Why lean makes you fat

The concept of lean started out in manufacturing in the 1980s and was focused on the elimination of waste. Now we try to "lean" everything. We have lean in healthcare, in banking, in pharmaceuticals and every other industry.

The problem with lean is that it focuses on the removal of waste and the preservation of value, but not the actual creation of value. Lean is too often used as a methodology and not a mindset. Organizations focus on tools and methods, not changes and behaviours. People are trained on the "lean methodology" but not so much on the "lean mindset."

When you focus on tools and methods, you become a slave to them and remove all thinking about growth and value creation.

Lean is an effective way to increase productivity for repeatable tasks, but it doesn't help to develop new ideas or strategies.

If you think lean is the answer to achieving operational excellence, you will be disappointed with the results. Operational excellence comes from the ability to relentlessly pursue improvements in performance and profitability by focusing on value for the customer. Unfortunately lean provides a much narrower focus than that.

How to take advantage of a faster, more connected world

The world has changed. We have never been more inter-connected and things are moving at a ridiculously fast pace. Are you taking advantage of this new world or are you breathing someone else's exhaust?

We now have access to our customers in a way that we have never seen before. Within hours, organizations can gather valuable feedback on new ideas for products and services or solicit suggestions for new products or services, or even gather suggestions on where a company should make a charitable donation. With crowdsourcing, online communities, blogs and other similar vehicles, we are able to tap into a customer base that is engaged and ready to provide insights.

Companies like Facebook, Coca Cola, McDonald's and many others are constantly gathering real-time feedback from customers. Companies are even creating specific websites to interact with their customers because they realize that they have a unique opportunity to tap into volumes of information not only about their own organization, but also about their competitors. Customer satisfaction has never been more transparent.

But what is the nature of those connections? Emails are replacing phone calls. Social media is replacing face-to-face meetings. We regularly have people doing business with each other even though they have never met.

With Silicon Valley driving much of the change in many industries, what does the company of the future look like and how do we take advantage of this inter-connected world? For these successful companies, we see a pattern of what they do:

  1. They apply solid business principles-Just because the world is more connected doesn't mean that basic business strategies won't work. You still need to know who can most benefit from the products and services you offer and how can you best reach them.
  2. They know where their customers hang out-Not all customers are on Facebook or LinkedIn or Twitter or read blogs or watch videos or post comments, so you need to ensure that any strategy you develop will reach those who it is intended to reach.
  3. They build communities-Many of these successful companies use their customers as evangelists and ambassadors for their brand. Determine the type of people you want in your community and the best way to communicate with them.
  4. They hire the best people-These successful companies aren't afraid to recruit the best people from other organizations to keep their organization strong. They recognize the importance of leadership and accountability.
  5. They are diversified-These organizations are flexible enough to enter into different businesses to diversify revenues and their customer base, and are also smart enough to figure out how to integrate those different revenue streams and customer bases to identify even greater growth opportunities.
  6. They execute effectively-These organizations are able to not only generate great ideas, but more importantly, they are able to implement them successfully.

So despite the fact that many of the new companies we read about are technology companies, we read about them because they are operationally excellent. They focus on the success factors above to ensure they achieve results and stay at the top of their industries.

Is success results or process driven?

What should drive an organization's success, results or process? Does an organization need to identify the results and then figure out the best way to achieve them or do they need to develop a great process and then follow it to the letter? Let me suggest that it's neither.

I realize that this might sound counter-intuitive, but success is not about results or process, it's about people and execution.

The Six Sigma black belts and Lean proponents will tell you it's all about process. Develop a great process, eliminate all of the waste from that process, standardize it across the organization and you will get great results. Sure, that might work if you are building a widget using automation, but what if my desired result is top-notch customer service? You can have the best process in the world, but if your people make bad decisions, you will not achieve those results.

Similarly, when we try to determine results and then figure out the best way to achieve them, we make our view too narrow. If a particular department wants to save money, they will develop ways of operating that focus on saving money. But what if making long-term investments would be the most profitable growth opportunity for the organization? This opportunity is in conflict with the results trying to be achieved (saving money), so the organization will not be able to capitalize on it.

There is a distinction we need to make between being results-oriented and results-driven. Organizations should be results-oriented to ensure that they are growing, as outcomes are important, but organizations need to ensure that they are not so focused on specific results that they miss out on other opportunities.

The same can be said for being process-driven. If you become a slave to the process, you stop thinking about results.

Organizations must strike a balance between the two. They need to understand what their future vision is and how they are going to achieve it. If they have the right people in place and are able to execute effectively, the right processes will be developed and the right results will be achieved. That is how an organization can be successful.

HP-Slow down, you move too fast…

Quoting the famous Simon & Garfunkel song Feelin' Groovy is very appropriate for the latest round of problems at Hewlett-Packard. HP was in such a rush to hire their former CEO, Leo Apotheker, that many of the board members never even met him before he was hired. I can understand not having all of the board be a part of the selection process, but before offering him the job, shouldn't he have been vetted by the entire board?

Now who knows what will come with these fraud allegations in the way Autonomy prepared their books, and you can't only point the finger at Mr Apotheker for this mistake, but it is another sign that HP can't operate without making huge mistakes. They have been in such a rush to make up for lost market share and previous mistakes, that they make even more mistakes. Not the kind of business cycle any organization wants to be in.

They need to slow down and stop panicking. There is no one solution that will fix all of their problems.

Hopefully that is what Meg Whitman will do….slow….them….down. They need to take their time and figure out what kind of company they want to be, then execute on that strategy. As I have said many times before, sometimes you need to slow down in order to maximize profitability. This is even more important for an organization like HP that has a recent track record of making bad decisions and big mistakes.

They need to sit down, put on Feelin' Groovy and let the words resonate…."slow down, you move too fast…"

Results of the 2012 SGN growth survey

Click here to download my report from the 2012 SGN Growth Survey (select 'Results of the 2012 SGN growth survey'). We had almost 100 executives from around the world complete the survey, and we will be sharing it with hundreds more organizations.

The Summit Global Network (SGN) is a group of boutique consulting companies from across the globe that collaborate on various initiatives to improve results for our clients.

Execution, without helping us execute

I recenty re-read Ram Charan and Larry Bossidy's book, Execution. There were some interesting ideas about why having a culture of execution is important, but I found the book lacking in practical advice about actually executing a strategy. Charan and Bossidy provide some great examples of questions to ask about strategy development and review, but not much what to do once you have answered those questions and need to execute your strategy. That's because the book's perspective on execution is about the senior leader and what he or she needs to do.

For example, Charan and Bossidy believe that a large number of strategies fail because the leaders don't make a realistic assessment of whether the organization can execute the plan. Firstly, I disagree with their premise. I believe most strategies fail because the tactics used to implement the strategy are not aligned with the strategy itself and there is a lack of accountability for strategy implementation.

Secondly, Charan and Bossidy provide very little guidance on how to deal with this complex concern. What if an organization has made a realistic assessment and it doesn't have the right capabilities? Should that organization then change its' strategy to align with the capabilities it has? That was the impression I was left with after reading the book. The strategy of an organization needs to be developed based on a realistic view of where the organization wants to be (the desired future state), not its' ability to execute. The key to executing that strategy is ensuring the right people are in the right roles and there is accountability for results. If the organization doesn't have the right people in the right roles, then they need to go out and get them.

Don't use your people as a limiting factor in the development of your strategy. Use your strategy as a way to ensure the right people are being brought into your organization.