If you’re a startup, lean will be the first steps and ultimate goals. If you’re an established business, lean will be a process of elimination and delineation which will trim the proverbial fat and streamline the business. Over the next eight steps, you will uncover some of the most important aspects of a lean business.
Definition: “A lean business has at its core the idea to maximize customer value while minimizing waste. Lean means creating more value with fewer resources.” [Source: http://www.lean.org/WhatsLean]
#1. Create A Lean Business Plan
Eric Ries, the founder of The Lean Startup defines lean business as “how entrepreneurs use continuous innovation to create radically successful businesses”. In order to do this and to run more efficiently, the business has to plan. That planning can only thrive within a clearly defined strategic methodology using a lean business plan. Can you tick the following boxes for your business?
✔ You have a clearly defined strategy
✔ Every aspect of product, service, marketing, sales et. al. detailed and long-term impact and growth is understood
✔ Infinite and constant adjustments to strategy occur and there is focus so the business remains perfectly tuned to the end goal
✔ There is a constant assessment of costs, profitability, expenses and product ensure forecasts are accurate and realistic
✔ You know the plan inside and out and always ensure it is easily presented to stakeholder and employee, and tailored to suit whomever reads it
✔ Update, assess and repeat – you constantly ensure the lean business plan is following lean precepts and you keep it that way
#2. Create A Lean Office
Do you really need all the employees you have at present? Or is your startup plan too enthusiastic with its hiring strategy? One of the most important questions the lean business has to ask is whether or not specific functions cannot be outsourced rather than brought internally. Many companies and individuals specialize in essential business functions such as accounting or payroll, so you don’t need to pay them a salary or worry about the various factors which will impact on the employer/employee relationship. Hire as few people as possible while outsourcing where relevant. But don’t under-resource the business and overstretch employees. A business in capable of being too lean.
#3. Focus On Profit
According to Sammy Blindell, founder of How To Build A Brand, the lean business must focus on establishing a steady profit in the beginning, rather than focusing extensively on growth. This will allow for more product innovation and development while remaining attuned to your core business proposition – more value for customers with minimal waste.
#4. Just Do It
It may be a slogan adopted by Nike, but it really does underpin the lean business premise. Instead of spending years developing and fine-tuning a product, just get it out there. What happens if you have invested your life savings into your business idea only to discover that consumers are not even remotely interested? On The Lean Startup site, Ries explains that companies can ‘create order not chaos by providing tools to test a vision continuously.’ Lean isn’t just about not spending money; it’s about creating a process which supports the relentless development of a product.
You may think that working lean means that you do everything with only one or two people helping you out, but you’d be wrong. Blindell adds: “Make a list of your strengths and those tasks you are prepared to take on yourself. Then make a list of things which you are not equipped to do, or that you have no desire to do. Delegate these tasks to one or two other people and do your homework – hire the best. A cheap team member can end up being expensive.”
#6. Answer The Lean Startup Questions Honestly
✔ Should this product be built?
✔ Can I build a sustainable business?
✔ How does my development method respond to the Five Whys?
✔ How is the work improving?
✔ Is a planned change really necessary?
✔ How can the culture of the lean business support transformation and growth?
#7. Follow The MVP Process
One of the most well-known, and fundamental, elements of the lean business is the minimum viable product (MVP) and the feedback loop of build-measure-learn. A lean business needs to start the process as swiftly as it can, creating an MVP and setting it out to market and using feedback to continue its growth and development.
#8. Cut The Costs
Blindell adds: “Avoid spending too much on overheads, work from your dining room if you need to at first.”
To build a lean business, follow the advice from the experts, engage with organizations such as Lean.org which have plenty of insight and information, and really understand what lean means for you and your future. Then set out to create an organization which keeps things clean, and lean.