All MSD projects aspire to achieve large scale poverty reduction in a sustainable and efficient manner, although most times the “efficient” part is silent. Often, this goal has to be accomplished in very ambiguous and complex market systems, making it an extremely difficult job. In a bid to deliver this goal, MSD practitioners have continuously attempted (with mixed results) to adopt/adapt various management concepts while steering projects. Not surprisingly, the most recent adaptation was of the concept of lean thinking to manage the complexity in MSD interventions, basing on its success in entrepreneurship and manufacturing where it has ensured growth under similar circumstances to those experienced by MSD projects.
Perhaps the most recent literary contributions to this work was that of our former colleague and friend Leanne Rasmussen through her white paper Adapting Lean Thinking to Market Systems Development, a case for how the Lean Startup approach can enable market systems development projects to navigate ambiguity, published on the BEAM Exchange. Leanne synthesized six principles that MSD practitioners can borrow from lean thinking to improve implementation and results of MSD projects. In this article, we propose seven roles of management in applying these principles.
Tracing the roots of lean thinking
We shall trace the roots of lean thinking for the benefit of our readers who may not already be acquainted with Leanne’s work (though we strongly recommend that you read). We assume however, that you are acquainted with the Toyota vehicles. Toyota, the company that manufactures them, is recognized for being the epitome of lean. In their book, The Machine that Changed the World, James P. Womack and Daniel T. Jones highlighted how Toyota company created a lean learning culture for employees at all levels. They observed that the company focuses on continuous improvement in everything they do, every day. This is widely believed to be a major, if not the, reason for the company’s success. In applying this manufacturing approach, Toyota developed a set of principles and methodologies for improving cycle times and quality through elimination of waste and synchronizing necessities, in order to meet market requirements both in short and long term. This mindset became embedded in their practice and allowed them to distinguish between value-added and non-value-added activities, with such immediate results as removal of unnecessary non-value-added activities. The approach allowed the company to make significant improvements to their operations; from improved productivity, increased resource utilization, to a more accurate understanding of product costs.
Adopted and adapted from Toyota, lean philosophy has been expressed in several different ways, including; achieving more with less people, reducing non-value-adding activities, slimming etc. Generally, lean is associated with efficiency, reducing surplus and increasing value to the customer. Outside of manufacturing, Lean has been used in entrepreneurship, enabled by the pioneering work of celebrated author Eric Ries through his book Lean Startup. In the book, Ries expanded the concept to an entrepreneurship approach (based on his own experience) and proposed it as a remedy to the countless start-ups that create their own demises by getting started with the wrong goals, the wrong structures, and the wrong processes. Ries’s work outlined a clear framework that empowers startups to navigate ambiguity and risks while using resources effectively. Following the success of applying this concept in the private sector and due to the writing of such practitioners as Leanne, many organizations in development have now discovered that lean can help them in implementing MSD projects.
Why Lean thinking for MSD
From our experience, market studies, detailed implementation plans, feasibility studies, logical frameworks, etc. which are used as key information sources at the on-set of MSD projects, are unable to provide the perfect prescription of what and how to implement initiatives. To address this, MSD practitioners have now perfected to art of generating logical assumptions and validating them by undertaking small pilots while consistently integrating feedback for (re) iteration. As Leanne earlier observed, this practice is consistent with Ries concept of minimum viable product (MVP), the “cornerstone” of Lean Startup. Ries defines an MVP as that version of a new product which a startup can introduce in the market to collect the maximum amount of validated learning from customers, with the least effort and cost. The validated learning is used to constantly improve the product. The underlying principle in this process is that seeing what people actually do with a product provides much more reliable feedback for improvement than asking what they would do with it. Ries emphasizes that an MVP saves a startup from waste by avoiding heavy investment of its resources (often limited) in a product that may not be useful in the market.
A market system however, is usually more complex and MSD pilots are more complicated than a single product or service. MSD projects constantly operate in complex, unpredictable, and changing context. As Springfield Center puts it, market systems are composed of a multitude of actors, multiple functions and multiple arrangements comprising of core functions of exchange by which goods and services are delivered, and their supporting functions and rules are performed and shaped by a variety of players. Though different in complexity, generally the situations of manufacturers, startups and MSD projects are very similar, MSD projects can therefore use some Private sectors leadership in managing it.
So, what is the role of management in advancing lean thinking in MSD?
As discussed earlier, in both manufacturing and entrepreneurship, lean’s goal is to eliminate process waste to improve outcomes. That means improvement in lead time, cost, quality, flexibility and also delivery performance. If we are to adapt/adopt this to the process of building an inclusive market systems, we must ask ourselves two fundamental questions; 1) what is the value creating work? 2) What is the role of management to enable it? In our view, MSD projects have often answered the first question. Therefore in this article, we propose answers to the second one. Also, our reflection is not to point out what management is not doing but rather what needs to be done to advance lean thinking in MSD. We base our thoughts on our experience and all the previous works referenced earlier.
Get better at determining what is really important
Drawing on Toyota’s reference model, management had a role to determine what was important for the company to survive- what was important for its customers. The Founder and Chairman of the Lean Enterprise Academy in the U.K Daniel T. Jones refers to this as focusing on the vital few. Focusing on the vital few frees up unnecessary effort and costs, enables us to solve strategic problems faster through quicker decision making process. For MSD management, it means focusing the team to find the most logical interventions out of the multitudes of constant and complex market analyses. Ironically, this is where most teams fail, cases of projects that have experienced “paralysis by analysis” are very common. Once that has been done, doing things right (according to available information) and timely (since time is a key dimension of systems performance) becomes the next task. The real significance of this is that if we focus on quality, time and getting things right as per available information, then these will enable us to deliver the results. Again, we are not proposing that MSD projects get pre-occupied with the processes rather than results, but rather delicately balance both. This is management’s biggest goal, and as frequently observed, biggest dilemma too!
Enabling the organization to run a value-creating system
Management has a task of enabling everyone and the organization to function as a value creating system where meritocracy is the order. In Our experience, keeping the organizations as flat as possible, allowing ideas to drive direction rather that hierarchy or position was very enabling. Toyota proved that diagnosing what is disturbing the system is easier when it runs as a value creating system because feedback loops can easily help to diagnose the underlying causes for disturbances rather than symptoms. Generally, lean thinking helped those who applied it to realize that in its absence, structures and layers that bring about unwanted waste become the norm. In projects, those wastes are manifested in terms of delays, unnecessary costs, wrong decisions, loss of opportunities and time, persistent failure to bring the desired change in the logical framework etc. Also in those cases, these wastes are symptoms and one needs to uncover several layers to go to the root cause of it. Practically, MSD projects experience conflicts with the implementing organization’s normal policies, regulations and culture, and management should lead the case for reviewing and surgically trimming-off all them that would lead to waste. This can be very disrupting for an organization, but possible.
Deploy the right improvements
Another significant take away from Toyota model is that management was responsible for deploying the right improvements. In lean, management must prioritize continuous improvement, acknowledging that there is always room to be better, and management must give all staff the urgency to identify, recommend, and act upon improvements. When taking a whole-systems perspective, inability to capitalize on employees’ strengths to solve particular problems (including those that are not necessarily in their routine job) is another form of waste. This is particularly important for middle managers, who can easily fail to manage such talent and start perceiving then as “competitors”. We have been privileged to work at various levels of the organogram in MSD projects, and we have learnt that no matter where you are in the organogram its very important to be able to suggest improvements and know that management consider these suggestions to ensure the right improvements to policies, logical frameworks, processes, tools, tactics, organogram, culture, etc. for implementation to proceed well. This is not an easy ask, as the constant changes can delay or deny project operations from reaching the predictable “steady state” so loved by managers and changing policies can take time. In our experience however, this has been done with interesting results.
Create time and go to the “Gemba”
People familiar with Toyota’s referenced model are acquainted with the phrase “gemba management”. In general business speak, gemba refers to the place where value is created. To Toyota however, the gemba is the factory floor. The idea of gemba is that the problems are more visible, and the best improvement ideas will come from going to the gemba. In MSD, we should never disengage with the context. Our iteration is that if you don’t want to engage with the context, you are better off separating with that particular MSD project because the best solutions will come from those engaged with the context. In one of our past MSD project, the Program Director/Chief-of-party was always in the market that needed to be changed (gemba management was quiet the practice) as much as possible. This increased the amount of time in the value creation process, it allowed iterations and pivots to happen as quickly whenever they were required.
Develop capabilities to predict and address future challenges
Developing the capabilities of staff is critical in the lean movement. In order to respond to such change—and keep the costs of responding at minimum levels—companies must have the capabilities to meet demand as it occurs. In MSD, we deal with very dynamic conditions. Putting impetus in solving today’s problems may create a disproportionate amount of future challenges and management must build capabilities to handle that. Management has a role to ensure staff develop the culture of anticipating “next generation” of challenges that could result from helping market actors address today’s constraints. In addition, management also need to provide opportunities for staff to undertake trainings and mentorship that enables them acquire the skills, competence and knowledge to address the anticipated challenges. A number of MSD Implementing organizations now have partnerships with various universities, training institutes, etc. to continuously build staff capacity.
Build leaders, not followers
Lean organizations need leaders. MSDs as well require people who can both serve and lead. Therefore, management must strive to create a work environment in which people can truly express their deepest of inner drives. People want to be engaged and also to have some level of control over their environment. MSD management must recognize that the people doing the work generally have the best ideas about how to improve the processes they participate in. MSD facilitators spend time with businesses to try out new ideas, suggesting improvements in behaviors, business models and practices and systems, participatory decision-making, empowering employees of businesses to be innovators and co-creators in positive change. This is only possible if management build leaders to drive the process. Such leaders are also enablers; they spend a significant amount of time at the workplace, making direct observations, and then striving to create systemic improvements that add value to the work of their employees. Empowerment of employees is an important leadership behavior to stimulate the use of operational Lean tools and to perpetuate the development of Lean practices. Indeed, Toyota taught us that employee empowerment is widely touted as the defining factor of Lean production; it is an important HR practice of Lean and involves the increase of capabilities, responsibilities, formal authority and involvement of broadly skilled employees in problem-solving, and participative decision-making.
Create a “Bossmance” and not a Womance/Bromance culture.
Most work cultures in development are premised on hierarchy. A subordinate should only meet the boss when it’s absolutely unavoidable, otherwise, you have your line manager. This culture simply will not cut it in MSD, where management and facilitators need to spend as much time on and off work as possible to enable them break the “hierarchical boundary” to permit free exchange of ideas. The risk with this suggestion however is that the team sometimes fail to realize that as much as there is need for friendly culture, it should not stand in the way of getting the job(s) done. In one of our past projects, the Director mastered the art of “Bossmance” as opposed to Womance/Bromance culture- management would participate together with facilitators in all sort of informal activities such as barbecues, adventure trips, etc., and demand for a deliverable the next morning. This enabled the team to draw the line between socialization and getting the job done. Management in MSD projects will need to create a similar culture to enable them get valuable market insights both formally and informally, especially in teams where writing is not a core strength.
Conclusion
We implore MSD managers to adopt/adapt the lean system of PDCA for plan–do–check–act or plan–do–check–adjust as the first step. The style and approach of implementing the system may vary from one organization to the next, and one geography to the next, but surely it works – as Toyota, countless silicon valley entrepreneurs and MSD projects have demonstrated. These seven roles we suggest, can help management a great deal in giving a head start to the adoption/adaption process. Indeed we find considerable similarities between our experiential advise and John Y. Shook’s in his book Managing to Learn: Using the A3 management process, which was inspired by his experience as an employee of Toyota. John also challenges managers to a) lead as if you had no power, b) set clear direction, c) manage by facts (be knowledgeable); d) manage by ‘go see, ask why’; e) enabling people to do their job; f) develop and mentor subordinates by asking questions not telling them what to do. Managers in MSD projects are thus challenged to change their behaviors and set the right culture in their teams first, before attempting behavioral change in market actors.