If you’re reading this, then you might be asking yourself whether going through the process of implementing kanban in your business is worth it. Or maybe you’ve been tasked with the difficult job of convincing your CEO to implement Kanban.
Let’s face it. When it comes to pitching ideas to senior leaders, there’s no better way than talking in terms that they all understand – the business bottom line. When you can show them how kanban is aligned with your business’ financial goals, you can expect their support in its implementation.
Let’s explore how you can use kanban to increase profits.
Improve Efficiency in Teams
A key principle of kanban is limiting work in progress. By forcing individuals to focus on one task at a time efficiency is sure to be improved. Sound too simple? It’s actually counterintuitive to the way we’ve been accustomed to working. In Greg Keown’s book Essentialism, he shared how the word priority has remained singular from the early 1400s until 500 years after. It was only in the 1900s that the word was pluralized. We were convinced that working with multiple priorities was what productivity meant. This is where we’re wrong.
Karen Martin, the author of Value Stream Mapping, said it so well, “When everything is a priority, nothing is a priority.” People introduced priority levels in their product backlogs. Everything was a priority level 1 (P1), the highest level in the priority scale. When you look at it, this just means that the business doesn’t know what’s most valuable in their backlog.
Working on multiple priorities at one time also has an adverse effect on cash flow. When we multitask, we’re lengthening the time it takes to deliver a working product. The longer you work, the longer it takes for you to profit from your work.
Our brain is not wired to multi-task. It never was. We think multitasking makes us productive. But in reality, we’re able to achieve more when we have less on our plate. By limiting work in progress, we allow teams to focus on delivering a working product faster with high quality. This then enables them to incrementally build on that product and get customer feedback faster. Teams who have switched to kanban over traditional product development methods have also observed that they are more satisfied with the work they do because they can see results more often.
Reducing costs increases your profits. How do you reduce your costs? Eliminate wastes in your process. Kanban, as a visual lean management tool, helps teams identify wasteful activities in their process. When you have your value stream mapped out, you can measure the amount of valuable vs. unnecessary work done by your team. Only when you actively measure waste will you be able to determine how to manage it.
Delays, rework, and idle time are examples of process wastes. But in order to cut these, you must be able to:
- Identify where and why they happen – knowing this will help you analyze how to manage your wastes. A kanban board is an effective indicator of your workflow.
- Quantify them – Measuring waste allows you to visualize the severity of the issue and helps you assess whether your resolution or improvement efforts are working or not.
Teams are able to measure their performance using kanban metrics such as throughput and cycle time. These are empirical data as to how much a team could work on given a time period and how fast they are able to work. Knowing these will allow teams to make more accurate projections for their future projects. So when the business lays down a plan for a new project, the team has a factual basis to estimate how soon they can get work done.
When you make your process predictable, you are able to deliver on the product scope you’ve committed on. This then enables leadership to make better budget and revenue projections to the company and its stakeholders.
Kanban to Increase Business Profits
Whether it’s to convince your boss or yourself, kanban can be an effective tool to increase your profits. But as with any tool or methodology, it won’t work unless you put in the work. When you focus on improving your business process iteratively, the profits will follow.
If you’re still on the fence on whether to try out kanban for your business or not, why not try it for yourself? When you have your personal experience on what kanban can do, then you will have more confidence to pitch kanban to your whole organization.