Leaning Into Services

On the topic of ‘Why Lean & How?’, a fellow lean learner asked an excellent and important question that got me thinking …

“Lean has been traditionally introduced in a manufacturing situation. Do the group feel there is an important role for implementation of lean in the Service Industry?”6

Debashis Sarkar author and speaker on the subject of employing ‘Lean in Services’ suggests two context driven definitions.

“Strategic Definition of Lean in a Service Context.

Lean is an improvement philosophy that targets to improve the performance of a business system by focusing on elements that do not add value. It is about creating an agile engine, which helps an organization weather the storm of competition.

Tactical Definition of Lean in a Service Context.

Lean is a process optimization methodology that focuses on improving the effectiveness and efficiency of a process by eliminating activities that do not add value to the customers and the product. It manifests itself in the following:

Reduction in cycle time
Reduction in touch times
Reduction in lead times”1

I think the suggestion that two definitions are needed speaks volumes as to the complexity of applying lean in the service industry in comparison to manufacturing industry.

Keeping in mind that ‘Culture’ and ‘Processes’ often begin as dynamically different divergent paths which must be marshalled and converged towards somewhere near perfection over an extended period and a perilously longer lean journey.

The common journey objective is to maximise value to the customer be they internal or external to the organisation as the single common denominator of any commercial or social organisation regardless of its chosen sector or business domain.

The customers final value satisfaction maybe heightened by the in service or product delivery experience used to deliver that product or service. The customers memory of the entire experience has the potential then to not only meet but exceed that of the customers initial expectations the memory of which could be sustained long after the consumption of the product or service has passed. Creating such a service culture and experience is never easy. True lean thinking seeks to harness the power of the customers perspective by viewing the service, product and delivery experience through the eyes of the customer. This view of customer value requires a vision system that many organisations are often blind sided or blinkered so as to never have the fullest view.

I see such a limited vision system as ‘Value Impaired’

This is often brought on by a short sighted view which looks internally to focus merely on process waste removal activities. Most lean journeys I fear maybe sustained only by a narrow vision of process improvement to remove waste and reduce cycle times with little vision available to see and explore the value creation, addition or sustainment opportunities.

Consider many of the big disasters which have accrued at corporate hands who in their haste successfully reduce process waste only to dramatically fail to respect people, the environment, the corporate heritage and customers love and loyalty for the brand. Would [BIG OIL COMPANY] be an example of ‘Value Impaired’ view that would at the price of value seek to reduce cycle times when decoupling off-shore oil rigs despite the possible risk?

I believe customer process ‘experience’ often realised in services have within the last 20 years become the new frontiers from which new business thinking has emerged shifting away from price point driven products (with their built in obsolescence) towards service which are based on customer experiences that add value to products and the creation of new value propositions.

In short, if your solely delivering products, your future maybe un-sustainable!, if however your delivering services, your most likely manufacturing and / or delivering products as a platform from which to launch service deliverables which offer valued customer experiences as a part of your unique value proposition in a sustainable way.

For example, Walt Disney was a pioneer of delivering ‘experience’ as a service (Theme parks based on animated characters extracted from imagination movies) which then produced merchandised product sales. Today company’s like Apple, Nespresso, Dreamworks, Minecraft ( See: http://goo.gl/MRZTf3 ), Tesla Motors, Cadbury, Oculus Rift 2, etc… are masters of service based ‘experience’ selling which demonstrate that the products are little more than an experience delivery system.

The tobacco industry were perhaps the greatest pioneers in this area. They became masters of addictive experience delivery until the level of customer respect and well-being perhaps became a growing obstacle to further sector growth. Again, an example of process focus over value focus or ‘Value Impaired Vision’.

There are also many such examples of those who have mastered experience as a product delivery method for added customer value in areas which are not always directly solely attributed to efficient manufacturing alone. These include pharmaceutical (Relief), cosmetics (Self Esteem), fashion (Projection), automotive, tourism, entertainment, etc… industries. Often however, these value propositions are weakened as greater numbers of competitors share the same technology and customer experience levels, services and quality which again brings the price point to the fore front as a primary driver of customer value.

Just as I believe this cycle of the past, I also believe healthcare is on the edge of a major breakthrough, realisation and new understanding. This breakthrough transforms healthcare to better hear the voice of the customer and focuses on how to learn to lean into the ‘Customer Perspective’. This approach will in my view realise some of the greatest opportunities for process improvement and re-engineering which delivers new and disruptive ‘Customer Experiences’ as a service.

Product and services in themselves are innate and limited by there capacity, capability, performance and efficiency as drivers of customer / users value. Learning and adding value is a collective of processes (aka process model) within itself. Sometime the waste that needs removing is the waste of an opportunity to learn and add value. Services often need to discover the value of learning to shed the organisational skin and step into the customers perspective before seeing the fullest extent of all the opportunities to create, add and sustain customer value now and into the future.

A classic example of this is the work of Scott Summit,6 who applied ‘Additive Manufacturing’ instead of traditional production to the needs of prosthetic limb users and forever successfully disrupted the medical sector. He looked at the manufacturing process and the customer value from the customer perspective. He then removed all the waste from this process to produce a new prosthetic limb. On route he arrived at a single piece flow that was 100% customised to customer needs, reduced from weeks to days the process of production and still managed to deliver a product at a fraction of the cost of normal manufacturing while greatly improving the overall customer experience.5

What often amazes me is how dumb intelligent people can be, often viewing waste to be solely removed and value added using lean without first showing the customer true respect and fully embracing the fullest customer perspective.

Often choosing instead to remain blindly self assured in the untested knowledge that “We own the process, we know what is best for our customers, so lets look at the waste to be rooted out from within our systems in isolation of the customer”. Refusing to realise the greatest value of embedding the customer perspective in the why, how and what of the entire customer experience.

Worst still, “Lets run a focus group or ask our customer in order to best understand how our customers value our product or service” and then expect a comprehensive scientific answer on which to plan and execute world domination.

STOP THINKING OF LEAN-IN-A-BOX!

I believe, Lean is ONE! Methodology within a toolbox of many, to be drawn from as and when required. Lean at its core principles can be applied (in my view) in any industry commercial or social when at its core, Lean is shockingly simple.

Waste not, want not … (if it is not wanted, its waste)
If you want people to love you (brand, product or service), love people (don’t just talk to them!)… (respect for people)

These are incredibly simple and common sense core values, the detail is in how intelligently they are applied. I think often our intelligence causes us to over-engineer the simplicity of lean and narrow our focus until we are fully boxed into a mindset which only see’s what is in front of us, instead of looking across a landscape of opportunities. We should not just think outside the box, we need to get out of the building and walk with the customer to better understand where products and services deliver the experience and value customers want regardless of what business we are in.

‘Research comparing Services to Manufacturing across a number of organisations and sectors’ suggests that … ‘Value-Added’ activities for service is as small as 1%, while manufacturing would be higher at 5%’3

Would this then suggest that 99% of all service activities are waste? or could it be suggesting that we have only uncovered 1% of the potential opportunities to add further value? I’m going with the later!

As Disney manufactured products as a bi-product of his customer service and experience, I believe many companies need to jump out of the box, stop being constrained by an inward navel picking process improvement strategy which constrains the organisation within one giant box / silo that is often isolated from observing and capturing changing customer needs and true interpretations of customer value. Instead to look outwards for further inspiration as to how to remove waste, improve or re-engineer internal processes, products, services and customer experiences and increase value in line with lean principles…

“Value – Specify value from the customer’s perspective”3

The optimum words being ‘Customers Perspective’, so if your not sure “Should Lean Be Applied to X?”, you only have to ask “What sector does not serve a commercial or social customer need by adding value?” and if you should happen to find an answer to this question, I would love the challenge of demonstrating how ‘Lean can be applied in that sector!’.

Just to say however, a more interesting question maybe “Where should lean NOT! be applied?”, I would say that, in line with lean principles, lean should not be applied where lean is perceived by the customer to have no added value … in such cases the focus normally narrows to management leadership as the internal customer and driver of a supportive environment and culture.

Even if lean should not be applied to a process or sector, we first should apply the lean principle of evaluating if in that process or sector we can add value? … so apply lean to find out if lean can be applied … neat!

“Focus on the core lean principles and you will be able to successfully lead Lean in any company, in any setting.”4