Author: Luke Smaul
Like it or not, technology is playing an ever-increasing role in our lives. From how we shop to how we communicate, technology has changed how we engage with the world. Observing this change, large companies, for the past five years, have tried to understand and explore what technology means to their future. This is driving a massive movement called Digital Transformation.
Digital Transformation lets companies reimagine their business in a world that is fully connected by the Internet of Things, hyper scalable through Cloud, and super-powered by Artificial Intelligence. The possibilities are endless, and the stakes are high – “disrupt or be disrupted.”
Digital Transformation means the possibility “to build end-to-end visibility into the entire supply chain, reduce forecasting errors, improve customer service responsiveness, and eliminate warehousing inefficiencies.”
I’d led part of one of the most visible Digital Transformations in Industry, and had the scars to prove it. The rewards were there, no doubt, but it wasn’t easy, and it wasn’t fast. If done wrong, it could also be extremely expensive. I wanted to know more about how other companies were experiencing Digital Transformation.
Unfortunately, when I did my research and talked to other people leading transformation initiatives, the story wasn’t good. A 2019 HBR article summed it up well; 70% of DT initiatives were not meeting their stated goals.
No matter how you look at it, 70% is a high number. Being a manufacturing engineer by training, I looked at it like a system to be optimized. A system with too much waste. Too much Digital-Waste. Billons of dollars of Digital Waste, by some estimates. There had to be a better way.
Check out Episode 16: Exploring Digital Waste
I co-founded Chakra so that I could explore different ways of tackling this challenge. The first thing we needed to do was understand the problem. Thinking of it like a waste problem was helpful. My Lean Six Sigma training had armed me with the tools to tackle waste streams. Why not treat Digital Waste, coming from Digital Transformation, the same way?
I’d been trained to think about waste using a thought experiment - “Picture yourself standing perfectly still on a manufacturing production floor. Take 5 min, and look around. What waste do you see?”
- Parts sitting idle on the shop floor – inventory waste.
- Operators walking from one machine to another to finish a job – wasteful motion.
- A feature being added that a customer will never use – over-processing.
- More parts being made than is needed. - over-production.
- Machines being ‘kept warm” ready for production – waiting.
- Raw material being transported from one position to another unnecessarily – wasteful transport.
- Somebody making something incorrectly – defects.
With that thought experiment in mind, I pictured myself standing still amidst the buzz of Digital Transformation. What waste did I see?
- Inventory – teams pumping data into a data lake to be examined at some point in the future
- Motion – technology vendors offering to connect everything, get the data moving, the results will come.
- Over-processing - everyone chasing the AI promised land, throwing more and more processing horsepower at ever more complex problems.
- Over-production – digital transformation programs treating the end customer or user as an after-thought. Did anyone want what they were building?
- Waiting – IT teams confusing scale-able with scale, leading to underutilized hardware capacity.
- Transport – Company culture driving the on-premise versus cloud discussion. How data was transported and accessed across the enterprise became a political battleground.
- Defects - Companies adopting agile methodologies struggling to separate fail-fast from low-quality.
Since Lean had provided the framework to understand the problem, we knew the same thinking would lead us to a solution. Borrowing the Womack and Jones definition Lean is:
"...a way to do more and more with less and less - less human effort, less equipment, less time, and less space - while coming closer and closer to providing customers exactly what they want"
For me, that definition was the perfect summary of how companies should think about their digital transformation. The great news is, a year later, that it’s working. We’ve baked this sort of thinking into everything we do at Chakra and the results speak for themselves:
“We collaborate with Chakra because of how they think about transformation. From how we run our supply chain, to how we optimize our on-site service teams, Lean is at the core of everything we do. We see our Business Transformation as an extension of that. Hence, Chakra’s transformation process aligns to how we want to work. I’m also happy to report we see the results of such an approach.” – Alex Smith, VP Operations, Edwards Vacuum
For each of our clients, this might mean something different. In one example, by focusing on demand, and understanding what our client’s end customers wanted, we helped launch a new digital offering in less than 90 days. Following our transformation process led to a significant reduction in over-processing of data and overproduction of applications compared to the client’s normal NPI process.
In another example, our transformation process led to a considerable reduction in digital inventory. It allowed our client to pause a data-lake initiative until we proved value with the available data sets. Shifting their mindset from “build it, they will come” to “test & learn” allowed them to save hundreds of thousands of dollars in unnecessary software licensing.
This approach also doesn’t need to be overly complicated. We recommend companies start by pausing for those 5 minutes to just think about their digital transformation. They’re often surprised by the waste streams they see.