implementing lean in public administration: research...

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1 January 6 th , 2017 Department of Informatics University of Oslo P.O. Box 1080 Blindern, 0316 Oslo (Norway) Implementing Lean in Public Administration: Research proposal 1. Introduction Quality management fads come and go, often using different names for presenting more or less the same content (Cole, 1999), but the management philosophy known as Lean Manufacturing, Lean Production, Lean Management or simply Lean, with it’s emphasis on production flow and just-in-time delivery, has been in popular use under its current name for almost 30 years, and continue to attract attention among practitioners and scholars, not at least within the area of information systems research (e.g. Sindre et al, 2016). Lean started out in the manufacturing industry, as a way of trying to describe characteristics of the Toyota Production System (Krafcik, 1988; Womack et al, 1991), but the ideas behind it are universal, and it has been applied in a wide variety of processes and organisations, including software development (Poppendick & Poppendick, 2003; Rolfsen & Wulff, 2014) and public administration (e.g. Zadnor & Boaden, 2008; Aune & Holmemo, 2014). Despite the popularity and many success stories, Lean is still considered difficult to implement, with implementation failure rates estimated by some sources to be well over 50% (Kallage, 2006). As Røvik (2007) points out, there are different ways of implementing management philosophies, and successful implementation requires the philosophy to be intelligently translated into local context. However, this also raises a dilemma of understanding when a philosophy is properly translated and when people are just pretending (Brunsson, 2002). In the case of earlier attempts to translate ideas associated with the Toyota Production System, such as Total Quality Management (TQM), it has been possible to distinguish between a flexible interpretation and a misunderstanding of concepts, as formal and operative definitions of TQM include assessment methods such as the EFQM excellence model, but in the case of Lean Manufacturing it is much less clear how evaluation should be carried out. While some organisations may choose to implement Lean for the purpose of showing how they are up to date with the latest management trends, thus choosing to reinterpret whatever has always been done in the language of Lean and believing that this means that Lean has been implemented, for organisations less concerned with image and more concerned with performance, it may be relevant to try to understand and apply Lean theory for the purpose of reaching the same level of quality, productivity and reliability that has been achieved by model-companies described in the Lean literature. If we look at the case of the Norwegian Tax Administration (NTAX), this could be an important example of how Lean has been successfully implemented in public administration. A Lean-inspired programme was initiated in 2008 and it has been effectively used for transforming organisational performance (e.g. Roheim, 2011; Lean Forum Tromsø, 2012; Aunan & Paulgaard, 2016; Aunan & Roseth, 2016), resulting in the NTAX director giving keynote speeches at Lean conferences (Løkken, 2012; Kristensen, 2015).

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1

January 6th, 2017

Department of Informatics

University of Oslo

P.O. Box 1080 Blindern, 0316 Oslo (Norway)

Implementing Lean in Public Administration: Research proposal

1. Introduction

Quality management fads come and go, often using different names for presenting more or

less the same content (Cole, 1999), but the management philosophy known as Lean

Manufacturing, Lean Production, Lean Management or simply Lean, with it’s emphasis on

production flow and just-in-time delivery, has been in popular use under its current name for

almost 30 years, and continue to attract attention among practitioners and scholars, not at least

within the area of information systems research (e.g. Sindre et al, 2016).

Lean started out in the manufacturing industry, as a way of trying to describe characteristics

of the Toyota Production System (Krafcik, 1988; Womack et al, 1991), but the ideas behind it

are universal, and it has been applied in a wide variety of processes and organisations,

including software development (Poppendick & Poppendick, 2003; Rolfsen & Wulff, 2014)

and public administration (e.g. Zadnor & Boaden, 2008; Aune & Holmemo, 2014). Despite

the popularity and many success stories, Lean is still considered difficult to implement, with

implementation failure rates estimated by some sources to be well over 50% (Kallage, 2006).

As Røvik (2007) points out, there are different ways of implementing management

philosophies, and successful implementation requires the philosophy to be intelligently

translated into local context. However, this also raises a dilemma of understanding when a

philosophy is properly translated and when people are just pretending (Brunsson, 2002). In

the case of earlier attempts to translate ideas associated with the Toyota Production System,

such as Total Quality Management (TQM), it has been possible to distinguish between a

flexible interpretation and a misunderstanding of concepts, as formal and operative definitions

of TQM include assessment methods such as the EFQM excellence model, but in the case of

Lean Manufacturing it is much less clear how evaluation should be carried out.

While some organisations may choose to implement Lean for the purpose of showing how

they are up to date with the latest management trends, thus choosing to reinterpret whatever

has always been done in the language of Lean and believing that this means that Lean has

been implemented, for organisations less concerned with image and more concerned with

performance, it may be relevant to try to understand and apply Lean theory for the purpose of

reaching the same level of quality, productivity and reliability that has been achieved by

model-companies described in the Lean literature.

If we look at the case of the Norwegian Tax Administration (NTAX), this could be an

important example of how Lean has been successfully implemented in public administration.

A Lean-inspired programme was initiated in 2008 and it has been effectively used for

transforming organisational performance (e.g. Roheim, 2011; Lean Forum Tromsø, 2012;

Aunan & Paulgaard, 2016; Aunan & Roseth, 2016), resulting in the NTAX director giving

keynote speeches at Lean conferences (Løkken, 2012; Kristensen, 2015).

2

On the other hand, as Baksjøberget (2014) points out, even though the translation from Lean

theory to NTAX practice has been successful, that doesn’t mean it is necessarily easy for an

outsider to understand how NTAX did this and how the new NTAX practice is different from

the old. In other words, it may be difficult to learn from cases like NTAX unless the

translation from theory to practice is more clearly explained.

1.1 Research question

While some public sector organisations have achieved success in implementing Lean, like in

the case of NTAX, others struggle (Rolfsen, 2014). There are consequently gains to be found

from understanding how more successful organisations have carried out their Lean

implementation journey, what were the lessons learned, and what they are presently doing for

making Lean sustainable and improving practice even further. In general terms, the overall

research question can be summarised in the following manner:

• How to implement Lean in public administration?

While there may not be a single answer to this question, as translation theory is based on the

assumption that all general frameworks have to be specifically adapted to local context, it is

still interesting to look at how NTAX has implemented Lean. The studies conducted at NTAX

so far have mostly been focusing on how NTAX members felt about the implementation and

the translation, with limited insight on how the practice at NTAX relates to the theory in the

Lean literature (Baglo & Langvatn, 2012; Alshbib & Ulvin, 2013; Baksjøberget, 2014).

2. Theoretical approach

Since Krafcik (1988) introduced the term ‘Lean Production’ for describing the Toyota

Production System (TPS), there has been an extensive growth of literature referring to Lean,

both of academic and popular type. However, as Baksjøberget (2014, pp. 4-6) points out in

her review of literature aimed for understanding how NTAX has translated the theoretical

definition of Lean into practice, there is at present no single definition of Lean that everybody

agrees upon. Instead, there is a wealth of different definitions, principles, models and theories

that all go by the name of Lean while referring to TPS in one way or another.

However, this should not be interpreted to mean that Lean can refer to anything whatsoever.

The concept of Lean is not new. Before people started talking about Lean, the American

response to competition from Toyota and other Japanese companies in the late 1970s and

early 1980s was understood as a response to a quality crisis. Although most of the quality

assurance methods used in Japanese industry were based on ideas developed in the US and

Europe, the methods had become part of a company-wide Japanese quality management

approach that the West now tried to understand and implement as Total Quality Management

(TQM). Although TQM enjoyed widespread attention in the late 1980s and early 1990s,

implementation failure rates have been estimated to have been about 80%, and TQM thus

became overshadowed by ISO 9000, Six Sigma and Lean.

Although ISO 9000, Six Sigma and Lean may not necessarily be any different from TQM in

content, the different programmes put different emphasis on how to implement company-wide

quality control. The emphasis in these three particular efforts could, for instance, be argued to

be that of quality standards, statistical quality control and just-in-time processes. However,

each particular emphasis also resulted in critique. As an example, some of the critique raised

during the early popularity of ISO 9000 standards was that the approach was more likely to

cement existing practice of mediocre quality or make results worse as the easiest way to

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implement the ISO 9000 standards would be to describe how everything was presently being

done and then develop standards and procedures for making sure practice continued without

change (Seddon, 1997).

While companies like Toyota had become brand leaders due to continual improvement over

several decades, the promise of TQM, ISO 9000 and Six Sigma was that quality management

and corporate excellence could be implemented by means of projects that lasted only a few

years. For example, Business Process Reengineering (BPR) was an approach that arrived on

the scene in the early 1990s, essentially yet another reformulation of the same old ideas, but

this time focusing on how organisations could be transformed by considering business

processes as black boxes that needed to be reengineered by use of information technology for

improving quality, productivity and competitive advantage (Hammer & Champy, 1993).

When writing about the different quality management fads, Cole (1999) makes the point that

it may not necessarily be a bad thing that different programmes fail and are rediscovered or

reintroduced under different names because the problem with the programmes is often not the

theories themselves but the difficulty in getting them implemented. In wanting to implement

something that requires an evolutionary approach by means of a TQM implementation project

is likely to fail. Projects are restricted on time, cost and functionality, so there is limited room

for experimentation. A single project is not the way to approach this, but an everlasting

sequence of projects may be useful. For this reason, it might be a good thing that ISO 9000

focuses on standards, Six Sigma on statistical methods, BPR on process design, TQM on

large-scope issues like quality awards and assessments, so allowing the same problem to be

addressed over and over again by means of different angles. In particular, what makes Lean

interesting in comparison to these other approaches is how it focuses on just-in-time

management and single-item flow.

Modig and Ahlström (2012) use a hospital setting for explaining Lean. In this setting they

define a dilemma between optimal patient flow and optimal use of resources. As surgeons are

expensive, it seems better to have patients line up in a queue for surgery than to have the

surgeons running idle most of the time as they are waiting for the next patient to arrive.

However, if patients have to go through a sequence of processes that have all been optimised

with respect to use of resources, this creates bottleneck in the process, causing the patient to

spend most of the time between arriving and departing in a state of waiting. The Lean

challenge thus consists of developing standardised yet flexible solutions with the aim of

making patients flow through the system as quickly as possible, with as little cost as possible

and with the best possible outcome. For other domains, such as an organisation like NTAX,

there are similar dilemmas between making sure that the tax lawyers and other experts are

kept busy while at the same time making sure that the individual cases reported by the clients

are not spending most of the time on wait.

However, Lean does not only have to apply to interaction with external clients. What

characterises a Lean company like Toyota is that all types of processes are managed in a

similar just-in-time and single-flow manner (Liker, 2004). For example, in a case like NTAX,

where information systems and software are being developed and maintained by in-house

resources, one might expect that Lean principles are being applied for making sure that

systems are developed and improved quickly and with high quality (e.g. Poppendick &

Poppendick, 2000). Also, as NTAX is using a quality management system that is supposed to

be compliant with the ISO 9001 standard and other standards, it would be natural to expect

that the quality management system is developed and maintained according to Lean principles

4

and is being used for supporting the overall Lean structure of the organisation (Guderian &

Renaud, 2008; Micklewright, 2010).

2.1 The NTAX Lean implementation process

When Baksjøberget’s (2014) argues how the success of the NTAX Lean approach had to do

with how Lean theory was intelligently translated into local NTAX practice, it is interesting to

see how the NTAX implementation method relates to the implementation methods discussed

within the Lean literature. For example, the so-called “five principles of lean” (Womack &

Jones, 1996) is an implementation method that is often referred to in the literature (e.g.

Rolfsen, 2014). The five principles are the principles of value, value stream, flow, pull and

perfection, and can be linked together in an improvement wheel of the type illustrated in

figure 1.

Figure 1. Lean Principles (http://www.lean.org/WhatsLean/Principles.cfm)

In an organisation like NTAX, it should be possible to interpret concepts like value, value

stream, flow, pull and perfection quite straight-forward, regardless of whether the process in

question deals with minimising the lead time for tax payer requests, developing NTAX

software, running the ISO 9001 quality management system, or all kinds of management

processes, operational processes and support processes. The content of each step in figure 1 is

as follows:

1. Specify value from the standpoint of the end customer by product family.

2. Identify all the steps in the value stream for each product family, eliminating

whenever possible those steps that do not create value.

3. Make the value-creating steps occur in tight sequence so the product will flow

smoothly toward the customer.

4. As flow is introduced, let customers pull value from the next upstream activity.

5. As value is specified, value streams are identified, wasted steps are removed, and flow

and pull are introduced, begin the process again and continue it until a state of

perfection is reached in which perfect value is created with no waste.

5

Although neither Baksjøberget (2014), nor any of the other resources on NTAX Lean

consulted in the writing of this proposal, make any references to the model above, that does

not necessarily mean that some version of the model has not been used, unless the success

with Lean at NTAX has to do with following a radically different approach.

2.2 Knowledge gap

The purpose of the literature review so far has been to sketch some ideas about what is

commonly understood by Lean in the literature, thus trying to manage some of the

expectations concerning what is to be understood by “NTAX Lean”. In what seems like the

most thorough study on NTAX Lean so far, Baksjøberget (2014) claims that Lean theory has

been successfully implemented into local NTAX practice, and she argues this by referring to

interviews done with various people within the NTAX organisation. As the director of NTAX

has also given key note presentations at the Norwegian Lean Forum, there is no reason to

doubt that NTAX is indeed among the best in class when it comes to successfully

implementing Lean in the public administration, but it is still unclear what this actually means

in terms of how NTAX Lean relates to Lean theory, both in terms of approach and results.

From the viewpoint of information systems development (ISD), it is particularly interesting to

see how NTAX has succeeded with Lean methods of software development and quality

control as ISD has been a challenge within large parts of the public sector, including the

Norwegian Armed Forces, the National Police Directorate, the Norwegian Labour and

Welfare Administration, and the Norwegian Directorate of Health. In all of these domains

there have been costly examples of failed ISD efforts, although in some cases they have been

working with Lean ISD and are interested in learning from others (Rolfsen, 2014).

The hypothesis of this literature review is consequently that there should be significant

possibilities for the Norwegian public sector to learn about how to succeed with Lean and ISD

if it is possible to extract insights from the success at NTAX in a language that makes it

possible to translate insights from one public sector domain into another.

3. Research design

To succeed with a study on how to implement Lean in public administration, by considering

the case of NTAX, it seems reasonable to take advantage of earlier experience in doing and

trying to do research on TQM and IT government at NTAX (Øgland, 2013; 2016). A central

aspect of this experience is that the most effective way of researching NTAX was by working

as a regular member of NTAX and to carry out research from this perspective. This approach

is commonly referred to as action research, and means that both action and research is carried

out at the same time.

There are many ways of designing action research, depending on how ambitious a client

organisation like NTAX is in terms of wanting to understand and improve current practice.

For example, an approach known as canonical action research (CAR) is an approach that may

be useful when the action researcher is part of an ISD project, and the aim of the research

involves the testing of a given ISD method as action hypothesis (Davison et al, 2004).

However, if the action researcher does not have a formal leadership position, making it

difficult to study how ‘we’ are diagnosing a situation and implementing a treatment, a less

ambitious approach is to study how ‘I’ am diagnosing a situation and implementing a

treatment, something that is often referred to as self-improvement research (e.g. Whitehead,

1989; McNiff & Whitehead, 2006; Øgland, forthcoming).

6

As a central part of the earlier experience in doing research at NTAX was that office politics

would make it difficult to get access to data or create other difficulties in carrying out research

(Øgland, 2013, pp. 123-141), the challenge of rigging a CAR project could be seen as a

research problem in itself (Øgland, 2007; 2016), meaning that the best way of starting any

type of action research at NTAX might be by starting the project as self-improvement

research on how to obtain data on how NTAX Lean has been defined and implemented, and

then use the outcome of this self-improvement action research as an opportunity for engaging

in ISD action research where the actual aim is not only to understand NTAX Lean but also to

help improve the effectiveness and efficiency of the approach.

What this means in practice is that research depends on the action researcher being given a

formal responsibility at NTAX for auditing the quality and security management systems,

investigating whether the IT function is operating according to expectations and agreements,

thus allowing him to research how this kind of audit work can be conducted in an optimal

manner, constraint by issues like NTAX culture and formal regulations. However, in addition

to performing this task, time is needed for reading, writing and engaging in discussions within

the academic community concerning how the task can be improved. In practice, this may be

best achieved by maintaining regular contact with academic staff at the Department of

informatics at the University of Oslo, where the researcher has a formal position as Visiting

Researcher.

It would also be natural that the researcher keeps in regular contact with the NTAX research

community, headed by Dr. Marcus Zackrisson, and collaborate with the Internal Audit, the

Continuous Improvement Programme and other units, inside and outside of NTAX, that share

similar interests in understanding how the overall Lean philosophy is implemented, although

the researcher remains part of IT staff or contained in whatever NTAX unit that is given the

future responsibility for monitoring and improving IT governance.

4. Expected outputs

The expected outputs of the research are both practical and theoretical. First of all, putting

somebody in charge of looking at how quality management for the IT function of NTAX

complies with the NTAX Lean philosophy and other aspects of NTAX philosophy is expected

to be a task that has been neglected for some time and is expected to be of vital importance for

improving IT governance in a cost-effective manner.

After having established this operative function of investigating and assessing the quality and

security management systems of the IT function, further practical improvements are expected

to follow from dialogue between different NTAX units working with Lean, quality

management, continuous improvement, audit and control. If the dialogue and coordination is

done according to the principle of the bootstrap algorithm (Hanseth & Aanestad, 2003;

Hanseth & Lyytinen, 2010; Øgland, 2016), an overall quality control infrastructure is

expected to emerge.

In terms of contributing to the research community, the early stages of research are expected

to contribute to the literature on Lean ISO 9000 assessments and similar issues, depending on

what standards are in current use and what standards NTAX would be interested in

investigating. Self-improvement research of this type is relevant both for action research

journals like EJOLTS (Øgland, forthcoming), journals concerned with systems research, and

journals and conferences that specialise in IS research, such as the ECIS conference (cf.

Øgland, 2009).

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If the self-improvement research succeeds in the initial steps of bootstrapping a NTAX quality

management infrastructure for the IT function, the action research may evolve in direction of

CAR and the research will be less concerned with the challenges of the ‘I’ of the researcher

trying to improve his own practice towards the ‘we’ of the community working with Lean and

quality management within the context of IT governance. As the practice makes a deeper and

wider organisational impact, the research will also change focus from psychological

perspective to a sociological perspective on organisational change (Herr & Anderson, 2005,

pp. 29-48). Gradually, it may also be relevant to visit other organisations to see how they are

struggling with their Lean implementation.

In addition to publishing academic papers for conferences and journals, focusing on particular

issues and challenges, the overall perspective will be maintained by a continued focus on

writing a book on how to implement Lean in public administration. The book will be aimed

both at the academic audience and as a format for presenting the NTAX experience for

members of communities like Lean Forum Norway.

5. Budget

The research is financed by the Norwegian Directorate of Taxes, but will take advantage of

applying for external funding from sources like the Regional Research Fund for the Oslo Area

(RFFH) whenever such opportunities are given1.

Researcher’s contact

The researcher concerned (Petter Øgland) will alternate offices between the IT staff of the

Norwegian Directorate of Taxes, the Department of Informatics at the University of Oslo and

his home office at Bekkestua. His contact address is: [email protected].

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