When you read the title of this article what immediately came to mind? For some people the use of the word “lean” connotes cut backs and austerity. “Let’s run this place on the smell of an oily rag!” For others they connect it with Toyota in Japan and its famous system of production which employs a “kaizen” philosophy. Kaizen is a Japanese word that translates as continuous improvement and this is what has me interested in lean and how it can be applied in accounting firms to achieve great things.
I was reminded of lean thinking recently when I came across a video from Paul Akers. He is the CEO of an American company called FastCorp and to call him a fanatic about lean would be an understatement. He wrote a book called 2 Second Lean which has become a popular reference and let me share with you some of Pauls’ thoughts. They are, in my view, 100% applicable to accounting firms.
Paul’s view is that lean is like the 2 second tire change of a formula 1 racing team ( Watch an example of a perfect Ferrari pit stop here.) which embodies operational excellence, making things flow and not struggling with processes, because you are working as a team on continuously refining processes. He stresses that lean is not about being organised, but rather being organised is a by-product of lean. (He notes you can be organised but still operate in a very inefficient and wasteful way!)
Paul believes Lean is about learning to see waste and eliminating it through relentless, fanatical continuous improvement. Build a culture of continuous improvement with a mindset of “everything in life is a process that can be continuously refined”. He cites some great examples where for example a business was able to shift from 14 hours to 6 minutes to complete a key step in a manufacturing process!
Paul’s three steps for implementing lean into your business are:
Step 1 Teach your people the 8 deadly sins of waste:
| Waste | My comments to connect with an accounting firm |
| 1. Over production | Doing work that for a client that does not meet their needs, is not important to them or is not on brief. |
| 2. Transportation | This could be interpreted as why travel to your client’s premises when the client can come to yours, but I think a better example is why have your employees who have to commute for a long period each day waste all that time when it could be used better if they worked from home for x days per week? |
| 3. Inventory | Building WIP and not billing promptly – the longer you leave it to bill the less likely it is the client will remember the benefit and the more likely it is that payment will be delayed or fees disputed. |
| 4. Defects | Making mistakes because we have not given people appropriate training, systems and tools. |
| 5. Over processing | Having to rework stuff because we made those mistakes. Doing the most beautiful workpapers when something simpler would be more than enough. |
| 6. Motion | Going back and forth between doer and reviewer to get the mistakes fixed or back and forth between you and your client because you did not provide clear guidance in the first place about what you needed. |
| 7. Waiting | Starting a job then stopping it because we don’t have all the information from the client, because we don’t have a system to check that before we start. |
| 8. Loss of employee potential | Not giving our team members the space and encouragement to fix crappy processes which they know are not working well. Believing the only good ideas come from firm owners! |
Every morning at FastCorp the entire team has a stand up meeting for between 15 and 60 minutes where they share business updates which include the previous day’s sales and any stuff ups. And most importantly they include celebrating continuous improvement initiatives implemented by team members and ongoing education on FastCorp systems. Embodied in this is the use of standardised systems which reflect the current best way of doing things.
Step 2 Get your people to fix what bugs them.
Every day your people are empowered (indeed required) to make a process less difficult and more enjoyable.
Step 3 Make before and after videos to show progress made
And then celebrate that progress, for every single improvement that is made.
Paul notes that some well known organisations that adopt lean are Toyota, Harley Davidson, Porsche, Amazon and the Israeli defence force.
So the questions I have for you is this. Do you have a culture of continuous improvement in your firm?
If you are not doing the things I have talked about then the answer is almost certainly no. In my experience that is true of many firms and that presents an opportunity if you want to break away from the pack and have your firm shine. And it ties in perfectly to understanding the value of standardised documented systems which I write about here.