Is Lean still relevant in the Digital Age?

Is lean still relevant in the digital age
Clever companies are using Lean concepts and Digital Process Automation to accelerate real results.

The Digital Age is upon us, with examples of transformation in almost every industry. According to IDC, by 2021, companies around the world are expected to spend more than $2.1 trillion on digital transformation, yet research consistently shows that nearly 70% of all transformation efforts fail to achieve their stated goals. The stakes have never been higher.

How can you help your company navigate the challenges of a digital world, achieve operational excellence, and avoid becoming yet another statistic? 

New technologies provide reach and capability, and allow startups with few resources to create and bring innovative products and services to market faster than ever before.  Large companies no longer enjoy barriers to entry formerly afforded by size and scale. In fact, many established companies are challenged by both legacy costs, business, and operating models.

Many have questioned the effectiveness and even the relevance of Lean in the digital age. Interestingly, the challenges and opportunities presented by digital provide an excellent case for the power of Lean principles. Eric Ries’ 2011 book, “The Lean Startup,” gives an excellent example of the application of Lean principles in the digital age. Ries defines the operational model of new digital business as one with minimal required investment and maximum speed to value via rapid cycles of experimentation and validation. While critics may argue “The Lean Startup” oversimplifies the complexity typical in large enterprises, the book provides an excellent illustration of Lean principles at work in a contemporary setting. 

At its core, Lean is a set of value principles that guide enterprise initiatives.

Among the common misconceptions is the meaning of “Lean.” Lean is not about eliminating waste, cutting costs, and reducing overhead. Lean is also not about getting “a little better each day.”  Blasphemy, right? Wrong. These are all features present in many high-performance cultures, but they are not the primary aim.

Lean thinking is best summarized in the Shingo Model.

Source: Adapted from the Shingo Model

The Shingo Model provides 10 guiding principles to anchor initiatives and strive toward ideal results and enterprise excellence. The model even provides a framework to provide context to the relationship of principles, systems, tools, and results.

The term “Lean” was first used to describe the Toyota Production System (TPS), but Lean principles have been applied in thousands of companies across every industry. They engage employees to make improvements to manufacturing and a multitude of other processes across the enterprise to boost financial results, consumer satisfaction, and operational speed.

The concept of promoting the flow of value to the customer is at work in recent examples of Lean concepts applied to finance, supply chain, customer service, and user experience (UX), with rapid cycles of hypothesis creation, development, and testing. This provides a “learn fast” environment to create the “minimum lovable product” and win in the marketplace.

Clever companies are using Lean concepts and digital process automation to accelerate real results. 

With Lean thinking and Pega’s intent-driven user interface, Fortune 100 company Cisco digitized their end-to-end customer service model to provide a frictionless customer experience that has eliminated 4 million hours of customer wait time, while reducing service costs by 80%. The result: a world class experience for customers, employees, and partners alike.

Japan’s first insurance company, Tokio Marine Holdings, has grown to become a multinational insurance holding company and the largest property/casualty insurance group in Japan. Leveraging Lean principles, Tokio Marine visualized, standardized, and streamlined business processes, improving process performance and tripling efficiency, compared with traditional Java development. 

Far more than just a method, Lean is a key, strategic enabler to continuous digital innovation.

As organizations begin to grasp the unique threats and opportunities digital transformation presents, there will be great rewards for those who can change, innovate, and transform better and faster than the competition to meet the insatiable demands of tomorrow’s digital customer. 

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ABOUT THE AUTHOR: As Director and Industry Principal for Global Manufacturing and High-Tech Markets at Pega, Gerry McCool helps clients create exceptional customer engagement and business outcomes through digital transformation.