I was never a huge fan of Simon Cowell’s TV talent competition, The X Factor, but I do like the premise: Raw ability alone is never enough to make you a star or even allow you to quit your day job. No, you need to constantly cultivate your talent and then add something special, an “X Factor” if you will, if you want to stand out in the audience’s eyes.
Sorry to dash your dreams of becoming the next Toyota through Lean, but the same holds true for business. Lean can help almost any organization become more efficient and effective at whatever they choose to do, but there is much more to being a successful company than just being lean. You still need an outstanding source of competitive advantage if you want to beat that bakery across the street who is currently just a little bit leaner (or cheaper) than you are in customers’ eyes. Customers demand more than just incrementally improved value to switch suppliers or better yet, become vocal fans.
Let me explain. You can enlighten all your executives, engage your entire workforce, and apply every one of those great lean tools to allow your R&D labs to run their experiments in half the time. BUT, they still have to be well-designed experiments that answer questions important to both your strategy and exceeding your customers’ expectations to make the R&D effort useful in the first place. In other words, there is a core, company-specific science beyond Lean that is necessary for any business to thrive. That core science, that outstanding source of competitive advantage is that X Factor.
Ferrari surely knows how to leverage theirs in designing and producing sensation and emotion through exotic Italian racing and sports cars. But the same theory holds true for the Acme Plumbing Fixture Supply Company’s sales and marketing team down the street. They can create great factory-like processes for running day-to-day selling activities: reducing waste, creating pull, leveling workload, etc. But unless they understand the core science behind satisfying and influencing their specific customers, Acme doesn’t stand a chance at increasing sales significantly.
Capital One has done some great lean work in their internal operations, but they also understand and continuously leverage the science of producing engaging commercials and promotions. And Trader Joe’s surely knows the science behind how to hire, develop, and maintain a truly engaged, foodie-friendly workforce to support their limited but highly satisfying grocery selection.
The reason this is so important is because there are A LOT of companies that believe that (or at least act as if) Lean is their strategy, and thus the only thing they need to continuously develop. I’ve visited quite a few who are very proud of their years of stand-up meetings, 5S workshops, value stream maps, culture change, etc. But when you ask them how the business is really doing, they look at their shoes in shame because their version of Lean (mostly just cost cutting or window dressing for management and visitors) rarely leads to growth. They are clearly missing something big that could make their businesses competitive investments.
How does an organization start down the path of discovering and cultivating their X Factor? Unfortunately there is no easy, “follow this formula,” answer. Some companies get lucky the first time around while others struggle for years. Dell had a great operational thing going with custom PCs in 3–5 days until customers decided that they needed more immediate (and in-stock) gratification or something cooler like a Mac. You can, however, get started by trying to answer (and stumbling and learning and improving and trying again for the rest of your company’s life) two basic strategic questions:
1) What REAL VALUE do (or could) we supply customers? Not the value-added from your Value Stream Mapping workshops, but something big, important, and advertise-able that customers will actually be excited to part with their cash / time / other opportunities to obtain. It also needs to be something they would be proud to recommend to their friends and colleagues. The Big Ass Fan Company does it with industrial fans and so does Blendtec with commercial blenders, so it doesn’t have to be some super-sexy consumer product like a Harley to capture customers’ fleeting attention. Lean may be all about delivering value, but what X Factor science do you have, or need to have, to define that value in the first place?
2) Do our processes enable us to deliver our REAL VALUE in a manner that grows a REAL ADVANTAGE in customers’ eyes? Or in other words, does Lean truly support your X Factor, or is it just another good thing to do along with everything else? Being lean is not necessarily a competitive advantage, but if you use Lean properly, it helps to grow one. I once worked with a company who was very proud of their standardized “lean” quotation process. Every quote, no matter how big / complex / thorough, would be processed and approved in three weeks per their internal cadence. Except their customers really wanted most of their quotes in a day. And if they could get their quotes in a day, those customers could avoid a burdensome internal global sourcing process which also opened up existing contracts for renegotiation. Being “lean” without understanding how to leverage value delivery not only created customer dissatisfaction, but actually cost that company millions and they just couldn’t see it.
There is obviously a lot more to strategy than just two deceptively simple questions, but I hope this at least opens the door to starting a scientific learning process of improving your own strategy. You can easily begin by gathering your leadership team, product development organization, and / or sales & marketing group together and asking these questions. Remember, your goal is not to incrementally beat your competition on the same playing field; it’s to make them completely irrelevant in customers’ minds when it comes time to buy. Lean alone is never enough to do that.
What’s your X Factor?