Often the term “lean” is misunderstood and misused for an isolated tool to push productivity or cut costs and thus became a shallow buzzword. Time to dive deeper into the lean philosophy and to clear up misunderstandings as well as show the immense advantages for startups when choosing the Lean Approach.
What does Lean Approach mean?
Simply put, the lean way of thinking sees the customer value at the center of attention. The value for the customer is maximized, while the use of resources is simultaneously minimized and waste is reduced. Rather than being an isolated, time-limited tool to push productivity or cut costs, it is a way of thinking, whose principles have to be implemented in the whole company. This does not only apply to manufacturing industries but can be adapted to any company in any business area.
Often the beginnings of lean movement are connected to the Japanese automotive manufacturer Toyota. But while their unique work system, which was invented in the 1930s, fulfills the requirements of a lean system, the actual philosophy of lean thinking was conceptualized in 1990. The process for Lean Startups was popularized by Eric Ries’ book of the same name in 2011.
The Lean Startup
The Lean Approach offers a lot of advantages. By building processes and business around the value for the customer, companies need to be in constant exchange with their customer base and are thus testing their business hypotheses.
This process – called customer development – creates new data that gives insight into which requirements of the customers are met and where the business plan might have to pivot in order to be successful. Such a pivot can include the change of the nature of the product or the change of the target group. Instead of firing the personnel, lean startups restructure the business plan. The self-repeating process saves time and money – a plus that weighs a lot when financial resources are limited.
Work Smart Not Hard
For startups the Lean Approach offers a process to develop a desired product faster with the least amount of uncertainty. At the center of it all should be a clear vision on what real existing problem should be solved. With the development of an MVP (minimum viable product – an early version which presents the possible features without being necessary fully functioning) the Lean Startup is able to enter the constant build-measure-learn-loop. By the end of the process, the startup will have not only a product at hand that customers will buy but also the first clients. Along the way, the startup has not only saved crucial time in the development but also money by avoiding detours with unfitting business plans.
Two common mistakes when starting the journey of the Lean Approach are to fall into extremes: either knowing too little or wanting to know too much. In the first case businesses have no knowledge of the methodology, hoping that their vague approach will give them insights without having a clear hypothesis. The other extreme is not moving forward at all because startups try to validate everything and are not willing to take an informed risk or spend too much time on perfecting the MVP. It is also no use to stick to a strict timeplan but rather accept the constant change or to stay fixated on a hypothesis that does not move the process forward at all. Startups should also carefully consider which data to rely on. There is no use in having a large amount of numbers, if they don’t add to the learning-process. And last but not least there should be good documentation of failures to learn and understand why the direction changed.