When you’re building a new business, you’ll need to adopt core principles and values to guide you on your journey. Whether you’ve launched numerous successful enterprises, or this is your first foray into entrepreneurship, it’s important to consider which philosophies will form the basis of your business.
Due to its versatility and almost universal success, the concept of lean is used by companies worldwide. First introduced by Toyota back in the mid-20th century, the lean ideology became widely popularized in the 1980s. Since then, businesses of all sizes and across all industries have used lean principles to enhance their success.
If you’re looking for ways to boost your start up potential, read on to discover exactly what the concept of lean is and why you should incorporate it into your enterprise.
What is Lean?
In essence, the lean concept focuses on delivering better value and minimizing waste. With an emphasis on continuous improvement, following lean principles means you’ll always be looking for ways to enhance your processes, products, and/or services. Key proponents of the concept, James Womack and Dan Jones, explain lean principles as:
“…a way to do more and more with less and less – less human effort, less equipment, less time, and less space – while coming closer and closer to providing customers exactly what they want.”
From a business standpoint, the concept of lean makes perfect sense. If you can do more with less, you’re using fewer resources to deliver better outputs. By maximizing productivity in this way, you’re reducing your costs, consistently improving your products and services and increasing your profitability.
Lean: Key Principles
The concept of lean can be broken down into five key principles:
- The Value Stream
The first principle of lean requires you to identify the value a customer places on your product or service. When you understand the value a customer ascribes to something, you know how much they will be willing to pay for it.
The value stream involves looking at the lifecycle of a product or service in great detail. By doing so, you can determine which processes genuinely add value and which don’t. Those that don’t are considered unnecessary and can, therefore, be removed, thus reducing waste.
The third principle of lean – flow – allows you to eliminate disruptions in the value stream and ensure that products and services are created, produced and delivered as efficiently as possible. When this is achieved, you’re naturally minimizing potential waste and increasing productivity.
Entrepreneurs often assume that they should use a push production strategy. This essentially means producing in accordance with forecasts or predictions about how the market will respond. However, the fourth principle of lean – pull – contradicts this way of thinking. Instead, lean principles dictate that customer demand prompts the production cycle, not the other way around. This ensures that nothing is wasted, but it does mean you’ll need to design flexible workflows to minimize production and delivery cycles.
The final lean principle – perfection – reflects the need to continuously improve your processes, products and services. While it’s easy to assume that perfection is unattainable, the on-going objective of delivering more value, reducing inputs and increasing efficiency enables your business to be innovative and creative.
Learning More About Lean
If you’re new to the concept of lean, you’re probably already beginning to see why it’s so popular. The idea of delivering better value to your customers, using fewer resources and making higher profits is something that every entrepreneur strives for – and the concept of lean can help you to achieve it.
Of course, you don’t become a lean prodigy overnight. The concept of lean has been carefully honed over many years. Its versatility and widespread application across all industries means that it can be used in any enterprise – providing you have an in-depth understanding of its real-world uses.
If you want to use the concept of lean to build a successful startup, it’s well worth taking the time to learn more about it. With books, videos, online tutorials and established qualifications, there are plenty of ways to enhance your knowledge. Click here to find out more about the benefits of educating yourself in the concept of lean and why it’s worth your while.
What Are the Benefits of Lean?
Business owners, managers, designers, engineers and many other professionals have achieved global success by employing lean principles. If you’re eager to achieve a similar level of success with your own budding enterprise, take a look at these five reasons why you should incorporate the concept of lean into your startup:
1. Reduced Costs
One of the core tenets of lean is minimizing waste. This means eliminating unnecessary processes, using less space, inputting fewer resources, reducing production lifecycles and decreasing effort. When you focus on diminishing waste in your business, the natural byproduct is lower costs.
Reducing the amount of space you need to produce goods means you spend less on commercial rent, for example. Similarly, using fewer resources means reduced expenditure. When you cut wasteful elements out of your business, you can dramatically reduce your costs.
2. Customer Focus
The very first principle of lean – value – emphasizes the importance of your customer’s opinions. When you create a lean startup, you’re focusing on the customer from the outset. Indeed, every decision you make will place significant weight on the customer’s viewpoint, opinions, feelings and actions if you follow the concept of lean.
What you offer your customers will ultimately determine whether your startup succeeds. By cementing the customer’s viewpoint into every business decision, the concept of lean ensures that you always have the most important element of your business at the forefront of your mind.
3. Staff Morale
One of the most overlooked benefits of lean is the effect it has on employees. When staff are overburdened with unnecessary or low-value tasks, it quickly reduces morale. Staff members know when the work they’re doing adds little to the overall output and this has a negative impact on their efficiency and productivity.
Conversely, when employees know their work is important and integral to success, it boosts staff morale and enhances their performance. When you’re implementing lean principles, you’re cutting out wasteful processes and ensuring your employees are always undertaking critical roles. In doing so, you’re giving them the motivation they need to thrive and boosting morale in the workplace.
4. Increased Flexibility
A lean business is one that is constantly improving itself. This requires flexibility – both in practical terms and in the way you think. In other words, lean principles encourage creativity and innovation from the top down. Being able to consistently refine your operations to enhance performance and productivity will turn your startup into a business that leads your industry.
Furthermore, businesses that are flexible are infinitely more likely to survive and succeed in the long-term. Adaptability is critical to commercial success, particularly when there are so many external factors that can affect your enterprise. The inherent flexibility fostered by the concept of lean will allow you to adapt to changes in the market and modify your processes swiftly to accommodate changing demand.
5. Higher Profits
The essence of lean – doing more with less – equates to increasing your company’s profitability. Cutting out waste means a higher percentage of your turnover will be profit while increasing value means more people will covet your products or services. With an increasing customer base and reduced costs, you can drastically increase your profitability and grow your startup more quickly.
A successful business is one that’s profitable and the more profit you make, the more successful you are. The core elements of the concept of lean are entirely reflective of this, which is why the philosophy has been adopted by so many thriving companies. From SMEs to multinational corporations and manufacturers to service businesses, companies use lean methodologies because they increase profits and enhance success.
Building a Lean Business
Understanding the theoretical concepts behind the lean philosophy is just one step towards building a successful business. However, you’ll need to learn how to apply these principles in a real-life commercial setting in order to make them work for your business.
How you incorporate lean principles into your enterprise will depend on your industry, your business and your setup. With numerous different ways to make your business lean, it’s worth spending time examining how other companies have taken the theoretical principles of lean and turned them into workable, practical methodologies.
By doing so now – when you’re in the process of building your startup – you’ll have a guaranteed advantage over other established businesses. While existing companies will need to relearn and modify their practices in order to become lean, you can create a lean business from the ground up.
Incorporating lean principles from the outset gives you a fantastic basis for a successful startup. Additionally, educating yourself about the concept of lean and creating new ways to implement lean principles in a business environment will enhance your skills as an entrepreneur and set you on the road to success.