From Keen to Lean

During difficult times within business, the general reaction can be one of consolidation and cost cutting. All too often this results in a self perpetuating cost cutting spiral which can be detrimental to the long-term future of the business.

“Unfortunately,we come across this behaviour pattern all too often,” John Quirke, director of S A Partners Ireland says. “Companies often focus upon cost and budget cuts in the first instance,which can constrain progress and de-motivate staff. As a result, performance falls further, sales suffer and the business shrinks.”

Lean thinking provides businesses with the tools and thinking to approach these challenges differently. It is a mistake to see lean as solely providing the tools to identify opportunities for cost savings. At the very core of lean thinking is a focus on business growth and how to understand and serve customers more effectively.

Through the thoughtful and contingent application of Professor Peter Hines’ Lean Business Model, businesses are not only realising additional capacity, eliminating wastes and inefficiencies through increased customer focus, they are also identifying ways of filling this capacity and achieving profitable growth. This 2X to 10X growth is based on the realisation of operational capacity and a focus on true customer value.

So how can lean thinking grow your business? Before we answer that, here are some questions for you to consider:

• How many new products or services have you delivered to the market in the last two years?
• Of this, how many will provide sustained growth for your business?
• Who decides what new products or services you develop?
• Are you measuring customer performance through service and delivery failures or value-add activity?
• Who is responsible for business development with your key accounts and do they have whole business view of what they offer to the customer?
• How do you link what your customers’ value with your overall development strategy for the business?
• If customer value has been integrated into strategy development, how effectively is this understood by the people across your business?

S A Partners work with many companies across many sectors. According to Quirke, “The first thing a company needs to do is stabilise what they have across the entire business and not just operations. This starts with understanding customer value, and also understanding what is a valuable customer?”

Think about that for a minute – the core of any business should be delivering exceptional value to the right customer. Within this, businesses need to accept that not all customers are friends.

Remember, you are implementing lean thinking to increase your bottom line profitability and to growyour business. It is all too easy to create an unsustainable business ‘Frankenstein’ around the old saying ‘the customer is always right’. Yes, customers can be right and yes small customers can become big customers, but are we focusing our attention, and that of the business, on the right customers?

And this brings us back to the word ‘value’. Whatever we do in the business, it should offer value. However, how often do we find ourselves continually performing non-value added tasks? Or even worse, do you realise what the non-value added tasks are in your business?

By understanding all these non-value added activities, you can then plan to eradicate and mitigate them. Straight away you are increasing your capacity within the business while increasing profits. However, a philosophy of lean for growth quickly focuses the attention of the business on how to fill this capacity. This forces the business to ponder the questions at the beginning of this article and to develop a process for identifying, understanding and delivering additional customer value.

S A Partners coach businesses to enable their staff to discover hidden capacity and fill in with additional customer demand. It takes time and it is not easy. “If it’s easy then you’re not doing lean,” says Quirke. “Currently in Ireland, we have a unique opportunity to develop Irish businesses and position them for profitable growth.

“Enterprise Ireland through their enlightened lean business offer is supporting companies with significant funding and technical support to implement lean thinking and this programme is delivering tangible results for Ireland Inc.” Quirke adds: “In Ireland we have a unique passion for what we do and how we work together in business.We are innovative in the way we solve problems. We are good with people and social skills and develop good relationships with our customers both nationally and internationally – this is a solid foundation for successful lean programmes.”

Lean thinking is successfully driving profitability in many Irish companies today. If you have not looked into the funding available from Enterprise Ireland then your competitor is probably ahead of you in the queue. Lean thinking is about business growth, and right now in Ireland, we need lots of that. Remember: customers make jobs.