LEAN 4.0 - Ensuring Sustainable Functional Excellence

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Stern Stewart & CO. GmbH
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80333 Munich

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Management Summary

A glance at today’s management agenda shows a clear picture: In many companies, the role, character and orientation of administrative and interdisciplinary functions are being redefined under the catchword “lean”. Basically, “lean” is about setting up cross-divisional functions such as HR, Legal, Communication and IT to be more flexible and independent of the divisional or regional business structure, thus sustainably improving their quality and efficiency by means of clearly defined management responsibilities.

The starting point for the optimization is clearly defining the functional tasks based on their fundamental character along four distinct groups (refer to Stern Stewart Research, Vol. 55): supervisory, expertisedriven, transactional-driven and business-specific tasks. Only truly business-specific – not necessarily all business-related – tasks remain embedded in the organizational business structure. This is based on the hypothesis that it is easier to achieve functional excellence with unified management while at the same time being close to the business via business-partner models than vice versa. If has frequently proven inadequate to accumulate own functional resources in each business accompanied by futile standardization attempts via policies and guidelines.

The clear separation of functional tasks forms the basis for a systematic advancement of the operating model in the administrative and cross-divisional functions. Lean 4.0 is characterized by six main features:

1. Strong functional and disciplinary leadership: Only allocate true supervisory tasks (governance) to the actual steering level (global or local) on a “one-time right” basis

2. A more pronounced end-to-end view within the function: Further develop fragmented activity split through bundling within the function – aiming for a true process model

3. Customer-oriented business partner organization: Ensure business proximinty in an increasingly bundled functional structure, by the means of clear roles and competencies

4. Strong delivery organization: Realize cross-functional optimization potential without diluting the functional governance (again)

5. Differentiated role of the regional organization: Increased localization in the go-to-market; enhanced bundling within the support functions

6. Knowledge transfers from the production world: Transfer of proven lean techniques to administrative processes, and systematic utilization of lean levers (e.g. continuous product/process elimination or Six Sigma)

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