Today I will try to analyze one of top problems in today’s business. It is inability to detect waste and I can assure you that there is waste in every company, in every process in everything. If you do an audit, you will not be able to see anything because of waste.

What is waste? Waste are unnecessary processes and procedures or unnecessary phases that don’t bring any value. Why that happens? Definitely not because that was an intention, but because generally there aren’t established processes detecting it. You will hear rarely that anyone is at all talking about it despite the fact that waste can easily kill any business.

Who is responsible for managing waste? As with everything, if management is responsible for managing of resources, the same management is responsible if those resources are managed improperly and if there is unnecessary spending. But that doesn’t end with management. Everyone has to be focused on trimming waste as a part of daily activities. Management has to encourage people to find waste and suggest optimization for existing processes.

How to detect that there is a problem? Just pick any meeting. If you don’t hear two sides and someone asking why we are adding something and after added asking to measure its value and update if needed you definitely have a waste. It is natural process that waste is created, so if you do not have anyone talking about process of self-trimming of business complexity and cutting of not needed pieces you will have more and more waste every day.

Because of waste, you have lean business philosophy originated from Toyota, but developed further by others. It is very attractive and helps modern companies to be focused on high-value business activities and to keep costs under control.

Lean philosophy demands discussion how to have “just enough” complexity and to actively work on keeping business productive. It asks everyone to be able to critically review processes.

For example, if there is a phase where someone signs some form before car in a production line can leave factory and after review that signature is given to 100% cars even if they are malfunctioning, that signature is a waste.

Other example would be if you have testing department that never finds a flaw in a product and really you never have issues that means you are overpaying production. Why? Because, generally, producing personnel is more expensive per hour than testing personnel. You always have to have workload spread to different departments and to have everyone working on their level of high-value activity.

Last example would be if you have two managers per employee. Why, because you are trying to better organize work. Why you need so many managers? Usual reason is when you have no trust on your senior professionals so effectively you are treating them as “entry-level”. This practice will bring many problems because managers are frequently not able to make professional decisions so they create enormous number of hours sitting in meetings for everyone. Those meetings are closely managed and guided so again value is lost. Members of the meeting are quiet and answer with “yes”, “no” and “maybe”. If you start telling someone what to do before you hear his opinion, you are losing the value of hearing unbiased opinion. How to detect this? You have very passive professionals and all activities are initiated by management which is not a good idea. And instead of actively working on getting professionals to be more involved you are trying to fix the problem with more managing.

Ok. Whose interest is to have low waste business? Primarily owner’s. Management will always inflate numbers to extremes because everyone wants to have larger budget and more employees to manage. To prevent that, owners have to connect well with top management, to share ideas with top management and also know how to measure performance and following of business goals. If owners are not able to do that, they have to add few very trusted board members that will represent owner’s interest and that will not have executive powers (to avoid conflict of interest). For the same reason it is not good idea to have Chairman and CEO in same person (if it is not the owner himself).

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