Lean and IT: Organization Design

IT organizations often organize around functional areas of activity. It is common to find dedicated teams dealing with project management, software quality assurance, IT governance, network engineering, security, change management, help desk, and data centre operations. It is also common to have general IT managers who oversee operations who bring classic managerial expertise to their organizations, but lack the product or process knowledge that their teams work with on a daily basis.

Communication, collaboration and integration of services between departments can be overwhelming. Often, special agents known as Client Portfolio Managers (CPM) are created to expedite the movement of IT requests through “the system.”

In addition, it is common for CIO organizations to have the “technology” folks working under “one virtual roof” that we often hear serves career needs and offers the promise of stewardship of IT people and services.

These concepts of functional organizations, general hands-off managers, and keeping IT staff together can promote inward looking thinking and non-responsiveness to customer value.

Lean Thinking has an approach to organizational design that starts with customer value. Activities are sequenced with the appropriate skilled people to remove back and forth wasteful activities, and eliminate re-work, errors, waste and inventory. Rather than focus on departmental output, the goal is to optimize the flow of IT products and services through the entire value stream that flows across technologies, assets, and departments to customers.

With respect to the role of management, Lean thinking requires staff to engage, design and implement how things get done efficiently in the entire value stream in order to provide maximum value to the client.

Lean managers are hands-on. Here is an illustration from the book by James Womack and Daniel Jones, titled “Lean Thinking.” German motorcar company Porsche was in need of change to respond to changes in market conditions and launched a Lean transformation. Part of the change process required expert input from experienced Lean consultants: The Shingijutsu Group and Chihiro Nakao (Lean Sensei) from Japan.

Considerable Lean planning work had been undertaken to get rid of mountains of inventory and the searching for parts that were rarely used which consumed and distracted staff. Assembly flow was changed to ensure rapid movement with no stopping, no scrap and no backflows to fix defects.

“As the Porsche (Lean) team formed its plan, a crucial moment arrived. Nakao handed a circular saw to Wiedeking (Porsche CEO) who was dressed in a blue jumper suit worn by all production workers and told him to go down the aisle sawing off every rack of (inventory) shelving at the 1.3 meter level. It was a defining moment. Historically, senior management never touched anything in the plant and no one ever took such drastic actions so directly and quickly.”

At the end of the first week, the rundown in inventory was complete. The effects were dramatic and visible. Organizationally, teams formed around customer products and levels of hierarchy removed.

Costs were also estimated for catching a defect at the moment it occurred compared to fixing it once it arrived in the customer’s hands. It helped staff to understand the down stream result of their work, rather than thinking inside the scope of their functional domain.

Key takeaways for IT managers: learn to understand the value stream of IT services; organize IT and non-IT staff together to deliver services the customer values; and promote Lean thinking IT managers who can demonstrate hands-on leadership and facilitate, guide and empower their staff to think through the entire value stream.