Journey to Lean Continuous Improvement Supported By

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  • 8/3/2019 Journey to Lean Continuous Improvement Supported By


    Making Leaders Successul Every Day

    Agst 2, 2010

    Y Jey T Lea: CtisIpeet Sppted By Tlsby Aleade Petes, Ph.D.

    Bsiess Pcess Pessials
  • 8/3/2019 Journey to Lean Continuous Improvement Supported By


    2010, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Inormation is based on best availableresources. Opinions refect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar,and Total Economic Impact are trademarks o Forrester Research, Inc. All other trademarks are the property o their respective companies. Topurchase reprints o this document, please For additional inormation, go to

    F Bsiess Pcess Pessials

    ExECuTIvE SummArY

    Forrester interviewed the executives responsible or the deployment o the Lean continuous

    improvement initiative at Wipro echnologies, a global supplier o technology services. Te case

    study shows that Lean can become an important dierentiator or I service organizations, striving to

    partner with their business customers and increase the stake in business transormations. Organizations

    embarking on the journey to Lean should ollow Wipros staged approach centered on the deployment

    o a Lean productivity team (or center o expertise) and unied Lean tool kit and perormancemeasurement system. But in addition to these tangible steps, many organizations will need to push aside

    a ew so barriers that risk making Lean eorts stagger or stall: 1) skepticism about what Lean really is;

    2) lack o leadership; and 3) silo culture.

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  • 8/3/2019 Journey to Lean Continuous Improvement Supported By


    2010, Feste reseach, Ic. repdcti PhibitedAgst 2, 2010

    Y Jey T Lea: Ctis Ipeet Sppted By Tls

    F Bsiess Pcess Pessials


    BARRIeRs TO LeAn

    Leans dual ocus on increasing business value and eliminating waste made it one o the most

    popular business perormance improvement approaches o the last decade.1 Leans most amous

    case study, the oyota Production System (PS), has been broadly studied and celebrated as

    paradigm change rom Fords mass production to PS mass customization in the automotive

    industry.2 Since its original publication in 1990, Leans continuous improvement process and

    tools have been adopted across dierent industries as diverse as chemicals, nance services and

    healthcare with dierent degrees o success. In particular, the sustainability o the Lean in

    industries with predominantly human-centric activities and/or less mature business processes has

    been a continuing debate. Research supported by examples rom companies o dierent sizes and

    operating in dierent sectors rom global manuacturers to local providers o public services

    has identied a ew common barriers to Lean:3

    Skepticism about what Lean really is. Lean best practices emphasize continuous improvementat all levels o the organization. Yet case studies reveal broad skepticism about how executivesand sta perceive Lean: Sta workers see it as just cutting headcounts and reducing costs.

    Managers and middle managers, busy with day-to-day operations, perceive it as a distraction

    rom real work. And senior executives, instead o getting involved, delegate the responsibility

    or Lean initiatives to consultants and methodology experts, who oen have limited inuence in

    the organization.

    Lack of leadership. When the link between Leans implementation and the organizationsstrategy is weak, the embedding o a continuous improvement process cannot succeed in the

    longer term. Case studies reveal that the goals o many Lean programs are not clear, and the

    basic questions that senior managers should answer upront are not addressed: why Lean is

    implemented; what drives the initiative; what change to the process is expected; and what

    commitments management is prepared to make.

    Silo culture and measures. Perormance management systems based on individual anddepartmental indicators encourage sta and managers to ocus on local optimizations and

    compete internally, rather than collaborate or the benet o customers and the organization.

    Te case studies show that disengagement and attempts to undermine continuous improvement

    are higher in rms, which operate with compartmented structures and measures, than in

    organizations that encourage collaboration and improvement as the means to an end.

    WIPRO DemOnsTRATes HOW TO ImPLemenT LeAn AnD OveRcOme ITs BARRIeRs

    Forrester conducted research to understand how executives implement Lean-style perormance

    improvements around the delivery o I services. In an October 2009 Forrester report, What

    CIOs Should Know About Lean, we discussed how several CIOs approached Lean to streamline

    captive I organizations and eliminate waste; however, those CIOs did not reveal any spectacular

  • 8/3/2019 Journey to Lean Continuous Improvement Supported By


    2010, Feste reseach, Ic. repdcti Phibited Agst 2, 2010

    Y Jey T Lea: Ctis Ipeet Sppted By Tls

    F Bsiess Pcess Pessials


    oyota-style implementations o Lean.4 But the Wipro echnologies (Wipro) case study presented

    in the next section deals with a ull implementation o Lean. It is the story o a large I services

    organization that adopted Lean as a source o competitive advantage to sustain its low-cost, high-

    quality strategy while growing rapidly.

    La Fll Ipltatio At Wipro spport Bi expaio

    Wipro, a global company headquartered in Bangalore, provides I services to 840 active customers

    in multiple verticals including banking, retail, manuacturing, healthcare, energy, utilities, and

    transportation. In 2009, the I services business crossed the 100,000-employee mark, tripling

    the number o employees rom 2005.5 At that time, Wipro Chairman Azim Premji announced

    that the company was implementing Lean and expected to derive competitive advantage rom it.6

    History shows that Wipro was able to ulll its chairmans expectation. Since 2004, the company

    has continuously developed its own Lean ramework and has applied its continuous improvement

    process and tools into a strategic capability with goals to:

    Dynamicallyreposition its portfolio of services for growth and innovation. Five yearsago Wipro competed as an outsourced provider o technical services, completing about 1,100

    soware projects yearly about 75% o them oshore and 25% at customers locations. Eighty

    percent o these projects were perormed on a time-and-material basis, and 20% were xed-

    price contracts. oday the company perorms more than 4,000 projects. Almost 45% o its

    contracts are xed-price. But more importantly, the company is shiing its service ocus rom

    executing soware projects to a consultative approach aimed to increase the share o system

    integration, business process outsourcing and transormational engagements, a market where

    the availability o Lean insights and capabilities is becoming a critical success actor.7

    Sustain its market position as low-cost, high-quality service supplier. At Wipro, compliancewith quality assurance standards has been critical or its reputation and success. o deend its

    position against other Indian and international service companies competing on low wages,

    Wipro has constantly renovated its delivery processes and trained its sta based on the most

    advanced quality initiatives and control models o the time, such as ISO 9000, CMMI, and

    Six Sigma.8 Since 2004, Wipro has continuously increased the number o Lean engagements

    (see Figure 1). During a recent brieng, Wipro reported that or the I business, 30, 000 out o

    approximately 55,000employees are covered through Lean, and or the BPO business, 4,000 out

    o approximately 26,000 employees are covered through Lean.9

  • 8/3/2019 Journey to Lean Continuous Improvement Supported By


    2010, Feste reseach, Ic. repdcti PhibitedAgst 2, 2010

    Y Jey T Lea: Ctis Ipeet Sppted By Tls

    F Bsiess Pcess Pessials


    Fir 1 The nbe o Lea Egageets Ctie T Icease At Wip

    Source: Forrester Research, Inc.57286

    Cumulative Lean engagements since inception













    Source: Wipro Technologies

    La At Wipro spport Bi soltio Byod Otord softwar Dlopt

    When the members o Wipros senior executive team decided to implement Lean in 2004, they

    realized that the quality models used beore, such as CMMI and Six Sigma, were very good or

    meeting soware specications but were less well suited or delivering business solutions. Te

    Harvard Business Schools 2006 case study documenting the early stages o the rollout reveals that the

    executive team correctly assessed Leans potential as a management paradigm changer and envisioned

    its role as a sustainable process, rather than the next quality initiative.10 During a recent Forrester

    brieng with Wipro, we learned that since those early experimentation stages, Wipro has developed

    Lean through several development phases into a mature ramework consisting o a continuous

    improvement process and customized tool kit applied to projects o dierent size and complexity:

    Phase zero: Experimenting with Lean. Te implementation o Lean began with the creationo the Lean productivity ofce (PO). Te POs mission was to: 1) incubate the Lean concepts;

    2) transcript Lean tools and practices such as Just-In-ime (JI), Visual Control Board, Value

    Stream Mapping (VSM) automation, and leveling into the I space; 3) select a ew pilot projects

    or experimentation and help the project managers implementing them; and 4) measure

    the tools impact on perormance. Only projects that could demonstrate more than 10%perormance increases on prespecied metrics (schedule, eort, or quality), were labeled as

    Lean. From 2004 to 2006, when the HBS case study was published, the number o Lean projects

    at Wipro grew rom 54 to more than 300.

  • 8/3/2019 Journey to Lean Continuous Improvement Supported By


    2010, Feste reseach, Ic. repdcti Phibited Agst 2, 2010

    Y Jey T Lea: Ctis Ipeet Sppted By Tls

    F Bsiess Pcess Pessials


    Phase 1: Mainstreaming Lean. Closed projects with Lean were more successul and set thestage or the executive team to deploy Lean on a larger and more ormal basis. Te sta in

    the PO grew gradually rom 10 in 2005 to 25 today. Tis Lean center o excellence (CoE)

    is responsible or: 1) leading the deployment o oyotas Lean practices in I services; 2)

    championing productivity, cost containment, and delivery excellence; 3) guiding project teams

    through the entire course o Lean deployment; and 4) providing statistical evidence o benets

    accumulated. During mainstreaming, the PO mandated the implementation o Lean tools

    across more than 1,000 large and midsize projects involving greater than 100 man month (MM)

    o eort and tracked their perormance.

    Phase 2: Gathering Lean momentum. Te PO team started selecting larger and more complexprojects or Lean intervention, meaning projects involving more than 200 MM. Te statistic

    measurements showed that in spite o the increase in size and complexity o the projects, Lean

    continued to deliver sustained perormance improvements. During this phase, the PO dedicatedadditional eort to: 1) marketing Lean via deliberate evangelization campaigns supported

    through newsletters; 2) orming communities o practice; 3) creating contextual and customized

    Lean workshops to address specic business needs; and 4) creating customized training

    modules to cover the entire organization.

    Phase 3: aking stock. As the Lean intervention gained momentum and touched a largenumber o projects, the ocus o the PO turned to cross-utilizing Lean and Six Sigma and

    integrating the combined approach with other established methodologies such as Agile, the

    Wipro Quality Management System, and other practices. Te goal was to move away rom

    silo productivity improvements to an integrated portolio o improvement tools and correlate

    them through a unied improvement process as part o project execution. Te solution was thedevelopment and implementation o an excellence index (EI) model consisting o a customized

    tool kit or various project types. Te PO selected and documented the tools based on

    experiential data and ranked them using weightings based on the impact seen in past projects

    (see Figure 2).

    Phase 4: Measuring improvement. Te PO employed the EI model to validate the coverageand rigor o implementing Lean. It introduced and started trackingtwo metrics across the

    entire organization: planned EI and actual EI. While doing so, it continued to: 1) guide project

    teams in selection o suitable tools (planned EI); 2) provide assistance in deployment; 3) ensure

    depth and rigor with requent tenet usage reviews (actual EI). From August 2008 to December2009, the number o Lean projects that could demonstrate perormance increases by more than

    10% based on prespecied metrics grew. For example, it grew in the banking sector rom 51%

    to 83% (large projects) and in the telecom sector rom 13% to 72% (or medium size projects).

    In addition, the PO continued to monitor the impact o dierent tools. A ew tools, such as

    dependency structure matrix (DSM), statistical analysis, and orthogonal arrays contributed

    signicantly to increasing business value (see Figure 3).

  • 8/3/2019 Journey to Lean Continuous Improvement Supported By


    2010, Feste reseach, Ic. repdcti PhibitedAgst 2, 2010

    Y Jey T Lea: Ctis Ipeet Sppted By Tls

    F Bsiess Pcess Pessials


    Te next phase. Te PO plans to continue capturing insights about the usage and impact o theEI tool kit and to continuously improve the rigor o the Lean process. In addition, it plans to

    enhance the tool kit by experimenting with new tools and also researching new methodology

    or doing projects, like the Critical Chain Project Management (CCPM). Last but not least,

    Wipro is planning to arm out a consulting practice based on its unique Lean insights and

    use these insights as a dierentiation actor; the company is shiing i...


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