Lean And IT’s Transformation To BT

Here’s another follow-up to our recent jam session on how to use Lean as an opportunity to make real improvement running IT. In a previous post on defining Lean, we addressed cost cutting, reduced planning horizons, consolidation and the quick killing off bad ideas. But we did not discuss whether and how Lean can help innovative CIOs transitioning their firms to Business Technology (see Forrester’s “Five Essential Best Practices For The IT-To-BT Transformation”), instead of focusing on making their IT shops skinnier.

Firms have used Lean for solving different problems. So far the most popular application has been as a process improvement tool, with Kaizen Blitz being similar to other process improvement tools such as Just-In-Time (JIT), Six Sigma, or Total Quality Management (TQM). Executives use them to uncover and implement opportunities to improve lead times, cut waste, and optimize development and provisioning processes. These tools work fine for processes with relatively stable steps and stakeholders, such as incident, problem, change, or release management (see Forrester’s “Applying Lean Thinking To IT”).

But what to do when processes, stakeholders and KPI’s become moving targets because the organization’s strategy is changing? Is still Lean the right approach? Lean is certainly not a panacea, but Toyota’s most famous implementation convincingly illustrates Lean’s potential to support both incremental and disruptive transformations (you can find a summary of HBR’s article, “Decoding the DNA of the Toyota Production System,” here). Translated into popular jargon, the four principles Toyota’s success sound like the basics of good management:

1. Build your strategy on deep knowledge of your business and it’s needs.
2. Streamline operational processes to consistently meet – but not exceed customer needs.  Exceeding needs is a form of waste.
3. Create a flat, flexible and fast organizational structure that reduces bureaucracy and simplifies work.
4. Develop and maintain a performance-oriented culture, which holds individuals and teams to firm, yet ambitious performance expectations.

Companies like Southwest Airlines, Vanguard and Alcoa have applied these principles and demonstrated sustained ability to outperform their competitors over many years (see the HBS summary article, “4+2 = Sustained Business Success,” here).

When I talk with CIOs about what they should do to lead their firm’s exploitation of technology, I translate those principles into these actions (see Forrester’s “The Lean Foundation For Business Service Portfolio Management”):

1. Develop your IT strategy using services to meet the business needs.
2. Commission execution to service providers and commit them to the business.
3. Create a service-oriented structure able to right-size service delivery.
4. Link individual and team rewards to the performance of the services they manage.

The Bottom Line?  The secret of applying Lean to Business Technology is not rooted in its tools but rather in the CIO’s business insights and commitment to clarity, simplicity, excellence and the people in his organization.

What do you think? Have you seen these Lean principles in action?

By Alexander Peters