Why lean thinking is the engine of a digital transformation

In recent months, I have been lucky enough to work on both sides of a digital environment: on one hand, I worked with leaders of large IT organizations trying to find a way to better serve their customers; on the other, with small companies run by young digital experts.

These two experiences showed me many characteristics of a digital transformation that, in my opinion, have been overlooked in current debates. Specifically, I am now convinced that lean thinking can make a significant contribution to companies trying to find a place in the digital world.

But let's take one step at a time and start with the problem to be solved.

WHAT DOES “DIGITAL” MEAN IN YOUR COMPANY?

In just a few years, IT has completely invaded our daily lives. Companies have had to find smart ways to adapt and have started using new technologies to offer customers an even better experience. Think of Uber, for example: today, you order a car in 20 seconds, and it will probably arrive in less than five minutes. A decade ago, this was unimaginable.

At the same time, technology is radically changing the way customers interact with companies. First, customers now take complete control - they decide what they want, where and when they want it, and how they want products or services to be delivered - and it is no longer up to organizations to “push” products and services. It is customers who pull the product and service they need, when they need it.

Second, customer expectations are increasingly high. The service a company provides must be simple, cost-effective, instant, transparent and perfectly tailored to their specific needs. And you cannot ignore these demands, because if you do, they will use social media to voice their complaints.

The main consequence of this momentous change is that IT now has a new role: it is no longer a support function, but a major communication channel through which customers interact with your services.

Organizations need to better integrate the IT function with the rest of their processes in order to become more competitive in the digital world, and they need to learn to do this quickly, because new competitors are always in their path - hundreds of innovative digital startups are born every day.

THE COMMON REACTION

There is a pattern companies tend to follow when they try to adapt to the new digital world: they build a new app and put it on sale in the App Store, often only to see it deleted by users shortly afterwards.

The poor performance of their apps usually convinces organizations that their processes also need to change, which usually results in the adoption of agile methodologies and the use of modern technologies such as cloud computing and big data.

The new processes and technologies introduced, however, rarely live up to expectations. After the initial period of excitement, product innovation and the company's processes do not get any faster, quality problems continue to dominate the service provided, and a few months later people are already starting to wonder what the next solution will be.

The reason this happens is that these companies are trying to embrace a new way of thinking and survive in the digital world using the same old approach (the one that made them obsolete in the first place, you might add). Are we not delivering as expected? Just change the tools we use and the processes we run!

However, that is not how modern digital companies think.

THE ANSWER? YOUR PEOPLE

Let's use Google as an example.

The founders say that when they started, they rejected the traditional management approach and decided to start from two basic principles:

• Focus on the user - If you have millions of satisfied users, everything else will follow naturally.
• Hire smart people and give them freedom - Freedom to experiment, to look for solutions, to satisfy customers, etc.

And it is now clear that what is missing in most companies today is that critical second item: people.

Google gives us a good description of the kind of professional they define as “smart creatives”: someone who would rather get their hands dirty than spend many hours in a meeting room; someone who loves users and technologies; someone who is able to make things happen, but who is also analytical and understands the business side of things.

The most important ingredient in the digital transformation is having this kind of person on your side, but be careful… they are not easy to find. And there is more. Suppose you find a few… how long do you think they will stay if you force your tools and processes on them?

That is why it is important to start with what you have: the key is to try to turn everyone in your organization into “smart creatives”. And that is exactly where lean thinking can help.

WHY LEAN IS THE ANSWER

Lean teaches us that we need to develop our people before we develop our products.

The first step in this direction is to set aside the old model of a manager handing the solution (tools and processes) to their team and expecting them to comply.

In fact, lean provides a new approach to management that seeks to develop and nurture creativity and is based on a set of specific actions:

• Communicate your vision to your people - What do you want for users? How do you create value for them? What will make your users smile?
• Set clear goals - This can mean many things, from improving customer satisfaction to reducing lead time, the number of defects or the volume of requests sent to the help desk.
• Let problems surface - Make sure customers' problems are identified and analyzed, and select the problems to be solved one by one. You do not need fancy tools; you just need to listen to your customers.
• Give individuals the power and the ability to solve problems - Coach your people, teach them how to use the plan-do-check-act (PDCA) approach to solve problems immediately. The goal is to get individuals to take ownership of the problem, using their minds and their hearts to solve it. Meet your users and build a relationship with them, understand their problems, gather facts, dig down to the technical root causes and continuously improve your services.

We see this in every lean transformation: this is the only approach that can turn people into “smart creatives” and develop a culture of continuous, incremental improvement. And what do digital companies rely on if not people who are constantly looking for solutions to the customer's problems?

AN EXAMPLE FROM THE GEMBA

The CIO of a large organization decided to make lean one of the pillars of his company's digital transformation. He was obsessed with customer satisfaction and asked his employees to try to understand all the problems users encountered and write them down.

Among his (internal) customers were many employees from one of his branches complaining about various IT-related problems. A branch manager, for example, was reporting that every week he received an email saying that many of his archived PDF documents were incorrect. He therefore had to leave his office, go downstairs, look for each of the documents and compare them with the physical versions, just to make sure everything was in fact correct. It was a huge waste of time, he complained.

Following the CIO's request, the IT manager who was responsible for the archiving system looked at the problem in a lean way. He started by leaving the building and meeting the user. He tried to understand his position, but also the kind of business impact the problem could have.

Looking at the technical reasons why the problem was occurring, he discovered that many of the documents were rejected because the scanner was producing a low-quality image. He dug deeper and found that this was due to a maintenance failure on the large printer used in the office. Digging even deeper, he realized that this happened because the maintenance contract for that printer did not include the scanner.

Following the root cause analysis, the IT manager fixed the problem and then tried to find out who else in the company would benefit from this improvement. The branch manager said it was the first time in 20 years that someone from IT had solved something for him, which clearly made the IT manager very happy.

What is important here is not so much the fact that the scanning problem was solved, but that the IT professional took a completely different approach to dealing with the problem: he had become more “useful to the user”, wanted to understand the problem's impact on the business, formulated and tested hypotheses, dug into technical problems, made connections between them and so on.

THE ENGINE OF A DIGITAL TRANSFORMATION

As the example above proved, problem solving is very effective when we teach the people in our companies to “become creative” (or, rather, smart creatives). If your business intends to survive and succeed in the digital world, you must have an environment in which people are constantly using their creativity to solve problems.

The main driver of a digital transformation is not an app, the use of agile methodology or big data, but the ability to listen to and solve every problem your users encounter.

This is a five-step process that you can start adopting today:

1. Define user-focused improvement indicators.
2. Gather all customer feedback.
3. Tackle problems one by one.
4. Coach every individual to solve problems immediately.
5. Watch your people grow and your customer smile.

Do this every day, and you will enable your company to enter the digital world with confidence.