The Lean Business
Last Updated on 23 April 2018
"Think big, act small, fail fast; learn rapidly", this is the slogan that is associated with the lean software development approach which is also applicable to running a business. Lean and the associated agile methodologies are a set of principles for achieving quality, speed and customer alignment.
Software development is a highly structured discipline that follows established guidelines and principles to deliver a final product, often under tight time as well as monetary constraints. As such, adopting the same approach towards crafting a successful business is bound to bring success. Following a structured approach in running a business similar to that taken in software development introduces a level of discipline to the business and offers guidelines on how it should be run effectively and efficiently.
The lean approach is focussed, among other things, on eliminating waste. Essentially, all features not directly benefiting the business should be cut out of the business process. This results in an optimised business that is more efficient and is able to quickly deliver its final product- a lean business. Emphasis on product delivery means to deliver as fast as possible with quality being built into the product. Learning should also be a central focus in the running of a lean business. As the adage goes, experience is the best teacher, and it is no different in the lean approach. Experiences gained in the process of conducting business should feed back into it to make it more effective. Emphasis is also placed on making decisions as late as possible in the product development process. This does not mean that you should forego planning. On the contrary planning should be an integral part of the process with several interim viable end results in-between with the decisions for the final product being left to the last minute. This allows for the best products to be developed and selected through a refined process. It is also important to empower your team with the freedom to make decisions. By putting together a strong team, you will be in a position to trust the decisions they make rather than restricting their creativity. Above all, you should ensure to always place the business as a whole in mind when making decisions instead of making them sporadically. This ensures that the business operates effectively as a unit.
Iteration is a central feature of lean. Rather than aiming to have the "perfect product" or "perfect business" before rolling it out to your potential customers, it is better to incrementally build on it based on customer feedback. Instead of waiting for your business or product to be “finished” before taking it out to the masses, build what is known as a “minimal viable product”. A minimal viable product is a product that is by and large incomplete in terms of features but is a functional concept of your business idea or product model- a prototype if you will. You should resist the temptation to create the “perfect” product or business before testing it out with your end users or consumers because it is only through feedback from actual customers that you may know whether you are on the right track, need to modify your ideas or scrap them altogether.
Measuring is a crucial part of lean- how else will you be able to judge your progress. It is important to develop a set of criteria for measuring the progress you are making in your business or product development efforts. The information gained from measuring progress will allow you not only to measure success but also to identify flaws in your operations and accordingly rectify them. One effective tool to use in measuring progress and milestones is a website. With a website, you may use analytical data to gain insight into your customer base’s activities as they interact with your product or service through your website. For instance you may measure how many people are coming to the website or how many people are visiting a certain page or carrying out a certain action. Be careful not to focus too much on vanity metrics however, but rather pay attention to actionable metrics. Vanity metrics are measurements that may not be reliably used to gain valuable insights about customer interaction. For example, even if your website is receiving 1,000 unique visitors per month, not all of them are actually potential clients. On the other hand, people visiting an “order” page are a good measure of the interest in your product or service. A/B testing, where you simultaneously test two alternative paths for customers under the same conditions and compare results, is a good tool for obtaining actionable metrics.
Experimentation and Validated Learning
In the true spirit of lean, you should not be afraid to experiment with various ideas. Otherwise how else will you ever know what works or what doesn't? The proof in the pudding is in the eating, so they say. By experimenting with ideas, you will be able to identify the ones that work and iterate over them to make them better whilst dropping the ones that fail and by adopting a culture of testing ideas, you will gain valuable insight and use your learning to improve your business. This is known as validated learning. A word of caution on experimentation; be prepared to discover that you will fail and fail often but this is not a good reason not to try because the ideas that do succeed will be the cornerstone of your business. Taking this approach may not be advisable for large businesses that are not agile enough to quickly change and pivot in the market even though large businesses can be restructured to be adaptable enough to take this approach. As a small business on the other hand, you are lean enough to quickly transition from experiment to experiment.
I recall going thought a Chemistry lecture in high school where we were taught that washing something several times by using little solvent at a time cleans it better than using all the solvent at once. Lean has a similar approach in the concept of small batches. Instead of dealing with a large number of issues or concepts, it will serve you well to break them down into small manageable parts. Remember to reduce waste by working on the right things at the right time. It might also help to restructure your business so that it is composed of small cross-functional teams instead of a hierarchical structure with departments working in silos of isolation. Try to adopt the 5 Whys method to effectively solve problems in your business and come up with practical solutions. The 5 Whys method starts by asking what the problem is and then asks why the problem occurred in the first place all the way to five successive whys before offering a solution. Once the fifth why is identified, its solution is sought and provided. Upon providing the solution to the fifth why, you work backwards by developing solutions to all the whys you initially discovered up to and including the root problem. This approach ensures that the root causes of problems are identified and eliminated.
Lean is a methodology that needs to be learned and applied. Like all things, you will only get better at it with time and practice. The best advice I can give you on applying the lean approach to your business is that you should empower yourself with knowledge on the subject. There is a lot of literature online as well as in books on the subject from which you can learn and broaden you knowledge on the lean approach.