Is Lean-And-Share The Right Approach In A Downturn?

The large majority of customer inquiries I answer these days cover the topics of Lean thinking and shared services.

Given the turbulent economy, the combination of these two methodologies — which I call “Lean-and-Share” — seem to provide a solid conceptual foundation for IT executives who strive to deliver services that solve business problems completely, eliminate waste, kill bad ideas, and increase the reutilization of assets. In practice, the application of Lean-and-Share could be a combination of best-practices, like the “4+2 formula” which many winning organizations have used to consistently outperform their peers regardless of the economic conditions (Nitin Nohria, William Joyce, and Bruce Roberson, “What Really Works,” Harvard Business Review, July 2003). When applied to IT (see the Forrester Report “Back To Basics – IT Strategy In Turbulent Times”)you can read the 4+2 formula as:

•    Master four primary management practices— The primary practices focus on aligning demand and service management: 1) strategy — develop your IT strategy using service archetypes to meet multiple business needs; 2) execution — commit service providers to deliver services according to business-related service levels; 3) structure — create a service-oriented structure that can right-size the delivery by service archetype; and 4) culture — link individual and team rewards to the performance of the servicesthey manage.

•    . . . and excel at two out of four secondary practices. The secondary practices bring the  additional “kick” that makes the difference. You will need to excel at only two of these four to be successful. These practices are 1) leadership — commit IT to deliver change through business technology leadership; 2) talent — constantly refresh your talent pool through development and hiring; 3) mergers and partnerships — change the business with the help of external partnerships; and 4) innovation — build an innovation culture and process.

But is Lean-and-Share also the right approach when you are desperately looking for cash and wanting to reduce spending fast? To answer this question let us quickly recap what Lean-and-Share can do for you. First, “Lean” can bring you a wide range of tangible and intangible outcomes, such as improving service performance by reducing waiting times, improving processing time, and achieving more work with less staff time. It also results in more standardized services, reduced costs and increased budget savings, greater understanding of the system, and greater customer and staff satisfaction. Second, “Share” adds the additional benefits of more cost-effective utilization of assets, clarity of roles and responsibilities, and culture change to focus on customers and service quality.

But Lean-and-Share has its price. Achieving the desired state of savings and quality improvements requires a carefully orchestrated approach. By integrating the 4+2 best practices and applying disciplined management and governance you should consider a Lean-and-Share endeavor as a comprehensive, long term project. For a large enterprise you will need about six months for assessment and analysis, three to four months for planning and — if everything goes well — twelve months for execution. And of course you will need to adjust your estimates according to the resources at hand, the levels of commitment, and the organization’s readiness for change.

The bottom line? If you need to reduce your IT budget now, you will probably have to look for another approach — a combination of tactical steps such as freezing hiring, deferring tech investments, and stopping or postponing transformational initiatives. And these look like the opposite of Lean-and-Share.

So what do you think? Is it possible to balance these two approaches in real time?

By Alexander Peters