An Introduction to Lean: The Next Big Thing in Government?
The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.
The following is an excerpt from an article published in the June, 2013 issue of Government Finance Review, copyrighted 2013 by the Government Finance Officers Association. It is reprinted here with permission.
Progressive governments are always looking for ways to serve their constituents more effectively and less expensively. To that end, many governments have begun exploring the efficiencies Lean practices can provide. Lean thinking and methods have made their way from private industry to the public sector and appear to be having a powerful impact on many government organizations. Based on several years of research, the Government Finance Officers Association (GFOA) sees a potential for public-sector entities to achieve significant value from adopting Lean. Using Lean techniques to reduce waste allows public managers to operate more cost effectively, maintaining the quality of the services offered, along with a high level of respect for the people – the public servants – who deliver them. This article reviews the main questions public managers might have about Lean, explaining the essential elements of Lean, and why Lean is so well-suited to government operations.
What is Lean?
Lean is a system of thinking and way of working that emphasizes reducing waste in both time and material costs while providing the same, or enhanced, value to the customer (e.g., a citizen or another department). Lean is often thought of as a process improvement method, known for its expansive toolset for improving efficiency and effectiveness in the workplace. And while those are perhaps the most tangible benefits, the true power of Lean is its ability to transform the culture of an organization – encouraging an entire workforce to work together as they strive for continual improvement. In that state, Lean is no longer a project to be completed; it has been ingrained into the DNA of the organization.
Lean evolved from total quality management and the manufacturing practices of the Toyota Motor Corporation. Toyota’s methods were thrust into the popular consciousness and dubbed “Lean” by a global study of automotive manufacturers, performed by the Massachusetts Institute of Technology. From there, its use has spread to manufacturing companies more generally, and then to organizations in the service industry, including government. In the last few years, the GFOA has observed increasing interest in Lean among governments as budgets tighten and the need to perform services better, faster, and cheaper has become paramount.
Put in the most basic terms, Lean is an evolution beyond the Industrial Age standard of mass production. Exhibit 1 summarizes some of the major differences.
Core Concepts of Lean
The starting point of Lean is to think in terms of how work creates value for the customer. Value is a product of quality, cost, and timeliness. Lean encourages one to understand who the customers of a process are and what they expect from the process. Only then can one begin to improve the value those customers receive. For example, a restaurant health inspection service dramatically improved its results when inspectors realized that restaurant owners are often as interested in food safety as inspectors, and any failure to provide safe food was often a result of insufficient knowledge or skill, rather than intentional neglect. This led the inspectors to schedule food safety assessments with new restaurants when they first opened to ensure that owners were aware of safe food handling practices. Proactively addressing food safety with new restaurant owners allowed inspectors to ingrain essential practices in the restaurants’ culture from the beginning. The incremental cost of the training was more than offset by discontinuing “routine” inspections that were unrelated to the actual risk posed to the public by the establishment being inspected.
Lean authors and researchers estimate that in a typical American firm, only 2 to 10 percent of workers’ time is spent on activities that add value for the customer. The implication is that an overwhelming proportion of time is spent on activities that don’t add value, or waste. The concept of waste is core to Lean, which aims to discover root causes of waste and eliminate or minimize them. In fact, Lean categorizes eight types of waste, helping employees more easily recognize it. The eight forms of waste are:
Defects. When incorrect work is sent to the next step in the process or to a customer.
Over-Processing/Inspection and Checking. Over-processing is putting more work into a product or service than is necessary to meet customer requirements. Inspection and checking is a particularly prevalent form of this waste, especially in government.
Waiting. Idle time created when employees (or customers) wait for information, physical items, and so on. Wait time equals downtime.
Inventory/Backlog. The sum of all tasks waiting to be processed; also includes physical inventory.
Transport. Transporting anything that does not directly add value to a final product or service is a form of waste.
Motion. Excess motion in completing a task causes waste.
Over-Production. This results when a product or service is provided in greater amounts than necessary or has more features than are necessary.
Underutilizing People’s Abilities. The most insidious form of waste is failing to make use of employees’ full talents, skills, and knowledge.
Lean does not suppose that waste can ever be completely eliminated, but encourages an organization to continually strive to minimize waste in all areas. In fact, Lean researchers and authors estimate that even the most efficient transactional process will add 25 to 50 percent value for the customer, at most.
Why should governments pursue Lean over other quality enhancement techniques? The GFOA has found a number of advantages to Lean practices that have the potential to be very powerful if properly adopted by governments. Below is a review of the most important benefits.
Lean Creates Real, Tangible Benefits. Waste leads to slower work. Slower business processes often cost more because of increased labor requirements to complete the work. When waste is removed, processes become simpler, resulting in increased speed, which allows the workforce to use their time more effectively. This makes the customer happier and engages the workforce.
Lean Improvement Is Incremental and Continuous. While dramatic, discontinuous change (like the moon landing) is very gratifying and gets lots of attention in the short term, it requires a heroic leadership effort and the confluence of other factors like money, expertise, etc. Lean change focuses on practical, bite-size improvements that can be accomplished with fewer demands in terms of budget, staff, and other resources.
Lean Is Low-Cost. Lean does not rely on massive investments in new technology to automate work. Employees can learn Lean and continue using it without the support of consultants, creating long-term value for the organization.
Lean Is Pro-Employee. Lean engages the workforce in a positive way. Many governments have experienced significant reductions in the workforce, perhaps with little potential for replacing the lost workers in the near future. Lean can help make life easier for those who are left.
Lean Focuses on Customer Value. Citizens’ trust of government has declined in recent years. Lean takes a step in the right direction by refocusing government on the value it provides to citizens.
Process Is an Under-Appreciated Perspective in Public Management. Other public management paradigms have focused on items such as budgets, strategies, and programs (instead of departments), but none have focused squarely on business processes. Process is ultimately how results are produced. If the results being produced by government are unsatisfactory, then the processes must be re-examined.
Lean may very well be the next big thing in government. It addresses important gaps in how public management attempts to improve government work, and it does not require a large budgetary investment to get started or to maintain. Most importantly, Lean can dramatically improve the results of government work for both the citizens and public servants.
Shayne Kavanagh is the GFOA’s senior manager of research. Jeff Cole is president of JCG Management Consulting, a firm specializing in improvement strategies.
Want to Learn More About Lean?
To read the full text of the Introduction to Lean article written by Shayne Kavanagh and Jeff Cole, go to the June 2013 edition of Government Finance Review at www.gfoa.org.
The State of New Hampshire, Bureau of Education and Training has a number of Lean process improvement courses available to municipal employees, including Lean Process Improvement Techniques, Lean Facilitator Skills, Lean Change Management and others. Go to http://lean.nh.gov/training.aspx for course descriptions, schedules and fees.
Author Shayne Kavanagh will be presenting a session on “Improving Government with Lean” at the New Hampshire Government Finance Officers Association annual conference on May 1, 2014 at the North Conway Grand Hotel. Go to www.nhgfoa.org for the NHGFOA annual conference registration information.