Steve Bell is a member of the Lean Enterprise Institute faculty, the author of Lean Enterprise Systems: Using IT for Continuous Improvement (Wiley, 2006) and co-author of Lean IT: Enabling and Sustaining Your Lean Transformation (Productivity Press, 2010) which received the 2011 Shingo Prize for Research and Professional Publication. He is preparing to publish his next book, Run Grow Transform: Integrating Business and Lean IT (Productivity Press) in Summer 2012. He is the founder of Lean IT Strategies, a lean leadership education and coaching firm.
In Part One of this series we explored the chronic challenge of Business-IT “alignment,” reflecting on why most organizations have been unable to solve it. Part Two explored the common obstacles to lean adoption within an IT organization. Now in Part Three, we explore the fundamentals of integrating business and IT. We approach integration through value streams, the vehicle for delivering value to the customer. Any effort to align and integrate IT with the business is bound to fail if we don’t keep this fundamental lean principle in mind.
Once again, I am writing on an airplane; this time returning from the 2012 Lean Enterprise Institute’s Lean Transformation Summit, where I presented a Learning Session on “Innovation through Customer Collaboration” (more on this later) and a full day Lean IT Workshop. I’m recalling the research for my first book, begun nearly ten years ago. At that time, many (most?) lean practitioners believed that IT did not enable or support lean performance, and the term “Lean IT” had not yet emerged.
Listening to the many conversations, formal learning sessions, and keynotes at this year’s LEI Summit, I am struck by how IT capabilities now permeate nearly every aspect of business. I regularly hear from practitioners with noteworthy stories about how they have applied lean thinking to reduce waste and add value in many areas of IT.
But achieving real value from IT investment entails more than just eliminating localized waste. Walk down the corridor of your enterprise and ask an information technologist, “Who is your customer?” Ask this same question of your IT leadership. Their responses may reveal a lot. Transforming their perspective from “IT serves the business” to a consumer–centric view that all work must ultimately serve the end–customer is essential to growth, innovation, and transformation. Consider this statement from Jeff Bezos, founder of Amazon.com, in his 2010 annual shareholder letter: “Technology infuses all of our teams, all of our processes, our decision-making, and our approach to innovation in each of our businesses. It is deeply integrated into everything we do.”
Not every enterprise will be an Amazon, but every enterprise must actively engage IT capabilities to serve its end customers in a meaningful way if it is to thrive in our technology-enabled marketplace. Integrating technologists fully into value stream teams facilitates collaborative learning of IT capabilities, enabling business colleagues to make well informed technology investment (and avoidance) decisions. Business colleagues can, in turn, educate technologists on the drivers of value stream success. This synergistic relationship leverages and extends chronically overburdened IT staff. While business colleagues won’t become technology experts, they will become more savvy, autonomous, and innovative under the guidance of their technology coaches.
With this relationship in mind, let’s consider the three primary value streams of any enterprise: (1) New product and service development, (2) Production and delivery, and (3) Customer service and support. Naturally these three primary value streams are interconnected, but within the context of this article, let’s consider each separately.
In the new product and service development value stream the primary drivers are rapid learning and innovation. IT capabilities play many important roles here. First, IT is integrated into most products and services we deliver these days. In some cases technology is embedded into the product, and in other cases the enterprise provides value-adding services to the customer through web or mobile interfaces to enhance their ability to learn and use the product effectively. Then there are collaborative and knowledge management systems, product lifecycle management, 3D modeling, and a host of other sophisticated applications that support the product development process.
In the production and delivery value stream the driver is primarily operational excellence: Can the organization deliver the product or service to the customer quickly and efficiently? IT plays a significant role here too, enabling efficient order to cash cycles. In some cases, IT capabilities can help to define new production and delivery mechanisms, and even new business models. Amazon is a classic example of this. They didn’t simply seek to improve the efficiency of the traditional retail book supply chain; they completely disrupted it, first by using the internet as a virtual store, then by introducing digital book readers (product development value stream), and most recently, in purchasing a robot manufacturer for nearly a billion dollars to support automated fulfillment operations.
Amazon is not the only company to completely transform an industry; see the story of Tesco, the retailing giant, told by Jim Womack and Dan Jones in Lean Solutions. Similar transformations are underway in many other industries. For example, in the financial services sector, IT has become the new “shop floor.” And strategists in nearly all industries are questioning their fundamental assumptions of value stream design, and the disruptive role internet-enabled commerce plays in production and delivery.
Finally there is the customer service and support value stream, whose primary driver is customer experience, intimacy, and loyalty. This may be where the most dramatic technology advances are taking place. The customer is now in charge and has an information advantage, as they carry their mobile, location-aware devices wherever they go, interacting with the world around them, making informed purchasing decisions in real time. Many companies are now experimenting with social networking applications to augment their customer service operations, to attract and connect with these savvy, always-online customers.
This was the focus of my “virtual voice of the customer” presentation at the LEI Summit. In a world of rapid innovation, customers aren’t always able to describe what they want—the famous example being Henry Ford’s statement, “If I had asked people what they wanted, they would have said ‘faster horses.’” Beyond the traditional voice of the customer techniques, social media listening and big data analysis are two emerging techniques that enable us to listen not just to the customers’ voice, but also to observe their behavior and spot emerging trends.
When asked recently what new technology developments companies should pay attention to, Tadao Saito, Toyota’s Chief Technology Officer said “the analysis of big data (the abundant transactional, behavioral, and sentiment data flowing across the Internet every instant) will become a competitive edge for many organizations.” The voice of the customer may never be the same. While we haven’t replaced the importance of going to the physical gemba and interacting with the customer directly, gemba now includes presence and participation in the virtual environment, where we can listen, observe, and analyze customers and potential customers’ behavior patterns on a much larger and more nuanced scale.
It’s clear that skillful use of IT capabilities has become essential for the lean enterprise to innovate and compete. However, in many enterprises, IT and the business remain separated, both physically and culturally. The practice of integrating value stream teams is essential to bring all stakeholders (including technologists) together to consider the process from a systemic view, to ask questions, to conduct experiments, and to learn collaboratively.
To create integrated business and IT value stream teams we must change our thinking from transient, disconnected projects, to a long-term product and process oriented view. When teams are kept intact over time, they develop an intimate relationship with their customer and their product, developing a sense of teamwork, pride, and collective purpose. The longer product teams stay together the more they learn from each other, which leads to a reduced dependency on specialized technical knowledge, and the bottlenecks it can create. This is the same lesson we learned in lean manufacturing decades ago: when teams form around value streams they share skills, collaborate actively, and balance the workload. As a result the overall value stream flows faster and can be more agile and responsive to changing needs.
I now encourage every business value stream and kaizen team to include a representative from the IT organization (and each IT-focused team to include at least one business team member). Technologists aren’t in the kaizen event because they are expected to create more technology “solutions.” In fact, their intention from the start should be the opposite, with technologists applying their knowledge of the underlying architecture and technology capabilities to help their kaizen and value stream teams first look for process simplification opportunities. This is the principle of “creativity before capital,” which ideally leads to less software intervention and technology investment, less accumulating “technical debt,” and more value. And when technology assistance is needed, the technologist, and the rest of the team, have a far better understanding of how to optimize value for the customer while keeping the system simple and adaptable.
The transition from project and task focus to customer oriented value streams is not easy, but it is worthwhile, and indeed, essential for the enterprise that aspires to be truly Lean. At the Summit, LEI CEO John Shook spoke about the importance of collaborative learning, emphasizing that it’s not just an individual, but also a social act. In the end, lean thinking is about people from all perspectives within the enterprise, gathering in teams, solving problems, learning together, striving for customer value and shared purpose: True North.
In Part Four of this series, we’ll explore how a lean approach to management and governance of these integrated business-IT value streams helps bring value to customers faster.
Links to articles in this series
- Lean Business-IT Integration, Part One: Who Wants to Go Talk to IT About This One?
- Lean Business-IT Integration, Part Two: Obstacles to Value-Stream Transformation
- Lean business-IT integration, Part Three: What is an integrated business-IT Value Stream?
- Lean Business-IT Integration, Part Four: The Lean Learning Leader
- Lean Business-IT Integration, Part Five: Measurement – Finding Our True North
Continue learning about Lean IT with these resources:
- Lean IT Workshop – The Lean IT journey depends on continuously improving people, process, and technology, in that order.
- Download excerpts from the Lean IT book
- Contact Steve Bell