Thursday, July 14, 2011

Can Government Think Lean?

Times are tough for governments trying to satisfy the needs of the people they serve. They are positioned with shrinking budgets, diluted employee morale, and increased public scrutiny. And as governments deal with an aging population and a greater demand for services, the additional costs of providing services can be monumental. But taking the traditional government approach of cost-cutting, hoping for 2% or 3% savings isn’t good enough to close the gap. Public sector organizations need to completely transform the way they produce their services in order to meet current taxpayers’ demands. Although the need to provide value and services in the most efficient manner should be a priority for all levels of government, it presently isn’t. Public sector productivity continues to lag behind the gains the private sector is experiencing.

A few progressive-thinking government organizations are starting to see real benefits by using Lean Enterprise principles to make significant gains in productivity. Lean Enterprise thinking was initially a set of tools and principles used successfully by Toyota and hundreds of other manufacturers around the world. However, in the past decade we have seen a renaissance, of sorts, in numerous non-manufacturing industries using Lean principles. Hospitals are using Lean to reduce paperwork, move patients more quickly through the emergency room, increase the number of operations performed in a day, and numerous other improvements that benefit the hospital, the patient and the insurance companies. Non-profit care providers are using Lean to reduce paperwork, ensure their clients get more face time with case workers, and serve more clients with the same amount of resources. The military is using Lean to reduce the turnaround time to service and repair mission-critical equipment so the equipment is available when necessary and to allow for less equipment needed overall. Construction companies are using Lean to reduce the time to complete a project, while using fewer resources and materials. Unfortunately, government appears to be the last of the major employment sectors (although it’s the largest) to embrace this well-proven approach to enterprise transformation.

Many a civil servant will react to the non-government improvement examples with indifference, and explain that public sector organizations are different. “We don’t make things or sell things or have a profit motive.” But in reality, they fit right in to the model of a lean enterprise. One performance measurement shared between private and public sector organizations is productivity. Productivity is defined as the amount of output in relation to the level of input required. Output can be a product or a service. For a manufacturer, it’s a widget. For a city, it could be a permit or public transportation. For a state, it could be a driver’s license or Medicaid reimbursement. Input is the other factor in the equation. For a manufacturer, input is mostly overhead, material and labor. For the city or state, input is mostly overhead and labor. By taking a lean approach to productivity improvement, teams will discover that there is an abundance of time (input) spent doing things that don’t add value to the service being performed. Examples are: searching for information; waiting for approvals; correcting errors; seeking clarification; duplication of effort; unnecessary approvals; repeated trips to printers, copiers and filing cabinets; creating unneeded reports; excessive information; waiting for people to respond to email or voice mail; trying to find someone; unnecessary meetings; and more. By eliminating or reducing some of these non-value added tasks, capacity will increase. Increased capacity can then be used to produce more services - of higher quality - with the same amount of resources. A few examples:
• The State of Missouri used lean principles to reduce the time to receive a tax refund to 2 days without adding any costs.
• The City of Cape Coral, Florida used lean enterprise principles to reduce commercial site permit approvals from 27 days to 5 days.
• In Grand Rapids, MI, a team of city employees used Lean to reduce the time to get a construction plan reviewed from 22 days to 9 days.
By focusing on productivity (doing more with the same or less), a city, state, or other public sector entity increases its capacity to provide services to the public. One of the benefits of using a Lean approach is that the additional capacity is gained without the need for additional people, equipment, facilities or money. The needed capacity has always been there. It’s hidden until the right team of people, with the right motivation and knowledge, is given the opportunity to identify and eliminate the non-value added tasks. The results are similar to what most private sector companies can expect:
• Improved customer (taxpayer) experiences
• Reduced wait times
• Reduced costs
• Improved morale
• Higher quality services
• Increased equipment utilization.
• Reduced facility space needed
The operational benefits that a city or state realizes from their Lean Enterprise initiatives can then support more strategic benefits, like economic growth, advancing social goals (health care, poverty) and improved faith in government. Once civil servants get past the mindset that private sector ideas won’t work in the public sector, the opportunities to improve government are nearly endless.