lean-methodology

Lean Methodology In A Nutshell

The lean methodology is a continuous process of product development to meet customers’ needs. It was in part borrowed by the auto industry and its roots are found in the Toyota Production System, which was heavily influenced by Henry Ford’s assembly line system. The lean methodology is, therefore, an evolution from lean manufacturing, based on continuous improvement.

A look into Kaizen and the roots of the Lean Methodology

kaizen-approach
Kaizen is a process developed by the auto industry. Its roots are found in the Toyota Production System, which was heavily influenced by Henry Ford’s assembly line system. The word Kaizen is a hybridization of two Japanese words, “kai” meaning “change” and “zen” meaning “good.” Two of the basic tenets of Kaizen involve making small incremental changes – or 1% improvement every day – and the full participation of everyone. 

Kaizen is actually a process that developed out of the auto industry. Its most infamous roots are found in the Toyota Production System, which was heavily influenced by Henry Ford’s assembly line system. 

In the 1930s a team from the Toyota Motor Company visited Henry Ford’s plant. At the time, Toyota was producing just 40 automobiles per day, while Ford was producing 8,000.

Toyota decided to implement many of Ford’s techniques, but a visit by one of the lead engineers to the local Piggly-Wiggly gave him an inspiration which significantly advanced the basics of Ford’s system. 

Kaizen didn’t gain international popularity, however, until the 1980s when a Japanese organizational theorist and management consultant named Masaaki Imai founded the Kaizen Institute Consulting Group to help introduce the concepts of Kaizen to western businesses.

Quick Intro To Lean Thinking

In their book, Lean Thinking, James P. Womack, and Daniel T. Jones highlighted the key principles for lean thinking and the basis of the lean methodology. Lean Thinking, based on the study of the Toyota Production System, looked at five key guiding principles for process improvement, mainly focused on waste reduction: value, value streams, flow, pull and perfection.

  • Value: The lean thinking paradigm starts by defining value from the customer standpoint. Value can take many forms and shapes, and it can be a practical value (helping solving problems and pain points), perceived value (to establish status), or brand value (trust, switching costs). And this is the foundation of the lean thinking methodology.
  • Value Streams: Once defined how the customer perceives value, it’s important to ma it out and identifies the stream, the steps the customer tasks to get that value, and how each step contributes to delivering it. Once identified the value streams, it is possible to identify the activities that add value to the customer and those that do not. And the latter need to be removed, as the lean methodology is a method of process improvement and, and foremost of waste reduction.
  • Flow: Once the value stream has been improved to remove wastes and add only the activities that add value to the final customer, it’s important to check the flow and ensure that the whole value-creating process is smooth and in case reconfigure the steps taken by customers to in case enable that flow.
  • Pull: Pull is all about avoiding wastes and have in place a just-in-time system, built from the ground up, on the customers’ needs.
  • Perfection: This is what makes lean thinking a continuous, always evolving process, a process that looks at perfecting each step of the way, which requires continuous tweaking, feedback loop and revisiting of the various steps with which value is created and delivered.

Quick Intro to Agile And Lean Startup Movements

In 2001, a group of seventeen software developers met to discuss these lightweight development methods, with the aim of challenging the old assumption of heavyweight software development.

They forged “The Agile Alliance,” as a group of independent thinkers about software development, which agreed on the Manifesto for Agile Software Development.

agile-methodology
Agile started as a lightweight development method compared to heavyweight software development, which is the core paradigm of the previous decades of software development. By 2001 the Manifesto for Agile Software Development was born as a set of principles that defined the new paradigm for software development as a continuous iteration. This would also influence the way of doing business.
agile-manifesto-principles
Source: agilemanifesto.org

Steve Blank, launched the Lean Startup Movement, which as he explained in a 2013 HBR article “Why the Lean Start-Up Changes Everything:”

 It’s a methodology called the “lean start-up,” and it favors experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional “big design up front” development. 

Today startups take this methodology for granted. Yet at the time this was an innovation as Steve Blank recounted:

Although the methodology is just a few years old, its concepts—such as “minimum viable product” and “pivoting”—have quickly taken root in the start-up world, and business schools have already begun adapting their curricula to teach them.

lean-startup-vs-corporation

Some of the key aspects fo the lean startup movement is based on using a “scientific method” and a process of creating, launching and growing a startup.

This focuses on getting insights as quickly as possible from customers without focusing too much on business planning. As Steve Blank remarked in his 2013 article:

A business plan is essentially a research exercise written in isolation at a desk before an entrepreneur has even begun to build a product. The assumption is that it’s possible to figure out most of the unknowns of a business in advance, before you raise money and actually execute the idea.

Once the money is raised:

Developers invest thousands of man-hours to get it ready for launch, with little if any customer input. Only after building and launching the product does the venture get substantial feedback from customers—when the sales force attempts to sell it. And too often, after months or even years of development, entrepreneurs learn the hard way that customers do not need or want most of the product’s features.

In the lean startup movement and methodology, three things are critically important. In fact, those are the new pillars that challenged the old assumption of how an enterprise should look like have allowed the lean startup movement, thus the lean startup canvas.

On the HBR article Steve Blank remarks the waste of time a five-year business plan represents:

No one besides venture capitalists and the late Soviet Union requires five-year plans to forecast complete unknowns. These plans are generally fiction, and dreaming them up is almost always a waste of time.

Start-ups are not smaller versions of large companies

One of the critical differences is that while existing companies execute a business model, start-ups look for one

This point is critical because of a large organization or existing companies operating with known business models.

The lean startup instead iterates until it finds a business model that fits that startup. In fact, Steve Blank defines the lean startup as:

a temporary organization designed to search for a repeatable and scalable business model

It is crucial to emphasize the fact that the business model needs to be repeatable and scalable.

Toward Continuous Innovation In Business

continuous-innovation
That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.
the-continuous-innovation-manifesto
The Continuous Innovation Mindset is a Manifesto proposed by Ash Maurya on blog.leanstack.com

Read Next: Lean CanvasAgile Project ManagementScrumMVPVTDF.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here