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Monday, September 14, 2020

Lean Requires Working IN the Business and ON the Business

Lean improvement involves both tactical and strategic efforts for high performance impact.

Tactical work is a term used to describe the actions that support day-to-day operations. Lean organizations make use of Daily Management systems, a structured process to focus employee’s actions to continuously improve their day-to-day work. Daily Management include activities like daily huddles, visual controls, leader standard work, Gemba walks, et al which empowers employees to identify potential process concerns, recommend potential solutions, and learn by implementing process changes. This is what I would call working IN the business.

Tactical work is the basis of operational effectiveness since it produces the impacts that are measured in evaluating performance. Because of this, changes in tactical efficiency are used to measure whether individual or departmental performance is improving or degrading.

Most improvements to tactical efficiency are incremental. This means that in the big scheme of things, incremental changes have a minimal impact on performance improvement. The main purpose of the daily management process is the enabling of robust “Check” and “Act” activities. An organization that places daily management at the core of its management system will be capable of identifying deviation as soon as it occurs and to initiate the problem solving process right away.

Such an organization will be best placed to deal with future challenges, because it has created a solid method for dealing with uncertainty and problems, and because it has continuously engaged and developed its people (the real value creators).

Strategic work on the other hand, is used to refer to actions that, while they are not integral to day-to-day operations, have the potential to significantly improve the efficiency of tactical work by delivering step-function magnitude efficiency impacts. Many organizations have hard-working people putting their best efforts into areas that have little to no effect on strategic success. They’re essentially majoring in the minors—because their activities aren’t aligned with the priorities. Your strategy serves as the vehicle for answering the question, “How can we better align all our resources to maximize our strategic success?”

You need a strategy because it sets the direction and establishes priorities for your organization. It defines your organization’s view of success and prioritizes the activities that will make this view your reality. The strategy will help your people know what they should be working on, and what they should be working on first.

In Lean, Hoshin Kanri is the continuous improvement management process to deploy breakthrough strategies. The Hoshin Kanri process identifies and concentrates resources on the vital few stretch achievements that support the vision. It separates those performance issues that require dramatic improvement from the many incremental improvements that can achieved at the local level. It translates the strategic intent into the required day-to-day behavior. This is what I call working ON the business.

Incremental improvements are important in business but certainly can’t be the sole basis for achieving (or maintaining) world-class performance. Incremental positive impacts will always be overshadowed by strategic improvements, whether they are made within your company or by a competitor.

Strategy and tactics are both how you will achieve your goals and objectives. Strategy is our path or bridge for going from where we are today to our goal. Tactics then are how specifically or tangibly we will do that. Therefore, Lean requires working IN the business and well as working ON the business for true success.

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