Integrating lean principles into digital transformation
by Bernd Schreiber, Willem Romanus, Yong Lee
Issue 2, 2017
Digital company transformation, Operations management

With the advent of digital, many organizations are looking to move away from lean management, in search of more radical performance gains. This article explains why lean principles are still vital, and how integrating them into digital transformation can be a highly effective way of simplifying the process. This allows companies to identify and apply the most effective levers for the digital journey.

“We’re through with lean – it’s time to go digital!” will sound familiar to the ears of many executives today. At first sight the idea of abandoning lean and trying something “new” that delivers more radical improvements seems appealing. However, although lean and digital initially appear largely unrelated, ignoring lean principles may be risky, and can even prevent digital transformation projects from being successful.
Successful companies have achieved outstanding performance by incorporating lean management at the center of their corporate transformation. However, even in those companies for which lean once transformed ways of working, the limits of what can be achieved have almost been reached. Numerous companies suffer from lean “fatigue”, with managers frustrated with results that are increasingly incremental.

The shift to digital

At the same time the potential of digital technologies to transform performance is now widely recognized. However, most companies struggle to find the right approach to effectively grasp the benefits of this digital promise. Indeed, choosing from among the plethora of new options provided by digital technologies is a real challenge.
Typically, it is unclear where to start and how to prioritize a company’s efforts and resources to drive tangible results. While some companies have been able to achieve a radical performance increase of up to 50% or more, many have become stuck in a situation in which initiatives happen in silos, efforts lack coordination, and successes are limited or even non-existent.
Recent experience has shown that integrating lean principles into digital transformation can be a highly effective way of achieving radical simplification of the process, allowing companies to identify and apply the most effective levers for the digital journey. In this article, we therefore explore the challenge of building digital transformation on the foundations of lean management. Starting from traditional lean excellence, we will indicate how companies can select the right technological building blocks based on their specific value creation potential. Subsequently, we will illustrate how to use lean principles to radically simplify the value stream and explain why digital “shortcuts” typically fail. Finally, we will highlight the need for a new, combined lean/digital capability which paves the way for sustainable competitive advantage.