Great lean forward

Why efficiency alone is not enough to achieve maximum value

This article was originally published in 360°view.

Lean management methods deliver value by boosting structural and behavioural efficiency, but also by enabling flexibility.

Lean management, efficiency and agility are natural partners. But, while the three are frequently mentioned in the same breath, the connection between them is strong but nuanced. The creation of efficient corporate structures and responsive behaviours is neither lean’s primary aim nor its happy by-product.

Instead lean thinking embeds efficiency and flexibility into an organisation’s structures and processes as part of its broader drive to deliver a competitive advantage, and therefore greater value. While its origins lie in manufacturing, lean is increasingly being applied in the delivery of capital programmes and projects.

Its appeal lies in its ability to offer management a structured approach that can engage the maximum number of people in delivering value, while also creating a culture and process that fosters a virtuous circle of improvement and innovation.

From car making to construction

The enduring stereotype of lean manufacturing techniques is filled with the imagery of the automotive industry – the production line operated with balletic precision by a fleet of robots, excess inventory eliminated by ‘Just in Time’ logistics and inefficiency ruthlessly removed.

However, lean has evolved substantially since its beginning in mass manufacturing. The construction leaders who have adopted it have also adapted it.

For both industries, lean’s primary attraction is similar – its ability to help an organisation build a solid, resilient core operation that is able to consistently and efficiently deliver what is required of it. 

Lean applies a disciplined approach to both the organisation’s structure and its processes, as well as the behaviour of its people.

In capital programme terms, this could range from fundamental structural questions, such as how the supply chain is managed and how its success is judged – to the most vital processes, like how decisions are made and by whom.

Among the lean toolbox is a technique known as ‘value stream mapping’ which identifies every part of the process that does not create value, and then suggests ways to eliminate the waste.

Given that programme delivery organisations are often created from scratch, this technique can be used at the outset to design a streamlined decision-making process, in which the level of checks and balances for each decision type is tiered according to the level of risk involved.

Lean has evolved substantially since its beginning in mass manufacturing. The construction leaders who have adopted it have also adapted it."

Core strength, with flexibility on the front line

But the discipline and rigour that lean thinking brings to an organisation’s core structure and day-to-day operations does not preclude responsiveness. On the contrary, it enables it and empowers the organisation to ad apt quickly to changing circumstances.

Take, for example, the ‘Just in Time’ inventory strategy that lean pioneered in the manufacturing industry. It is built on the principle that a manufacturer should receive goods only when they are needed in the production process, and not before, making it highly responsive, removing the need to keep large stocks and reducing inventory costs.

The philosophy has since proved itself to be highly efficient across the retail, travel and hospitality sectors too. But it relies on an organisation having the courage to dispense with cumbersome contingency planning, to trust instead in speed and agility.

While a capital programme may use ‘Just in Time’ strategies to minimise materials inventory costs, they can make an even greater impact in the managing of changes to the design.

It is worth remembering that rather than being an immutable fixture of a construction project, the design is liable to repeated change. During the extended timeframe of a capital programme this could be due to many reasons – an unexpected event in the delivery phase, a change in the business’s requirements, or the client simply changing their mind.

Used correctly, lean thinking should give management the two things it needs to successfully make late design changes: an understanding of what level of variability is required to deliver both optimum efficiency, and value, and a map of ’last responsible moments’ for change.

Just as ‘Just in Time’ drives efficiencies in inventory and logistics, lean-inspired change control processes enable capital programmes to be nimble, equipping them with the intelligence and ability to make critical decisions at the crucial moment.

Best behaviour

While lean has made great inroads into the construction industry, at times it has been deployed as a bolt-on to existing ways of working, or late in the day as a ‘get out of jail’ card played to turn around an underperforming project.

Lean can have a significant impact in such circumstances, but its ability to make a decisive difference is constrained if it is only used in this way.

To deliver its true potential it should be used from the start, as an end-to-end approach that focuses as much on people’s behaviour as on the organisation’s structure.

In fact, successfully shifting the paradigm of a large organisation is likely to be 80 percent down to making the right behavioural and cultural changes, and just 20 percent down to structural improvements.

It follows that when designing the ideal programme architecture from scratch, it is vital that a culture of collaboration and optimal behavioural patterns be ingrained right from day one.

However-the definition of optimal will vary over time and in tandem with both the business’s priorities and its definition of value, typically a blend of time, cost and quality. The ideal delivery organisation will be built to respond to and embrace change.

All roads lead to value

Identifying and maximising client value lies at the heart of what lean seeks to do. It eliminates waste in a large organisation by creating streamlined structures and processes, while simultaneously instilling into its staff a hunger for constant improvement to deliver better outcomes.

It is the combination of those two crucial elements – the resilient and efficient core operation, together with a progressive culture which welcomes and adapts to change – that gives organisations both the capability and confidence to embrace uncertainty.

Turner & Townsend acquired UK-based lean consulting and operational experts Suiko in 2016 to embed the benefits of lean thinking into the delivery of capital programmes.

For further information, contact:

Andy Marsh
Managing Director

t: +44 (0)207 544 4000
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