How can Lean and Innovation make your business evolve to 4.0?

The reality of business today is very different to that of a few decades ago. The Fourth Industrial Revolution is accelerating competition like never before and moulding a very different reality, with the emergence and propagation of cyber-physical systems, the Internet of Things, cloud computing and other technological advancements. Leading organisations cannot take their positions for granted and must constantly adapt their operations and overall approach to keep the pace in a 4.0 era.

Once the go-to strategy for ensuring business efficiency and growth, in the context of the current reality, Lean Management has been branded by some as being outdated. But, in a more evolved form, this business approach has in fact shown that it can complement Innovation Management when it comes to company operations, and could be the answer for businesses to remain competitive in today’s world.

This ability to be lean while remaining innovative seems to be crucial for companies to continuously succeed.

Besides the technological updates required by firms in the age of 4.0 – and the tech talent that comes with them –, it has also placed a focus on operational efficiencies while maintaining a high level of quality and innovation excellence. To respond to these demands, and looking to reduce waste and increase profit simultaneously, many organisations have started to implement the strategies found in both Lean Management and Innovation Management.


Introducing Lean into your innovation programme

The age-old desire to innovate continues to be a priority for leading companies. However, top-level executives have identified short-term focus and lack of resources as the largest barriers to innovation in their company – issues that are addressed by Lean Management.

When the principles of Lean are entrenched in a structured innovation programme, not only can it lend a hand in reducing costs and optimising operations, but it can also work to improve income sources.

Rather than aggressive cost-cutting tactics, a successful strategy that targets Lean goals will help organisations lower costs, focus on the aspects of business that are controllable and free up resources to fund transformation and future growth. In essence, it opens the doors for ongoing innovation. This application of the Lean philosophy should ideally come from the top, with leaders instilling the approach as part of the company culture.

There are three starting points to becoming Lean:

  • Apply basic Lean principles to identify the waste and complexity within the company;
  • Foster a creative culture that is balanced with efficiency;
  • Fail early and often, by testing models, prototypes, simulations to hone in on their sense of value.

This process of incorporating Lean into an innovation programme should start by mobilising a company’s most valuable resources: people and their expertise, involving them in shared challenges.

Capturing the wisdom of each employee and of their collective intelligence, and aligning them with clear Lean Management objectives, enables companies to encourage a change in mentality and create a community in which innovation becomes second nature.

Once a culture of continuous innovation is instilled, innovating operations, processes and products become a systematic procedure, embedded within the walls of organisations.

Managers can focus innovation efforts to develop a Lean Management approach to business by:

  • Mobilising everyone to focus efforts on efficiency: send a clear message when inviting people to share ideas;
  • Optimising use of resources: find ideas to improve resource use and allocation, and rally your human resources capital;
  • Ensuring more effective field monitoring/screening: keep a close eye on the ideas and comments of those on the ground who deal with the reality of the company’s activity every day;
  • Developing smarter processes: continuously seek new and better ways of doing, by also incorporating the potential of new technologies, such as cyber-physical systems, the Internet of Things, cloud computing and cognitive computing;
  • Getting valuable results, faster: increase productivity, eliminate waste, rationalise existing resources (human and physical capital) and mobilise them towards concrete results.

Generally speaking, when employees are aligned with strategic and operational goals, they won’t be distracted by unclear tasks; they will be more productive and bring you more value. You get to mobilise your most valuable resource to make a joint effort to increase efficiency and, ultimately, drive business growth.


The Lean/Innovation union in harnessing collaboration

By stimulating the influx of fresh ideas and insights through Innovation Management initiatives, aligned with the ongoing Lean Management efforts, your people across different teams and locations can be actively engaged to improve your organisation’s operations.

Achieving a positive balance between Lean and Innovation, particularly within Collaborative Innovation initiatives, can help organisations move forward, by reducing costs, optimising operations and simultaneously improving revenues. Besides increasing revenues, this strategic combination can also instil creativity in the core of the workforce.

Therefore, not only are Lean and Innovation Management not antagonists but, when done well, these seemingly opposing strategies have the potential to be symbiotic.

Contrary to some thoughts, Lean will not necessarily dampen the fire of Innovation, but rather help lay the foundations of a system that nurtures and encourages continuous, ambitious evolution in the 4.0 era.

Diana Neves de Carvalho, Exago’s CEO
Francisco Bernardes, Exago’s Head of Innovation Services

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