Can BPM and Lean Provide Substantial Cost Reductions?

Can BPM and Lean Provide Substantial Cost Reductions?

A client that I have been working with has a three year goal of reducing its operating costs in one of their business units by 15%. This is a goal that is essential for them to maintain market share and increase profitability without adding increased pressure on business units to generate more top line revenue.

To realize this lofty goal they realized that they have to undertake different approaches to get them there. They expressed a desire to implement Business Process Management (BPM) and Lean methodologies and were seeking a path forward. Can BPM and Lean provide substantial cost reductions?

Significant organizational change is not very easy to accomplish. Corporate culture, personal opposition, inertia, fear and a number of other factors create resistance to change. For an organization to introduce the radical change involved in embarking on a BPM/Lean journey, it requires a significant commitment at the executive management levels, proponents and champions within senior management and buy in that “it’s for the better” at all levels. It requires a strategy that encompasses evangelizing, mentoring and dictating. Quite frankly it requires a committed team that is empowered and committed to the change process.

Here are some of the many questions that need to be addressed:

• What are the drivers for change?
• What are the elements of change?
• Who can we rely on to cause change?
• What is the process of change?

Each question can be considered as a standalone topic. However, let’s briefly explore some of the considerations.

The drivers of change are easy to identify. They are the impediments that restrict the company from increasing year-to-year profitability. They are the loss of productivity that hang around in the hallways, offices, cafeterias, break rooms and cubicles of the business. They are companies that are hampered by useless and time consuming processes, mired in rules and regulations and subjected to uninformed decision making.

The elements of change must include a desire by leaders for improvements. However, leaders alone cannot make them happen. While they can create an environment that fosters change, willing participants have to be included in the equation. There must be a game plan that is provided for execution. Included factors in the game plan are evaluation, training, measurements systems, timelines, tools, incentives and most important measurable along with realistic goals.

The people that we can rely on should include a dedicated BPM/Lean team with the explicit purpose of execution. This team needs a key executive sponsor that is essentially the Change Agent/Evangelist. It should also include Lean and Process Subject Matter Experts, process analysts, as well as stakeholders from both the relevant business and information technology areas. Combined groups of people that are pulled from cross functional areas are very useful.

The process of change is quite often long and painful. It requires a change over from the old ways of thinking to new ones. It is essential that there is buy in across the board. This requires education, mentoring and training for new ways of thinking and new approaches to solving old problems. Most important, change is transformational and it requires transformational leadership and thinking.

So, what was my response to our client — can BPM and Lean provide substantial cost reductions? Of course it can. Be prepared to take baby steps first.

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