1. Lead the hunt for “gaspis”
Lean means “to make leaner” and its general philosophy is to eliminate non-value in processes. This non-value in a Lean logic is assessed according to 3 categories:
- Value-added activity or work directly increasing the value of the product or service from the customer’s point of view. These are the activities for which the customer would be willing to pay,
- The ancillary activity or work that does not directly add value for the customer but is necessary for the proper functioning of the business. In a financial environment, internal control is a good example,
- The activity without added value or waste creating no value, neither for the customer nor for the company and whose elimination will not be detrimental to the quality of the product or the service delivered.
However, achieving a high rate of added value is unrealistic in the finance function. Indeed, it is estimated that an efficient production cycle integrates only 30% of value-added time in administrative functions because, in contrast to industrial processes, financial processes are invisible, and therefore more difficult to conceptualize.
2. Create value for its customers
Customers are at the heart of any Lean or Six Sigma approach. The level of excellence of the process is measured above all by the satisfaction of internal and external customers of the organization. By providing the service expected from its customers and ensuring responsiveness and adaptability to changes in their requests, the finance function contributes to the creation of overall value in the company.
The difficulty of the exercise is to translate often imprecise customer requests into measurable objectives. This task can be particularly difficult for back office functions because the customer is less easy to identify – the operator has a natural tendency to designate his line manager as his customer – but also because these functions have a predisposition to s ” self-feed (the number of reports produced is often greater than the number of reports used for example).
3. Know the terrain
This is undoubtedly the essential break between Lean and traditional methods. Lean considers that since added value is the result of a process, the identification of waste and levers can only be done by relying on the actors of the process.
This management style involves a paradigm shift with the Western approach. In this one, where it is assumed that the processes are functioning satisfactorily and where managers are only called upon in the event of a crisis, a problem is a plague that one seeks to minimize. In the Lean philosophy, the manager is involved in daily management and each problem is seen as an opportunity for improvement, an inexhaustible source of progress.
Concretely, it involves touring the site on which the operational staff are working. This visit allows us to take a fresh look at the problems and to discuss their difficulties with the operational staff. In contact with the field, the manager is able to help identify waste and sources of improvement. He may also see the often large gap between the processes as described in quality manuals and the processes as they are actually carried out in the field.
4. Use visual management
Visual management consists of establishing a management ritual, the frequency of which varies according to need, in order to exchange effectively with operational staff. The objective is to comment on the activity based on indicators understood by all, to share the problems, to identify the causes and to decide on action plans.
For visual management to be effective, three golden rules must be observed:
- see together: the situation is visible and understandable to all (83% of the information is recorded by sight),
- know together: the objectives and rules are known to all,
- act together: users are involved in the decision-making process and the implementation of action plans.
These sessions, in accordance with the Lean philosophy of simplicity, are generally quite short and not debriefed.
This is undoubtedly the essential break between Lean and traditional methods. Lean considers that since added value is the result of a process, the identification of waste and levers can only be done by relying on the actors of the process.
This management style involves a paradigm shift with the Western approach. In this one, where it is assumed that the processes are functioning satisfactorily and where managers are only called upon in the event of a crisis, a problem is a plague that one seeks to minimize. In the Lean philosophy, the manager is involved in daily management and each problem is seen as an opportunity for improvement, an inexhaustible source of progress.
Concretely, it involves touring the site on which the operational staff are working. This visit allows us to take a fresh look at the problems and to discuss their difficulties with the operational staff. In contact with the field, the manager is able to help identify waste and sources of improvement. He may also see the often large gap between the processes as described in quality manuals and the processes as they are actually carried out in the field.
5. Control your performance
Lean and Six Sigma approaches are both based on a culture of measurement: you can only improve a process if it is stabilized and controlled.
The implementation of performance measurement indicators is the first step in bringing a process under control. These allow a factual diagnosis of the initial situation to be made. Crossed with critical customer requirements, these indicators are given quantitative objectives against which progress will be measured. The regular observation of improved performance is an important motivator, demonstrating factually that everyone’s efforts have had a tangible impact on collective performance.
The natural tendency of operational staff is to devote time and energy to justifying figures a posteriori. The move towards a forward-looking logic, which favors the definition of corrective action plans to secure the achievement of target objectives, requires several months and substantial efforts in terms of change management.
6. Stabilize and standardize
Any continuous improvement system involves the definition of standards. This standardization has many facets: standardization in the execution of processes and associated good practices, standardization of the performance monitoring framework (dashboard, KPI), standardization of management rituals.
The establishment of standards is a guarantee of repeatability of tasks which makes the execution of the process more predictable. The organization is also more flexible; skill transfers are faster and employees more versatile.
Standard does not mean immutable; on the contrary, it is essential to be able to make this reference framework evolve as and when anomalies and failures are discovered and resolved. On the other hand, the standardization of tasks is also a way of empowering teams, which contribute to the work of building standards and their evolution.
7. Make a long-term commitment
Being Lean doesn’t just happen overnight. It is a long-term process that requires long-term investment. A Lean program requires engaging the company in a transformation of its management system, in order to align company culture and Lean principles. Its dissemination takes place over several years and the deployment trajectory must be pragmatic.
Any large-scale Lean program first requires the definition of strategic objectives from which the operational staff will develop their own target, in perfect coherence with the vision of management. To encourage and maintain this culture of continuous improvement, the company’s strategic vision must be clear and consistent.
8. Dare the collaborative approach
Beyond knowledge of the field and in situ analysis of dysfunctions, the Lean methodology recommends rethinking the managerial approach and advocates reflection and a search for solutions in a group logic, where competence and expertise of all employees are valued and where the silos between the different levels of the company disappear.
Indeed, unlike a traditional approach whereby management decides, operators execute and middle management controls, Lean Management advocates reflection and implementation at all levels.
In the Lean philosophy, the added value of the manager is to support continuous improvement initiatives and to put in place the conditions for their success. The field teams, for their part, produce and implement the improvements pushed by management or proposed by operational staff.
9. Stimulate innovation
Unlike other approaches, Lean approaches are above all pragmatic; they do not aim to achieve perfection all at once but to get closer to the ideal target little by little. Continuous improvement comes from leaps in technology but also thousands of small daily improvements. If a problem is detected and a solution is found, it should be implemented as quickly as possible on a pilot. If its effectiveness is proven, it must be generalized.
All initiatives should be taken into account as they are likely to improve the process. It is better to consider all ideas, even average ones, rather than waiting for a great idea from one person. This lack of “censorship” is a lever to promote the involvement of operational staff and thus gain their support.
This innovation process can generate very significant gains: we can cite, for example, the case of a receptionist from the Accor group who had the idea of turning off the televisions as soon as a customer leaves his room. For this idea, he received only 600 euros in reward (to be related to the millions won by the group) but his career was greatly accelerated, since he is now a hotel manager.
