Lean IT expert Steve Bell helps solve the long-standing battle between a company’s goal of Continuous Improvement and the perceived lack of IT’s agility. It’s a constant friction between the boss wanting computer/network changes now, and IT wanting to slow down and do it right.
Hear about Kaizen, and how IT departments are now considered strategic partners in business planning, due to so much online interaction with the public.
Mac or PC? In this interview, Steve actually admits his preference.
Mr. Bell is the author of three books on Lean IT, and is winner of the Shingo Research Prize. Steve is a faculty member at the Lean Enterprise Institute. Scroll to the end of the transcript for a link to his website.
(:15) Steve Bell: When to engage your IT professional isn’t when you need a new piece of software, or when your printer isn’t working.
(:19) Dan Clark: It can be a high-tech Civil War. So, how can businesses and their IT departments work better together? Hello I’m Dan Clark.
(:31) Brandon: And I’m Brandon Nys. Today we’re talking with Steve Bell, a Lean IT expert. Steve is a faculty member at the Lean Enterprise Institute.
(:40) Dan: He’s the author of three books and received the Shingo Research Prize . Steve does Lean leadership coaching in his company, Lean IT Strategies. Hello, Steve.
(:51) Steve: Hello Dan and Brandon. Nice to, ah, talk with you.
(:54) Brandon: So, Steve, there is, kind of, this long-standing battle between the Continuous Improvement of business processes and IT’s lack of agility. Kaizen teams go in, they solve problems, but eventually they bump into a technology wall, and then it comes down to drawing straws on who gets to go and talk to IT. How can IT be more responsive to businesses trying to implement Continuous Improvement?
(1:24) Steve: Yeah, that’s a very good question because, unfortunately, IT organizations—try as they might—often get branded with terms like “slow,” “unresponsive,” “risky.” It’s a great challenge managing technology because technology changes so quickly. And what companies often find themselves using is a combination of a variety of old and new technologies that are cobbled together on a purely opportunistic, less than strategic perspective. And every time a new change is introduced to that technology ecosystem, it has the opportunity to, ah, destabilize it.
(2:07) And so, left in a situation like this over time, IT professionals tend to be very cautious and tend to work in the long, slow and very cautious change cycles. Change cycles that may be three months, six months, even a year-long. And what that does is that causes the Kaizen process on the business side to slow to a grinding halt and it really creates an atmosphere of conflict between business, that needs to continuously improve, and IT.
(2:39) There’s no easy answer to this, but there are several things that IT must do. But they’re all long-term strategies. But they have to do around, as you said, agility and, ah, increasing the speed and reliability that they’re able to make change happen.
(2:56) Brandon: So, it seems to be that IT professionals want to be very sure of technology so that it doesn’t compromise the company, because a lot of what we do relies on technology. Do you think that’s the main contributing factor to their lack of speed?
(3:25) Steve: Not necessarily, but it is a key factor. Let me answer this in a couple of different ways. First of all, particularly in the last five or 10 years, IT really is playing more and more of a strategic role. Many products and services that companies deliver, a good part of the value proposition these days as something to do with digitization. Either digitization built into the product itself, or the way customers interact with the product, or the way customers interact with service.
(3:46) For example, people are starting to call automobiles simply iPhone accessories. And, while that’s being a bit tongue-in-cheek, there’s a lot of truth to that. And you’ll see more and more of that in the evolution of the automobile in the next few years.
(3:59) So, IT is playing a more important role in all aspects of this. But, also add to that concerns with privacy, security. The CEO of Target recently resigned over a security breach, a very, very serious issue. So, IT professionals are being very cautious because significant assets of the company are being exposed. It’s really, sort of, a wild west environment out there having to do with IT security.
(4:31) But, I think one of the most fundamental challenges that IT organizations face is the complexity of their technology portfolio. One of the first things I do when I engage in a new client is we do a portfolio analysis, and we’ll find that even a small company will have between 50 and 100 distinct software applications running within the company, some running locally, some running in a shared environment, coupled or integrated in various ways. Some are very old and obsolete, some are very new.
(5:06) And just managing this technology portfolio in a way where all of the applications and all the data is somehow normalized and kept in high quality is a very very difficult challenge. And the more applications and databases that a company has in its portfolio, the more opportunities for things to become, ah, “disconnected,” shall we say. Or a lot of waste and complexity—unnecessary complexity—exists in that environment.
(5:35) Technology professionals are always interested in reducing the portfolio, but at the same time the business is always asking for more, more, more. New applications, new this, new that. And so there’s always a tug-of-war to keep the whole technology ecosystem manageable, moving forward in high quality and service to the business and its customer.
(5:58) Dan: I have a question about one of your earlier articles, where you point out, in survey after survey, business people say that “IT does not understand their business, does not deliver value.” Do you think this is because, maybe, business people should take some of the responsibility, and they haven’t bothered to bring IT into their tent, and explain their business?
(6:21) Steve: Um, that is a common scenario. I think it’s on both sides of the relationship that IT, in some cases, does not understand the business because they’re focused on technology. But I will tell you that in the last five or 10 years the whole focus of IT organizations has been on business value. And so I think, in general, the awareness, uh, and the understanding that IT professionals have of business requirements has made great leaps forward. Not in all cases, but I’d say generally.
(6:54) But also, there is, on the business side, a lack of understanding of how to engage with technologists that’s also partly at fault. What I like to counsel people is that technology people probably understand your processes better than you do, because they’re in charge of maintaining the databases, and the applications, and the integrations, and the report writing, and the business intelligence that helps you automate those processes and make them run well.
(7:23) So, when to engage your IT professional isn’t when you need a new piece of software, or when your printer isn’t working, or when something technology needs to be done. They need to be involved at the very front end when you’re talking about process improvement, process change. Because the primary, the first and most important role, I think, for the IT organization, is to help in partnership with the business to improve processes and prevent needless new technology from being introduced. So that, hopefully, first, the right thing to do is to improve and simplify a process and reduce some of the technology legacy that’s already there, that’s getting in your way. And then when, finally, you have a specific problem that needs a specific technology intervention, it can be defined and implemented in small batches, very simply, quickly, in a way that the business people own the solution. It’s not an IT solution. It’s a technology enabled business solution. That’s the ideal relationship that we should be looking for.
(8:32) Dan: Well, let me give a tip that I have used before.
(8:35) Steve: Right.
(8:36) Dan: Involve everybody in your process. You get the receptionist, the IT guys, and I got Razor scooters for everybody. And we ran round out in the parking lot and had ice cream. And we were all together.
(8:48) Steve: (laughs).
(8:49) Dan: We weren’t even talking about work. But it was an opportunity to link with each other, and I thought it was a good thing, so maybe that’s what businesses and IT departments can do.
(8:57) Steve: I, I absolutely agree that you need to start with the relationships and a sense of shared purpose, although it’s not always going to be as easy as buying ice cream and that having Razor scooters. I, I love the idea.
(9:10) Dan: (laughs)
(9:11) Steve: But one challenge, I think, most organizations have, is overburdened. The fact that people have more work to do in a day than there are hours in the day.
(9:21) Dan: Mm-hm.
(9:21) Steve: And I’d say most IT organizations I see are terribly overburdened. Too much work to do and hence not enough time to go out into the business and form those relationships, and have those dialogues that lead to the kind of improvement that we’re talking about.
(9:39) So one of the first things I like to counsel people to do is to make demand visible. IT work, by nature, is virtual. It’s invisible. It’s not like seeing demand and workflow in a factory. And there are numerous ways that demand can be brought to the IT organization. Certainly formal requests, and project proposals, and all of that. But there are the “drive-by shootings,” and emails and phone calls. An IT organization really needs to make an effort to make that visible, and governable so that demand on the IT organization can be prioritized according to the needs of the overall business, and not the squeakiest wheel.
(10:27) I particularly like the Kanban approach. We’re not particularly talking about Toyota’s version of Kanban, which are boxes of inventory and tags and cards moving around the factory. But the software development form of Kanban, which is become quite popular, which is a whiteboard or piece of butcher paper with some columns and some sticky notes where all demand, and all work in process that’s being done is made visual. And it’s been my experience that when the IT organization is able to make demand, and prioritization, and workload, and flow of their work, and any problems they’re experiencing visible for all to see, that’s a good first step to them developing a healthier relationship with their customer, who is the business.
(11:15) Brandon: Steve, with businesses relying heavily on technology, inwardly and outwardly, I imagine one of the big obstacles for some companies is that, perhaps, they don’t have their IT staff on site. And I would imagine that that, even with the team on-site, there can be issues with this. So, you urge companies to not just align with IT, but integrate with IT. And, given the nature of IT right now, what’s really the difference between aligning and integrating?
(11:47) Steve: You know, that’s a really interesting question. It seems that the pendulum swings back and forth every few years for various companies. At one time you’ll see an IT organization being very centralized, focusing on efficiency of shared-services, software development being shipped offshore, infrastructure management being shipped out of house and into the cloud to be managed by some service provider in the interest of low-cost. And then, recently, I’ve been seeing, with the, ah, economy doing as well as it’s been doing, some of those low-cost, centralized, shared-service initiatives swinging back in the direction of decentralization where the IT organization is more focused on relationships with the individual business units, and stakeholders where you have more hands-on relationships, and problem solving and understanding of the needs. A little bit more specialized attention to the various business units.
(12:51) Both federated and confederated models, you could call them—that’s what the IT folks talk about as decentralized and centralized—have their pros and cons, have their advantages and disadvantages. So, it’s important to build the model of the IT relationship to the overall business organization with alignment to the overall business strategy. Is it focused on a centralization and standardization strategy where low-cost service is the most important? Or is there more, ah, specific service and innovation driving the business units?
(13:27) And, like I said before, I sort of see the general trend in the industry in the last few years moving more towards IT driving innovation. Closer relationships, integrated, embedded within the business rather than as these large, centralized, shared-service organizations.
Kaizen Guide: Better your business with continuous improvement
To be successful, you can’t make an improvement once and forget about it. Effective lean businesses use kaizen, which means “continuous improvement”. In kaizen, everyone looks for ways to improve processes on a daily basis. This Kaizen Guide explains
the kaizen mindset, basic kaizen concepts including the PDCA cycle, and real-world examples.
(13:45) Brandon: You also talk about encouraging Lean IT on two fronts: the “outward facing” Lean IT, and the “inward facing” IT. Can you talk to us a little bit about those?
(13:56) Steve: Right. What I mean by “outward facing” and “inward facing” is in the majority of organizations, IT exists primarily as a support organization. Now, that may not be true with companies like Amazon, and Google, and Netflix and others where IT is really, essentially, the business they’re in.
(14:16) So, in the case where IT is primarily a support organization, who are they supporting? Their customers. The “outward facing” customers of IT are typically the business customer. But often, IT is also supporting, directly, the end customer through websites, and self-service, social media and things like that. So the business, in the end, customers need value of the IT basically in the functioning of an IT. Applications that work, data that’s of high quality and accessible, that sort of thing.
(14:49) But, before the IT organization can do that, they really, kind of, have to fix their own backyard first. So, I spend a lot of time working with IT organizations, working on things like consistency, standardization, security, reliability and the services they provide to their customers. Application services, product development services, infrastructure services. Desktop, and server, and communications, and network services. All of those things that an IT organization does behind-the-scenes so that the people who are using those IT services, particularly applications on a daily basis, just flip their computer on and they get what they need.
(15:35) And often times we need to look at the overall value stream architecture within an IT organization to sort of those services out. So that they provide the right service levels and service-level agreements to their customers. That’s what I mean by “inward facing” where the IT organization fixes its own backyard first before they’re able to reach out to the organization and provide better services to their customers.
(16:03) Dan: Now, I know, it used to be, the surveys a few years ago showed that a company will spend 70 to 80% of their IT budget on just the, ah, run-the-business and keep-the-lights-on activities. To me, that’s like spending all of your food budget on potatoes.
(16:20) Steve: (laughs)
(16:20) Dan: I’m getting the impression that is changing and that businesses are bringing IT into the creative aspects. Is that true?
(16:27) Steve: Ah, very, very much so. In fact, that was the primary theme of my latest book “Run, Grow, Transform,” where you need to shift more of your budget, and your energy from running the business to growing the business, and ultimately transforming it through innovative use of IT. The challenge for many organizations is that they are so invested in legacy systems—old, often obsolete systems that still are operating the core of their business—that many of these applications that are integrated together in a very tightly coupled way, meaning every time one system changes, everything changes. And it creates a very unstable and very fragile environment.
(17:11) So, many IT organizations over the last few years have been investing heavily in standardizing their infrastructure, oftentimes hiring infrastructure management out to service organizations that do that living. That’s why you’re seeing IT organizations shifting a lot of their infrastructure into the cloud where it’s more standardized and can be run as a service based platform where they’re basically hiring out someone to run their systems for them so they can focus on what drives the company forward. Growing the business. Innovating the business. Whether its applications, serving the customers, or embedding technology—embedding software technology right into the products and the services themselves. That’s where I think we’re going to see radical changes in the next decade or so.
(18:05) Many, ah, large, very well-established, legacy organizations—hundred-year-old organizations, S&P 500 companies—are really having, ah, long dialogues with themselves right now, saying “What does it take for us, for a hundred-year-old company live to be a two-hundred-year-old company?” Because we’re seeing a lot of technology disruption in the industry.
(18:28) It started with Amazon. It started with the travel industry. But, it’s moving into all industries now, where technology startups that don’t have all that legacy, that can be hyper aggressive niche providers, are starting to tackle the foundation of many long-standing sectors. So, it’s going to be an interesting decade or two we’re heading into now.
(18:53) Dan: Get out of the way, technology is here to stay.
(18:56) Steve: Well, it sure seems that way. But, don’t underestimate the importance of having good strong supply chains and big legacy companies are here to stay as long as they can hold onto their core assets. Their customers, their products, their supply chains. But there’s definitely a need for those long well-established companies to innovate because we’ve already seen, in the last decade, how fickle the consumer is, and how quickly they’ll jump ship for a new and compelling technology driven product or service. So, it’s not going to go all one way or the other but there’s definitely a shift in the direction of technology.
(19:35) Brandon: So, if there’s anyone listening to this podcast that is smack dab in the middle of an IT dilemma, searching for, maybe, the first or the next step on what they can do to align and integrate IT into their business model, where would you suggest that they start looking?
(19:56) Steve: Well, um, in a sort of selfish mode of thinking, I would say, well, first of all, buy, ah, one of my books and read it. If you have an understanding of what Lean principles are, “Lean IT,” which was my second book, really explain how IT organizations work in the context of Lean thinking. So, that might be a helpful primer. And then, my third book, “Run, Grow, Transform,” really talks about “Now that you understand the foundation, how do you innovate?” There are plenty of other good books out there in the world on this topic too, but I would urge you to pick up one.
(20:32) But, being a Lean thinker, where you really need to start is ask yourself the question “What is the problem we’re trying to solve? Why is it important?” And practice Lean, which is: Get the stakeholders together. Really, thoroughly understand the problem. And understand the countermeasures for common technology problems in the way they’ve been solved, in the application development, in infrastructure. How Lean has been applied to, ah, helping ERP systems become more effective, that sort of thing. And turn to others who solved these problems before to, ah, help guide you on your way.
(21:09) Dan: Well, my final question is are, are you a Mac guy, or a PC guy, or something else?
(21:17) Steve: Hmm. Oh boy trying to start a religious war.
(21:21) Dan: (laughs)
(21:23) Steve: And you forgot to add the Google Droid platform in on that. Well, I will admit to continuing, after all of these years, to be a Windows guy because that’s what I learned and I’m comfortable with it. And most of my larger, ah, corporate clients use Windows as their primary interface. So, I find it easiest in working with them to stay on that platform.
(21:50) But, I see a lot of people love their iPhones, and love their iPads, and love their iMacs and I have a profound respect with the design innovation that Apple, and Jobs, and everyone who’s come behind them is doing.
(22:06) It’s going to be wide-open platform war in the next decade going forward, and it’ll be interesting to see where the market winds shift. How’s that for being noncommittal?
(22:18) Brandon: Well, it’s an interesting response, especially since you’ve talked about the need to, maybe, pass on legacy products, so… (laughs)
(22:28) Steve: You know, it is very, it’s very interesting when you look at the market share numbers, how dominant the Windows platform, the Office platform, the server platforms, the SQL Server databases, how dominant those still are in the corporate world. But, everybody’s gunning for Microsoft, and everybody deserves a piece of the pie, but one thing we’ve learned is: legacy dies very, very slowly. So, I don’t expect Microsoft to be going anywhere anytime soon. They’re still hugely profitable and very successful by most measures, so…
(23:08) Brandon: You know, I’d have to agree with you. I don’t see them going anywhere anytime soon.
(23:11) Steve: No.
(23:12) Brandon: So, any final thoughts you have on Lean IT?
(23:15) Steve: I would say the relationships, and the learning. Keeping a focus on process excellence and operational excellence first. It’s a win-win when you’re introducing fewer technology interventions and more process improvement on the way. That’s a win for everybody, including the IT organization.
(23:41) Dan: Well, this has been excellent, and we look forward to maybe talking with you again because the Lean IT world is so huge.
(23:48) Steve: I’m happy to any time. Dan and Brandon, thank you for your time and interest.
(23:53) Dan: Thanks for joining us, Steve.
(23:54) Steve: Thanks Dan, thanks Brandon.
(23:56) Brandon: Steve Bell, a Lean IT expert.
(23:59) Dan: Steve does Lean leadership coaching. Check him out at LeanITstrategies.com. I’m Dan Clark.
(24:05) Brandon: I am Brandon Nys.
(24:06) (Outro Music with Voiceover)
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