Digital Transformation (DT) has greatly intensified since the Covid-19 pandemic. Due to social distancing, digital solutions have gained prominence to help maintain productive activities and everyday life around the world. Thus, artificial intelligence, virtual reality, Big Data and many other DT practices were used to solve real challenges. In this context, Lean Digital (LD) is increasingly being seen as a priority within companies.
LD is simply the application of the fundamentals, principles and techniques of the lean methodology to the digital development of corporate processes. The lean philosophy states that businesses should dedicate a large part of their business to what actually generates value. Efforts dedicated to what does not generate value should be minimal.
This requires prioritization and continuous improvement techniques to be applied. Internal communication should also be improved so that everyone can use strategic information to optimize the company’s activities.
Thus, its main goal is to gain more intelligence on how to strategically manage a company’s resources. Consequently, there is a gain in efficiency, productivity and, above all, competitiveness.
Want to understand how this applies to digital business transformation? Keep reading our post!
What is Lean methodology?
The history of Lean begins with the new model of manufacturing production proposed by Toyota in the last century. That is, without the technological advancement that we have today. This means that Lean principles can be applied with the technologies that each business already uses.
In 1953, after long studies of the American production chain, Toyota leaders developed the Toyota Production System (TDS), which is based on eliminating three problems:
- Muri — any type of overload on equipment;
- Mura — unwanted variations in the process that generate difficulties and irregularities;
- Molt — waste of time, materials or money.
Although it may seem obvious, since all these items are the desire of any entrepreneur, the big question is how to achieve this — the bias by which we look at these three challenges. The main point is to understand how to manage efforts to improve these problems and it is quite simple:
If a variation impacts on time, materials, or money, it does not need to be changed. There is no such thing as change for the sake of change. In order of impact, one should focus on the transformations that bring the most damage in relation to these three criteria.
This is done with continuous improvement cycles, which include the following steps:
- Acting (optimizing).
What is Lean Digital?
After TDS begins to be implemented, activity and resources monitoring gains even greater prominence. The more accurate the identification of inefficiencies and resources, the greater the chance of correcting processes.
However, unlike Fordism, there is no obsession with numbers. So, it’s not about reducing the time processes or production take at any cost. After all, metrics and indicators are just a tool to generate value. The focus is on the value being generated.
Let’s imagine a scenario where you’ve implemented an ERP (Enterprise Resource Planning) to automate repetitive tasks. With this, you wanted to increase the profitability of the business.
After a while, that the implementation brought a significant reduction in the time of each process. However, this was not reflected in real value indicators:
- Operating costs remain the same or have increased. This can happen when a business acquires a complete and more expensive solution, but effectively uses few of its tools on a day-to-day basis;
- The company’s cash receipts have been reduced. This can occur, for example, when the ERP implementation process interrupts operations for a significant amount of time;
This means that profitability was reduced even with a significant improvement in operational efficiency by implementing ERP.
The Digital side of Lean
Lean digital invites people to look at digital strategies, tactics and operations globally, focusing on real values, not vanity metrics. It combines the Lean way of thinking to concepts of the digital economy:
- Digital first — adopt an operational and enterprise model where digital services are prioritized over traditional ones. After all, they are more flexible, efficient and generally more innovative;
- Digital Transformation — Big Data Solutions, Internet of Things and Artificial Intelligence enable your business to collect relevant data quickly. They will transform into actionable strategic insights to drive more value;
- Business Intelligence — the more you know about the market, your operations, your customers and your suppliers, the greater your ability to make better decisions and adapt quickly to changes (internal and external).
The Lean Digital methodology, thus, continues to be updated and creates a more efficient way to implement technological solutions and innovate in a sustainable and actually effective way. Often, technologies start trending and are quickly adopted, without proper investigation on how they can actually generate real value and raise earnings for the business.
What are the principles and benefits of Lean Digital?
There are 6 fundamental principles that govern digital Lean:
- First —use technology to optimize each individual step of your processes, starting with the activities where it can bring the most value;
- Second —always aim to create technological processes and products without flaws or defects. This does not mean that everything will be perfect, but that there will be effort/attention from all parts of the business to comply with the strategies;
- Third —reduce operating costs, but think systemically. Plan your actions and map the risks so that an optimization today does not become an issue in the future;
- Fourth —make a product that your customers want. Therefore, your focus should be on constantly communicating with your target audience to understand what they really want. Don’t spend a lot of resources on abstractions, intuitions, and conjectures of what people want. For this, idealize, test, prototype and optimize by employing the techniques of Design Thinking;
- Fifth —nothing is set in stone, business success demands flexibility. The only fixed thing should be the focus on generating value. Everything else can be adapted to achieve the most important goals. Therefore, implement the technology in a way that modifications are easy and agile to carry out.
- Sixth —have a strong and reliable relationship with your employees, customers and suppliers. Therefore, prioritize technological solutions facilitate the exchange of information, preferably in real time.
The results of implementing the Digital Transformation culture are extremely tangible. Several studies show the positive impact of technology on productivity and profitability indicators. However, Lean Digital is key to achieving better and more valuable results strategically. After all, it is very easy to get lost in so many digital novelties, wanting to implement as much as possible and forgeting what is really strategic for your business.
Want to know more about the best strategies for implementing digital solutions for your business? Get in contact with Venturus!