The five key principles of lean management are value, the value stream, flow, pull, and perfection. Some of these words may sound like instructions from a workout instructor but the only thing they have in common with physical effort is the workout part of it. Implementing leaner processes requires assiduous analysis and execution that continually asks “why?” when inefficiencies are found. Business management and development is already demanding, given project planning and management, human resource management, and bi-directional communication between delegators and the delegated. The lean tool-set can help cut through complexity to see with new eyes the familiar processes around us and find new insights on practical improvements.
In the case of higher education institutions, these lean principles are intertwined with academic ambitions and performance and the creation of a communal and educational value that transcends the financial aspect. Due to the multi-faceted and fluid challenges universities face, a rigid list of best practices is not enough for good governance. Purist financial managers may clash with academic goals and staff, educational and financial compliance regulations, as well as donor and student needs. The organization must provide the highest quality education to attract students and academia, while exploiting opportunities to increase income and manage its financial risks.
The principles of lean management can contribute to financial accounting and control in balance with the educational activities at the core of a learning institution.
When we think about value in terms of higher education, what comes to mind is a win-win scenario for students and the institution, where financial stability undergirds quality learning and teaching that, in turn, increases the reputation and income of the school.
The main sources of income for university are grants, tuition fees, investments, residences and catering, and endowments, donations and subscriptions. Lean analysis focuses on different kinds of waste, generally anything that doesn’t bring value to students or the school, that gets in the way and slows down value-producing activities from getting to the finish line. Forms of waste include decisions affecting money, such as inefficient management and complicated bureaucracy that justifies redundant positions (the so-called ‘administrative bloat’), research and patents that lead nowhere, excessively expensive new wings and other construction projects, irrational investments in losing sports teams, decline in enrollment due to competition, antiquated facilities and teaching methods, PR problems, and bad investments in the stock market.
Time and money waste also prevent delivery of value. In order to make a system efficient and self-sustaining, the system needs a design that allows it to function exactly as intended with the resources it already has, in order to provide the highest output possible. Making university administration efficient involves removing redundant players and shortening the value stream, i.e. cutting down the number of stages and the time at each stage involved in providing the university’s services to the students, to free up procedures to be executed in the fastest and most productive possible way. In this case, an honest quantitative and qualitative analysis of the value stream across the board is necessary, to fulfill the university’s primary function as an educational body and to achieve every other endeavor it seeks.
The ‘flow’ principle can help the institution optimize processes across the board, where any item or activity that delays or blocks the process is removed or improved. A steady, constant, even flow is the fastest possible flow. Little’s Law illustrates how objects or items within a system move within a process, prolonging or shortening the work-in-progress. When a number of items or tasks arrive within a closed system, they either follow a well-organized, predetermined flow, at a steady, measurable rate, until they’re processed and exit the system, or form a queue that keeps becoming longer and longer, until they start delaying and overwhelming the system.
Take, for example, the life cycle of students’ entrance application, from the moment the initial forms are filled out until they are either approved for or denied admission. As more applications come in, they form a queue, which needs to move forward and free up more space for more incoming applications. Little’s Law can be used in any situation where volume and resolution rate go hand-in-hand in order to increase efficiency and prevent systemic overload. In practical terms, delays can translate into students picking other schools because they received the acceptance letter too late, or never. The school’s reputation also suffers.
A lean perspective offers a different look at the financial side of educational supply and demand. In terms of expenditures for new wings, research and patents, sports teams and facilities, the university’s management must look at the availability of funds, their allocation, their use as projects progress, and the levels of risk that would attach to any such project. A school can diversify its funding base with outside investments, but educational investments succeed mostly when the education quality is high, for which there is a high market demand. Income flows from students who want to attend the university and investors who want to put their money into such an institution. This demand is the ‘pull’ value of the school, an index of desirability translated into profitability, and it is the function of the university to shape and hone a lean system to efficiently and fully deliver that value that matches exactly the demand that exists for it.
Some other key parts of lean practice include detecting problems as early as possible rather than doing the same (and probably more) work later and reducing the waiting time before work continues to the next step in the process. Finally, an essential part of improving overall system productivity is to look where people or equipment need help to boost their own individual performance while they participate in some process stage.
The important thing about ‘perfection’ is not dwelling on its impossibility but taking it seriously enough as a goal, to continuously measure and question wasted time or non-value effort when delivering any kind of educational or institutional service, to work in small, hard-won steps toward a better, more sustainable process. It takes time, but inevitably, consistently shaving away imperfections where it makes sense to do so will lead to concrete results.