Better, Faster, More: Lean for the Digital Age
Once upon a time business was about predictability. Simply put, the goal was to get to know your customer, get your product right, forecast it, promote it, get it right at production, and finally distribute. And the critical components were promoting and distribution. Then consumer perceptions about quality and the access to information started to gradually change things. This was the era of production obsession. Some companies turned to quality and short cycles of product development as a way to keep up with the changes in the environment.
Then things really changed. Over the last decade, technology has reshaped our behavior and what competition means for most companies. In this new environment, uncertainty is the only certainty; barriers to entry are down; and the speed of change is increasing.
At first it seemed for many that it was about new business models. Digital business models. For a time it seemed as if the most important thing to do was deliver new and engaging digital experiences. But the days are gone when having a new killer app was enough to satisfy our customers. In the words of Amazon CEO Jeff Bezos, “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”
However, many companies are still trapped in their outdated way of thinking about digital innovation. We’re all witnessing a marketplace in flux, and many companies don’t have an operating model that allows them to understand the customer, design and provide a truly engaging and unique experience, and do it thoughtfully fast. And being slow is hurting them in this new era of consumer obsession.
Rethinking Lean for the digital age
In principle, being customer centric and innovative are qualities that most companies aspire to. In practice, many companies have a hard time delivering the goods.
But if we look at industry titans such as Amazon, Google, Starbucks or any number of globally recognized brands, there are similarities in their operating model that provide insights on how to get it right. Many of the companies that are realizing success in this new digital economy have Lean principles at the core of their organizational DNA.
When you think of Lean, do you think of Toyota or manufacturing? If so, you’re not alone. Indeed, many of us have read the literature on Lean that focuses extensively on manufacturing and optimizing processes in the physical world. Worse, the word "Lean" has been incorrectly used as a euphemism for cost cutting. That's so far from the truth.
At its core, Lean helps companies in three critical areas: 1) identifying value for the customer and the flows of value creation, 2) creating a management system to guarantee that they’re delivering that value consistently, and 3) continually finding ways to improve. These considerations are also indispensable in the digital realm. And considering the magnitude of complexity within most large organizations, it’s easy to appreciate how Lean principles can help teams break out of their silos to identify and deliver value to their customers while constantly improving.
Lean has become a key word for describing the general mindset of successful startups. And you can see it concretely in practices such as Agile, Minimum Viable Products, and the short cycles of build, measure and learn. But to our point, it is particularly interesting to observe how Lean has also been a powerful and concrete inspiration for very large organizations to scale their business in this new economy without losing their edge.
Global brands and Lean Digital
Let’s examine some of the world’s top brands more closely to better understand how Lean principles are being used to drive digital innovation. Since the day Amazon opened its doors, it has been a beacon of customer centricity. Much like Toyota, Amazon’s growth is largely rooted in its success automating simple tasks while using its employees for more high-value tasks. “Kaizen”, or continual improvement, is also a central tenet of Amazon’s business philosophy. And these improvements aren’t just reactions to complaints. The company actively mines its own operations to identify weaknesses in the way it delivers value, and then proactively creates solutions.
Google also has Lean at the core of many of its business processes. This is a company that makes an estimated 500-600 changes to its search algorithm every year. To be this adaptive, one of the arrows in Google’s quiver is a Design Sprint, which is a revolutionary approach to experimenting in as little as five days.
Starbucks was so inspired by Lean that it hired a “vice president of lean thinking” whose mission was to help create a more efficient organization with an unparalleled coffee-buying experience. We see further evidence of Lean at work through Starbucks’ app, which allows customers to order their drinks without setting foot in the store—saving valuable time for the billions of coffee drinkers it serves every year while creating one of the most celebrated mobile payments solutions in retail.
Creating your own Lean Digital machine
If you’re thinking about how to replicate this type of success, you should avoid mimicking what other companies are doing. Imitation may be the highest form of flattery, but it’s no guarantee for success. Each company has its own “journey,” if you will.
Instead, a better starting point is focusing on your company’s goals and roadmap. Applying Lean to your digital transformation is a tremendous opportunity—one with a clear business impact no matter which industry you're in.
This is also a good time to consider what “transformation” in the digital context really means. When people talk about transformation, they are acknowledging that the change in environment demands a change within their organizations. In response, companies that hope to remain relevant in the face of this new reality must transform themselves by reviewing and possibly rethinking their digital strategies, business needs and operating models.
But this is where some companies fall short. Rather than changing their operating model, the change is limited to one department or team within the organization—and fails to achieve scale. For example, with a group of 50,000 employees, maybe you change 200, with the rest working exactly the same way they’ve worked over the last 30 to 40 years. The change of the parts must communicate with the vision for the change of the whole.
Lean Digital for leaders
To avoid transforming only at the surface level, company leaders need to take that first step—and immerse themselves in the transformation process. This is not something to delegate. Changing mindsets is no simple undertaking. In fact, change can be downright terrifying for some people. That’s why it’s so important to change the company culture from the top, and to create a safe place for teams to experiment and make mistakes.
The only way to innovate is through a series of trials and errors, or better said fast learning by doing. Of course, this concept isn’t new. As far back as 1882, Thomas Edison wrote in an article, How to Succeed as an Inventor, “The reason why I get along with comparative ease now is because I know from experience the enormous number of things that won’t work.” Ad-hoc trial and error though is relying too much on sheer luck and it doesn't solve today's business imperatives. Lean provides the framework for doing that at a rapid pace, consistently, and generating a lot of learning in the process.
Furthermore, it’s important to invest not only in technology or solutions, but how teams engage with their work and customers. Culture drives behavior, and behavior dictates how employees engage with systems, technology solutions, customers and each other.
The results speak volumes
Having worked with several of the world’s largest companies, CI&T has witnessed firsthand the power of Lean Digital thinking. For example, one of our banking clients—which has over US$400 billion in total assets, a US$60 billion market cap, and over 90,000 employees—was able to transform the way people approached their work in less than two years, and the results were astonishing. The bank began delivering new digital experiences five times faster than before. One of their apps, called “App Light,” was also awarded “The Best Banking App of 2017.”
But this client is not an aberration. We’ve seen how this new mindset has helped companies across a range of industries deliver products to market 10 times faster, improve employee and customer satisfaction, and much more. Remember that Lean Digital is all about applying Lean principles to provide better experiences, but faster and more consistently. If your company can satisfy consumers by consistently meeting or exceeding their expectations, you’re all set to jump ahead of the competition