The first step to success is to understand and appreciate the nature of transactional processes. Manufacturing, in which many Lean and general process improvement techniques evolved, represents a declining percentage of the end-to-end economic and strategic process activities in organizations. Sure, manufacturing is still part of the value chain, but a very small component in terms of the fully loaded process costs of doing business globally. Not a criticism but a fact: the historical focus of Lean has been on manufacturing and tools. Most of the books and existing body of knowledge is focused on manufacturing and tools. Education has been focused on tools
. Lean has been practiced as a generic recipe of tools for improving manufacturing
. This mode of Lean has produced dramatic improvements in many manufacturing and assembly environments. However, many organizations find themselves in a diminishing returns mode with their allusive going through the motions Lean manufacturing programs that worked so well in the past. What happened? The competitive leverage of process has transcended away from physical content and more towards human, knowledge, and technology content. Transactional process improvement presents a whole new set of complexities and challenges that extend far beyond traditional Lean manufacturing thinking and practice.
Many organizations have morphed themselves from geographically and country-specific physical sites into a global network of complex, knowledge-based transactional processes. Success is highly dependent upon a paradigm shift to nimble and efficient strategy and opportunity alignment processes, supply chain processes, time-to-market processes, cash-to-cash processes, engineering processes, customer service processes, sales and marketing processes, and many other “people plus technology” processes in organizations. As the professional knowledge worker and technology content increases, the complexity of transactional processes increases, the degree of difficulty of improvement and change increases, and the usefulness of Lean manufacturing toolset thinking decreases.
By comparison, Lean manufacturing is simple. If you have worked in enough organizations, there are more similarities than differences in manufacturing across different industries. Lean manufacturing is based on a commoditized, straight forward set of standard practices and approaches to improvement. Transactional processes are much more complicated because of their interconnected, convoluted, and cross-enterprise nature, lack of standardization, unsighted activities, velocity, political interchanges, and of course the human element of originality, professional judgments, and workarounds in daily operations. So why has Lean failed to deliver in these strategic and mission-critical business processes? Here are a few major detractors to success:
Many uninitiated and well intentioned Lean practitioners view Lean as a standard toolset vs. an open mindset by their actions. Consequently, many of the Lean tools that produced success on the production floor were ported over to the human-dependent transactional processes with little (and often negative) results. “5Sing” the entire office (including bathrooms) or creating a pull system to replenish Jello® to a hospital floor or hanging up symbolic A3 storyboards in an engineering department might be interesting but it does not improve much of anything.
Transactional Lean initiatives cannot rely upon normal senses to identify issues and new opportunities for improvement that is possible on the production floor. Transactional process opportunities are hidden in the human and information architectures of organizations. One cannot see an IT transaction or a human bottleneck, hear a bad decision or sniff end-of-month G/L adjustments. The process of readily defining and measuring defects and root causes is highly complex . . . and often put off. In the absence of hard data and facts, transactional processes are managed via opinions, perceptions, cursory explanations, and political deflections that lead to quick symptomatic responses;
Lean practitioners have relied on a fixed set of Lean tools in the transactional process space. For example, many organizations have spent months conducting blind value stream mapping exercises of the entire company with no purpose or specific problem in mind. The hard truth is that these naive efforts often lead to a dead end of “now what do we do,” and does not serve much use other than a non-actionable, out-of-date reference covering a conference room wall.
There is a fact about transactional processes that is proven time and time again due to the human factor. There are (at least) three versions of every transactional process: how it was designed to work, how it has been documented to work, and all the variations of how it actually works in practice. Consensus on which version is correct does not exist; all versions may be incorrect, and each is open to scrutiny and improvement. Failure to flush this out through the right business process expertise and data and transaction-driven analytics results in the failure of improvement.
In some situations it is a leadership introduction and commitment issue of allowing Lean into the professional and knowledge worker domain, but preventing practitioners from tackling the things that matter the most to the business. In this world of egos and perceived power, functional authorities, and political imagery, improvement can be viewed as a challenge on professional judgment or negative reflection on performance. Many engrossed executives, managers, and highly skilled professionals are allowed to skirt Lean altogether and become conveniently exempt from improvement.
Transactional process improvement requires a much deeper view of Lean thinking, approach, analysis, information, and measurement systems. It requires a broader blend of improvement thinking, methodologies, and technologies. In the absence of a proactive, well planned and executed transactional improvement effort, organizations cannot manage and prevent problems. Instead, they are forced into a mode of detecting and reacting to problems after the fact – and that is too late. This is not acceptable, and organizations should not have to put up with these wastes because they are assignable and correctable. It requires putting the Lean keys down for a minute and rethinking the journey with the right competencies, resources, and approach.