A strategic guide for enhancing performance in crises

A comprehensive study of Lean and Financial Control

Lean and management control are two powerful tools that can help companies improve their performance and achieve their strategic goals in a crisis context. However, there is still some debate about how to best implement these tools, and what role leaders should play in the process.

Leaders play a critical role in creating a culture of continuous improvement and ensuring that Lean and management control principles are embedded throughout the organization.

To support our research on the importance of Lean and financial control for company performance and development, we surveyed industrial professionals, Lean consultants, and accountants with deep understanding of these topics.

We hope to provide a comprehensive and actionable guide for SMEs that are looking to implement Lean and management control.

By following the recommendations in this synthesis, SMEs can increase their chances of success.

Lean and Strategy

Do you consider Lean Management to be a relevant tool in strategic management, and why?

Lean management is a powerful tool for strategic management, but it is more than just a toolbox of techniques. It is a mindset that should be embedded in the company’s culture to complement a clear corporate strategy.
To implement Lean effectively, it is important to use the right semantics. Avoid terms like “Lean management” and “management control,” which can have a negative connotation among teams. Instead, use more positive terms like “Kaizen” and “performance management.”

Lean helps managers prioritize issues and manage organizational improvement in an optimal way. It also plays a significant role in change management and employee engagement.

Training in Lean tools and problem-solving is essential for implementing continuous improvement. Once this step is completed, defining Key Performance Indicators (KPIs) and using visual management are key to performance improvement.

Lean is all about people – both customers and employees. Continuous improvement aims to eliminate barriers that hinder the implementation of the strategy. Without commitment to Lean, it is difficult to empower and make individuals autonomous.

Implementing Lean takes time and effort. It is important to start with a personal evolution toward individual improvement before deploying tools. Then, focus on systemic thinking and cross-team collaboration. Finally, establish standards and indicators to enable continuous improvement and reduce operational losses.
Lean should be at the service of the customer. It is about employees’ way of being and their alignment with the leader’s vision.

In Happy CEO’s words

Lean is a “powerful lever for strategic transformation.
It is a “way of thinking and acting” that “puts the customer at the center.
It is “a journey, not a destination.
It is “about people, not tools.
It is “about continuous improvement.

Conclusion
Lean management is a relevant tool in strategic management because it helps companies to improve their performance, reduce costs, and deliver better value to their customers. It is important to implement Lean in a way that is aligned with the company’s culture and strategy, and that puts the customer at the center.

Lean, Financial Control, and Management Style

What style of management should be adopted for change management and the integration of Lean and Management Control into processes?

To implement a strategy supported by Lean and Management Control, managers should adopt a participatory, collaborative, and transparent style. This means that everyone should be involved in setting goals, developing plans, and tracking progress.

Managers should also be hands-on, humble, and exemplary leaders. They should spend time on the “Gemba” (the place where the work is done) to observe, train, and support their team members.

Management routines are essential for communication and coordination. They should be structured and regular, and everyone should adhere to them strictly. Change management is a complex challenge, and managers need to be skilled at leading and supporting their teams through change.

It is also recommended to have a Lean Leader reporting to management and a Controller who plays a dual role of providing figures to management and supporting teams in change.

In Happy CEO’s words:

The manager is a servant leader who empowers their team members to achieve their goals.
Management routines are the glue that holds the organization together.
Change management is a journey, not a destination.
The Controller is a strategic partner who helps the organization achieve its goals.

Conclusion
By adopting a participatory, collaborative, and transparent management style, managers can create an environment where Lean and Management Control can thrive. This will help the organization to achieve its strategic goals and deliver better value to its customers.

Lean and Small Businesses

In your opinion, can Lean tools also be applied regardless of the size of the company, especially in SMEs (or even micro-enterprises)? If so, which ones do you find relevant?

Lean tools can be implemented in SMEs, but they need to be adapted to the scale and culture of the organization. It is important to start with a few key tools, such as 5S and pull systems, and to be flexible with schedules.
One of the biggest challenges in SMEs is the lack of availability of involved individuals. To overcome this challenge, it is important to focus on training and empowering employees. It is also important to create a culture of continuous improvement, where everyone is encouraged to contribute ideas and participate in change.
Management control plays an important role in Lean implementation. By tracking key performance indicators (KPIs), SMEs can identify areas for improvement and make necessary adjustments.

In Happy CEO’s words

Lean is not about tools, it’s about culture.
Start small and scale up.
Be flexible and adaptable.
Empower employees to contribute and improve.
Use management control to track progress and make necessary adjustments.

Here are some additional tips from Happy CEO for SMEs implementing Lean:

Start with a clear vision for what you want to achieve.
Get buy-in from all levels of the organization.
Focus on a few key tools and processes at a time.
Be patient and persistent. Change takes time.
Celebrate successes along the way.

Example: A small manufacturing company wants to improve its on-time delivery performance.

They start by implementing a pull system in their production area. This helps them to reduce inventory and improve the flow of materials. They also implement a 5S program to keep their workspace organized and efficient.

To track their progress, they set a KPI for on-time delivery. They also create a visual management board to track their performance and identify areas for improvement.

Over time, the company is able to significantly improve its on-time delivery performance. This has led to increased customer satisfaction and profitability.

Conclusion
SMEs can benefit from Lean culture and tools, but they need to adapt them to their own context. Some of the key steps are to start small, be flexible, empower employees, and use management control. By doing so, SMEs can improve their efficiency and customer satisfaction, as well as their profitability.

Lean and Crises

In a crisis context, do you consider continuous improvement to be a priority, and for what reasons?

There are mixed views on the use of Lean as a management tool during crises. Some believe that it is more valuable when a company is in a growth phase, while others believe that it is essential for companies to embrace Lean during difficult times.

Arguments for using Lean during a crisis

Prioritizing actions and communicating through continuous improvement can lead to quick, visible, and easy-to-achieve gains.
Lean can help companies to improve their processes and reduce waste, even when profitability is impacted.
Lean offers a long-term vision and action perspective that can help companies to withstand crises without diverting from their customer-centric missions.
Lean can help to structure and engage everyone in the necessary changes.
Lean methodology, including root cause analysis, can help companies to better address risks and losses resulting from external phenomena.
Targeted Kaizen projects can be indispensable for making significant improvements during a crisis.
A change in mindset through Lean can lead to improved performance, even during a crisis.

Arguments against using Lean during a crisis

Change management can be more difficult during a crisis.
Companies may be focused on cost reduction and sales, rather than Lean improvement.
Services or projects may be degraded, budgets may be cut, and projects may be put on hold, potentially affecting quality.

Happy CEO’s perspective
Happy CEO believes that Lean is an essential management tool, both during good times and during crises. He argues that Lean can help companies to improve their performance, reduce waste, and become more resilient.

Conclusion
Whether or not to use Lean during a crisis is a decision that each company must make for itself. However, it is important to consider the potential benefits of Lean, such as improved performance, reduced waste, and increased resilience.

Advice from Happy CEO for using Lean during a crisis

Start by identifying the most important areas to focus on.
Prioritize actions that will lead to quick, visible, and easy-to-achieve gains.
Communicate clearly and frequently with employees.
Be patient and persistent. Change takes time.
Celebrate successes along the way.

Lean and Management Control

If I do not combine Lean with management control tools, am I at risk of theoretical work and missing my objectives?

Management control is essential for a continuous improvement strategy. It helps companies to measure their progress, identify areas for improvement, and make necessary adjustments.

In Lean culture, control is not about punishment or blame. It is about measuring achievement against standards and set goals. Management control sheds light on different and complementary indicators, which helps companies to understand their performance and identify opportunities for improvement.

Without the establishment of progress measurement indicators, it is difficult to maintain long-term motivation. Behind the numbers, there are humans and situations that need to be considered to understand and analyze results.

The Controller plays a dual role of managing and measuring performance. They are responsible for developing and tracking key performance indicators (KPIs) that are aligned with the company’s strategic goals.

Lean and Management Control KPIs are interrelated and essential for achieving objectives. The PDCA cycle (Plan-Do-Check-Act) is a continuous improvement framework that uses management control indicators to plan, do, check, and act.

In Happy CEO’s words

Management control is not about punishment, it’s about improvement.
Measure what matters.
Use indicators to understand performance and identify opportunities.
Consider the human element behind the numbers.
Align KPIs with strategic goals.
Use the PDCA cycle to improve continuously.

Additional tips from Happy CEO for using management control for continuous improvement:

Set clear and measurable goals.
Develop KPIs that are aligned with your goals.
Track KPIs regularly and identify trends.
Analyze results and identify opportunities for improvement.
Make adjustments to your plans and processes as needed.
Communicate your results to employees and stakeholders.
Celebrate successes and learn from failures.

Conclusion
To improve continuously, companies need to use Lean and management control tools together. They need to measure their performance, set clear and measurable goals, and use indicators to track their progress and identify opportunities for improvement. They also need to respect the people and situations involved in the process.

Role of the Controller in a Continuous Improvement Context in SMEs

Based on your personal experience, what is the role of the controller in a continuous improvement context in SMEs?

The Controller plays a vital role in SMEs, helping to identify efficiency levers, provide factual evidence, and support teams. Their primary role is to be highly cross-functional and present on the ground, working with teams to understand their constraints and provide data. They must also be able to identify and understand the causes of deviations from defined objectives.

The Controller’s secondary role is to regularly diagnose the company, raise alarms, and propose improvement areas. Their action aims to identify and correct deviations from defined and shared objectives.

In SMEs, Lean and Management Control are closely linked, as they often involve CFOs or versatile individuals who are highly involved in financial and organizational quality aspects. However, it is important to note that

Lean’s philosophy seeks long-term benefits, which may be at odds with the short-term financial results sought by CFOs or management.

Happy CEO’s perspective:
Happy CEO believes that the Controller plays a critical role in helping SMEs to implement Lean and achieve continuous improvement. He emphasizes the importance of the Controller being cross-functional, present on the ground, and supportive of teams. He also argues that the Controller must have a long-term perspective and be able to balance the need for short-term financial results with the need for long-term sustainable improvement.

Advice from Happy CEO for Controllers in SMEs:

Be cross-functional and present on the ground.
Support teams by understanding their constraints and providing data.
Identify and understand the causes of deviations from defined objectives.
Regularly diagnose the company, raise alarms, and propose improvement areas.
Balance the need for short-term financial results with the need for long-term sustainable improvement.

Conclusion
SMEs need the Controller to help them improve continuously. The Controller supports teams with data and feedback, and identifies and corrects deviations from objectives. The Controller also needs to be cross-functional, present on the ground, and have a long-term vision.

Obstacles and limits to Lean and Financial Control

In your view, what are the limitations and barriers to Lean and management control initiatives?

The two most commonly mentioned obstacles to Lean implementation are resistance to change and team engagement.

Resistance to change: Lean can be perceived as complicated and disruptive, and people may be reluctant to change their ways of working. Managers need to communicate clearly and effectively about the benefits of Lean and how it will help the organization to achieve its goals. They also need to provide training and support to help people learn new skills and adapt to new ways of working.
Team engagement: It is essential to have the buy-in of the entire team in order to successfully implement Lean. Managers need to involve everyone in the process and give them a sense of ownership over the improvements being made. They also need to create a culture of continuous improvement, where everyone is encouraged to contribute ideas and suggestions.

Other obstacles to Lean implementation include:

Leader commitment: Leaders need to be fully committed to Lean and willing to drive change from the top down. They need to provide a clear vision and purpose for the Lean journey and be role models for continuous improvement.
Too many tools: It is important to focus on a few key Lean tools and implement them gradually. Introducing too many tools at once can be overwhelming and can lead to confusion and frustration.
Lack of perseverance: Lean is a journey, not a destination. It takes time and effort to achieve sustainable results. Managers need to be persistent in conducting improvement routines and motivating their team members to stay engaged in the process.

Happy CEO’s advice for overcoming obstacles to Lean implementation:

Communicate clearly and effectively about the benefits of Lean and how it will help the organization to achieve its goals.
Provide training and support to help people learn new skills and adapt to new ways of working.
Involve everyone in the Lean process and give them a sense of ownership over the improvements being made.
Create a culture of continuous improvement, where everyone is encouraged to contribute ideas and suggestions.
Leaders need to be fully committed to Lean and willing to drive change from the top down.
Focus on a few key Lean tools and implement them gradually.
Be persistent in conducting improvement routines and motivating team members to stay engaged in the process.

Conclusion
SMEs face various barriers when implementing Lean and management control, such as resistance to change, team engagement, leader commitment, too many tools, and lack of perseverance. To overcome these barriers, SMEs need to communicate, train, involve, create, lead, focus, and persist in their Lean journey.

Observations of Improvements

If you have implemented Lean and/or Management Control, what improvements have you observed?
The results of Lean implementation are overwhelmingly positive.

Leaders have experienced business development, improved profitability, increased productivity, and higher OEE rates (Overall equipment effectiveness).

They can now analyze deviations and steer the ship thanks to dashboards. Bottleneck processes have been unclogged, and errors have been addressed. Interdepartmental communication has improved, and employees appreciate feedback from management.

The overall mindset has improved, and job satisfaction has increased. Improvement has become a reflex for some. Lean has allowed companies to adapt their strategy, optimize operations, and make informed investment decisions.

Management control has supported the identification of priorities, the measurement of performance at all levels of the organization, and the satisfaction of clients.

In Happy CEO’s words:

“Lean is a win-win for everyone involved.”
“It helps companies to improve their performance, reduce costs, and deliver better value to their customers.”
“It also creates a more engaged and motivated workforce.”
“Lean is not a silver bullet, but it is a powerful tool that can help companies to achieve their goals.”

Additional tips from Happy CEO:

Start small and scale up.
Focus on a few key areas at a time.
Be patient and persistent. Change takes time.
Celebrate successes along the way.

Conclusion
Lean and management control can help SMEs achieve continuous improvement and success by increasing productivity, improving quality, reducing costs, and improving customer service and employee satisfaction.
By implementing Lean and management control, SMEs can position themselves for long-term growth and profitability.

Suggestions during a crisis

What suggestions would you offer to a leader facing a crisis in terms of continuous improvement?

Diagnose and challenge the company’s processes.
The first step to Lean implementation is to understand the company’s current processes and identify areas for improvement. This can be done through a variety of methods, such as process mapping, value stream analysis, and root cause analysis.
Focus on anti-Lean elements.
Once the company’s processes have been diagnosed, it is important to focus on anti-Lean elements, such as waste, bottlenecks, and silos. These elements can be eliminated or reduced through the use of Lean tools and methods.
Don’t initiate too many changes at once.
It is important to start small and gradually implement Lean changes. Trying to change too much too quickly can lead to confusion and resistance.
Implement management control and visual dashboards.
Management control and visual dashboards are essential for tracking progress and identifying areas for further improvement. Visual dashboards should be used to communicate performance results to all employees.
Be present in the “Gemba.”
The “Gemba” is the place where the work is happening. It is important for leaders to be present in the Gemba so that they can see firsthand the challenges that employees are facing and identify opportunities for improvement.
Communicate clearly and support employees.
Leaders must clearly communicate the company’s vision and strategy to all employees. They must also support employees daily and make them autonomous and responsible.
Never abandon Lean and performance management routines.
Lean implementation is a journey, not a destination. It is important to never abandon Lean and performance management routines.

Happy CEO’s advice

Lean is a mindset, not a toolbox.
Start small and scale up.
Be patient and persistent. Change takes time.
Celebrate successes along the way.
Focus on the customer.
Empower employees.
Continuous improvement is never done.

Conclusion
Leaders can achieve continuous improvement during a crisis by focusing on critical areas, being flexible and communicating with their team, and celebrating successes. Specifically, they should identify and eliminate anti-Lean elements, make incremental changes, and track progress with management control and visual dashboards.

Interpretation of interviews

Lean and management control are essential for company performance and development. They are inseparable in the management of a sustainable and profitable business.

The leader’s commitment and involvement are crucial for success. The implementation of Lean and management control will also depend on the teams, the existing company culture, and the acceptance of change.

It is essential that leaders receive support and training in Lean and management control, change management, and continuous learning. Team training in Lean is also essential for success.

Change management is complex, but it is essential for building continuous and sustainable development. It involves instilling a new mindset and engaging all stakeholders in revising and improving their positions.

Happy CEO’s advice

Lean and management control are indispensable for company performance and development.
The leader’s commitment and involvement are crucial for success.
It is essential that leaders receive support and training in Lean and management control, change management, and continuous learning.
Team training in Lean is also essential for success.
Change management is complex, but it is essential for building continuous and sustainable development.

Conclusion
Lean and management control are essential for sustainable company performance and development. Leaders must be committed and involved, receive support and training, and implement change management and team training.

In summary, A strategic tool for SMEs to improve performance and adapt to crises

Leaders should…

Lean and Strategy
- Utilizing Lean as a strategic management tool that demands alignment with corporate culture and strategy.
- Promoting the adoption of positive terms like “Kaizen” and “performance management.”
- Integrating Lean into issue prioritization, change management, and fostering employee engagement.
- Emphasizing the vital role of training in Lean tools and problem-solving.
- Establishing the significance of systemic thinking, cross-team collaboration, and the implementation of standards in Lean.
- Enabling Lean to focus on individuals and align with the leader’s vision.
Lean, Management Control, and Management Style
- Embracing a participatory, collaborative, and transparent style of management.
- Highlighting the importance of hands-on, humble, and exemplary leadership.
- Executing structured management routines for effective communication and coordination.
- Defining the roles of Lean Leader and Controller within the organization.

Lean and Small Businesses
- Tailoring Lean tools to the scale and unique culture of SMEs.
- Commencing with key tools while emphasizing adaptability.
- Emphasizing the role of training, fostering a culture of continuous improvement, and implementing management control in SMEs.
Lean and Crises
- Acknowledging varying opinions on the application of Lean during crises.
- Recognizing Lean’s potential to swiftly achieve visible gains and enhance processes.
- Stressing Lean’s long-term perspective, structural approach, and its role in fostering engagement during times of crises.
- Understanding the transformative impact of Lean on mindset, enhancing performance even in challenging times.
Lean and Management Control
- Recognizing the indispensable role of management control in continuous improvement and performance evaluation.
- Utilizing management control to shed light on performance indicators and identify opportunities for enhancement.
- Defining the dual role of the Controller in managing performance and measurement in alignment with strategic goals.
Role of the Controller in SMEs
- The Controller’s pivotal role in SMEs, understanding constraints, deviations, and facilitating improvement.
- Conducting actions that encompass diagnosing the company, sounding alarms, and proposing areas for improvement.
- Balancing the pursuit of short-term financial results with the quest for long-term, sustainable improvement.
Obstacles and Limits to Lean and Management Control
- Identifying key obstacles, such as resistance to change and the imperative of fostering team engagement.
- Stressing the need for leaders to articulate the benefits, provide training, and offer support in overcoming these challenges.
- Acknowledging the impact of introducing too many tools, insufficient perseverance, and the critical role of leader commitment.
Observations of Improvements
- Notable outcomes of Lean implementation, including business development, heightened profitability, increased productivity, and enhanced communication.
- Addressing challenges such as bottleneck processes and errors, resulting in improved job satisfaction.
- Allowing Lean to serve as a catalyst for adapting the company’s strategy, optimizing operations, and making informed investment decisions.
Suggestions During a Crisis
- Initiating the diagnosis and challenging existing company processes.
- Directing focus towards anti-Lean elements, thereby avoiding the introduction of excessive changes.
- Implementing management control and visual dashboards to maintain clarity during a crisis.
- Emphasizing the leader’s physical presence in the “Gemba” and the importance of clear and consistent communication.
Interpretation of External Results
- Recognizing the inseparability of Lean and management control as foundational tools for building sustainable and profitable businesses.
- Highlighting the pivotal roles played by leader commitment and the acceptance of the team.
- Stressing the significance of leaders receiving support and training in Lean, management control, and change management.
- Acknowledging the essential role of change management in fostering sustainable development by instilling a new mindset and engaging all stakeholders.

“In the domain of leadership, the strategic vision, fortified by the alignment of Lean and Financial Control, serves as the persistent guide that leads organizations through challenging times. Continuously questioning convention, valuing a culture of transformation, and investing in the development of employees, businesses of all sizes can steer towards enhanced performance, even in the toughest of times.”
Pierre PERDRIAUD