Beyond the Lean Revolution
Achieving Successful and Sustainable Enterprise Transformation
Authors: Deborah J. Nightingale, Jayakanth Srinivasan
Pub Date: August 2011
Print Edition: $34.95
Print ISBN: 9780814417096
Page Count: 256
e-Book ISBN: 9780814417102
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Why Enterprise Transformation?
The whole is greater than the sum of its parts.
PERHAPS YOU and your company are standing at the edge of the
proverbial cliff. Challenges beset you from within and without.
The competitive environment is changing. Your R&D organization
has an idea that has great promise, but you just can’t find a way
to capture the opportunity. Employees are finding it difficult to be
heard when they have ideas for making the business run more efficiently.
A supplier has advised you about a problem with providing
your manufacturing organization what you need, and you can’t figure
out where in the business that problem originates. How do you fix
something you can’t find?
Or perhaps you and your company are not standing at the edge
of the cliff. Maybe everything is humming along, but the general sense
is that the organization is not coming close to meeting its potential.
Even though you’ve been trying to improve your business processes,
things aren’t making it to the next level. All those Six Sigma black belts
are helping run projects, but the incremental changes don’t seem to
amount to very much. You’re not achieving the kind of total benefit
you thought you would.
We encounter businesses and organizations all the time that are
facing one or all of these challenges. Many of them have been working
hard to change. Again and again, though, they tell us they are failing
to sustain change. They feel as if they are taking two steps forward and
one step back. Their improvement projects suffer from false starts. Or
they get only so far, and then whatever they were changing plateaus
and cannot reach a higher level of efficiency or effectiveness. The bottom-
line effects are just not happening.
Why do improvement efforts so often fail to provide all the benefits
expected? Typically, it’s because businesses are trying to do things
in a piecemeal fashion—in silos. They spend a lot of time on things
that do not affect the bottom line or that are not linked to the company’s
most important strategic objectives. They may not even know
that their efforts are disconnected.
To be sure, you can make some improvements through these
sorts of efforts, and your company might even realize some big benefits.
However, the best opportunities to transform an organization are
usually found somewhere other than in the silos. Often, they are found
in the interfaces. They become clear only when you look at the entire
enterprise—a complex, integrated, and interdependent system of people,
processes, and technology that creates value as determined by its
key stakeholders. A stakeholder is any group or individual that can
affect or that is affected by the achievement of the enterprise’s objectives.
Value is the particular worth, utility, benefit, or reward that stakeholders
expect in exchange for their respective contributions to the
Enterprise transformation is the taking of an enterprise from its
current state to an envisioned future state, a process that requires a
significant change in mindset, the adoption of a holistic view, and execution
to achieve the intended transformational goals and objectives.
Transformation requires that you know the enterprise. You have to take
a step back and look at the big picture. You need to gain a deep
understanding of where things stand. What are your strategic objectives?
How are you currently performing against those objectives? How
should you be performing? How will you close the gap? What is the
current state of the different key components and levers that comprise
We have seen many organizations undertake improvement projects
with a lot of fanfare but with little or no sense of the big picture.
We have seen them adopt lean—a term describing the philosophy centered
on minimizing resources and eliminating waste to create value.
We’ve seen improvement projects on the shop floor aimed at reducing
overall company costs by, say, a stated goal of 20 percent. Only after
later analysis did the businesses discover that less than 5 percent of
company costs could be attributed to direct labor. Talk about failing to
see the forest for the trees!
Why does this happen? It has to do with how the business world
has embraced concepts from lean manufacturing. All too often, we hear
senior business leaders talking as though all they have to do is figure
out a way to adopt the Toyota Production System (TPS, to which lean
traces its origins), and Toyota-like results will fall into place. This perspective
is very narrow and tends to miss the strategic element. Many
organizations embrace TPS but apply its concepts only to certain operations
in the organization, such as manufacturing, but not to others,
such as the leadership and enabling operations: Together, these constitute
the whole organization. Still others apply lean principles and TPS
to their manufacturing operations quite well, but they never look beyond
their internal organizations to embrace a broader perspective that
might include, for example, suppliers or other stakeholders. People in
business also tend to think that TPS is a bottom-up miracle worker,
missing the fact that it is driven strategically from the highest level of
the Toyota enterprise. It is only a means to enact the enterprise’s strategy,
not the strategy itself.
When we visit companies, we often see telltale signs that the
focus of change efforts is askew. One day, when we were invited to
visit Mega-Corp (a pseudonym for a company that makes aerostructure
parts and components and that employs some ten thousand people), a
group of managers presented the firm’s improvement plan. It sounded
plausible enough, but there wasn’t a senior leader of the company in
the room. That was the first clue that something was amiss. Then we
were given a tour that began in the manufacturing area (a typical starting
place, we’ve found). On bulletin boards, we found performance
measures posted, but they were either not very current or partially obscured
by other postings. In the office areas and elsewhere, we saw the
same thing. It was obvious that these metrics—the objective, quantified
data or information that an enterprise collects to support decision
making—were not at the heart of people’s daily work lives. No one was
paying much attention to them.
The types of metrics were telling too. Mega-Corp was measuring
machine and operator utilization on its manufacturing line, as well as
the quality of parts coming in from its suppliers. But where were the
metrics about Mega-Corp’s performance with respect to its suppliers?
When we visited the engineering department, we found nothing about
how well the company was supplying specifications to its suppliers.
On top of all that, no one in manufacturing or engineering
could explain how what he or she did on the job worked toward achieving
any vision or strategic objective. Yet Mega-Corp had a full-blown
set of improvement projects underway.
Build-Create Corp. (a pseudonym for a five-thousand-employee
firm in southern California that makes space system components) told
a different story. A worker on the manufacturing line described how
his work was part of the larger process and how people in his organization
had redesigned some of the process flow. He cited some specific
reductions in costs and cycle times that had been achieved and explained
where the company stood with respect to work-in-process. The
worker put everything he told us in a context that sounded like a strategic
objective that the enterprise expected to achieve four or five years
down the road. A production manager introduced us to someone on
his team who turned out to be a supplier. An engineer in Build-Create’s
R&D group explained how they had reduced their cycle time for new
The differences between Mega-Corp and Build-Create were palpable.
At Build-Create, everyone was enthusiastic about transforming
the enterprise. The employees used a similar vocabulary to talk about
change and improvement, suggesting to us that they were all on the
same page. They could share insights into processes, metrics, stakeholders,
resources, and other aspects of their enterprise, implying that
they had been part of figuring out analytically where things stand.
With ease, they put what they were doing into a larger context and
explained how it fit with a vision of the future.
At Mega-Corp, the senior leaders could go on and on about how
they are transforming their enterprise. But we saw no evidence beyond
some disconnected change initiatives related to lean.
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