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Why It's Time To Run Digital Enterprises The 'Lean' Way

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The digital enterprise, which everyone is striving for these days, isn't a single, cohesive venture that is efficiently processing bits and bytes on one end and delivering instantaneous customer gratification out the other. Rather, as it currently stands, it's an incomprehensible mountain of systems, platforms, processes and one-off efforts that people are trying to sort through, all the while worrying about the future of their jobs, at risk either because of obsolescence or due to their companies being overrun by more nimble competitors.

Perhaps, then, simply becoming a "digital enterprise" isn't enough to succeed in today's hyper-competitive global economy, something else is needed. That missing piece is a healthy dose of forward-thinking, well-tuned management to make it all work. After all, dropping technology on top of an enterprise does not automatically turn it into a profitable venture overnight.

Enter the "Lean" philosophy. As the Lean Enterprise Institute defines it: "The core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources."

Lean is a philosophy that helped turn around manufacturers over the past couple of decades, based on the idea that tasks should be accomplished faster, simpler, better, and cheaper, with employees engaged as full partners in continuous improvement. In the process, many companies evolved from calcified operations churning out substandard goods to be foisted on consumers to more responsive, smarter enterprises that are designing quality into their offerings right from the start.

Now, the concept of Lean is increasingly being applied to enterprises and their technology operations.  Steven Bell and Michael Orzen have already done some stellar work in identifying the requirements for "Lean IT." In their book Lean IT: Enabling and Sustaining Your Lean Transformation, they point out that too many companies obsess about cutting costs for the sake of cutting. Instead, employees and managers should collaborate to figure out ways to drive out waste in their processes and decisions. The ultimate benefit, they say, is executives will be able to build a well-functioning technology organization, while reducing the need to constantly fight fires.

Of course, IT is no longer just about what goes on in the IT department. Entire organizations now function on technology. Now, Jez Humble, Joanne Molesky, and Barry O'Reilly take that thinking a step further into the digital enterprise, exploring the promises of the lean enterprise in their latest book, Lean Enterprise: How High Performance Organizations Innovate at Scale. They point out that despite the pervasiveness of technology in every nook and cranny of the enterprise, "a lean enterprise is primarily a human system."  If anything, the continuing rise of technology means people are more important to business success.  "As the pace of social and technological change accelerates, the lean approach pioneered by Toyota becomes even more important because it sets out a proven strategy for thriving in uncertainty by embracing change," Humble, Molesky, and O'Reilly write. "The key to creating a lean enterprise is to enable those doing the work to solve their customers' problems in a way that is aligned with the strategy of the wider organization. To achieve this, we rely on people being able to make local decisions that are sound at a strategic level -- which, in turn, relies critically on the flow of information, including feedback loops."

The point is that technology in and of itself does not provide competitive advantage -- people are an organization's competitive advantage. If anything, technology initiatives need to be approached with the same mindset as product initiatives -- infused with quality and built on collaboration.  While not an end in itself, technology -- especially social, cloud and mobile -- serves as the enabler that enhances and speeds up collaboration and access to resources.

The book explores many of the tenets of applying lean principles to today's technology-driven enterprises. Two in particular stand out: IT itself needs to be turned IT into a competitive advantage versus being seen as a cost center, and the adoption of a lean enterprise needs to go hand-in-hand with an innovation culture. To get to a lean digital enterprise, it's time to change the "IT mindset" in which IT is seen as a cost center, the authors urge.

To turn IT into a competitive advantage, Humble, Molesky, and O'Reilly make the following recommendations:

You build it, you run it. "Teams that build new products and services must take responsibility for the operation and support of those services, at least until they are stable and the operation and support burden becomes predictable," the authors state. "By doing this, we also ensure that it is easy to measure the cost of running the service and the value it delivers."

Turn IT into a product development organization. "Product development lifecycle and strategies should be used to deliver internal products and services as well as customer-facing ones."

Invest in reducing complexity of existing systems. "Invest in ongoing improvement work with the goal of reducing the cost and risk of making changes to existing services."

These are just a few snippets from what is arguably one of the most important initiatives enterprises need to undertake if they are to compete in today's economy, and take on their increasingly digital-savvy competitors. Many organizations will soon be investing millions of dollars in new technologies in an attempt to keep up. Ultimately, the key to success is not how much money you spend on digital technology; it's how you enable your people to help run things and deliver products quicker, simpler, better, and cheaper.