executive briefing

Why LeanMattersUnderstanding and implementingLean in public services

RESEARCHAdvanced Institute of

Management Research

www.aimresearch.org

Written by:

Professor Zoe Radnor, Professor of Operations Management, Cardiff Business School

2

AIM – the UK’s research initiative on management

Written by:

Professor Zoe Radnor, Professor of Operations Management, Cardiff Business School

The Advanced Institute of Management Research

(AIM) develops UK-based world-class management

research. AIM seeks to identify ways to enhance

the competitiveness of the UK economy and its

infrastructure through research into management

and organisational performance in both the private

and public sectors.

about AIM

contents

AIM consists of:

■ Over 300 AIM Fellows and Scholars – all leading academics in their fields…

■ Working in cooperation with leading international academics and specialists

as well as UK policymakers and business leaders…

■ Undertaking a wide range of collaborative research projects on management…

■ Disseminating ideas and shared learning through publications, reports,

workshops and events…

■ Fostering new ways of working more effectively with managers and policymakers…

■ To enhance UK competitiveness and productivity.

AIM’s Objectives

Our mission is to significantly increase the contribution of and future capacity

for world class UK management research.

Our more specific objectives are to:

■ Conduct research that will identify actions to enhance the UK’s international

competitiveness

■ Raise the quality and international standing of UK research on management

■ Expand the size and capacity of the active UK research base on management

■ Engage with practitioners and other users of research within and beyond the

UK as co-producers of knowledge about management

AIM – the UK’s research initiative on management 2

About AIM 3

AIM research themes 4

Executive summary 5

Introduction 7

What is Lean? 8

Approaches to implementing Lean 11

Main tools and techniques of Lean 15

Impacts of Lean implementations 20

Success factors and barriers to Lean implementation 24

Conclusion 29

3

AIM research themes

Current AIM research projects focus on:

UK productivity and performance for the 21st century.

How can UK policymakers evaluate and address concerns surrounding the UK’s

performance in relation to other countries?

National productivity has been the concern of economists, government policymakers,

and corporate decision-makers for some time. Further research by scholars from a

range of disciplines is bringing new voices to the debates about how the productivity

gap can be measured, and what the UK can do to improve the effectiveness of UK

industry and its supporting public services.

Sustaining innovation to achieve competitive advantage

and high quality public services.

How can UK managers capture the benefits of innovation while meeting other

demands of a competitive and social environment?

Innovation is a key source of competitive advantage and public value through new

strategies, products, services and organisational processes. The UK has outstanding

exemplars of innovative private and public sector organisations and is investing

significantly in its science and skills base to underpin future innovative capacity.

Adapting promising practices to enhance performance

across varied organisational contexts.

How can UK managers disseminate their experience whilst learning from others?

Improved management practices are identified as important for enhancing

productivity and performance. The main focus is on how evidence behind good or

promising practices can be systematically assessed, creatively adapted, successfully

implemented and knowledge diffused to other organisations that will benefit.

4

5

executive summary

In the current

economic

climate all

organisations

are under

pressure to

reduce costs

and become

more efficient.

In the current economic climate all organisations are under pressure to reduce costs

and become more efficient. This is particularly true of the public sector which has borne

the brunt of a large number of job losses.

One set of management practices that can be useful in helping with, reducing cost and

improving both efficiency and the quality of products and services is lean management

(Lean). This set of management practices, refined in Japan over several decades from

the 1970s onwards, has traditionally been applied in the manufacturing industries.

However, Lean can also be implemented in services organisations, including public

services organisations, with impressive results.

This briefing both explains the essential principles of Lean, and also provides a

framework for the successful implementation Lean in a public service setting.

The executive briefing details

The principles of Lean which hold in public services: understanding and specifying

the complex value requirements of the customer; identifying the value stream for

each service offering; achieving continuous flow of services through standardisation

of the process; and, managing towards perfection to eliminate as much ‘waste’ from

the process as possible.

A framework for Lean implementation ‘House of Lean for public services’ consists of:

bedrock and foundations represented by the steering group and project team, as

well as ongoing training and development. On top of these are some essential

organisational readiness elements of the framework: the ability to understand

demand and capacity; an understanding of value; strong committed leadership;

maintaining a process view; a communication strategy; developing co-production

and, the ability to link activity to the Lean strategy.

Finally there are the stages of Lean planning and implementation: engagement,

establishment and embedded in each which include sets of tools used within Lean

for assessment, monitoring and improvement.Tools for assessment including:

customer and stakeholder analysis, process mapping, and value definition.

For monitoring there are tools such as: benchmarking, visual management,

and workplace audit. While for improvement the tools include: control charts,

structured problem solving, and Rapid Improvement Events, among others.

6

Key success factors required for the effective implementation of Lean: a culture

of continuous improvement; visible senior management commitment and strong

leadership throughout the organisation; adequate and capable resources; a clear

communication strategy; and organisational readiness is in place to support

the implementation.

There are also some common barriers to a successful implementation. These may

be directly related to the success factors, a lack managerial commitment, poor

communication, or insufficient skills and resources, for example. But they may also

relate to cultural barriers, such as a poor understanding of the relationship between

capacity and demand, command and control structure that obstruct responding

to customer demand, a belief that Lean is not applicable to public services.

Finally, it is important to note that Lean must not viewed solely as a cost cutting

exercise. Instead it must be considered as an approach which could turn a challenging

situation into an organisational opportunity, improving the quality and delivery of

services by re-examining the value provided by those public services, and restructuring

the ways in which they are delivered.

…it is

important

to note that

Lean must not

viewed solely as

a cost cutting

exercise.

7

In the current political and economic climate there is considerable pressure on public

services to do more for less i.e. to be more efficient. Government departments, local

authorities, higher education, the National Health Service and emergency services are

all in the process of determining how budget cuts will be implemented. One important

methodology at the disposal of public sector managers that can help to bring about

improvements in services, whilst at the same time saving costs, is Lean – an

improvement methodology originally refined in and imported from Japan.

Lean is not just about cutting jobs and costs. Lean can help public services reduce

waste and the cost of a product or service, while increasing value-added activities.

It can help to meet the public service challenge of retaining or improving the standard

of service delivery, despite the financial cuts. A challenge that involves delivering the

same or a better quality service for less money implies improving the effectiveness

as well as the efficiency of public services.

The purpose of this document is to help support public services in their engagement

with Lean. In particular it will be of use to managers in public services who are

responsible for managing and implementing a Lean programme. It will provide advice

to enable them to make more informed decisions regarding Lean implementations

so that good practice can be developed and shared across the public sector.

This document should help to:

■ Understand what Lean is and what its key principles are.

■ Recognise the approaches and the main tools and techniques

for implementing Lean.

■ Establish benchmarks for quantitative and qualitative impacts of Lean

as experienced by some public services that have implemented Lean.

■ Understand the contributing factors to successful Lean implementations

and barriers to implementation.

Importantly the document will draw upon case examples from across public services

that have undergone Lean implementations including government department, local

authorities, higher education and healthcare.

At the end of each section of the executive briefing are a set of questions. These are

key questions which should be considered when planning and implementing Lean.

Lean can help

public services

reduce waste

and the cost

of a product or

service, while

increasing

value-added

activities.

introduction

8

what is Lean?

The process improvement methodology of Lean is the product of a dynamic learning

process that adapted some of the management practices honed in the Japanese

automotive and textiles industries, in particular the Toyota Production System. Over

the last few decades Lean has been implemented across a variety of manufacturing,

service, and more recently public service organisations. This is mainly due to its

participative nature and its track record of providing efficiency and cost savings,

at the same time as embedding a culture of continuous improvement.

Lean is a philosophy that uses tools and techniques to create a change of

organisational culture in order to implement the ‘good practice of process/operations

improvement that allows the reduction of waste, improvement of flow, more focus

on the needs of customers and which takes a process view’. Lean implementations

should ideally involve a programme of continuous improvement that is wide ranging

and leads to the whole of the organisation visibly changing over a longer period of time.

There are five core principles of Lean

1 Specify the value desired by the customer. Eliminating waste in every aspect of

business provides real value to the customer. This requires a good understanding

of who the customer is at every level of the organisation and their complex

requirements.

2 Identify the value stream for each product providing that value. A value stream

is an end-to-end business process which delivers a service to a customer.

Seek to remove non value added elements from this value stream.

3 Make the product flow continuously. Standardising processes around best practice

allows them to run more smoothly, freeing up time for creativity and innovation.

4 Introduce ‘pull’ to ensure that work moves through each stage of the process

as dictated by the end of the value stream. That is the movement and activity of

work is only triggered (kanban) by the demand from the customer and is linked

to customer needs.

5 Manage towards perfection so that non-value adding activity will be removed

from the value chain and the number of steps and the amount of time and

information needed to serve the customer continually falls.

Whilst all five principles are key to the implementation of Lean, the most important

element is probably the first element of specifying and identifying the value.

The concept of value is mainly defined by the customer or consumer.

Within a commercial organisation, the definition and requirements of the customer

are usually straightforward and directly impact upon turnover and profit. It therefore

becomes easier to identify value and value added activities. Within public services,

the concept of a customer is not so straightforward. It can include, for example,

people who are dealt with, but who are not the beneficiaries of a service, people

who are regulated against, and importantly, residents who may not have a choice

of service provider, but who expect a level of service.

9

In public

services, it

appears that the

three elements

of Lean that

are of most

importance are

value, flow and

the reduction

of waste.

In public services, it appears that the three elements of Lean that are of most

importance are value, flow and the reduction of waste. Any activity that does not add

value or is unproductive is classed as waste. Of the three elements the reduction

of waste seems to be used most to reduce costs and improve efficiency in public

services. The reduction of waste is an effective way to increase profitability. A process

adds value by providing a service that a customer will pay for. A process consumes

resources, and waste occurs when more resources are consumed than are necessary

to provide the service that the customer actually wants.

Value is a difficult concept to grasp in public services. Together with value defined

from a customer perspective, other forms of value may well exist which need to be

included within the processes and system. These include an adherence to relevant

policy, and laws, and also the notion of equity, which may not be so prevalent within

commercial organisations. Therefore, it is important when considering the concept

of Lean in public services, that there should be a focus on the recognition of value,

and also the drivers towards that value, rather than just the customer.

Lean may have its roots in high volume, low variety processes, however, it has also

been applied to high-medium volume and low-medium processes in public services,

such as planning applications and benefits administration. And it is also possible to

apply many of the principles of Lean to a range of other processes in order to deliver

value at the right time and the right place including, for example foster services and

disability services.

10

In terms of the drivers for implementing Lean, the focus appears to be on the need

to reduce cost, improve quality, develop efficient processes, reduce variation and

respond to competitive pressures from other organisations and legislation. Within

public services, the main drivers also include less tangible elements such as a change

of leadership, the struggle with performance indicators, government agendas, changes

in policy, making better use of staff time, reduction in errors, the threat of open

competition, and service expansion with limited or reduced resources.

In terms of the drivers for implementing Lean, the focus appears to be on the need

to reduce cost, improve quality, develop efficient processes, reduce variation and

respond to competitive pressures from other organisations and legislation. Within

public services, the main drivers also include less tangible elements such as a

change of leadership, the struggle with performance indicators, government agendas,

changes in policy, making better use of staff time, reduction in errors, the threat

of open competition, and service expansion with limited or reduced resources.

Cardiff University: Management training in Lean

Cardiff University’s Lean Skills for Leaders Programme for middle and senior

managers and leaders, which began in April 2008, is a way to equip managers with

the ability to apply Lean thinking in their part of the organisation and to give them

the skills to do continuous improvement work themselves, without reliance upon the

Lean University Team. This training has been successful in helping to embed some

of the principles of Lean.

Managers and leaders attending the course learn what Lean is and how it can be

applied successfully within their own working environment. It also equips them with

techniques in order to help teams identify problems within systems. They are then

expected to work with their own staff to overcome these issues

There have been some culture change outcomes from the training programme.

There is the recognition that it has enabled staff to lead in a more confident way,

to realise that they were experiencing similar problems, to voice and share issues

and concerns and ultimately to accept the improvements that have taken place.

Developing an Understanding of Lean: Essential questions

■ Does the Executive Team understand what Lean is?

■ Do all staff recognise the need for process improvement?

■ What would be the focus of a Lean programme within my organisation – waste or value?

■ Are there public sector organisations in the same region we could share our

experiences with?

■ Could joint projects or programmes be developed with neighbouring public services?

11

approaches to implementing lean

The House of Lean

The framework set out in Figure1 below highlights the approach to developing

and supporting Lean within public services.

Figure 1: House of Lean for Public Services

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StrongCommittedLeadership

Whole system view

Embedded continuous improvement behavioursStable robust efficient and effective processes

The bedrock and foundations are represented by:

■ The establishment and regular meeting of: a steering group to give direction and

be ultimately accountable for the implementation of Lean; and a project team to

manage the day-to-day implementation.

■ Ongoing training and development of all staff in the organisation. Ideally the

training should be tailored to distinguish between the leadership requirements

of managers and the day-to-day problem solving requirements of front line staff in

a Lean organisation. Initially, external facilitators should be used to deliver training

with a view to developing internal champions to continue the training throughout

the organisation.

The bedrock and foundations of the house support the foundation blocks. These

include a full understanding of the organisational processes, customer requirements

or value, levels and types of demand, and the link with strategy through committed

leadership and clear communication. These organisational readiness factors are

incorporated as strong foundations in the house to ensure that the organisation

is ready to engage with, or can enable, Lean. Readiness is also critical for the

long term sustainability of Lean implementations.

Steering Group and Project Team

CreateValue

Link toStrategy

UnderstandDemand

ProcessView

Co-Production Communication

12

The tools and techniques are represented as the pillars of the House. The red

assessment and improvement tools should be implemented in the short term to

achieve some quick wins, help to define a clear focus and promote staff engagement.

The orange pillars are focused on the monitoring tools to allow the impact of the

activity to be identified and established. The green pillars are tools which allow

Lean to sustain the improvement activity and become embedded in the day-to-day

processes and service delivery.

The House integrates the technical and cultural aspects of Lean throughout, feeding

into each other in order to achieve: a whole process, value chain or system view;

embedded improvement behaviours; and stable robust processes.

The role of external suppliers

When public services organisations are implementing Lean and deciding whether

to engage with external suppliers there are three options. These are summarised

in table 1 opposite, together with advantages and disadvantages of each option.

Public services

organisations

undertaking

Lean

implementations

need to realise

that the full

benefits of

Lean require

a long term

programme

and not a short

term fix.

13

Table 1: Options for Implementation of Lean

Option Advantage Disadvantage

Use externalconsultants toundertake Leanimplementations.

Lean implementationsup and running quickly.

Cost of using externalconsultants is likelyto be expensive.

Ownership of theimprovement remains withthe external organisation.Sustainability of Lean isreliant upon consultants.

Undertake the Leanimplementation usinginternal knowledgeand capability

Less expensive than usingexternal consultancy.Internal staff developLean expertise.

Staff transfer knowledgeand capability to otherdepartments/areas.

Lean implementationsslower to start whilstthe knowledge is beingdeveloped.

Internal staff may becomea substitute for an externalconsultancy that ownsthe improvement activity.

A combinationof external andinternal capability.

External consultantsundertake initial training andLean Champion developmentand initial improvementwork with staff.

Over time the focus movesto external consultantsproviding a mentoring /coaching role.

Staff decide on/undertakeimprovement activitythemselves.

Lean Champions couldbe perceived as anelite group.

Lean Champion knowledgeneeds to be developedover time.

Public services organisations undertaking Lean implementations need to realise

that the full benefits of Lean require a long term programme and not a short term fix.

The essence of Lean is about continuous improvement across the whole of the

organisation, and not a one off process redesign or a Rapid Improvement Event (RIE)

focusing on one department. Although such RIEs can result in a radical process

redesign removing waste or low hanging fruit, inefficiencies may slowly return if other

Lean tools are not employed. In particular, this includes visual management tools,

such as the performance boards and ongoing problem solving tools (see next section).

Furthermore, concentrating improvement work in one department is likely to lead to

a disparity in efficiencies between departments, which may be noticed by customers.

Transferring knowledge across departments is best done when staff from different

departments are involved in the improvement and witness the benefits for themselves.

Lean should therefore be seen as a complete philosophy that cuts across departmental

boundaries. It could be considered as an organisational journey resulting in more efficiency

in the short term and complete organisational effectiveness over the longer term.

14

HM Courts and Tribunal Service (HMCTS)

HM Courts andTribunal Service (HMCTS) launched a three-year Lean programme in

2008 aiming to have reached all court jurisdictions in England and Wales by December

2011. All jurisdictions of court were involved and the programme was designed to be

consultant free focusing on developing internal capability in the form of change agents.

These were HMCS staff who had undergone training through a Lean Academy.

Each Court started with a Lean event to introduce the revised processes and new

practices through standard operating procedures. These practices also included the

introduction of Team Information Boards and daily meetings to manage workload

allocation, identify problems within the skills of team members and report successes.

The evaluation report highlighted that the Lean programme was leading to immediate

or quick win improvements in processes, with the use of performance boards and

trays highlighting the current state of work. The role of the internal change agents

was making a huge difference at sites where they spend significant amounts of time.

Approach to Lean: Essential questions

■ What structures are in place in the organisation to support the foundation

and building blocks for Lean and do any need developing?

■ What funds are there to engage external consultants in a Lean implementation?

■ Is there the willingness amongst staff to undertake process improvement?

■ What capability and expertise do the staff have to undertake process improvement?

■ Is there a recognition of and full support for the breadth, depth and length of

a Lean implementation by senior management?

The University of St Andrews

Part of the Lean engagement at St Andrews University was to have contact with an

external consultancy to provide support. There was also a consultant based in-house

for three months, guiding the Lean Team through the initial improvement work.

The external consultants were initially involved in providing Lean training to the three

members of staff of the University’s Lean Team, as well as two members of staff

from the Business Improvement Team. The one week-long training course was

delivered on site, and was based around Lean tools and techniques using a Lean

simulation. Subsequent training also involved a visit to a bank to see Lean operating

in a service environment and introductions to various Lean tools and techniques.

15

Lean draws on a range of process improvement tools and techniques. However,

the fundamental idea of Lean lies in continuous improvement, the elimination of

uncertainty with regard to variation and process flow developed throughout the

organisation focused around the Lean principles. This has been carried out for some

time in manufacturing and service organisations and is now starting to be applied

in the public services.

The Lean tools relevant to public services are the pillars of the House of Lean

framework. The purpose of all the tools is to engage, establish and embed Lean in

the organisation. These tools have been used for Lean implementations in commercial

organisations and are capable of being utilised in public services after training

to undertake assessment, monitoring and improvement activity as shown in

table 2 below.

Table 2:Tools for Lean Implementation

main tools and techniques of lean

Assessment Monitoring Improvement

Tools Customer Analysis

Process Mapping

Six Thinking Hats

Value Definition

Value Stream Mapping

A3s

Benchmarking

Competency Framework

Problem Solving

Standard Work

Visual Management

Workplace Audit

5S

Control Charts

Cross Functional Teams

Daily Meetings

Rapid Improvement Events

Visual Management

Assessment

These tools are used to assess the processes at the organisational level and include

the following:

■ Customer and stakeholder analysis – A definition of the customer and the

service that they receive, and an understanding of the customer requirements

and how they interact with the organisation.

■ Process mapping – This maps out activities associated with a process

and assigns cycle and value-added time to each activity, who is responsible

and where hand offs occur, to what standard a process should be completed,

and how the success can be determined.

■ Six thinking hats – Devised by lateral thinking expert Edward De Bono,

this is a means for groups to think together more effectively, and a means

to plan thinking processes in a detailed and cohesive way.

■ Value definition – Understanding internal and external customer value

and what the customer considers waste.

■ Value stream mapping – A technique used to analyse the flow of materials,

services and information required to bring a service to a consumer.

16

Monitoring

These tools measure and monitor the impact of the process improvement and include:

■ A3s – Developed by Toyota the term ‘A3’ derives from the paper size used for

a project definition report. The document highlights issues to be addressed,

key activities to undertake to resolve issues and the key metrics to measure

performance.

■ Benchmarking – This is a process of comparing organisational processes or

performance metrics against best practices from the same industry or other

industries to make improvements.

■ Competency Framework – The competency framework defines the knowledge,

skills, and attributes of staff, matched with individual roles and the required

competencies to perform the job effectively.

■ Problem solving – There are a number of both informal and more structured

techniques to improve processes, including:

– 3Cs (Concern, Cause, Countermeasure): Highlights day-to-day issues on

a performance board, together with short team discussions to define the

cause and implement a solution.

– 5Ys: Explores the cause and effect relationships underlying a particular problem.

It involves asking the question ‘Why?’ five times to arrive at the root cause of

a problem.

– Fishbone (or Ishikawa) diagrams: Identifies causes of imperfection that

cause variation. Causes are usually grouped into categories: people; methods;

equipment; materials; measurement and; environment.

– Nominal group technique: A large group decision making method using a

ranking system to make decisions quickly and take all opinions into account.

– Root cause analysis: Directing corrective measures or eliminating root causes

of problems to reduce the likelihood of problems recurring.

■ Standard work – Defining, organising and agreeing the activity in a process

to ensure the most effective and efficient use of resources, people, tools

and equipment.

■ Visual management – see opposite

■ Workplace audit – A structured means of monitoring working practices, to

ensure conformance to standards so that the improvements achieved during

the implementation phase are sustained and continuously improved upon.

17

If a process is

under control

then data can

be used to

predict the

future

performance

of the process.

Improvement

The following improvement tools are examples of tools used to support and improve

processes:

■ 5S – A rigorous form of housekeeping which supports the pursuit of waste

elimination. It consists of sifting and removing all unnecessary items, simplifying

the workplace so that each item is clearly visible and labelled, sweeping and

keeping everything clean, auditing the workplace to ensure standards are being

met and self discipline to sustain the housekeeping.

■ Control charts – Determine whether or not a business process is in a state of

statistical control. If a process is under control then data can be used to predict

the future performance of the process. If a process is not in control, the chart

can help determine the sources of variation, which can then be eliminated to

bring the process back under control.

■ Cross functional teams – Involving all relevant staff that work directly on

the process at all levels within and outside of the department (i.e. no silos).

■ Daily meetings – Daily team discussions that provide team members with

information on improvement activity, team performance and provide a forum

for discussing specific issues, problems or skills requirements.

■ Kaizen blitz or Rapid Improvement Events – Three to five day workshops

involving staff from different departments to scope out issues to be resolved

and implement the required changes.

■ Visual management – A notice board for teams or sections with data relating

to people, performance and improvement. The tool enables anyone entering

a work place to assess team performance at a glance.

18

Healthcare

Healthcare examples of Lean implementations, have predominately included the use of

rapid improvement events (RIEs) at NHSTrusts in the UK which, to date, have provided

quick results.The Royal Bolton Hospital staged rapid improvement events where

employees brainstormed process improvements.The result was that the death rate

for patients fell by a third, and the time taken to process important categories of blood

fell from one day to three hours.The Royal Devon and Exeter HospitalTrust also used

Lean techniques to remove waste from its back office helping it to meet financial

targets. However, case study evidence is beginning to show that if the focus of Lean

is Rapid Improvement Events (RIEs) and Projects, then patchiness of activity occurs

with a limited range of actions taking place within a department or ward which are

not recognised outside individual departments or across the patient pathway.

HM Revenues and Customs PaceSetter programme

Pacesetter (HMRC’s name for the Lean programme) was developed to improve

efficiency and customer service by delivering a 30% improvement in productivity,

reduce backlogs and inconsistencies, and ensure that HMRC Processing is amongst

the best UK processors and becomes the UK Government’s Processor of choice.

Lean in HM Revenue and Customs (HMRC) began in earnest in April 2006 with Unipart

rolling out Lean across a number of sites. It consisted of introducing revised processes

in the four key customer facing operations at each of the sites. Introducing performance

boards which reflected the teams’ performance, resource planning, targets and,

problems.These were supported by daily meetings (10 minutes each morning) to

motivate the staff to reflect on the achievements of the previous day, plan the day’s

work and resolve any outstanding problems or issues with the process. Other tools

were also introduced to support ongoing problem-solving.

The findings of the evaluative research included a direct correlation between

engagement of senior management towards Lean and staff at their site, poor

communication leading to issues around engagement, staff not linking Lean with

improved quality and productivity, mixed understanding of the customer, increased

quality, a more structured approach to problem solving, perceived better team working,

and a well-supported process for transferring capabilities from the consultancy to

the organisation.

19

Lean Tools and Techniques: Essential questions

■ Are some of the assessment, monitoring or improvement tools already being used

in the organisation?

■ What staff training is needed to encourage the use of these and other tools?

■ Is staff training being developed which focuses on leadership training, specific front

line staff training and awareness training for all staff?

■ Does the organisation’s leadership support the use of the tools to develop a culture

of continuous improvement?

■ Do we focus on a Rapid Improvement Event approach with one off interventions,

or do we focus on a more organisation wide approach utilising a larger number

of tools and techniques?

The Royal

Bolton Hospital

staged rapid

improvement

events where

employees

brainstormed

process

improvements.

20

Potentially, implementing Lean has significant quantitative impacts including

increasing labour productivity, reducing throughput times and inventories, and

reducing the number of errors reaching customers. Productivity increases will

result due to the reduction of waste, allowing organisations to run at capacity,

reducing costs and defect rates.

In addition to the quantitative impacts mentioned above, there are a number

of other tangible impacts of Lean implementations which include:

■ Consolidation of product service lines and departments leading to more

standard processes, reduced variability, flatter management structures and

more flexible processes.

■ Decreasing work in progress by removing bottlenecks and making work flow

smoothly.

■ Increased capacity and output leading to more on time delivery of services

thereby increasing customer satisfaction as they receive an improved and more

consistent level of service.

■ Reducing instances of failure demand. Failure demand is when an organisation’s

service standards fail to meet or exceed customer expectations about when and

how a service should be undertaken and so the customer complains about the

service, thus creating more demand on the service, regardless of whether the

problem is the responsibility of the authority or not. Therefore, the reduction

of failure demand includes fewer calls being made to an authority to complain

about the lack of a service or a service not being delivered properly.

These quantitative tangible benefits are measurable results which can be used to

show management specific improvements and include savings in time and money,

less people required, reduced lead or cycle time, fewer steps in the process, reduced

inventory, improved right first time statistics and definition of value and non value

elements. However, not all impacts are immediate and the benefits can take several

years to be realised.

Lean can also lead to qualitative impacts that are more difficult to measure.

These qualitative impacts include human elements that are just as important as

the measurable elements and have more lasting and important effects. Importantly

they can support the development of a culture of continuous improvement within

the organisation.

Productivity

increases will

result due to

the reduction of

waste, allowing

organisations to

run at capacity,

reducing costs

and defect

rates.

impacts of lean implementations

21

The qualitative impacts include:

■ Culture change to focus on understanding the customer requirements.

■ Increased employee morale through more empowerment.

■ More cross functional teamworking which can contribute to knowledge

transfer between staff from within and across departments. This increases

the understanding of the whole system and how it fits together leading

to a change in attitude and outlook.

■ Increased awareness and time for problem solving using appropriate tools

and techniques to focus on the prevention rather than correction of errors.

■ Better layout of processes and being able to find items more easily.

■ By seeing immediate benefits from Lean events, staff will appreciate that

Lean does work and will understand that they can influence improvements.

Measuring the impact of Lean implementations

It is important to track the benefits of a Lean implementation, both as a means

of obtaining benefits realisation, and also of sustaining the improvement over

the longer term. However, in practice this is very hard to do in public services and

there are very few examples. A benchmarking study on behalf of HMRC surveyed

35 companies and included questions on impact measurement. The report noted

the difficulty organisations have providing performance measurement data,

especially in the areas of lead time and value for money.

There are also very few evaluations or performance measurement systems that are

implemented to monitor the impact of Lean implementations. HM Court Services

undertook a monitoring system whereby internal Lean change agents undertaking

Lean implementations agreed time savings to be made from the implementations

with court managers. This was followed by the change agent undertaking 3, 6 and

12 monthly reviews to determine whether these time savings had been realised.

Confirmed time savings were transferred into cost savings by the Lean Programme

Team and then reported across the organisation.

However, this type of monitoring is very time consuming to undertake, as well

as being open to criticism about how and if time savings convert into cost savings.

In practice, many reported outcomes for Lean implementations focus on the

increase of employee morale through more empowerment, more cross functional

teamworking, and increased awareness and time for problem solving using

appropriate tools and techniques.

22

There is considerable evidence of Lean being implemented in many public services,

including central government, local government, NHS Trusts, higher education and

emergency services. Where Lean has been implemented in these public services,

the evidence indicates significant quantitative and qualitative impact related to quality,

cost and time and even satisfaction. However, it should be noted that often only the

good and successful stories and results are reported. Also, as mentioned there is

still a lack of robust frameworks to track benefits and impacts within and across

public services.

Lincolnshire Improvement and Efficiency Partnership

The Lincolnshire Improvement and Efficiency Partnership (LIEP) has undertaken a three-

year BusinessTransformation Programme using a Lean/SystemsThinking methodology.

The programme had a total budget of approximately £590,000 to improve service

provision through a combination of partnership projects amongst councils and individual

projects across the seven District Councils. Examples of the impacts specific LIEP

projects include:

■ Addressing waste collection problems with the collection teams experimenting

with new ways of working.This includes collection staff moving between teams

to ensure teams are appropriately staffed to enable them to complete their rounds,

and collecting side waste so that fly tipping is reduced.

■ Projects looking at redesigning and improving the revenues and benefits services in

four District Councils and investigating the possibility of delivering a shared service

between three Councils.The projects resulted in halving processing times for

applications and absorbing a 30% increase in workload.

■ Two District Councils looked at the planning service with the aim of tackling backlogs

and reducing the time taken for new planning applications, typically halving the time

from between 65 to 70 days to between 33 and 35 days.

■ A project in voids and allocations has resulted in the overall re-let times for void

properties being reduced from 60 to 44 days, enabling faster occupancy.The project

also identified over £100,000 of potential savings by reducing the use of external

contractors to undertake large repairs and surveys.

A tool was used to track the financial and non-financial benefits of the projects. Project

managers completed this on a monthly basis. Benefits tracked include time saved,

improvements in service, improvement in customer satisfaction, cashable savings

and risk management issues.

23

Nottingham Business School

Nottingham Business School (NBS) has adopted a scorecard approach to enable

a quantitative and qualitative assessment to be made regarding the success of

improvements through their Lean programme. Performance against the information

presented on the scorecard is monitored on a weekly basis by the School Executive.

This is the management group for the Lean programme.

There is a ‘Blue Sky’ document which highlights direction of the school with respect

to education, research and executive education and external engagement in terms of

quality, quantity, money and people. This document is then translated into a scorecard

with appropriate metrics.

Each scorecard has a sponsor from the members of the School Executive. This

is usually a senior academic who is the head of a department. Each one of these

scorecards has several A3s. These are project definition documents highlighting

issues to be addressed, key activities to undertake to resolve issues, and the key

indicators (metrics) to measure performance. The A3s drive the scorecard and staff

undertake the work that lead to changes in the metrics.

The School Executive meets every week to review projects and the scorecard is

the first item on the agenda. In week 1, the Executive review the status of all the

A3s associated with education, week 2 it focuses on research, week 3 focuses

on executive education and week 4 on external engagements and other projects.

There is a rolling review that is repeated on monthly basis.

The development and the agreement of the format of the A3s was a long term

process. It took NBS one year to agree the correct set of scorecard metrics and

another year to produce high quality A3s and review them. Once the work was done

in developing appropriate A3s, the review at the weekly meetings is done within an

hour. The scorecard shows whether the school has succeeded in changing outcomes

or not and also captures the cultural aspects.

Lean Impact in Public Services: Essential questions

■ Lean Impact in Public Services: Essential questions

■ Does robust data currently exist within the organisation to create a baseline against

which to measure the impacts?

■ Are there any performance measurement systems within the organisation that can

be used to measure the Lean impacts or do such systems need to be developed?

■ What networks exist between public services which have engaged with Lean to help

transfer knowledge and exchange best practice?

■ How can cross organisational improvement programmes be developed in line with

customer pathways?

24

success factors and barriers to lean implementation

Contributing factors to successful Lean implementations

When implementing Lean, factors such as organisational readiness, critical success

factors and barriers to implementation should be considered.

Five key success factors

Five factors of success have consistently emerged during evaluations of Lean

implementations in the public services. The most effective implementations are

those where:

1 A culture of continuous improvement exists where staff are always actively

discussing and implementing improvements through either formal or informal

problem solving.

2 There is visible senior management commitment and strong leadership

throughout the organisation, in actions as well as words. It is vital for senior

management to show genuine interest, support and act upon the results

delivered to ensure the sustainability of the changes.

3 Time, adequate and capable resources are committed to improvement, including

financial resources but more importantly the use of dedicated and well trained

individuals.

4 A clear communication strategy has been developed and implemented through

appropriate channels to ensure messages penetrate. It has been highlighted that

a lack of clear communication regarding process improvement has led to anxiety

and concern amongst staff and also a perception that the approach is not relevant

for their role and organisation.

5 Organisational readiness is in place to support the implementation. These are

perhaps the most significant elements as they can provide a basis through which

the tools can be applied. Without these elements it can sometimes be too easy

for staff to work as they did before and not sustain the improvements made.

The key elements of organisational readiness include: staff engagement through

appropriate training and development; linking Lean to an improvement strategy;

having a process view; understanding customer requirements; strong, committed

leadership; seeking ways to co-produce with the service user; and, understanding

demand, capacity and variation. Together with a clear communication strategy

and supported by a steering group and project team, they are the bedrock and

foundations for developing Lean.

25

Barriers to Lean implementation

Many of the barriers that stop or slow down Lean implementation are the reverse of the

success factors e.g. lack of leadership, poor communication, no sense of urgency, lack

of methodology, little monitoring and evaluation, little consultation with stakeholders,

poor engagement with employees and, under resourced implementation teams.

Importantly barriers appear to be mainly around the cultural issues of leadership,

management and employees, including1:

■ Organisations having a lack of commitment and discipline to deliver the changes

resulting from implementations;

■ A nervousness or resistance to implement change because there is a lack of

managerial commitment or because staff lack the skills and capability to work

in a Lean environment;

■ Management waiting for the right time to implement Lean because they feel

staff are not ready for Lean;

■ Suspicion of change with employees not believing the Lean improvements are

real or will be sustained;

■ A lack of clear or open communications with trade unions about the changes

cause by Lean practices resulting in strained industrial relations.

Many of the

barriers that

stop or slow

down Lean

implementation

are the reverse

of the success

factors…

26

Furthermore, in public services there are other cultural barriers which need to be

overcome in order to create the foundation blocks of Lean that allow the appropriate

use of the tools and techniques. These include:

■ The distinction and power base of professionals and managers. Policy is focused

at an organisation level and is undertaken by managers, whilst practice is often

focused at the departmental level and undertaken by professionals. Professional

work is specialised and very rarely crosses departmental boundaries. Professionals

can therefore control the flow of work within their department and very powerfully

resist management attempts to undertake organisational wide changes.

■ Command and control structures imply that the requirement to engage with

process improvement is driven by management in response to the political

environment. Therefore staff are often responding to management requirements

rather than customer requirements.

■ A lack of understanding regarding the relationship between capacity and demand

and the need to manage variation. Public services need to better understand how

demand varies for different services and to remove activities that do not add value

to customers or that create bottlenecks in the system. This includes the need to

remove unnecessary paperwork or the different staff involved, for example.

■ Another method to manage queues is to manage variation rather than increase

capacity by reducing the overall steps in a process or introducing buffers between

departments. Training, especially using simulation games and techniques, can help

staff better understand the concept of end-to-end processes and flow through

an organisation.

■ A belief that Lean is a manufacturing based philosophy that is not applicable

to the public sector. Managers should consider how Lean is being applied in

other public services and also in commercial organisations in order to learn from

these experiences. Managers should visit other organisations as well as attend

conferences, read practitioner publications and engage in networking in order

to understand the issues and factors important to implementing Lean.

For Lean to become embedded within local authorities, it is important that a structure

is found and culture is developed that support both political and customer needs.

Managers

should consider

how Lean is

being applied

in other

public services

and also in

commercial

organisations in

order to learn

from these

experiences.

27

Nottingham Business School

Lean at Nottingham Business School (NBS) is being led by the Dean, who has

experience of implementing programmes in product development at previous

workplaces. As the project lead the Dean is involved in the initial set up for the

programme, specifying the training required for staff, reviewing the projects on a

weekly basis and a direction to the rest of the school that this is how business is done.

The Dean was very aware that in order to become a Lean school, the top

management needed to be on board with the initiative and to help drive it forward.

It sends a signal that Lean is not an add-on but about getting the entire operation

of the organisation to adopt Lean philosophy and practice on a continuous basis.

The approach adopted by the Dean was not to take one or two critical processes

and engineer them, but to try and enable staff to continuously question and look at

the process and practices and try to improve them all the time. Staff are therefore

empowered to make the changes.

The Dean was responsible for outlining and developing the required training programme

that will be delivered to all staff at NBS through collaboration with a local company.

There has also been leadership through example with the Dean attending a three week

training event and attendance by the School Executive at a one day training event at the

company location.

The Dean is part of the School Executive reviewing the performance of individual

improvement projects as part of the overall Lean programme. This is done at School

Executive meetings on a weekly basis. Crucially the Dean is also involved when there

are blocks in the improvement system. This intervention usually involves assistance

from other senior staff from other parts of the University so that there is a greater

level of understand regarding the improvement the Business School is trying to

achieve. These discussions at the right level enable the improvement to happen

more quickly and more smoothly.

As the Dean notes: “Sometimes I need to remove road blocks that exist. These could

be resource, systems, processes or lack of decision making. For example, one of the

things we looked at was increasing the number of exchange students we have. The

road block for this was the university structure which didn’t allow easy exchange with

other universities. We went through the process of talking to various parties in the

university and changing the structure of our second year. This required talking to

senior academics and the university’s central authorities to make changes to the

overall university’s system and module structure for this change to happen.”

28

Success factors and barriers to Lean: Essential questions

■ How are the senior executives demonstrating a commitment to Lean in both words

and actions?

■ What level of resources are being dedicated to Lean implementations in terms

of money, time and staff resources and for how long?

■ How is the organisation planning to communicate the Lean implementation both

within and beyond the organisation?

■ How are we planning to engage those staff in the organisation that are resistant

to change, especially those professionals with a significant power base?

■ How can the organisation better understand the demand patterns with specific

services and how should capacity be managed in order to respond to demand trends?

29

conclusion

Lean is a good framework for process improvement in organisations as the principles

give managers simple tools and techniques to use. Across public services Lean

is being introduced to improve service delivery by eliminating waste, simplifying

processes, and creating capacity to do more work with fewer resources. It is

therefore giving public services the opportunity to address some of the inefficiencies

around processes and practices.

At present the three principles of Lean that are being applied in public services are

value, flow and the reduction of waste. The one that is being used the most is the

reduction of waste in order to reduce cost and improve efficiency. If this remains

the total focus of Lean, then it will be difficult for Lean to become sustained in

public services.

There needs to be more focus first on value, then flow, and then waste. Through

a better understanding of process and variation, through viewing the organisation

as a system, and through better collection and understanding of monitoring data,

it is possible to achieve impact in terms of improved time and service quality,

as well as employee morale and satisfaction. Cost savings will occur as a result

of these benefits.

Lean is a good

framework

for process

improvement in

organisations as

the principles

give managers

simple tools

and techniques

to use.

30

There is

enormous

pressure on

public services

to reduce costs

and to become

more efficient.

However, organisational leaders and managers need to fully understand what this

means, commit and support it, and not merely view Lean as just another policy.

They must view it not as a policy or set of tools, but as part of an organisational

strategy which can include rapid successes that fundamentally consists of a shift

in culture, thinking and structure.

For a successful implementation for Lean in public services attention must be paid

to the following recurrent issues:

1 Recognising the importance of senior management commitment and

understanding. There is a direct correlation between the enthusiasm and drive

of senior managers and the positive experience of Lean across the organisation.

2 Enabling staff to acknowledge that Lean can both improve their own working

environment and impact upon the delivery of the service to the customer.

3 Ensuring that staff realise that Lean is part of their daily working life and that

a change of behaviour is required. Lean should not be viewed as external to the

organisation, carried out by the change agents or management consultants.

4 Remembering that Lean is not a one-off process redesign, Lean event, or a Rapid

Improvement Event (RIE), but about continual improvement. These events can

result in a radical process redesign, removing low hanging fruit, which needs

to be tackled first. However, the challenge will then be to tackle other areas of

improvement which may be more difficult. If other Lean tools are not employed,

in particular visual management, daily meetings and ongoing problem solving,

then inefficiencies may slowly return and Lean will not be sustained.

5 Realising that Lean is a journey. Along the journey many tools and techniques

can be used, some of which result in quick wins, but behaviours also need to be

developed over time e.g. leadership style and developing a culture which seeks

and addresses improvement. Taking a holistic approach to improvement, as was

done in HMRC, means that over a period of time (up to seven years) improvement

methodologies can become embedded.

There is enormous pressure on public services to reduce costs and to become more

efficient. These financial challenges can be addressed by systematic and effective

Lean programmes. However these programmes must not give the wrong message

about Lean. It should not be seen as a cost cutting exercise but instead as an

approach which could turn a difficult situation into an organisational opportunity,

restructuring the ways in which public services are delivered.

AIM Research ReportsExecutive Briefings

2012 Uncovering Innovation Processes

In the Hotel Industry

2011 The Complexity Challenge

How simplifying your business can create value

2011 Using business models to shape business success

2011 Performance Measurement Systems

For Product-Service Providers

2011 Open Collective Innovation

The power of the many over the few

2011 The Knowledge Management Challenge

Mastering the Softer Side of Knowledge Management

2010 The growth of services

Towards a better understanding of servicemeasurement, performance and innovation

2010 Creating a culture of innovation

Why corporate culture is key to radical innovationin firms

2010 The Uncertain Middle

Innovation lessons for low carbon energy technologyfrom demonstration projects and trials

2010 TheTen Myths of Manufacturing

What does the future hold for UK manufacturing?

2009 Building a strategy toolkit

Lessons from business

2009 Outcome-based contracting

Changing the boundaries of B2B customer relationships

2009 Risk management gets personal

Lessons from the credit crisis

2009 Radical Innovation: Making the Right Bets

2009 Racing For Radical Innovation

How motorsport companies harness networkdiversity for discontinuous innovation

2009 Capability vs. Productivity

Identifying the weaknesses in the UK Retail Industry

2008 High Value Manufacturing

Delivering on the Promise

2008 Is the UK’s science base performing?

2008 When organisations change

A middle management perspective on getting it right

2008 Leadership of Business Schools

Perceptions, Priorities and Predicaments

2007 Dancing with gorillas

How SMEs can go global by forging links with MNCs

2007 Adapting to the China Challenge

Lessons from experienced multinationals

2007 Twelve search strategies that could save

your organisation

Is discontinuous innovation on your corporate radar?This report is accompanied with a self-assessment booklet

2007 The Future of Business School Faculty

2007 The Future of HR

How Human Resource outsourcingis transforming the HR function

2007 The Importance of Meetings

How the structure of meetings affectsstrategic change in organisations

2007 The International Success of British Companies

An industry perspective

2007 Making sense of workplace performance

2006 From Modern to Paternalistic

How does your firm type affect your performance?

2006 How does UK retail productivity measure up?

2006 ‘Who does what’ and ‘who gets what’

Capturing the value from innovation

2006 Is Organisational Learning a Myth?

2006 Attention HQ

Strategies for UK subsidiary companies

2006 The Asian Century

Opportunities and challenges for the UK

2006 The Future of Business Schools in the UK

Finding a path to success

2006 Acting on Information

Performance management for the public sector

2006 Signing up for Competitive Advantage

How signature processes beat best practice

2006 Biotech Clusters in the UK

Challenges and opportunities

2006 Give and Take

Understanding attitudes to learningin the collaborative process

2006 Intelligent Design

How managing the design processcan boost company performance

2005 Dealing with Discontinuity

How to sharpen up your innovation act

2005 The Ambidextrous Organisation

2005 Leading for Innovation

The impact of leadership on innovation

2005 The Cluster Effect

How clusters policy can makethe UK more competitive

2005 Making Best Practice Stick

How UK firms can increase productivityby adopting leading-edge working practices

2005 Offshoring: Myth and Reality

What the global trade in business servicemeans for the UK

2005 Pathways to Value

How UK firms can create more valueusing innovation strategically

2004 i-works

How high value innovation networkscan boost UK productivity

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ISBN 978-1-906087-42-5

© Professor Zoe Radnor 2012