’s chance of achieving its full transformational potential. deliver the best service we can at 3. Lean requires a very 42 pse Jul/Aug 09
- 2. SUSTAINABILITY “ When used for what it was intended, the case for Lean is compelling - improved service at a lower cost delivered by an engaged workforce “ 2. Lean requires change change by understanding to every part of an - quality and right first time customers better, by coaching organisation and facilitating problem solving - end to end process lead problems on the shop floor, Lean managers look critically at times and productivity by rewarding successes, by the whole organisational system. recognising great ideas and by We call this ‘seeing the whole’ - extent to which behaving in a ‘Lean way’. but we do not take the business organisational; capacity process re-engineering approach is aligned to customer This means going beyond of ‘change everything all at once’. demand a simple technical or tools- based definition of Lean. It Change in Lean organisations - staff satisfaction and means addressing challenges is a constant process in which engagement such as transformational all managers and staff engage, leadership: creating the driving out waste by generating - continuous improvement capability within managers to huge numbers of sometimes and change capabilities. create a vision and strategy for small improvements to ways of end to end change. working. At one point, Toyota By doing this, a public sector claimed to be implementing two organisation can start any The departments that are million ideas each year that had Lean transformation from a seeing benefits across their been generated by their staff: threshold of performance: entire organisation (back a level of performance office, front office, and support The Lean approach must also where improvement directly functions) are those that have acknowledge that localised corresponds to increased been able to secure senior improvement efforts can impact customer value. management commitment and other parts of the system and have set ambitious performance no one department, team or 3. Lean requires a very improvement targets. business unit can get there on significant commitment their own. from senior executives One of our clients said: “In hindsight, we did not do enough Lean should seek to test the We have never seen a Lean to get senior management extent to which organisational system succeed without the total buy–in. Making senior targets are focused on increasing commitment of the senior team. managers aware of the changes customer value and to baseline We don’t mean the CEO should that Lean will bring, alone, is operational performance against send out a monthly newsletter not sufficient. We need to set the measures that matter, which – we mean that the entire top ambitious goals and develop the may include: team (at least three layers deep) capability in our managers to lives and breathes Lean. lead transformational change”. - customer service delivery Cont. overleaf and satisfaction They lead their teams in driving 4. Lean starts with a deep Jul/Aug 09 pse 43
- 3. LEAN SIX SIGMA understanding of, and and creation of value – fix this are based on identifying and commitment to, customers problem and the customer gets improving operational problems a high quality service and the in a structured manner. It has been our experience that organisation reduces its costs. public sector organisations have This needs to start bottom up very limited understanding of Such types of customer insight and may require the introduction the needs of their customers and, can be delivered through voice of of Lean through a series of in fact, are often confused about the customer analysis, including cell-based pilots (a manageable who their customer is. the investigation of customer team that is co-located around complaints, failure and value a product, customer outcome We once asked a senior demand analysis and proactive and process with supporting operations manager in a tools such customer survey and infrastructure). government department: “Who focus groups. is your key customer?” and were By building continuous told ‘the minister’. We particularly like the very improvement with frontline simple techniques of bringing teams, anticipated outcomes Yes, the stakeholder map customers together with from this type of approach would can be complex and in some operational staff as part of include: organisations the normal rules performance improvement do not apply but, in general, events to ask: - making visible and “ the public sector serves those demonstrating at team level, members of the public who “What is it like coming here for the culture and organisational come to it and ask for services or help?” Try it, you will be amazed mindset required to sustain It has been our products. We do not argue that at how staff are affected by the Lean, experience that public this is always right but it is a very answers and how they then sector organisations good starting point. go back to work and set out to - implementing new approaches have very limited improve customers’ experience. to structured problem solving, understanding of Understanding the drivers of customer value can also 5. Lean won’t work if you do - establishing new the needs of their be difficult. Feedback from not free your staff to help accountabilities for customers and, in fact, customers is often limited to an you improve your business performance management. are often confused about who their customer is “ annual satisfaction survey. This is not at a sufficiently granular level to drive operational Continuous improvement is the lifeblood of any Lean transformation. However, Each approach to Lean varies and needs to be adaptable. They service improvement. Our building a culture of continuous are broad in scope and difficult impression is that few public improvement is a significant to define precisely. We are sector organisations have gained challenge to any organisation passionate about Lean because, insight into customer views on that wants to be Lean. if applied effectively, it helps the relative importance of the managers and staff to deliver various value drivers or their We have seen recent examples great service to customers observations of the organisation’s across the public sector where, without wasting resources on current performance in relation once the early enthusiasm for tasks that no one values, whilst to these key drivers. Lean or the ‘big idea’ wanes, providing staff with the means to performance drops as teams contribute to the improvement of We think that customer feedback return to the older, more their organisation. should look to identify the comfortable way of working. detailed causes of “failure However, to be successful in demand”, that is demand which Without overcoming these types any public sector department, is placed on the operation as a of challenges, the benefits of any managers need to apply the five result of poor initial service. Lean change programme will be lessons we outlined earlier. quickly undermined. This generates additional For those public sector work for the organisation. At A more sustainable approach organisations that can apply one recent client, over 30% of will require changes to Lean in this way, the benefits are calls placed into a call centre organisational mindsets transformative change: improved originated because customers and ways of working. Part customer service, at a lower cost, could not understand the of the answer will be building delivered in a sustainable way. application forms. Here, we and supporting continuous see an alignment of interests improvement processes which 44 pse Jul/Aug 09