The Fourth Industrial Revolution, driven by smartphones, cloud technology and explosive connectivity was the topic for the recently ended 2016 World Economic Forum at Davos.BY BRENDA CHIREMBA
There was acknowledgement that all organizations are in flux, and rethinking their services, products and systems to meet ever-changing customer needs.
Due to limited resources and mounting operational costs, companies are looking internally to improve performance, with customers and shareholders demanding increased quality, efficiency, accountability and governance.
However, research also shows that internal barriers such as a risk-averse unsupportive culture, inflexible processes and silo mentality often stall change efforts (Sim & Rogers 2009). This can slow decision-making and business responsiveness.
This was the case when a close relative had a routine eye operation in Harare recently. I was struck by the number of visits they made to the medical aid centre to process the claims forms, not just the numerous trips within the same building but also within the same room and even on the same day!
There also seemed to be a lot of unexplained customer waiting and paper shuffling, followed by several layers of approval, all the time being asked the same questions by seemingly disengaged staff.
It was unclear to me the purpose of these complex processes and how they promoted efficiency and productivity within the organization. Although the customer care on the whole was excellent were it not for the time-consuming duplication.
In contrast, across town in Mbare Musika, I also recently observed a sole fruit trader systematically load his wares onto his manual coach cart, before selling to a passer-by. I was struck by the simplicity of his rather linear system, and the ease with which the transaction was completed to satisfy the customer.
No extra processing or complex approval system, no intervening device connected to the so-called Internet of things (IoT), no big data analytics, no delay no fuss.
Can businesses be leaner and simpler?
While technology systems and processes can be enablers for efficiency, improved productivity and quality customer experience, over complex systems can also create problems.
This emphasizes the need for all businesses to streamline and simplify systems and processes (whether digital or manual) to make them more efficient and customer-focused. This enables the organization to be more competitive and agile in dealing with future threats and opportunities.
This is the principle of lean, founded on the Japanese kaizen practice meaning ‘to become better’, through eliminating wasteful processes that do not add value (Bicheno and Holweg 2009). Similarly, other improvement models such as Six Sigma also simplify and reduce costs via elimination of waste.
Hence simpler, leaner systems and processes are a driver for business agility as the business can easily flex to meet current and future market demands, including quicker staff training. This increases productivity and quality, and ultimately customer satisfaction, competitiveness and profitability (Standard et al 1999).
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What is waste and where does it exist?
Waste refers to any work activity that consumes time, resources or space, without adding any value to the product or service. This could be periods of inactivity and delays such as waiting for parts or loose change or someone to take action, or looking for tools, which is a waste of human capital.
It also includes overproduction and over-processing when the customer does not require it, or unnecessary moving of equipment and goods over long distances, which increases cycle time to market and is costly.
Hence Nestle, manufacturers of the popular hot drink Milo, has built 465 centres around the world, including the recently refurbished Harare plant with new technology to increase production capacity and efficiency.
This new plant is close to where the raw materials are (local milk), and conveniently close to the consumer so the customers can get fresh products quickly and easily.
This customer-centric approach gives Nestle a strong competitive advantage through getting timely customer feedback. This facilitates business agility as the market environment changes, and there are also cost efficiencies for Nestle.
Similarly high defects levels from poor quality work or wrong tools, inventory, processing of waste, and unnecessary relocation of items generates more work than is required and is therefore wasteful. It also results in low productivity and reduced morale.
Kaizen aims to eliminate this waste by removing activities that add cost but don’t add value, and adjusting pace of production to meet customer demand (Bicheno and Holweg 2009).
However, organizations are complex adaptive systems that are continuously evolving, and are not formulaic and orderly environments as the fruit trader above.
Whilst his simpler systems may enable him to quickly and effectively move out of less promising business areas and switch products without much advance planning, larger sized organizations have to be even more proactive in changing and meeting customer and market need.
This is more so in the services industry where the customer participates in the production process and the service is produced and consumed at the same time, which adds complexity.
Furthermore, as companies grow in size, there is a temptation to introduce even more comprehensive fail-safes to ensure staff remain productive and efficient. This could stifle agility.
Hence more and more companies are turning to HR and organizational development (OD) specialists to help them find the right balance between structure and fluidity, including upskilling staff. This facilitates a culture of learning and innovation to boost profit.
In particular, small medium enterprises (SMEs) who contribute significantly to the country’s economic growth through job creation and innovation, often have limited material and financial resources (OECD 2012).
Consequently, their employees are their business, and inefficient systems and processes mean human effort being applied to activities that don’t require it which is wasteful (Cardon & Stevens 2004).
In this VUCA (Volatile, Unpredictable, Complex, Ambiguous) era, this lack of internal preparedness to shift focus and rapidly execute affects customer satisfaction and bottom line.
Keeping it simple for strategic success
The basic tenet of lean thinking is that it is an-going and never-ending improvement process involving everyone from managers to staff to deliver more value at less expense.
Toyota Motor Company for example, is well known for using kaizen and implementing employee suggestions to align customer with employee satisfaction. Within these companies, employees apply low cost, low risk kaizen tools as a normal part of the job rather than an optional extra.
Tools such as team Quality Circles, and Just-In-Time (JIT) systems produce only what is needed when it is needed with better utilisation of facilities, inventory and workers’ time.
However, before a process can be simplified, a good understanding of each business process is required, its variations across the business, and what other teams are doing.
Studies also show the engagement and cost benefits of training and empowering every person within the business to identify wasted time and effort in their own job to improve processes.
This is in stark contrast to Taylorism where specialists devise the standardised ‘one-best-way’ of doing a job which management then enforces. This top-down control and organizational efficiency model however may still be relevant, for example in fast food outlets to reduce process time and contain costs.
How can your business remove complexity?
To identify areas where operational efficiency can be increased, businesses should consider asking themselves the following questions:
- Do we run a business where staff are always saying the processes are too complicated?
- Are our processes and infrastructure aligned with company strategy?
- Are our policies and processes easily understood, accessible and up to date to enable speedy decision-making?
- Are our functions set up to share information and respond to one another’s changes, without conflicting priorities?
- Is there duplication or decision points that are redundant e.g. unnecessary inspections and sign-offs, and multiple data sources, with potential for error?
- Can processes be done in parallel, rather than in sequence?
- Do these processes add value to the product or service?
- Are people in the right roles, and do they have the right tools?
- Are the jobs sufficiently interesting to enable the employee to engage and innovate?
- Can technology help to increase productivity and reduce potential for costly mistakes?
- Does the organization have the skills and resources to identify and attract the right people when new expertise is needed?
- Are there committees that are not delivering outcomes and should be dissolved?
- Are there projects that could be stopped to release time for more useful activities?
- Are our meetings productive, and are they all necessary?
- Can decision-making be devolved down the organizational hierarchy?
- Is relevant information and data easily accessible to enable quick decision making?
- Are staff empowered to take small risks, innovate and drive change in line with business goals?
- Is leadership visibly committed to agility and continuous improvement?
The Way forward
In today’s globalised and free-market environment, with the emergence of non-traditional competitors and rising customer demands, companies should consider ways of making their systems more agile and flexible.
The call to simplify and remove complexity means limited resources can be directed to satisfying customer expectations (Harvard Business Review 2012).
Companies could also consider leveraging process knowledge of their frontline workers as well as outside knowledge, including data collected through the IoT.
Most importantly, developing the kaizen spirit in every employee through a shared commitment to improve things via step-by-small-step changes.
Finally, reflections from Toyota’s lean strategy:
‘We get brilliant results from average people managing brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people managing broken processes’.
(Next time in this continuing series we will explore how upskilling human capital in times of change is a driver for business agility and sustainability).
Brenda Chiremba is an experienced HR and OD Consultant with IPP Learning, a Harare-based training and development consultancy.For assistance with HR/OD consultancy, implementation and training to transform your bottomline, you can contact Brenda or send comments to firstname.lastname@example.org or Whatsapp 0776 311268. Visit website at www.ipplearning.com
More articles by Brenda Chiremba
Building an agile business in a changing Zimbabwe
Strategic agility: Are you ahead of the competition?