Installing Lean strategies for a competitive edge

In a dynamic global marketplace, the aim isn’t just to survive but to thrive and lead. The fact is, if we don’t set the pace, we won’t survive for long or, at best, survive as a niche player.

Operational efficiency is a cornerstone for organizations and professionals striving for this goal. In the context of business competitiveness, efficiency is more than just reducing excess; it’s about consistently delivering value promptly. Lean strategies offer a framework to achieve this, helping businesses remain competitive and adaptive.

Prioritizing value flows

In a Lean-Agile paradigm, the focus shifts to ensuring the optimization of value delivered through our products and services, as defined by our customers. This optimization extends throughout their economic lifecycles, transcending the conventional, often fragmented, project-based approach. Instead of fits and starts common in project-centric processes, Lean-Agile emphasizes a continuous flow, seamlessly integrating operations, development, and supporting value streams.

In the previous section, Streamlining value delivery, and specifically within the Classifying value streams subsection, we introduced three standard value stream types: operational, development, and support. We are going add a fourth value stream type, called 'product'. After all, both Lean and Agile emphasize that everything we do, indeed our very livelihoods, depend on us meeting our customers’ needs via our products and services.

To get a clearer picture of this, let’s take a look at Figure 3.8:

Figure 3.8 – End-to-end customer value stream flows

Figure 3.8 illustrates a product value stream that defines the end-to-end flow of work required to take a concept and incrementally deliver new value. Feeding the product value stream are any number of operational and development value streams. Business enabling value streams (often called support value streams) are not connected to the product value stream. However, they are needed to sustain the business (e.g., HR, Legal, Finance, Marketing).

So, why did we add the product value stream? Well, the classic definition of a value stream is an end-to-end set of activities from concept through delivery that collaboratively transforms inputs into outputs, ultimately providing value to the customer. That’s a mouthful, but basically, it implies that a value stream encompasses virtually everything a company does to deliver value to its customers through its products and services.

However, the problem with that definition is that it doesn’t make it easy to break work down into bite-size chunks that make sense in terms of how we need to run our businesses. To overcome this problem, various thought leaders began to organize value streams around operations, development, and support (business-enabling) functions. But, in doing so, we’ve lost the notion that everything we do must support the customers who fund our work. Again, they are the reason our organizations can exist.

In a large, multi-billion-dollar organization, there are hundreds, if not thousands, of potential value streams. However, the number of revenue generating value streams is limited to the primary products and services they offer to their customers.

In the following subsection, we’ll take a closer look at many of the critical activities necessary to deliver value to our customers, from concept through delivery. Specifically, we will explore why there are so many potential value streams and how to organize them.

Demystifying organizational value streams

First, all organizations are driven to support a specific market, types of customer, and their needs. Organizational focus and alignment are critical to success and require a broad spectrum of work to deliver new increments of customer-centric value constantly.

Looking across an iterative product life cycle, we start with activities to define corporate, customer, product, and portfolio investment strategies. Other activities are needed to conduct market and product research. We often need to develop partnerships and supply chains to support our manufacturing, delivery, and support services. We require activities to promote and sell our products. Plus, we have activities to design, develop, test, and deploy our new or enhanced products and services. We have other activities to support the continuous production of our goods and services. And we still are not done because we need other activities to manage fulfillment and provide customer support.

Finally, it’s essential to know that customer facing value streams must also support product evolutions across multiple development lifecycles. So, all of the activities noted in the previous paragraph are iterative to deliver new value incrementally. But hold on to that thought for now. We’ll come back to it in Chapter 9, Defining a Business Agility System for the Enterprise (BASE).

For now, let's et’s look closer at this paradigm shift that has permeated virtually every industry.

The Lean paradigm – where efficiency meets value

Historically, Lean was rooted in manufacturing, aiming to reduce waste and streamline operations. Over time, its principles have permeated diverse sectors, from aerospace, banking and financial services, construction, consumer electronics, education, food and beverage, healthcare, information technology, pharmaceuticals, the public sector and government, and retail.

At its core, Lean is more than just a methodology; it’s a mindset centered on value delivery. By eliminating non-value-adding processes (or waste) and focusing on what genuinely adds value from a customer’s perspective, Lean ensures that every organizational effort amplifies customer satisfaction.

For instance, in an IT services company, if client feedback reveals that system stability and security are their top priorities over the latest innovative features, a Lean-oriented approach would prioritize efforts on rigorous testing and robust security protocols, which might require new tools, test scripts, and automation. This ensures the delivery of a product that aligns with the client’s primary needs, reducing potential system vulnerabilities and costly post-launch fixes.

With this paradigm shift comes a competitive advantage. Let’s see why.

Crafting competitive advantages with Lean

Competition in business isn’t just about who offers a particular service or product; it’s about who offers it best, quickest, and in alignment with customer expectations. Leveraging Lean methodologies can be your cornerstone for achieving this competitive advantage through these four areas:

1. Customer-centricity: By focusing on value from a customer’s vantage point, Lean ensures organizations stay attuned to changing market demands, swiftly adapting and delivering what the customer genuinely wants.
2. Optimized operations: Lean encourages streamlined operations, reducing cycle times, and ensuring swifter market responsiveness. In sectors such as retail or tech, this can mean the difference between market leadership and obsolescence.
3. Cost-efficiency: By eliminating wasteful processes, Lean not only ensures time efficiencies but also drives cost savings. These savings can be strategically reinvested for innovation or passed on to customers, further enhancing competitiveness.
4. Catalyst for innovation: Lean isn’t just about doing things right; it’s about doing the right things. By freeing up resources from non-value-adding tasks, organizations can invest more in R&D, driving innovation and staying ahead of market curves.

Lean isn’t just an operational tool; it’s a strategic asset. By understanding and absorbing how Lean methodologies bolster competitive advantage, you can position yourself as an invaluable asset to your organization.

In roles ranging from operational management to strategic planning, the ability to deploy Lean-driven solutions that exceed customer expectations can set you apart. Imagine leading a project that not only meets its targets but does so ahead of time, on budget, and with innovations that the market hasn’t even articulated yet. That’s the prowess Lean brings to the table.

Furthermore, as businesses globally embrace the Lean mindset, professionals fluent in its principles and applications will find themselves in demand, transitioning from mere role occupants to strategic influencers. The beauty of Lean is that its principles are universal. Whether you’re in healthcare, finance, tech, or manufacturing, Lean’s focus on efficient value delivery remains a constant competitive differentiator.

Paving the way for market leadership

This concludes our discussion on Lean strategies for a competitive edge. We have learned that, in today’s age, the market leaders of tomorrow are being defined by their ability to deliver unmatched value efficiently today. Lean strategies offer the blueprint to achieve this. By aligning organizational processes with customer value, optimizing operations, and continuously innovating, Lean ensures that businesses aren’t just running the race but leading it.

As professionals, embracing Lean’s tenets equips you with a potent combination of strategic foresight and operational excellence. It’s a toolkit that ensures you not only contribute to your organization’s competitive prowess but also carve a niche for yourself in a marketplace that values efficiency, innovation, and value above all.

Now, let’s move on to discuss how Lean drives continuous improvement.