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Lean principles and how they’re applied everywhere

While listening to the BBC World Service, which I tend to do when I work from home, the program Global Business all of a sudden caught my attention when I heard the mention of Lean and the Toyota Manufacturing System. Having studied and applied Lean principles for a while I became interested in the program. The focus of the program was how Lean was being applied to companies in the services industry who produce no physical products to apply quality control to still benefit from applying Lean principles to their way of doing business. The program outlines how companies such as Amazon, GE Moneybank and gem all use Lean principles in order to make more money and help grow their business.

“Taking people seriously costs too much”

The program interviews author of “The machine that changed the world: The story of Lean production” James P. Womack of the Lean Enterprise Institute who explains easily how for instance Home Depot and Wall Mart have disconnected themselves from customers by either off shoring customer services or using temporary unskilled workers instead of full time employees with actual. He goes on to explain how businesses who say “taking people seriously costs too much” are totally missing the point. I will not repeat everything he said, but instead encourage you to listen to the program (see details about this at the end of this post).

Lean customer service

One of the more surprising places that Lean has been applied is in call centers and the program shows how the Northern Ireland call center company gem have grown their business by applying Lean principles to customer service. By treating customers as actual human beings as opposed to treating them as numbers in a queue. Gem employees and executives are all measured on customer satisfaction and not how. They provide value to their clients by providing a feedback loop back letting them know how they can improve their business. Gem work with their clients

Steven Perry (I apologize if I spelled this wrong) of Transform also explains how they where hired by the government of Northern Ireland to try prevent jobs being off-shored and making their works important. By applying Lean principles to call-center companies in Northern Ireland they are securing jobs and making companies grow. One amazing example is a call-center handling technical support for an airlines company which keeps getting complaints about the email system not working properly. When contacting the CEO of the company the call-center got a reply that it was too expensive to upgrade the email system and that people would had to live with a few quirks in the email system. The call-center company then looked at the emails and discovered that the emails contained shift rosters, lists of passengers transferring from the airline to other airline and details about parts not arriving on time. When providing these root causes to the CEO it was an obvious decision to upgrade the email system.
The program also outlines how Lean principles when applied provides great value to companies providing services and how they transform themselves into management consulting companies and not just simple service companies.

Lean banking?

GE Money Bank measures customer satisfaction by using a simple survey with 5-6 customers and are not linked to change, growth or volume. Instead they measure customer satisfaction using net promoter score, which means asking customers, “would you recommend us/our product to your friends?”

Linking this to the Lean philosophy GE Moneybank sees an answer of “yes, I would recommend your product” as a much better indication for future growth. Their business executives are all measured and paid according to these scores and this enables them to execute their business based on Lean principles and by doing this making billions of dollars.

Lean in the software industry

1) Lean does not only apply to companies manufacturing products

2) Lean is gaining momentum in most areas of business and will become the standard way of doing business also in the software industry.

The software industry have started on it’s path towards Lean by starting to apply agile principles to software development. But in order to make the industry more mature and help customers get better value for their investments in information technology I am certain that our industry too needs to apply these principles in order to everyone in the entire business to focus upon the customer. Agile only does this for a certain part of an organization whereas Lean has principles which more easily transcends into the management sphere because of it’s roots in the Toyota Manufacturing System.

Iterate “leaning” the way in Norway

(I sincerely apologize for the tabloid heading of this section, but I just could not resist the temptation and again I am sorry) Lean has not become very relevant in Norway yet and we are still getting used to the idea of applying Scrum and agile methods. However there is a Norwegian consulting company called Iterate who both apply Lean to their clients, but also follow the same Lean principles to the way they run their own business. When talking with them you learn how Lean also can be applied to a company which makes money by billing hours.

I had the pleasure of being in contact with Iterate and it really is quite fascinating to learn how they apply Lean to a consulting company. By focusing internally on making sure their employees are treated as the knowledge workers they are and not cash-cows and by doing this providing their customers with excellent services by applying the same principles. They do not have what I call the “Accenture focus”, which means focusing upon getting the most number of hours squeezed out of any client, but instead treat the customer the same way as their own employees. Just like with call centers in Northern Ireland, Iterate of Norway applies Lean principles in the the service industry and they both do it with success.