Lean and Agile: the way forward for companies in optimizing their business processesThe pandemic has highlighted that agility and speed in work structures are important to overcome economic difficulties and to face new competitors
Photo: Team meeting following the Agile methodology. Credit: Unsplash
By Chema Carvajal
Companies and institutions have been implementing differential work methodologies for decades in order to stand out and excel in their activities against fierce competition. In their pursuit for improvement, each organization has applied the techniques it deemed necessary and has measured its results in order to optimize its processes and grow within the sector. But, since the challenges of globalization are near insurmountable, even new methodologies have had to adapt to new environments.
In this context, Lean and Agile systems are responding to this need on the part of all economic actors to improve, optimize and adapt to the new times that do not allow for any mistakes. To understand both methodologies, it is necessary to explain their origin, highlighting that the key is to take advantage of their different strengths depending on the business area.
Lean from Japan and Agile from Software
If an analysis is to be carried out in chronological order, we must first start with Lean methodology. It emerged in the West during the 1980s to describe the characteristic production system of the Japanese automobile company Toyota, which had been applying it since the 1950s. At that time Taiichi Ohno, the company’s CEO, spoke out against traditional production systems that generated enormous amounts of waste.
In this sense, the Lean philosophy consists of a management model that focuses on minimizing losses in manufacturing and production systems, while at the same time maximizing value creation for the end customer. The aim is to use the least amount of resources to produce something, and thus give greater value to the final goods.
For its part, the Agile methodology was born in software development environments, specifically from the Agile Manifesto. It is a text published in 2001 and signed by 17 critics of process-based software development improvement tools. In this manifesto, the term Agile Methods was coined to describe the systems that were emerging as an alternative to formal methodologies, which were considered too “slow” and “rigid.”
This philosophy aims to deliver products to users as quickly as possible and receive early feedback from consumers in order to learn and improve on subsequent deliveries.
While it is true that both methodologies differ in their definitions, the ultimate objective is the same: to quickly deliver a product that generates value for customers and to constantly look for adjustments in their processes in order to survive the changes in the market and the ever-increasing needs of customers.
Becoming agile as a company has proven vital in an area of constant changes at all levels. According to a McKinsey study in the Standard and Poor’s 500 index, the average lifespan of companies has gone from 61 years in 1958 to a current estimate of less than 18 years.
In addition, according to these same estimates, 75% of the companies in the S&P 500 will have disappeared by 2027, as competition is getting tougher and more agile, allowing them to gain market shares in a very short time.
For Javier Visedo, Innovation and Strategy Project Manager at Opinno and expert in Lean-Agile methodologies, the future is more uncertain than ever and adaptation to new work methodologies is crucial: “large organizations are slow to react, it is difficult for them to reorient themselves, and that makes them easy prey for smaller competitors who do have that capacity.”
To address this situation, Visedo explains that “over the next few years we will see how companies around the world will be adapting their processes to Lean and Agile, often taking advantage of parts of one or the other depending on the type of business of the organization, in order to respond to this current challenge, where survival of the fittest is no longer guaranteed.”
Agile maturity: a challenge for companies
One of the goals is for companies to focus on being efficient in order to add value. Visedo explains that in the projects for which he works, he uses the Enterprise Agility tool: “With this product, what we aim to do is to accelerate organizations by making them more agile, so that their products provide value. This involves helping to create a business structure that is fast from its inception.”
This speed is intended to be implemented at several levels: in the definition and decision-making, in the management and execution of initiatives, in the management and execution of operations and, finally, in the creation of a culture of innovation and continuous improvement.
According to the expert, this system is helping companies to increase their financial performance by 20% and 30% thanks to the reduction of direct costs, and a 30% to 50% increase in their operational performance in terms of speed, achievement of objectives and predictability. Similarly, companies are increasing their Net Promoter Score (NPS), where customers rate the quality of service and experience, by 10 to 30 points. It is also having a positive impact on the NPS for employees, with companies improving by an average of 20 to 30 points.
“Our experience is that, today, companies that decide to follow Lean and Agile methodologies notice a real improvement in optimization and efficiency in their business areas, regardless of the level of maturity that they have, although the better implemented the methodologies are, the greater the improvement is qualified,” Visedo concludes.
There are companies that have already started on this path and others that should start as soon as possible. The former should know that improvement is continuous, and the latter should start by knowing their agile maturity level. To do this, they can use tests to self-diagnose. It is clear that Lean and Agile are much more than just methodologies: they are two philosophies that will enable companies to adapt to global trends.