Lean digital for business advantage

Digital transformation (DT) has picked up significantly since the Covid-19 pandemic. Due to social distancing, digital solutions have gained prominence to help support productivity and daily life around the world. Therefore, artificial intelligence, virtual reality, Big Data and many other DT practices have been used to solve real-world problems. In this context, Lean Digital (LD) is increasingly seen as a priority in companies.

LD is simply the application of the foundations, principles and techniques of lean methodology to the digital development of enterprise processes. The lean philosophy states that businesses should devote a significant portion of their business to what truly creates value. Efforts that do not create value should be minimal.

This requires prioritization and the application of continuous improvement methods. Internal communication should also be improved so that everyone can use strategic information to optimize the company’s operations.

Therefore, its main goal is to get more intelligent information about how to strategically manage the company’s resources. So there is a gain in efficiency, productivity and, above all, competitiveness.

Want to understand how this applies to digital business transformation? Continue reading our post!

What is Lean methodology?

The story of Lean begins with a new production model proposed by Toyota in the last century. That is, without the technological progress we have today. This means that Lean principles can be applied with technologies that are already in use in every company.

Working car workshops

In 1953, after a long study of the American production chain, Toyota leaders developed the Toyota Production System (TDS), which is based on the elimination of three problems:

  • Muri — any type of equipment overload;
  • Mura – unwanted changes in the process that cause difficulties and disturbances;
  • Shedding is a waste of time, materials or money.

Although it may seem obvious that all these points are the desire of any entrepreneur, the big question is how to achieve it – the bias with which we look at these three problems. The key is to understand how to manage the effort to solve these problems, and it’s quite simple:

If the change affects time, materials, or money, it does not need to be changed. There is no change for the sake of change. In order of impact, you should focus on the transformations that deal the most damage according to these three criteria.

This is done through continuous improvement cycles that include the following steps:

  • Planning;
  • performance;
  • Monitoring;
  • Acting (optimizing).

What is Lean Digital?

After the start of implementation of TDS, activity and resource monitoring is gaining even more prominence. The more accurate the identification of inefficiencies and resources, the better the chances of correcting processes.

However, unlike Fordism, there is no obsession with numbers. Therefore, it is not about reducing time processes or production at any cost. At the end of the day, metrics and indicators are just a tool to create value. The focus is on the value that is created.

Let’s imagine a scenario where you have implemented ERP (Enterprise Resource Planning) to automate repetitive tasks. With this, you wanted to increase the profitability of the business.

After some time, this 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 company buys a complete and more expensive solution, but uses few of its tools effectively on a day-to-day basis;
  • The company’s revenue has decreased. This can happen, for example, if the ERP implementation process is interrupted for a significant period of time;

This means that profitability has decreased even with significant operational efficiency gains due to ERP implementation.

The digital side of Lean

Lean Digital invites people to look at digital strategies, tactics and operations on a global scale, focusing on real value rather than vanity metrics. It combines the Lean way of thinking with the concepts of the digital economy:

  1. Digital First — Adopt an operating and corporate model that prioritizes digital services over traditional services. After all, they are more flexible, efficient and generally more innovative;
  2. Digital transformation — Big data solutions, the Internet of Things and artificial intelligence enable your business to quickly collect relevant data. They will be transformed into actionable strategic ideas to increase value;
  3. Business intelligence — the more you know about the market, your operations, customers and suppliers, the more you have the ability to make better decisions and quickly adapt to changes (internal and external).

Therefore, the Lean Digital methodology continues to be updated and creates a more efficient way to implement technological solutions and innovations in a sustainable and actually effective way. Often technologies become popular and are quickly adopted without proper study how they can really create real value and increase profits for the business.

What are the principles and benefits of Lean Digital?

There are 6 fundamental principles that guide the digital economy:

  • The first isuse technology to optimize every single step of your processes, starting with those activities where it can bring the most benefit;
  • the second –always strive to create technological processes and products without flaws and defects. This does not mean that everything will be perfect, but that there will be effort/attention from all parts of the business to match the strategies;
  • third –reduce operating costs, but think systemically. Plan your actions and create risk maps so that optimization today does not become a problem in the future;
  • the fourth –make a product that your customers want. Therefore, your focus should be on constant communication with your target audience to understand what they really want. Don’t waste a lot of resources on abstractions, intuitions, and assumptions about what people want. To do this, idealize, test, prototype and optimize using design thinking techniques;
  • fifth –nothing is set in stone, success in business requires flexibility. The only thing fixed should be the focus on value creation. Everything else can be adapted to meet the most important goals. So, implement the technology in such a way that modifications are easy and nimble to perform.
  • sixth –have strong and trusting relationships with your employees, customers and suppliers. Thus, priority technological solutions facilitate the exchange of information, preferably in real time.

A man is working on a tablet with a desktop computer in the background

The results of implementing a culture of digital transformation are extremely tangible. Several studies show the positive impact of technology on productivity and profitability. However, Lean Digital is the key to achieving better and more valuable results strategically. After all, it’s very easy to get lost in so much digital innovation, wanting to implement as much as possible and forgetting what’s really strategic for your business.

Want to learn more about the best digital implementation strategies for your business? Contact Venturus!