While the “lean philosophies commenced primarily in the Manufacturing sector, “lean” can be applied to just about any business model including Startups.
It has been used in businesses such as dentists, accountants, hospitals, government organizations just to name a few.
One of the questions I am regularly asked is can I use “lean” to assist in my start up business? The answer is unequivocally yes!
In fact there are advantages in using a “lean” model within your startup, you are setting an efficient culture from the beginning, conversely an established business needs to “transform” to a “lean philosophy” and as with any major change in business one of the major challenges is the change management requirements due to entrenched practices – something a startup will not experience.
So how can I implement “lean” into my startup? Well; as with any successful business you need sustainable consistent processes and procedures, lean complements this requirement by dealing with the uncertainty of a startup and ensure the way you do business is efficient , but more importantly, effectively with minimal duplication and waste.
Most startups begin with an idea or product that the owner thinks a lot of hard work will convert the idea to a fortune and they can eventually sit back and enjoy the rewards! Unfortunately that is only part of the recipe. Most businesses don’t fail because the owners are lazy; typically they are some of the hardest workers in the country! It needs a deliberate plan, a strategy based upon good market research. While a “lean startup” needs a plan and deliberate strategy, it doesn’t need copious amounts of information as traditionally thought; just a hypothesis which when executed is continually monitored and adjusted to create customer value.
It needs a number of ingredients, what is the most important ingredient? In my opinion, the application of lean thinking to the process of innovation is one of the critical requirements. Think about it; isn’t innovation the main “driver” of your product or service? Secondly, time is money; you need to get your product or service to your customer faster than the competition. So how can I develop a lean business model?
The business model is developed by:
- A vision of the product or service is created INCLUDING how the company is going to create value for itself and its customers.[a hypothesis]
- Go out in the market place and test the hypothesis by asking potential users and customers, about the product or service features, pricing, distribution channels to confirm or modify the potential or existing product. The focus here is on flexibility and speed. Utilize the feedback to modify your offering, and continue the cycle again if needed.
- It is important to implement the relevant feedback as quickly as possible, if possible concurrently don’t wait, get it to market and seek further feedback.
- Monitor the results, is the pricing correct? Am I making the optimum profits? Can I introduce further customer value? If needed modify your existing offering.
- Continually repeat the cycle.
A “lean startup” approach is no “magic bullet”, but if you continually seek feedback to determine customer value, AND reject or modify the attributes that aren’t working it is a solid foundation that will help you on your road to success.