Five Management Pillars for Digital Transformation
Integrating the Lean Thinking Philosophy
David Romero* Myrna Flores
Tecnológico de Monterrey, Ecole Polytechnique Fédérale de Lausanne,
Mexico, Switzerland,
david.romero.diaz@gmail.com myrna.flores@epfl.ch
Abstract—This paper discusses Five Management Pillars for
Digital Transformation integrating the Lean Thinking Philosophy.
It proposes a “Digital Lean Transformation Framework” where
its five management pillars – (Digital) Strategic Management,
Processes (Re-)Engineering Management, (Digital) Technology
Management, Change (People) Management, and (Digital) Risk
Management – are enriched with lean practices and tools in order
to support a digital transformation journey. A case study is also
presented as a validation mechanism for the proposed framework,
demonstrating its capability to enable process-culture-technology
alignment, which is a key enabler for success in any digitalization
initiative.
Keywords—Digital Transformation, Lean Thinking, Strategic
Management, Engineering Management, Technology Management,
Change Management, Risk Management, Industry 4.0, Fourth
Industrial Revolution.
I. INTRODUCTION
Is the Fourth Industrial (R)Evolution a “revolution” or an
“evolution”? For those companies without the right instruments
to monitor technological and socio-economic trends for making
the right strategic adjustments to their business and/or operating
models, in a proactive way, is most likely to be a “revolution”,
while for those thinking-forward companies with a strong praxis
of technological forecasting and future studies on interrelated
social, environmental, technological and economic factors may
become to be a natural, non-reactive, “evolution” for their way
of doing business. In both cases, in a proactive or reactive way,
a Digital Transformation will be required in a certain degree
for all organizations to stay competitive in a revamped Digital
Economy leveraged by the new advancements of information,
communication and operational technologies that have started
to converge the digital and the physical worlds. In this sense,
Digital Transformation [1] can be defined as a “specialized type
of business transformation, in the pursuit of innovative digital
or hybrid business and/or operating models, where the adoption
and integration of information, communication and operational
technologies play a dominant role in the corporate strategy to
create new competitive advantages, namely: digital capabilities,
based on digitally-enabled internal and/or external operations
(i.e. business processes) in order to create value for customers,
employees and other stakeholders”.
*
e.g. Additive Manufacturing, Big Data Analytics, Collaborative Robotics, Internet of Things, Machine Learning, etc. [3].
978-1-7281-3401-7/18/$31.00 ©2019 IEEE
Authorized licensed use limited to: UNIVERSITY OF HERTFORDSHIRE. Downloaded on June 24,2023 at 04:13:58 UTC from IEEE Xplore. Restrictions apply.
Martin Herrera, Homero Resendez
CEMEX,
Mexico, Switzerland
martinadolfo.herrera@cemex.com,
homero.resendez@cemex.com
In this paper, we apply the Lean Thinking Philosophy [2]
as the main guiding tool for a Digital Transformation process,
since lean has proven for decades to enable continuous learning
and improvement by focusing first on ‘processes’ and ‘culture’
rather than on implementing (new) ‘technologies’, to empower
organizations to be successful in their transformation journeys.
By applying a Lean Mindset, along with its different practices
and tools, this philosophy will enable teams to discover in which
activities of their end-to-end (business) processes the application
of Industry 4.0 technologies* [3] can help to reduce or eliminate
waste [4], which are the expected efficiency gains in the TO-BE
processes, and to re-engineer, digitalize, their (business) processes
in order to add more value to the end-customer and obtain in
consequence a more accurate expected Return on Investment
(ROI).
With the hype of the Fourth Industrial (R)evolution, several
organizations started to actively acquire Industry 4.0 technologies
after an initial ‘techno-centric approach’ towards digitalization,
where a strong ‘technology-push’ driven by many technology
vendors convinced companies to start their digital transformation
journeys – but without the proper ‘process-culture-technology’
alignment. In plenty of these cases, this led to many unsatisfied
companies, since: (i) efficiency gains have not been enough to
justify their technological investments based on costs reductions;
(ii) new digital capabilities developed in their products, services
and/or (business) processes have not created true ‘value-added’
under their customers eyes, so customers are not willing to pay
for it; and (iii) full potential of their recently acquired technology
was not realized since their investments where mainly made in
technology, leaving behind their employees engagement and
training in the strategic use of the new technologies to create
(digital) competitive advantages.
Therefore, in this paper, authors propose a ‘process-centric’
approach, a ‘technology-pull’ initiative by the companies, for
successful digital transformations, where processes and culture
are strategically (re-)engineered with a clear ‘process-culture-
technology’ alignment to guarantee the Return on Investment
(ROI) over Industry 4.0 technologies adoptions and new digital
capabilities developments, following always the Lean Thinking
principles of customer-centricity, efficiency and profitability.
2019 IEEE International Conference on Engineering,
Technology and Innovation (ICE/ITMC)
 In 1996, Womack & Jones [2] expanded the Lean concept
to a comprehensive philosophy. In their book, “Lean Thinking:
Banish Waste and Create Wealth in your Corporation”, they,
for the first time, defined the five principles of Lean Thinking:
(i) specify value; (ii) identify the value stream; (iii) making flow;
by reducing waste and inefficiencies; (iv) pull value; and (v) strive
for perfection with continuous improvement (Kaizen) as shown
in Fig. 1.
Fig. 1. Lean Thinking Principles
In order to achieve a successful – Digital Transformation
aligned with the Lean Thinking philosophy – a framework
composed of five management pillars incorporating the ‘lean
practices and tools’ is proposed in this paper. Such management
pillars are: (Digital) Strategic Management, Processes (Re-)
Engineering Management, (Digital) Technology Management,
Change (People) Management, and (Digital) Risk Management
These five management pillars were selected due to their common
appearance in strategic management frameworks. Fig. 2 integrates
the different identified lean methods/tools that can enable a digital
transformation based on a process improvement strategy; several
of them will be explained in this paper.
Fig. 2. Proposed Digital Lean Transformation Framework
The proposed Digital Lean Transformation Framework aims
to provide a practical approach, at the strategic level, to interlink
the method world of lean with the technology-driven vision of
Industry 4.0 in order to support digital transformation initiatives.
978-1-7281-3401-7/18/$31.00 ©2019 IEEE
Authorized licensed use limited to: UNIVERSITY OF HERTFORDSHIRE. Downloaded on June 24,2023 at 04:13:58 UTC from IEEE Xplore. Restrictions apply.
Furthermore, the proposed framework makes some ‘basic
assumptions’ for its management pillars: (P1) a digital strategy
is not simply to digitalize (business) processes but in fact to
provide novel ways of working, of doing business, capable of
creating new efficiency gains, (digital) capabilities, and/or value
for the customer; (P2) business processes should be standardized
/engineered before being digitalized in order to exploit higher
effectiveness levels enabled by digital technologies capabilities;
(P3) technology cannot magically fix a bad (business) process,
and the wrong technology could become an ‘inhibitor’ rather
than an ‘enabler’ for the execution of a good (business) process;
(P4) digital transformation is considered as a socio-technical
phenomenon, where all people should be empowered to drive
change, and use methods and tools to continually improve and
digitalize processes; and (P5) there is always risk in change, so
risk should be managed.
II. RESEARCH METHOD & RELATED WORKS
The proposed Digital Lean Transformation Framework was
derived from discussion-based interviews with Lean Researchers
and Lean Managers, and Industrialists ‘piloting’ digitalization
initiatives, as well as from an umbrella literature review.
Based on an umbrella literature review, using ScienceDirect
and SCOPUS databases, and the following keywords: “Digital
Transformation” and “Lean” as searched terms, we were able
to identify a limited number of works offering a method-based
approach towards digital transformation, and in many cases, our
findings depicted works based on digital technologies adoptions
that were not based on methods, which is the aim of our proposed
framework. Also, the grey literature was consulted in order to
enrich our proposed framework. The result, a framework (see
Fig. 2) based on learnings from the practice and research works’
insights cited in this paper, the call for a process-centric and
method-based approach towards digital transformation.
III. DIGITAL LEAN TRANSFORMATION FRAMEWORK
A. (Digital) Strategic Management
Quoting Lewis Carroll in Alice in Wonderland, “if you do
not know where you are going, any road will get you there”.
Sadly, this is not true when it comes to Digital Transformation
Journeys, and therefore, the importance of having as our first
management pillar the development of a Digital Strategy.
A Digital Strategy refers to a type of corporate strategy that
a company develops to create or enable new ‘digital capabilities’
capable of better serving the needs of their business units and/or
customers by leveraging the capabilities of digital technologies
[5] (see [6-8]). Moreover, digital strategies that go beyond the
Industry 4.0 hype of implementing new technologies, and focus
on (re-)engineering their business processes and organisational
culture, are the ones that show true digital progress towards new
levels of (digital) competitive advantage.
In a certain way, developing a Digital Strategy is similar to
the traditional strategy development process, but focused on
managing specific issues of digital strategies.
An effective Digital Strategy should: (a) provide a future
direction to the digital/hybrid business model and/or operating
model of the company by defining a holistic, long-term ‘digital
2019 IEEE International Conference on Engineering,
Technology and Innovation (ICE/ITMC)
vision’ as an aspirational goal for the digital transformation
journey; (b) involve a ‘digital maturity assessment’ to set the
scene, break-down the digital vision into targets and identify the
internal areas of improvement, including the needed resources
and capabilities to implement the digital strategy, as well as an
external analysis of the competitive environment focusing on
the customer preferences and needs against competitors and
intermediaries; (c) evaluate the digital maturity level against
the digital vision in order to articulate goals for each business
process to be engineering or re-engineered in order to support
the digital strategy; (d) select the right technologies and working
methods so that the new technology can enable people to do their
work according to the new or re-engineered process and create a
sustainable competitive advantage; (e) formulate a digital strategy
that fusions business and IT strategies (i.e. business-IT alignment
frameworks) and incorporates innovative and disruptive digital
technologies to leverage business processes in order to create a
differential value for the customer (e.g. digitally enabled products,
services, or product-services) and to create new corporate digital
capabilities; and (f) specify how resources will be deployed and
the organization will be structured to achieve the digital strategy
(e.g. a new digital (working) culture creation).
One Lean tool that is very powerful to define, deploy and
cascade a new (digital) strategy is the Hoshin Kanri (meaning
“Hoshin” = direction & “Kanri” = Administration), also known
as ‘Hoshin planning’ or ‘policy deployment’. It is a technique
that aims to transform the corporate vision into objectives and
actions, which are later cascaded down the organization hierarchy
to achieve a multilevel PDCA cycle [9] [10]. This approach was
developed in Japan in the 1960s, and it has been proved by diverse
companies. A Hoshin Kanri exercise can be rolled out to define
the specific initiatives, KPIs, targets and employees responsible
to deploy a digital transformation strategy. The Hoshin Kanri
will also enable the alignment of the different layers of an
organization during its digital transformation process from senior
management to middle management to the implementation
teams (see Fig. 3).
Fig. 3. Hoshin Kanri enabling Organizational Alignment
B. Processes (Re-)Engineering Management
According to Lean Thinking principles, (business) processes
always take precedence over technology, since ‘technology’ is
considered an enabler that increases processes ‘efficiencies’ if
the process has been engineered or re-engineered in an ‘effective’
way to deliver the expected outcomes. Therefore, Digitalization
– of outdated processes, rooted in traditional ways of doing
978-1-7281-3401-7/18/$31.00 ©2019 IEEE
Authorized licensed use limited to: UNIVERSITY OF HERTFORDSHIRE. Downloaded on June 24,2023 at 04:13:58 UTC from IEEE Xplore. Restrictions apply.
business, can only place a limitation or even a risk for companies
in their development of digital competitive advantages. Thus,
successful (business) processes digitalization requires a ‘process-
centric’ perspective implying a ‘horizontal view’ of the business
that cuts across the company in order to create inter-departmental
collaborations and an end-to-end flow of value-added activities
from suppliers to the end-customer to achieve improvements in
processes performance and customer satisfaction.
Moreover, (business) process engineering or re-engineering
is a crucial activity when it comes to make a change or design a
new innovative process. In this sense, digital process innovation
encompasses the envisioning of novel ways of working, of doing
business, by leveraging the new digital technologies capabilities
and transforming the actual process design into a hybrid or digital
one with new value-added features for the customer and/or new
efficiency gains (e.g. cost, time, quality, flexibility, service levels,
etc.) when it comes to its improved execution [11].
Furthermore, when it comes to processes (re-)engineering,
it is important to highlight that this is a complex socio-technical
activity that includes technological, human and organisational
dimensions to be considered, since “a good process should suit
the organisational culture” – as it makes emphasis on how work
should be done in the right way in the company [11].
Understanding the business objectives, customer expectations
and existing (business) processes before improving or designing
new ones is essential for succeeding in their digitalization, since
any process, digital or not, should be designed to produce/offer
outputs that satisfy the requirements of the customer and support
operational excellence [11].
Particularly, engineering or re-engineering processes nature
towards digital or hybrid implies something very different from
business as usual, since it implies starting at their end state and
work backwards to guarantee customer satisfaction and expected
processes performance by removing actual process constraints
by means of new digital technologies capabilities and upskilled
employees in order to respond to the voice of the customer, and
other stakeholders’ voices. Therefore, in order to (re-)engineer
a (business) process towards its new digital or hybrid nature,
the new process should: (a) respond to a digital process vision
consisting of a vision statement, key process characteristics,
performance measures and objectives, critical success factors
and potential barriers of implementation; (b) offer an improved
performance and value-added offering based on new digital
capabilities, benchmarked against its old nature, competitors
similar processes and customer expectations; (c) be co-designed
and co-engineered by bringing current process constraints and
problems and potential digitally-enabled solutions to all those
affected, its stakeholders, to gather their ideas and get agreement
on the new process design and nature (q.v. Nemawashi); (d) be
prototyped and tested taking advantage of advanced modelling
and simulation tools, enriched with interactive virtual reality
capabilities, and (e) be newly implemented or migrated to its new
version considering the technological, human and organisational
requirements for its successful adoption (see also [11]).
By applying in this pillar, the very well-known Lean tool of
Value Stream Mapping (VSM) [12] [13], organizations will be
able to discover what is the value for the customer and where is
the waste to better select and align the most appropriate Industry
2019 IEEE International Conference on Engineering,
Technology and Innovation (ICE/ITMC)
4.0 technologies to reduce the physical and digital inefficiency the customer; the front-end activities performed by the value
gaps [4] focusing on making the digital or hybrid value process provider interacting with the customer; the back-end activities
flow more effective and efficient, which is one of the main performed by the value provider, but hidden from customer’s
principles of the Lean Thinking philosophy. view; and the support activities performed by the value provider
(i.e. general management) [15] (see Fig. 7).
Value Stream Mapping (VSM) is a method used to illustrate,
analyse and improve the steps required in the process to deliver
a product or service in the most efficient way. Value stream maps
enable teams to identify the flow of process steps and information
from its origin to the delivery of the product or service to its end-
customer. VSM engages teams to identify the current-state and
design a future-state of the value process flow. It uses a system
of symbols to depict various work activities and information
flows and it is very useful to include information such as cycle
times and resources. Thus, VSM is especially useful to find and
eliminate waste and non-value adding activities, as well as the
value-adding activities. Items are mapped as adding value or
not-adding value from the customer’s standpoint (see Fig. 4).

Fig. 5. Empathy Map Template [14]

Fig. 4. Value Stream Map Example

Moreover, investment decisions towards acquiring Industry

4.0 technologies will be taken by assessing the process(es)
performance based on the quantitative metrics obtained thanks
to the VSM efforts. Additionally, the TO-BE value process flow,
integrating the Industry 4.0 technologies, will be also obtained
facilitating the quantification of the expected financial impact Fig. 6. Customer Journey Map Template [14]
and an overall improvement in the process(es) (see also [12] &
[13]).
Another set of tools, provided by Design Thinking discipline
that will enable the identification of value for the customer are:
The Empathy Map [14], The Customer Journey Map [14], and
The Service Blueprint [15].
Empathy Maps help designers to get “into their customers
shoes”, and distil and organize qualitative data to gain insights
on what their potential customers of a (new) product or service
think, hear, tell, and feel about upcoming or existing solutions
for their needs, and their expected pains to be relieved and gains
to be obtained from the value-added features of their preferred Fig. 7. Service Blueprint Template [15]
(winner) solution [14] (see Fig. 5).
C. (Digital) Technology Management
Customer Journey Maps provide a structured visualization
of the customer experience across the value delivery process “It is a good (digital) strategy, not technology, what drives
touch-points, including what the customer is doing, thinking and a successful digital transformation” [16] – yet, the process of
feeling about the value delivery experience [14] (see Fig. 6). embracing new digital technologies in order to develop digital
Complementary, Service Blueprints allow visualizing the value competitive advantages should be properly managed considering
delivery process, the points of customer contact across it, and the different maturity levels of such “Industry 4.0” technologies
the evidence of the value delivery from the customer’s point and their true business and technological understating by their
of view. All this while detailing the activities performed by adopters.

978-1-7281-3401-7/18/$31.00 ©2019 IEEE 2019 IEEE International Conference on Engineering,

Technology and Innovation (ICE/ITMC)
Authorized licensed use limited to: UNIVERSITY OF HERTFORDSHIRE. Downloaded on June 24,2023 at 04:13:58 UTC from IEEE Xplore. Restrictions apply.
 Technology Management is then a fundamental function for
any company, and now more than ever for any emerging Digital
Enterprise, in order to truly understand the value of certain digital
technology for innovating, digitalizing, from a couple of business
processes to their entire business and operating models. Some of
the technology management practices and/or tools to consider
to support a digital transformation are: (a) a technology strategy,
where technology should be ‘pull’ by the company rather than
‘push’ by the technology vendor, since the company should
have always in mind a clear adoption plan for new, emerging
(digital) technologies with objectives, principles and tactics for
their ‘strategic’ use to meet business goals and develop digital
competitive advantages; (b) the praxis of technology forecasting
and scouting, since in order to create a true digital competitive
advantage, the company should identify and adopt, even acquire
and/or develop, ahead of its competitors all possible relevant
(digital) technologies for improving or innovating its (business)
processes and/or business and/or operating models; (c) the use
of technology roadmaps for supporting a technology strategy
in alignment with market opportunities to digitally-enable new
value-added features in existing products and services or develop
new digital ones, and (d) the management of a technology project
portfolio pondering outcome over technology in order to avoid
becoming enamoured by technology, since no matter how ‘cool’
or promising the different Industry 4.0 technologies might be,
their implementation must have a clear value proposition for its
adoption in terms of creating value-added for the customer or
providing efficiency gains for the company.
The Lean Start-up approach [17] could be applied in this
pillar, as it is the application of the Lean Thinking philosophy [2]
during the creation of new ventures, products and services. One
of the cornerstones of Lean Start-up methodology is the “Build
– Measure – Learn” cycle, also known as the “feedback-loop”
(see Fig. 8). In this three-step cycle, the first step is to understand
the customer problem that needs to be solved. The second step
refers to the development of a Minimum Viable Product (MVP)†
enabling a rapid and timely learning cyclic process (i.e. Just-
in-Time (JIT) learning). The final and third step, once the MVP
is established, is to measure “success” using actionable metrics,
and learn from the customer requirements and insights provided
by the early-users from the first learning cycles to improve the
MVP [17] [18] (See also [19]).
Fig. 8. “Learn Before You Build: The Lean Startup Approach” [17]
In the context of a Digital Transformation process, ‘small
pilots’, aligned to the MPV thinking, could be carried out to test
the selected (pilot) Industry 4.0 technologies, and to measure
their impact and learn about their benefits before taking the
decision to fully implement them.
†
Minimum Viable Product (MVP) – “The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated
learning about customers with the least effort” [17].
978-1-7281-3401-7/18/$31.00 ©2019 IEEE
Authorized licensed use limited to: UNIVERSITY OF HERTFORDSHIRE. Downloaded on June 24,2023 at 04:13:58 UTC from IEEE Xplore. Restrictions apply.
D. Change (People) Management
“Whether culture drives technology adoption, or whether
technology changes the culture” [16] – a positive (digital) culture
means – people – believing that they can do better their work
with the use of new digital technologies and that are willing to
change how they do things now. So, an integral part of a digital
transformation is the creation, development and cultivation of a
Digital Culture – understood as a set of values and characteristic
behaviours, at personal and organisational levels, driving new
digitally-enabled ways of thinking, working and interacting with
the customer, among employees and business units, and with new
digital tools [20].
According to [21], a digital culture should be created building
on the following factors: (a) innovation – meaning disruptive
thinking and new ideas; (b) adaptability – as the ability of
an organization to adapt itself, including agility and flexibility
to keep with the needed speed and dynamism of change;
(c) customer-centricity – considering the customer feedback as
an opportunity for continuous improvement; (d) openness and
transparency – between internal and external customers; (e) data-
driven decision-making – backing-up decisions with hard-data
rather than intuition; and (f) digital mindset – to provide timely
solutions by taking advantage of digital technologies capabilities.
Moreover, in a moment in time (i.e. today’s Digital Economy
or Fourth Industrial Revolution), when digital transformation
is disrupting everything, switching or updating current business
and operating models to the latest (digital) business processes,
organisational structures, working methods, (digital) strategies,
and (digital) technologies, “employees’ engagement is a must”,
since employees are the ones that create value by quickly learning
and adapting to changes, e.g. new value creation processes [22].
The complexity of digital transformation can only be then
handled by focusing on employees’ mindset and skills, through
which ‘change’ of processes, technologies and strategies should
take place by means of training and development, organisational
communication, reward systems and recognition.
Furthermore, the development a digital culture is a three-tier
process and structure [23]: It requires a foundation based on a
new (digital) strategy capable of understanding the new rules
and challenges of the digital economy, and elaborate principles
and methods of activity to bring them into line with the business
transformation goals. In its next level, it implies the refinement
(change) of the organisational environment, the corporate culture,
in accordance with the new (digital) strategy. Finally, in its last
level, it entails managing the changes made that are at the same
time the end and the beginning of the digital transformation.
Thus, developing a digital culture is a step-by-step program
of changes that involves [23]: (i) the dissemination of the idea
of digital transformation (e.g. a digital strategy); (ii) developing
a scenario of changes (e.g. (re-)engineering initiatives towards
hybrid /digital business processes); (iii) reconciling the current
/
business and/or operating model(s) with the new digital strategy,
(iv) implementing best practices – for digital transformation;
2019 IEEE International Conference on Engineering,
Technology and Innovation (ICE/ITMC)
(v) procedural, organisational and technological transformation,
and (vi) construction of a full-change cycle (e.g. the PDCA cycle).
In a certain way, the digital culture creation and cultivation
challenge in organizations can be compared to the Lean Culture
development challenge in the 90s, from a which a lot can be
learnt. If today we would ask ourselves the question: Who can
be our baseline team to help us in our organization’s digital
transformation? – the answer could be our ‘lean master black
belts’ since they have already been trained in some way in the
five pillars being discussed in this paper and may just require an
update when it comes to new available digital methods and tools
to (re-)engineer and digitalize (business) processes.
For this fifth management pillar, the proposed Lean tool is
the implementation of the Obeya Room [24] [25], which will
allow the teams to carry out daily stand-up meetings to discuss
the (continuous) process improvements enabled by the digital
technologies fostering a collaborative and innovative working
culture enabling on data-driven decisions (see Fig. 9).
Fig. 9. Obeya Room enabling Change Management
E. (Digital) Risk Management
Finally, (digital) risk management is more than a technology
issue, is also a business issue. Since as the company digitalizes
its business processes, unknown ‘digital risks’ associated with
the new digital and/or hybrid business processes operations
will arise and must be learnt to be managed by all the people in
the organization. In this context, “(Digital) innovation always
comes with a certain degree of risk, but if properly managed,
with a great reward for the organization”. Hence, laying out the
building blocks for a digital risk management strategy since the
beginning is crucial for succeeding in a digital transformation.
Moreover, according to [26], a (Digital) Risk Strategy implies
establishing a ‘framework’ to address the risks associated with
the implementation of digital strategies and their related digital
technologies. Such digital risks may include, but not limited to
[26]: (a) technology risks – due to technology failures or obsolete
technologies that may have an impact on the business processes
operations; therefore, any digital technology to be implemented
should be assessed for scalability, compatibility, and accuracy
to support the business process that will help to digitalize (q.v.
our (digital) technology management pillar); (b) cyber risks –
related to unauthorized access/use of the corporate information
systems and data (i.e. cybersecurity); (c) strategic risks – as a
result of changes to the goals and objectives of the ‘original’
digital strategy, which may have a negative impact in regards
to fulfilling the customers, employees and other stakeholders
expectations about it (q.v. our (digital) strategic management
pillar); and (d) operational risks – as a consequence of losing
978-1-7281-3401-7/18/$31.00 ©2019 IEEE
Authorized licensed use limited to: UNIVERSITY OF HERTFORDSHIRE. Downloaded on June 24,2023 at 04:13:58 UTC from IEEE Xplore. Restrictions apply.
the ability to achieve the digital strategy objectives due to poor
business processes (re-)engineering initiatives that will create
inefficient digital business processes (q.v. our processes (re-)
engineering management pillar), lack of digital culture and skills
that may create a disengaged workforce that must support at all
time the digital transformation process (q.v. our change (people)
management pillar), and poor technology selection not offering
the needed functionalities to support properly the new digital
business processes requirements (q.v. our (digital) technology
management pillar).
In the end, supporting a (digital) risk strategy is more than
designing a digital risks framework, is about creating awareness
in the workforce about the digital risks as part of the new digital
culture and to train the employees on how to properly manage
them in the daily digital business operations. Thus, a set of Lean
tools that could be used by the employees to identify, analyse,
evaluate and treat risks are [27]: (i) VSM for risk identification –
looking at the current-state and opportunities for improvements
to get the desired (safe) future-state; (ii) Five Whys and Ishikawa
fishbone diagram for risk analysis – looking for the root-cause(s)
of the risk(s); (iii) A3 (sheet) management for risk evaluation
– reporting and formulating ideas for risks management, and
passing into the communication process for consensus (i.e.
Nemawashi); and (iv) PDCA cycle for risk treatment – to build
into the (digital) risk management framework/process various
lean and not-lean methods for monitoring and reviewing risks
(see Fig. 10).
Fig. 10. Lean Processes Overlaid on Risk Management Process
as per ISO/DIS 31000:2009 Standard [27] [28]
IV. CASE STUDY: CEMEX GO
Since 2014, CEMEX [29] has designed and implemented
a global coordination mechanism called: “Global Networks”,
oriented to share best practices and to promote innovation.
Five Global Networks have been created in order to cover all
the businesses and geographies of the company: (i) Customer-
Centricity; (ii) Cement Operations; (iii) Aggregates; (iv) Ready
Mix; and (v) Supply Chain.
At the same time, CEMEX CEO, and the C-suite level team,
declared the following four strategic priorities that pursue a
(digital) transformation journey: (i) Ensure Health and Safety;
(ii) Customer-Centricity; (iii) Work as one CEMEX; and
(iv) Return to Investment Grade.
2019 IEEE International Conference on Engineering,
Technology and Innovation (ICE/ITMC)
A. (Digital) Strategic Management Pillar
As part of the strategic priority #2, and with the commitment
to become a customer-focused company, a digital transformation
program was introduced. As part of this digital journey, in 2016
it was decided to centre all the company’s efforts in digitalizing
the commercial process and offering a new (digital) solution that
would transform the construction industry creating a superior
experience for the customers and at the same time optimizing
CEMEX internal processes. This (digital) platform was called:
“CEMEX Go” [29]. Its goal is to be connected to the customer
during the entire commercial process, from the initial contact
that consists of becoming a new CEMEX customer to placing
orders, receiving products, making payments, and requesting
information (see Fig. 11) [30].
Fig. 11. CEMEX Go Scope [29] [30]
B. Processes (Re-)Engineering Management Pillar
To develop this (digital) solution, different methods and
tools were applied to assure the integration of the customer in
all the commercial process, and in alignment with the global
customer relationship trends and in combination with the latest
digital technologies.
CEMEX innovation model was divided into III main stages:
(Stage I) Identification of the latest customer relationship
and technological trends, and how to apply these trends –
with the objective of keeping CEMEX at the forefront of the
construction industry and as the customer’s favourite supplier.
For this strategic aim, an internal research team and other
stakeholders like customers, employees and expert collaborators
(i.e. external consultants, universities, etc.) maintained CEMEX
informed about the technological state-of-the-art and customers
tendencies, and suggested to take advantage of the potential
offer of cutting-edge (digital) technologies and practices, and
to evolve CEMEX business model, products and services.
(Stage II) Understanding the problem – by listening to
“the voice of the customer”, and applying “Design Thinking”,
was the way CEMEX was able to know its challenges and the
points where it can offer a better experience and new (digital)
services attending the commercial process from end-to-end.
At the same time, it is key to obtain and consolidate the ideas
of the different customer segments for the development of
MVP prototypes. Furthermore, after listening to more than
3,000 customers, CEMEX deeply understood their pain-points
and discovered how to turn them into customer satisfaction.
The conduction of Design Thinking session in 12 countries with
the participation of more than 100 executives of the company,
helped CEMEX to collaboratively define the new “customer
experience” that its different segments will start to live, i.e.
construction, distribution, industrial and government. Moreover,
as a result of these sessions, CEMEX created “Empathy Maps”,
“Customer Journey Maps”, and “Service Blueprints” to identify
those points of contact (touch-points) where there is interaction
with the customer to ensure that the new commercial process
and the CEMEX Go digital platform could exceed customers’
978-1-7281-3401-7/18/$31.00 ©2019 IEEE
Authorized licensed use limited to: UNIVERSITY OF HERTFORDSHIRE. Downloaded on June 24,2023 at 04:13:58 UTC from IEEE Xplore. Restrictions apply.
expectations and increase their satisfaction levels. Finally, based
on the stage findings, a “Digital Business Model Design” was
developed by CEMEX and their technology partners with
experience in digital transformations such as IBM and NEORIS.
(Stage III) Development of a product by applying “Lean”
and “Agile” methodologies – in order to quickly create MVPs
and planning short-sprints looking for the CEMEX Go digital
platform launch as soon as possible. CEMEX tested different
prototypes in an iterative matter, actively seeking for customers
feedback at the end of every sprint and assuring learning by the
development team. The development of the CEMEX Go digital
platform involved a team of more than 500 programmers located
in three cities: Monterrey, Mexico; Prague, Czech Republic;
and Chennai, India. This first released version to the market took
24 months and will continue to improve in its next versions.
Moreover, the mentioned methodologies used by CEMEX,
allowed the company to quickly develop “mock-ups” that were
reviewed with the customers in order to obtain their feedback
and validate if their pain-points were being treated. From the
process of listening to the “voice of the customer” before and
after creating the new customer experience in “mock-ups”, the
CEMEX Go digital platform was completed, and its alignment
with the initial (digital) vision validated: “to provide an end-to-
end solution that allows a superior customer experience through
the use of digital technologies”.
C. (Digital) Technology Management Pillar
CEMEX adopted new internal working methodologies in
which collaboration in small, multidisciplinary, and empowered
working groups was the key for rapid-decision-making, and
for the configuration and development of minimum functional
capacities allowing the customer to appreciate if the CEMEX Go
digital platform functionality (i.e. a digital service) was giving
value or not, and to adjust and evolve them in time incrementally
by the concept of always listening to “the voice of the customer”.
Furthermore, 40+ SCRUM teams were created and worked in
a coordinated manner in the different digital transformation
initiatives and each with clear objectives about the business
areas they serve. The SCRUM Agile work practice allows the
teams to focus on minimal goals (i.e. the definition of MVPs)
and transform those objectives into functionalities/capabilities
of the CEMEX GO digital platform that can be tested quickly
and decide whether they are useful or not for the customer,
and in case the result is not the expected one, discard their
development or adapt it. This practice leads to investments in
time and money being minimal, so minimizing waste.
D. Change (People) Management Pillar
CEMEX Go is already transforming the way CEMEX does
business in 21 countries: Mexico, USA, Colombia, UK, France,
Germany, Poland, Spain, Czech Republic, Guatemala, Panama,
Nicaragua, El Salvador, Costa Rica, Puerto Rico, Dominican
Republic, Egypt, UAE, Israel, Peru, and the Philippines. CEMEX
will continue the CEMEX Go digital platform deployment in
other countries during 2019, leading the digital transformation
of our (construction) industry. More than 28,000 customers are
now using the CEMEX Go digital platform (online store),
enjoying greater productivity, more control over their business
and making better business decisions. The average level of
adoption in these 21 countries is 45%.
2019 IEEE International Conference on Engineering,
Technology and Innovation (ICE/ITMC)
E. (Digital) Risk Management Pillar
“Lean” and “Agile” methodologies used during CEMEX Go
digital platform development helped to minimize the risks of the
project in general by performing iterations (i.e. “Build – Measure
– Learn” cycles) that delivered meaningful results and learnings
in a rapid, timely and safely matter. Moreover, for the particular
case of cybersecurity risks, a fundamental part in the CEMEX Go
digital platform conceptualization was the development of cyber-
protection mechanisms for the information of its users and the
company as well as for operational risks, the creation of some
systems redundancies in order to guarantee a high availability
of the digital services offered. All this was possible through the
adoption of best security practices such as “safe development
management process”, which allows assuring the security of
the code, the digital services and the digital platform through
firewalls; information encryption; effective authentication and
authorization mechanisms; monitoring, detection and proactive
threats management, etc.
F. CEMEX Go Digital Lean Transformation Results
CEMEX obtained efficiencies in both customer processes
and internal CEMEX processes such as: (i) Reduced time from
customer spent ordering; (ii) Reduction of the time spent by
the sales representative in the management of invoices and
payments; (iii) Reduction in the number of calls received in
the call centre to track the delivery truck; (iv) Reduction in the
time spent by the sales representative/dispatcher who monitors
the delivery truck; (v) Reduction in the number of credit notes;
(vi) Improvement in working capital; and (vii) Cut in the courier
service for physical deliveries of product delivery tests.
V. CONCLUSIONS
This paper has proposed a – Digital Lean Transformation
Framework – composed of five management pillars, which have
been enriched with ‘lean practices and tools’ in order to support
a digital transformation journey (see Fig. 2).
It has also been argued in this paper the importance of
a ‘process-centric’ approach towards digitalization rather than a
‘techno-centric approach’ in order to avoid the trap of becoming
enamoured by new, emerging (digital) technologies and making
them incorrectly the aim, not the enabler, in the digitalization of
a (business) process or any digitalization initiative that should
always be driven by the Lean Thinking principles of customer-
centricity, new efficiency gains (i.e. reducing/eliminating waste)
and profitability (i.e. value-added creation).
Moreover, it provides a familiar and common language and
a method-based approach towards digital transformation for
those in top-, middle-, and low- level management.
Finally, the CEMEX Go (visit [30]) case study was presented
as a validation mechanism for the proposed framework, where
was possible to demonstrate its capability to enable ‘process-
culture-technology’ alignment, a key element for success in any
digitalization initiative.
REFERENCES
[1] A. Uhl, L.A. Gollenia. “Digital Enterprise Transformation: A Business-
Driven Approach to Leveraging Innovative IT”. Routledge, 2016.
[2] J.P. Womack, D.T. Jones. “Lean Thinking: Banish Waste and Create
Wealth in your Corporation”. New York, NY: Simon & Schuster, 1996.
978-1-7281-3401-7/18/$31.00 ©2019 IEEE
Authorized licensed use limited to: UNIVERSITY OF HERTFORDSHIRE. Downloaded on June 24,2023 at 04:13:58 UTC from IEEE Xplore. Restrictions apply.
[3] M. Sameer, K. Muztoba, D. Romero, T. Wuest. “Smart Manufacturing:
Underlying Characteristics, Technologies and Enabling Factors”. In
Proceedings of the Institution of Mechanical Engineers, Part B: Journal
of Engineering Manufacture, 2017, DOI: 10.1177/0954405417736547.
[4] D. Romero, P. Gaiardelli, D. Powell, T. Wuest, M. Thürer. “Digital Lean
Cyber-Physical Production Systems: The Emergence of Digital Lean
Manufacturing and the Significance of Digital Waste”. Part I, IFIP AICT
535, pp. 11-20, 2018.
[5] A. Bharadwaj, O.A. El Sawy, P.A. Pavlou, N. Venkatraman. “Digital
Business Strategy: Toward a Next Generation of Insights”. MIS Quarterly,
37(2), pp. 471-482, 2013.
[6] V. Grover, R. Kohli. “Revealing Your Hand: Caveats in Implementing
Digital Business Strategy”. MIS Quarterly, 37(2), pp. 655-662, 2013.
[7] S. Mithas, A. Tafti, W. Mitchell, W. “How a Firm’s Competitive
Environment and Digital Strategic Posture Influence Digital Business
Strategy”. MIS Quarterly, 37(2), pp. 511-536, 2013.
[8] M. Pagani. “Digital Business Strategy and Value Creation: Framing the
Dynamic Cycle of Control Points”. MIS Quarterly, 37(2), pp. 617-632,
2013.
[9] Hutchins, D. Hoshin Kanri: “The Strategic Approach to Continuous
Improvement”. Routledge, 2008.
[10] M. Rother. “Toyota Kata: Managing People for Improvement,
Adaptiveness, and Superior Results”. New York: McGraw-Hill, 2010.
[11] T.H. Davenport. “Process Innovation Reengineering Work through
Information Technology”. Harvard Business School Press, 1993.
[12] Meudt, T., Metternich, J., Abele, E. “Value Stream Mapping 4.0: Holistic
Examination of Value Stream and Information Logistics in Production”.
CIRP Annals - Manufacturing Technology, 66(1), pp 413-416, 2017.
[13] Hartmann, L., Meudt, T., Seifermann, S., Metternich, J. “Value Stream
Mapping 4.0: Holistic Method to Analyse and Design Value Streams in
the Digital Age”. Procedia CIRP, 78, pp. 249-254, 2018.
[14] Stickdorn, M., Schneider, J. “This is Service Design Thinking: Basics,
Tools, Cases”. Wiley, 2001.
[15] Bitner, M.J., Ostrom A., Morgani, F. “Service Blueprinting: A Practical
Technique for Service Innovation” California Management Review.
50(3), pp. 66-94, 2008.
[16] G.C. Kane, D. Palmer, A.N. Phillips, D. Kiron, N. Buckley. “Strategy,
Not Technology, Drives Digital Transformation: Becoming a Digitally
Mature Enterprise”. MIT Sloan Management Review, 2015.
[17] Ries, E. “The Lean Startup: How Today's Entrepreneurs Use Continuous
Innovation to Create Radically Successful Businesses”. Currency, 2011.
[18] Maurya, A. “Scaling Lean: Mastering the Key Metrics for Startup
Growth”, Portfolio, 2016.
[19] Flores, M., Golob, M., Maklin, D., Tucci, C., Flores, K. “Lean Product
Development Best Practices: Ten Industrial Success Stories”, ISBN:978-
2-8399-2105-3 http://lean-analytics.org/product/leanbook2017/
[20] R. Sood. “Build a Digital Culture for Successful Digital Transformation”.
IndraStra Global, 4(9), pp. 1-3, 2018.
[21] Capgemini Consultation. “The Digital Culture Challenge: Closing the
Employee – Leadership Gap. 2017.
[22] Y. Singh, H. Atwal. “Digital Culture – A Hurdle or A Catalyst in Employee
Engagement”. Int’l. J. of Management Studies, 6(1/8), pp. 54-60, 2019.
[23] T.V. Bochulia, A.P. Grinko, P.L. Hrynko. “Digital Strategy of the
Development in Accordance with the Concept of Corporate Social
Responsibility”. Series of Monographs, Faculty of Architecture, Civil
Engineering and Applied Arts, Katowice School of Technology, pp. 20-
30, 2018.
[24] Aasland, K., Blankenburg, D. “An Analysis of the Uses and Properties
of the Obeya”. Int’l. ICE Conference on Engineering, Technology and
Innovation, IEEE, 2012.
[25] Terenghi, F., Cassina, J., Kristensen, K., Terzi, S. “Virtual Obeya: A
New Collaborative Web Application for Running Lean Management
Workshops”. Int’l. ICE Conference on Engineering, Technology and
Innovation, IEEE, 2014.
[26] Deloitte – Risk Advisory. “Managing Risk in Digital Transformation”.
2018.
[27] Pearce, A., Pons, D. “Implementing Lean Practices: Managing the
Transformation Risks”. Journal of Industrial Engineering, 2013.
[28] ISO/DIS 31000:2009. “Risk Management – Principles and Guidelines
on Implementation”. Int’l. Organization for Standardization, 2009.
[29] CEMEX Go https://www.cemex.com/go
[30] CEMEX Go Learning Hub https://www.cemexusa.com/go/learning-hub
2019 IEEE International Conference on Engineering,
Technology and Innovation (ICE/ITMC)