Digital Lean Management
by Bernd Schreiber, Willem Romanus, Engin Beken, Yong Lee
September 2017
Unlock potential and achieve next performance levels

Unlock potential and achieve next performance levels

Successful companies have achieved outstanding performances by incorporating Lean Management at the center of their corporate transformations. At the same time, the potential of digital technologies to transform performance has become widely recognized. However, we observe two types of lean companies on their way to digital: either companies realize a radical performance increase of up to 50% or more, or become stuck in situations in which initiatives happen in silos, efforts lack coordination, and success is never achieved. This Viewpoint is about transforming companies to digital lean by developing their lean capabilities and embedding technological building blocks into their value streams.

“Traditional Lean Excellence” and new digital potential

Lean companies develop their capabilities and processes continuously as part of their culture. Continuous improvement allows lean companies to align their activities flexibly, according to business strategy. As a consequence of this holistic alignment, these companies achieve relatively high performance levels compared to their competitors.

A recent Arthur D. Little automotive study classified the lean lifecycle into three phases and determined annual company growth rates in each phase. Using a key automotive productivity indicator (“hours per vehicle”) as a measure, the correlation with with lean implementation was analyzed.

Performance growth of up to 8 percent is common during the Lean Exploitation phase. This decreases as performance improves, and tends to stabilize at around 1 percent in the Lean Excellence phase. Digital technologies have the potential to make a further step-change improvement across all phases. Similar trends have been identified in other industry sectors.

Companies that are able to consequently rely on lean principles and embed digital enablers overcome traditional barriers and unlock digital potential. This results in a radical shift of the traditional Lean Excellence performance and new value propositions for the customer.

Lean foundation of outstanding organizations

Even decades after “The machine that changed the world”, still many lean journeys fail. Companies often focus on tools rather than philosophy, and on waste removal rather than customer value. Disappointing incremental improvements and lean “fatigue” are the main symptoms.