The biggest challenge with business transformation is not just about turning those lights on, it is about keeping them on - and then resisting all cries to have them turned off again. When the horrible mess first comes into full view, the temptation is for managers to not want to even look at it, let alone start to deal with it. There may be tricky questions from their own managers: ‘didn’t you know this mess was there?’ ‘didn’t you do anything about it?’ And then the conclusion might be drawn: ‘You can’t be a good manager’.
All Businesses Have Costs, But Waste Is Optional
Let’s start by asking what do we mean by waste? Waste can simply be defined in terms of its opposite – value. While costs are inevitable for all businesses, waste is optional. When a company is creating value and nothing but value, there is no waste. However, no system is that efficient and there will always be some waste which is uneconomical to remove. But a large percentage of organisational waste, anything from 50% to 70% - based on most studies- when removed, provides a healthy return on investment while contributing to competitiveness.
And this is why we turn the lights on. And while those lights are on, it is important that all can see the mess for what it is. It will almost certainly be a lot bigger than anyone had imagined, and leaders need to be prepared for that. They also need to be prepared to forgive, because if they don’t, the waste will simply go back underground.
Keeping the lights on means focusing not on the people, and not on the waste, but rather on the causes of the waste. If time and resources are spent only on cleaning up the mess, things will get dirty again very soon. The endgame here is to understand and deal with the institutional practices and structures that are endemic to the creation of institutionalised waste.
Consider the example of the company that has defined and laid down strict policies and procedures. Managers are busy keeping their plates spinning and making things tick along. But then comes a competitor with a disruptive product. Suddenly everything has to change, and managers must set more plates spinning. But they physically can’t do it. Plates are smashed because the manager has been overburdened with an impossible task.
In this kind of culture where managers have to maintain control by knowing everything that is going on – not actually possible – any admission of waste is an admission of failure. So of course, the temptation is to deny the existence of any waste.
That’s Where The Money Is
It is said that when renowned US bank robber Willie Sutton was being marched into the courthouse for trial, a reporter stuck a microphone in his face and asked: ‘Why did you rob banks?’ Back came the wry reply: ‘Because that’s where the money is.’ There’s a similar stark answer for today’s business organisations. Putting the lights on your business shows the mess and where the money is.
When we look at a business, we don’t just see with our own eyes. We see through the eyes of the culture of the business. And the best way to find out about this is through our staff. They, after all, are the ones who must walk around the broken plates to avoid cutting their feet. We need to learn from our staff what value we are delivering to our customers, and therefore our business.
The goal is to produce maximum value for minimum waste. But before we can even start to think about how efficient we are being, we must evaluate how effective we are being. In simple terms, we need to ask: Is what we are doing any good? If we don’t spend most of our available resources answering this key question, we will just end up processing waste more efficiently, and this is what companies can end up doing as a matter of routine – institutionalising the production of waste.
As soon as we are sure that the product we are making is nigh on what the customer really wants, then we can begin to look at efficiency. But our priorities must always be effectiveness first, second, third, fourth fifth… and maybe efficiency 22nd!
Waste – A Case Study
There is a common perception in the IT industry that maintenance has value. But this is not true. Why? Because maintenance is nothing more than a pre-emptive response to failure. If we didn’t know something was going to fail we wouldn’t need maintenance. If something breaks and we fix it, we call that waste. But what is the difference between that and maintenance, where we fix something before it breaks?
In the dim and distant days of my childhood we had a man who would come and work on our black and white television. My parents had a maintenance agreement with the TV company, so he would come and work on our set. But TVs don’t have maintenance agreements any more. And cars don’t have maintenance agreements any morel because they don’t break down during the course of their life cycle. When that cycle is over, they simply get replaced.
Putting the lights on is about seeing the reality of the situation. I once spoke to a head of maintenance about the work she had been doing scheduling repairs to equipment. She was devastated when the lights went on and she came to the realisation that for all these years she had not been restoring value. Her job had been to institutionalise waste.
Dismantling And Rebuilding The Corporate Architecture
Inappropriate corporate structure is perhaps the biggest waste of them all, because it stifles any attempt at a culture shift. The process of turning on the lights takes vision and it also takes courage, but the rewards, in terms of value delivery, are profound.