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[Music]
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[Music]
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Dish, thank you so much for joining us
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today. My pleasure. Thank you for having
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me. Great. So, we're going to talk about
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lean practices and services. Now ever
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since the 1950s when Toyota started
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implementing lean manufacturing uh lean
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has become quite a by word in
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manufacturing but uh in services it has
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always been a much harder situation.
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What are some of the reasons for that?
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Um well maybe let's spend a moment on
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talking about what it is and how lean
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applies to services and um why people
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should care. Um as you said rightly lean
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has has had a long history in the
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manufacturing space. Um in the last
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decade or two it's become uh much more
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common to see it applied to services.
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It's the same set of ideas which start
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with taking a customer perspective on um
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a process and taking out waste from a
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process. Um it's a little harder in
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services to do that for a few different
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reasons primarily rooted in one simple
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fact which is in the manufacturing world
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um you have a product a physical product
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that's going through a manufacturing
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process. Um in the services context it's
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not a product it's actually the customer
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it's a human being that's going through
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the process which drives a few different
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differences. Um, you know, in the
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manufacturing context, you the product
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is typically a widget. You're making the
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same thing a million times over. Um, in
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the services context, each transaction
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is slightly different. Um, they're not
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identical and you have to account for
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that complexity when when looking at
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that process and thinking about how to
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improve it. Um also in
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manufacturing um the um process of
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making the product is usually not um
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visible to the customer. So you could
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for example have a process that has a
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high defect rate um but as long as you
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have a QA step at the end that takes out
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the defects you can get a terrific
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product to the customer at a great
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price. Uh and that's a perfectly
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acceptable trade-off. In services
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however typically in customerf facing
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processes the customer sees everything.
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So think of yourself standing in line at
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Starbucks. Uh if there's a high error
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rate in that process or if there's a
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delay in that process, you experience it
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immediately. There's no covering up for
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that, right? Um and then a third point
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I'd highlight is from now from a
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practitioner's perspective looking at a
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process and trying to improve it. Um in
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manufacturing waste is very visible. You
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walk into manufacturing plant you will
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see waste if it exists. You'll see
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inventory piled up. You'll see defects,
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rejects, um you'll see bottlenecks. If
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you walk into a services process,
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typically these days in companies, um
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these are electronic processes. A lot of
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the workflow is electronic. So you might
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see rows and rows of cubicles with
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people working away at the process, but
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you wouldn't see waste physically
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optically. And so you really have to map
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out the process carefully, understand
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the facts, um, lay out the value stream
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to try to figure out where the waste
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it's. So those are a few few of the ways
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in which you know it's it's different to
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apply lean services and and perhaps a
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little more subtle. So tish why should
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companies care about lean services?
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So look, Mul, as you know, we are in a
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um challenging macroeconomic environment
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where growth has been difficult for a
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lot of companies and will probably
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continue to be for the foreseeable
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future. Competition's quite intense. And
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we're also in an era where um consumer
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attitudes and perceptions are are
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changing. Uh consumers and customers
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generally expect high levels of service.
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They're conditioned by the evolution of
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technology around us. and you know the
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era of global, social, mobile
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um and companies have to adapt to
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respond to those needs. They have to be
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um flexible, adaptive uh you know be
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able to be responsive to what customers
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are asking for. Um when we actually look
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at
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um service processes in companies uh and
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I'd say both customerf facing ones and
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back office ones, we actually don't find
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them to be that responsive to the needs
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of customers. They tend to be often
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slow, errorprone, uh, and lead to c
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customer
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dissatisfaction. Think about your own
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experience, let's say, in interacting
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with your bank or with your telecom
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company or with the health care system
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um or even with government services. You
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know, you'll find plenty of areas where
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processes could be a lot more responsive
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than they are. Um, lean is a set of
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techniques as you know uh rooted in in
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the manufacturing world which takes a
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look at processes from a customer's
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perspective and tries to help take out
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everything that the customer does not
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feel is value adding is quote waste in
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the process. And so it can be a very
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powerful lever for companies to um
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significantly improve both the cost, the
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efficiency and the effectiveness of of
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their service processes and make them
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much more responsive to customers needs.
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Now let let's assume that a company does
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succeed in identifying where the waste
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is and and and it gets it out of the out
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of the service uh process. uh what kind
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of impact uh do you have you have you
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seen companies see on their bottom line?
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Um we find actually lean efforts can be
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quite
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transformational. Um we see cost
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improvements in the range of often a
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quarter to a third of the cost of the
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process. Um let me give you a a very
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simple example uh and in how how we
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actually see this. Um we work a lot with
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telecom clients. If you ever ordered a
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telecom um service um at home, you know,
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it takes a long time to get that service
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up and running. Um one of the important
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steps in um a telco installing a new
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service is actually the process of
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testing the service before before they
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turn it up. It turns out actually that
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they typically test the service in
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almost eight different segments before
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they turn it up with each one of those
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tests being um timeconuming and labor
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intensive.
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Um it actually turns out when you look
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at the process that um if you replace
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those eight individual steps with one
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single end to end test the error rates
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are so low that you're better off making
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that change and uh you you end up
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getting a a significant improvement in
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cost in the 30 to 40% range and you cut
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the cycle time by more than half.
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So um that's an example of you know how
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you would take out cost using a lean
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lens and actually I emphasize um one
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additional um lesson from it which is
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actually a lot of it is about taking
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cost but it's not only about taking
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cost. It's actually about improving the
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quality of the interaction with the
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customer. So in that particular example
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you know reducing the time to install by
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half is actually a huge benefit. you
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know, you wait less for for that service
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to be up and running. And lean when done
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right uh is impactful not just in cost.
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It's actually about whatever the
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customer deems to be value, which often
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is
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quality. That's right. So that that's
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great. That's a huge impact if you see
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25 to 30% impact on the bottom line. I
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wonder if we could go back to something
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you said a little earlier about how
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difficult it is to standardize uh uh
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things when you look at services. Uh
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what are some of the challenges involved
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in standardizing operations in services?
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So you know as we as we talked about a
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little bit earlier
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um in in the services context you're not
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producing widgets you're producing a
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very human customer experience. So you
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um can tend to break you can tend to
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group your transactions into categories
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or kind of short list of categories but
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you can never actually make them fully
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identical. Um and so what I'd say is
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standardization actually is one lever
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that tends to get used in lean. There
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are a host of other levers as well. um
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you know from uh uh reducing unnecessary
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steps or duplicative steps or
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eliminating rework and handoffs and so
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on and so forth. Those are all an
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integral part of lean standardization is
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one part. The the challenge with
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standardization as I said is you can
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take it to the nth degree in
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manufacturing. You can only take it so
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far in services.
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Could you u give any examples of
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companies that have done an outstanding
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job in implementing lean services?
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Certainly I can um give you several
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examples from you know different
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industries um where we've um uh seen
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lean in action. Uh let me start maybe
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with um a finance process you know
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representative I would say of of a lot
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of back office processes in companies
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like finance HR and IT um accounts
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payable it's a common process in a lot
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of companies where you pay invoices to
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the vendors of of the companies um you
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you typically have a uh large group of
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people who process these invoices and
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make sure that they can get paid on time
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and accurately. One of the um issues we
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typically find with those processes and
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several other transactional processes is
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the issue of variability. It's a classic
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lean waste unevenness in a process. Uh
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and we often test it in the following
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way. We create a uh a dummy invoice, an
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artificially created transaction
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effectively and send it to 10 different
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operators. So it's the same transaction
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sent to 10 different people and we
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repeat that three different times and
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time what level of variability CV across
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those people and we are very frequently
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stunned by the results. We see 6 to 7x
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differences in the productivity of the
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best performer to the low um to the
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weakest performer. Not just 10 or 20%
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differences but six to seven times. Um,
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as I said, that's a classic lean waste.
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You shouldn't have that level of
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variability. And it often happens
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because people are following different
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practices. They haven't been trained
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consistently. They're not following the
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same script. And actually, quite
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importantly, there is often no
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expectation for how long a transaction
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should take. Nobody's measuring it. Uh,
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you know, they often measure performance
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at an aggregate level across the group,
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but individual performance on a
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transaction is is often not measured and
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tracked and managed. Um so taking that
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out can be a really significant
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opportunity. Uh let me take another
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example um from let's say a retail bank.
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Um you know you I'm sure have made
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customer support calls to your bank. Uh
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many processes have um um cyclicality in
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work volume. So the calls to a retail
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bank will often go up in volume and come
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down. Um often these peaks are
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predictable. In a retail bank that we've
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worked with, for example, um the middle
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of the week is when the calls peak. And
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the peak is actually quite high. It's
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one and a half to two times the normal
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workload um of that group. And if you
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don't handle that with extra capacity,
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you can lengthen the average weight time
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of the call. Customers get frustrated,
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they drop off, and you know, that's not
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a great outcome. So um you know often
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operations will handle this by staffing
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to peak. You keep around enough people
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so that you can handle the peak load and
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you never miss a beat. But of course
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those people are not doing much the rest
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of the days. Um you know a simple idea
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that you would see in lean is the idea
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of crossraining across different groups
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to smooth out utilization. So for
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example, you could take the mortgage
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desk um crossrain them on handling
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support calls and bring them into
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service whenever the call volume goes up
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very high. Um and of course they can go
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back to their work you know on on the
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other days. So again a very simple
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example that we've you know seen work in
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in the banking space and actually in
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most customer service operations. Um let
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me highlight another one from a very
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different industry which is healthcare
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providers. Um if you've ever been to a
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hospital u as an inpatient um you'll
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know that um in the hospital's process
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flow specialized tests like lab tests
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and blood tests and imaging can often be
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bottlenecks. Um in fact in one hospital
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client that we worked with if you
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measure the extra time that patients
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have to stay in the hospital just
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because of scheduling issues with these
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tests it's in in the range of 2 to three
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days. So people patients are literally
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you know stuck at the hospital extra
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time just because of the scheduling
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challenges around these tech around
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these tests and the bottlenecks. Um what
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we found also is that if you improve the
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communication across various departments
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so that you're not when you're
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scheduling one of these tests, you're
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passing on more granular information
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about the criticality of the test for
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each individual patient, the likely time
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frame of stay. You can actually cut that
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waiting time in half.
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So these are pretty meaningful impacts
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you know um three different examples of
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um cross trainining of improved
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scheduling and of of um evenness or
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tackling unevenness in a process that
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you know grew up in the manufacturing
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world can be but but can be very
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powerful in a services context. Great.
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So uh let's say a company uh is sold on
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the idea of implementing clean services.
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They see the benefits. they see the
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value. Uh uh when they actually try to
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implement a lean program, what are some
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of the most common obstacles that they
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face in doing so? Uh and how can these
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be overcome? I'd say there are, you
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know, three main things um that are that
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are fairly straightforward and and ones
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we see frequently. Um the first is
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actually finding where the lean
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opportunity is. as as we were talking
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earlier um you know lean applied to
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services is a little different it's a
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little more subtle and the waste isn't
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quite visible so it's actually feriting
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out where the waste is happening takes a
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little bit of work getting to the facts
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you know getting to the value stream and
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so on so that's one just figuring out
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which processes is the waste in what
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exactly is the waste and how do you
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tackle it um I'd say a second um very
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common issue is getting the organization
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to buy in um getting people to change
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ultimately
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um service processes are all about
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people and it's about getting people to
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think differently. It's getting people
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to um work differently and that's not an
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easy thing and uh you know there are
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ways to overcome it which is to involve
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people in the process and make them um
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feel ownership um over the changes that
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that they should be making. But that's a
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common challenge that we see. A third
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one I'd highlight is sustaining the
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changes. Even after lean efforts have
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been designed and implemented, we often
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see that it's very hard to sustain the
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improvements. Uh if you don't um
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monitor, track and um encourage the
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organization to continue um the change
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and sustain it, there can be a reversion
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back to to old practices. So I'd say
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those are a few of the common challenges
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we see. Now you've also identified uh in
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a report that I I uh saw uh uh some
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success factors uh that companies need
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to pay attention to if they want to
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implement uh a lean program. Uh could
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you take us through a few of those? So
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to start with um I'd say one of the
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common success factors for a for a
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strong lean program is getting a really
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good handle on how people spend their
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time. Believe it or not, actually, if
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you walk into most service operations,
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it's a simple question. Um, how do your
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people spend your time? Most service
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operations actually don't track that
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very well. They may track it at a very
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macro level in the sense of
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understanding what accounts do people
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spend time on or what's their attendance
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level. Uh, but they don't track it down
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to an activity or a transaction level,
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which is really what you need to do lean
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effectively and to figure out what's
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value added work versus nonvalue added
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work. So getting a good handle on how
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people spend their time is is actually
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quite important and helpful and it
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doesn't require a big IT solution. It's
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you know uh often not a complicated
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answer but a simple set of tools that
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can help you do that. I'd say a second
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success factor is um very clear um
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measurement and monitoring of success.
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So very clearly defining what you think
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success is for the effort. what measures
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or metrics or KPIs would you want to put
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in place and then actually measuring
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them and making them transparent. You
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know, back to our earlier conversation,
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whether it's a cost metric or a quality
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metric around customer satisfaction or
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turnaround time or net promoter score or
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or whatever it is that the right metric
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is, but getting transparency around that
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and ongoing tracking is extremely
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important.
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I'd say a third um um success factor is
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for the management of the company and
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and uh you know the employees to not
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think of lean as a one-time project. Uh
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it really is a mindset shift. It you
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know lean starts with the philosophy
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that um
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processes can always be improved.
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Everything can always be improved. And
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so while there is typically a one-time
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step change benefit you get when you
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first start doing it um you know the
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fundamental principle underlying lean is
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that it's about continuous improvement.
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It's about changing all the time. It's
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about improving all the time. So I think
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going in with that mindset and
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instilling that mindset in the
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organization I think is another really
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important success factor. Well it seems
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that that last point you mentioned is
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very critical. uh but it it almost also
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seems like one of the most challenging
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and the most difficult. How can
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companies develop a lean culture? Um it
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you're absolutely right. It is actually
00:19:10
one of the most challenging things to do
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um in any transformation but
00:19:14
particularly in in in a lean-like effort
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where where this is the fund you know
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changing what people do is kind of the
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fundamental improvement you're making.
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I'd say a few things that we've seen
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work very well. The first is for the
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executives um you know to really own the
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transformation and embody the behaviors
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uh that the transformation requires to
00:19:38
really be out there visibly. This is not
00:19:40
something that you delegate to somebody
00:19:42
else. It's not something that a a
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specific lean group does for you. This
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is something that the executives of the
00:19:48
company have to take on as a priority.
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Own it visibly be out in front on. Um, a
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second thing, um, is to pay really close
00:19:58
attention to the human aspects of
00:20:01
change. As I said, changing people and
00:20:04
what they do and their attitudes is not
00:20:06
trivial, but actually getting them
00:20:09
involved in the lean process and getting
00:20:12
them to feel a sense of ownership is
00:20:15
critical. Lean is about grassroots
00:20:18
problem solving. It's about the people
00:20:20
who are closest to the process thinking
00:20:22
about what the improvement should be and
00:20:24
then owning them and implementing them
00:20:26
and seeing you know the results. So
00:20:28
paying careful attention to the human
00:20:30
side of change I think is is another
00:20:32
important enabler of of culture change.
00:20:35
And I'd say a third common um success
00:20:40
factor if you will that that we see is
00:20:43
communication communication.
00:20:44
Communication. It's really important to
00:20:46
communicate clearly right from the start
00:20:48
of the effort um you know with clear
00:20:51
objectives a clear platform a rationale
00:20:54
for why you're doing what you're trying
00:20:55
to do in the lean transformation and
00:20:58
then you know keeping up the
00:20:59
communication as you try out various
00:21:02
things communicating to the organization
00:21:04
what's going on what improvements are
00:21:05
coming out celebrating successes and
00:21:07
wins so people feel good about the
00:21:10
change um and bringing the entire
00:21:13
organization along so they feel part of
00:21:15
you know the effort. So le one last
00:21:18
question. Let's assume that uh in the
00:21:22
studio right now in in addition to just
00:21:24
the two of us, we had uh the CEOs and
00:21:27
chief operating officers of some really
00:21:30
large services companies. If they want
00:21:33
to get started on a lean initiative in
00:21:35
their firms, what advice would you give
00:21:38
them about how to get started?
00:21:41
Um I'd say um to start with just first
00:21:45
start with a very clear idea of what
00:21:47
you're trying to do and why you're
00:21:48
trying to do it. So clear set of
00:21:50
objectives and rationale. Why is lean
00:21:53
important for them as a company or them
00:21:55
as an industry and um what's the target?
00:21:59
What's the set of targets? What do they
00:22:00
want to drive the organization to? Um
00:22:03
once you've done that I think then you
00:22:05
can get into how do you actually
00:22:07
tactically launch a lean effort. And
00:22:08
typically what we see being effective is
00:22:12
to take um you know a couple of
00:22:15
different parts of the company. It may
00:22:17
be a couple of processes. It may be
00:22:19
business units. It may be geographies um
00:22:21
and then um actually pilot um something.
00:22:27
You know take a process um look at it
00:22:30
through a lean lens. try to identify the
00:22:32
sources of waste, actually pilot some
00:22:34
improvements and see what results you
00:22:36
get. We find that kind of an approach
00:22:38
really helps you contextualize lean to
00:22:41
your environment uh and build some fact
00:22:45
base and a level of confidence that it
00:22:46
can work within your company. Once
00:22:48
you've done that, then I think you have
00:22:50
a pretty good platform to launch
00:22:53
something pretty broad. Um and you can
00:22:56
you can then kind of sequence the rest
00:22:58
of um the processes or units that you've
00:23:01
that you're considering in waves. Uh
00:23:04
design a clear rollout program or
00:23:06
implementation program you know
00:23:08
communicate as I said uh and you know
00:23:11
bring the rest of the company along.
00:23:13
Great. Thank you so much for speaking
00:23:15
with us today. My pleasure. Thanks for
00:23:17
having me.
00:23:25
[Music]
