If you are like me, you were raised using a very effective approach to lean that starts with identifying and mapping your value streams, identifying problems, then systematically improving them. The improvements are anchored in the concept of value, or “what the customer is willing to pay for.” Do less nonvalue-added stuff and more value-added stuff. Using this approach, your organization will identify and realize meaningful improvements.
Often this work starts in areas where the work is easy to see, the distribution center or the clinic, for example. Then it spreads to the upstream areas, with perhaps less clear results.
Transformation as a Design Problem
In the Lean Product and Process Development (LPPD) world, we’ve known for decades that the decisions made when a new product or process is developed lock in around 70% of the costs, as well as quality and delivery capabilities. This varies by industry, but the general concept holds true. Now, let’s go back to the idea of improvements being made with value as a grounding concept. In the traditional approach, value is both grounding, but also pre-defined. When you approach the improvement as a “design problem to be solved,” however, you actually take a step back and define the value itself from the perspective of the customer. This is important because there is a significant, untapped benefit to deeply understanding what value SHOULD BE, not what value IS CURRENTLY.
Here’s an example.
What if your organization wants to transform Human Resources (HR)?
1. The first step would be to identify pre-development enablers. These are broader HR business considerations, such as technology trends that will impact workforce skills needs, company expansion strategies, and regional expertise. Essentially, we need context as we enter the study period, and this will vary area by area.
2. Within this study period, the Transformation Lead (TL) assigned to define and steer this transformation spends time in the HR “gemba,” the place where the value-creating work happens. This means talking with stakeholders, observing HR processes in action and their impact, and perhaps even mapping some of them to understand how work is actually getting done. Simultaneously, they need to develop and socialize a concept paper that will ultimately articulate the value HR needs to provide to the rest of the organization and how that value will be achieved.
Experiments also form a critical part of the study period. Perhaps one of the key workflows HR will provide involves succession planning. The team should consider several alternative approaches to succession planning. The TL, along with key stakeholders, may run a series of trials to judge the performance of the alternatives, ultimately working towards an informed decision on the best approach for the organization to embrace for succession planning. This same work would be repeated for the key HR value streams, and the TL would continue to keep the concept paper updated. The concept paper should include performance measures for the future state value streams and a plan for executing this vision.
3. Once this concept paper is complete, all key stakeholders sign off, committing to making this vision a reality. As my colleague and fellow LPPD coach John Drogosz succinctly put it recently, “At the end of the study phase, the Concept Paper is frozen along with the product concept. At this point, it becomes a contract between the team and the organization. The team is committing to deliver the value within the scope defined in the Concept Paper, and the organization is committing to provide the needed support.”
4. and 5. With a vision, a plan, and performance measures, now the focus switches to execution. The details of each supporting value stream must now be defined, along with the processes used to deliver the value. In our example, what exactly is succession planning? Who will be involved at each level? What are the roles? What is the cadence of involvement? What inputs and tools are needed to support this value stream? These are just a few high-level questions that the TL needs to get the stakeholders to answer, all while staying on schedule, fulfilling the intent of each milestone, and creating a process that meets the performance targets.
6. and 7. As the value stream begins to take shape, so does a strategy on how we will launch and scale up the value stream. Yet before the actual launch, the team needs to run pilots to test key aspects of the new value stream. So rather than just declare the new succession planning process, followed by rollout training, and then the discovery of problems, we might have a manager test a particular tool with her staff while someone from HR takes notes on what is working, what isn’t, and what is causing confusion. It’s so much easier to address problems before launch than after a new process is rolled out.
Once these key components have been assessed, we may decide to pilot the whole process end-to-end, on a single career path. This ultimately provides valuable insights which enable a more successful launch and scale-up of the new way of working.
To summarize:
- There exist some pre-development enablers, then we
- Enter a study period to deeply understand our customer and the value we provide while capturing our thinking (and what we learn) in an aligning document called a concept paper
- Once the vision is complete, along with the plan to execute it, the aligned stakeholders sign off on the concept paper
- Then we enter an execution phase to create the detailed design, implement our ability to deliver the value, launch the newly created value stream, and scale it up… all while continuously reflecting and learning.
This is what it looks like to approach a department’s transformation as a design problem unto itself.
Lean Transformation as a Design Problem, Traverse City 2019
The idea of enterprise transformation as a design problem appears in the book Designing the Future by LEI Senior Advisor Jim Morgan and Jeffrey Liker:
“From an LPPD perspective, an organizational transformation is essentially a design challenge. But instead of designing and building a new smartphone or airplane, your challenge is to design and create a better product and process development system. We believe this is a crucial insight into the nature of organizational transformation because, like a new product program, you are starting with so many unknowns in a complex and dynamic, human centric environment and your goal is to create something that delivers better value than any previous versions.”
This story captured in the book originated in a conversation between Jim and Alan Mulally, former CEO at Ford, years earlier. The key idea to remember here: we design a better organization by using the same thinking we use to design better products and processes.
How this concept translates to your problem may not be immediately obvious. In broad strokes, all problem-solving, small or big, has the same key steps:
- We have some foundational knowledge and experience, then we will
- Grasp the situation
- Understand what is keeping us from reaching good
- Identify what we’re going to do to address those barriers
- Develop a plan to implement the ideas
- Execute the plan
- Reflect, adjust, and learn based on the results
And throughout this entire process, we adjust for the interdependencies among the people involved, the processes we are impacting, and the tools being used by the people to make the process operate. Again, broad strokes here!
Sounds good, right? But why change in the first place? Siloed interpretations of value distract the organization from creating real value for the customer.
Take a look at this photo of an operator’s work station. Yes, it is purposely blurry to protect the innocent, but what you are looking at are a set of quality notices and alerts. The expectation is that the operator (who is producing a part every 25 seconds) also has to watch out for eight pages of possible defects beyond the basic work instruction for the job position. In this case, the quality organization believes its value to be inspecting-in quality. On top of this, we have an HR organization that considers their value to be enforcing training hour goals set for each working level. Finally, let’s add a procurement organization that believes their value is reducing purchasing spend. It’s like that classic image of an unsynchronized crew rowing team. Everyone thinks they are adding value, but most people/areas are distracting from true value creation.
You can’t build a reputation on what you are going to do.
-Henry Ford
Getting started
If you want to approach enterprise transformation as a design problem, where to start is situational, but here are some ideas to consider:
- Go to the gemba closest to your customer and look for signs (sometimes literal signs) of an organization that is impeding value creation. This could be the factory, the clinic, or the construction site. Regardless, the gemba reflects all the upstream processes that feed it.
- Find an organization that is willing! Sometimes it’s more important to create an example than to change the most strategic area.
- Select an area that is asking for a large investment in capital or people. Before committing to that investment, it is critically important to verify that it is in support of creating value.
And remember the LPPD principle, “Development is a team sport.” This principle quietly underlies every LPPD success story. Development isn’t just an engineering and operations thing; to design a successful value stream (another LPPD guiding principle), the enterprise needs to be part of the development process. HR, Finance, Legal, Supply Chain… they all need to contribute. If they were to do so today, your organization would be much better off. But if these same functions were redesigned to focus on their value-driven purposes as well, the results would be truly transformative.
This is what we mean when we talk about enterprise transformation as a design problem.
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