Systems Thinking and Lean underpins the business strategy for change by addressing three domains in parallel:

• Continually improving core business processes.

• Aligning resources to the ‘few critical’ breakthrough change initiatives.

• Applying Lean within the Business Management System.

Transitioning to a Lean Enterprise is not a project; it is a continual process of enterprise cultural change that becomes a new way of working for every employee, on all processes every day.

Systems Thinking

Systems Thinking helps us understand the complex interaction between these three domains. Stable core operational processes provide the foundation for breakthrough change. Breakthrough change initiative often dramatically transform operational processes and it is the continuous improvement that sustains the change and drives further business value. Continuous Process improvement and Breakthrough Change have to be balanced by the Business Management System. The business management system needs to provide the strategic direction and leadership of change and has to provide the cultural environment that supports both Continuous Improvement & Breakthrough Change. Additionally, in today’s era, embracing digital advancements becomes imperative to stay competitive and agile in the market.

Core Processes and Continuous Improvement

Implementing Lean to the core business processes or Value Streams is driving performance into the engine room of the business. Lean provides a set of tools and ways of working that form a systematic way of continuously eliminating waste from operational processes and this is done by everyone every day as part of how they work. Tools such as Value Stream Mapping, Voice of Customer, Root cause analysis, Visual Management all provide a proven basis for Continuous Process Improvement.

Breakthrough Change

Successful Businesses identify opportunities that will deliver breakthrough business performance and focus their resources on delivering these ‘few key critical’ change initiatives. These initiatives frequently bring about dramatic change in the operational processes of the business.  They are critical to the businesses competitive positioning and will usually require cross functional teams to participate together to deliver the required change. They are the class of change that should deliver a step change in performance and they are typically very tough to execute.

Selecting breakthrough change initiatives is critical. A business can usually only manage two or three of these at any one point in time, also, it can typically take 12 to 18 months to identify, mobilise, execute and then sustain breakthrough change. This means that businesses have to be really good at identifying and selecting the right breakthrough initiatives and then mobilising their resources to deliver the Breakthrough in Performance.

Lean Business Management Systems

All businesses have a set of processes that collectively represent the Business Management System. These typically include; financial and operational reporting, budgeting, forecasting and communications. Strategic Planning and the allocation of resources to drive the breakthrough change initiatives is one or the most important. Systems thinking can help identify the best breakthrough initiatives and Lean provides a proven policy deployment process to align resources to these initiatives and track the delivery of the change.

All management processes are amenable to all the lean practices of standardisation and continuous Improvement. There is a strong case for management teams to apply Lean practices to the management processes. This not only improves the business performance it becomes a very visible demonstration of management commitment to the change process.

Transition to Lean Enterprise

There are some common characteristics of Lean transition that are fundamental and can serve as a guide.

• There is no ‘quick fix’ change,
• The root of sustainable change is based on understanding and doing
• Management Leadership and commitment is essential
• Lean and Systems thinking needs to be the enterprise strategy for change
• The pilots need to demonstrate delivery of value to customers, owners and staff.

Organisations need to be able to identify their own ‘pockets of excellence’. It is important to discover these as they are the very best building blocks for the future change. Discovering them however is not always easy. The change process need to start with enquiry and this means executives need to know ‘what good looks like’ before they can enquire and successfully discover the pockets of excellence.

Enquiry & Discovery for Core Process Continuous Improvement

Physically going and seeing the place where the work is done is fundamental to the enquiry of the core work that operate within a business. There are some questions that can be asked that give an indication as to the state of the core processes:

• Is the work place clean and tidy
• Is safety being visibly given the right profile
• Are there markings showing paths and where things are kept
• Do the level of inventory look right and are there items of inventory collecting dust.
• Find if daily meetings are being held and attend some of them.
• Are the meetings short and well run and does the meeting focus on performance, variance and corrective actions.

Enquiry & Discovery for Breakthrough Change

There are some tell-tale signs when an organisation isn’t really managing its change agenda to prioritise Breakthrough Change. Common symptoms include:

• The list of important projects is substantial and there is no agreement on the priorities.
• Many projects have just been dropped or fizzled away and at the same time there is an even longer list of projects that people think should be done
• The projects are run by functional managers as opposed to cross functional teams.
• The organisation complains about “Project and Initiative overload”
• A PMO has been formed to “coordinate the large project portfolio”
• The projects have many dependencies of other functions and there is a poor record of cooperating.
• The projects are typically late on delivery
• The benefits are generally less than promised

These organisational characteristics are indicators that the strategic planning process may not have been deep enough to tease out the few key ‘Must Do’ Breakthrough Initiatives. They can also be a reflection of a planning process that does not engage enough of the business management and associates in the decision making. The result is that the organisation cannot focus on the few key priorities that will improve the business performance.

Enquiry & Discovery for Business Management System

Some common symptoms of waste within Business management Processes:

• Considerable time is wasted preparing large packs of information as part of the reporting and reviewing process.
• A disproportionate amount of management time is spent analysing and explaining the reasons for the historic performance of the business.
• Head office functions are constantly asking business units for information and data on specific issues.
• Meetings are poorly planned, weak on preparation and frequently waste time.
• There is no systematic focus on improving business processes.