Lean Business Development: How 7 Lean Principles Guide Sustainable Growth
In order to survive, businesses today must have the agility to sustainably deliver value to their customers. Lean is a business methodology that provides businesses with the ability to continuously deliver value to an ever-changing marketplace. Lean business development enables organizations to grow and scale in a disciplined, principled way — working continuously toward the goals of continuous improvement, respect for people, and a relentless focus on customer value.
Lean business development is rooted in these key seven Lean principles: Optimize the whole, eliminate waste, build quality into the system, deliver fast by managing flow, create knowledge, defer commitment, and respect people.
Keep reading to learn how each of these principles can guide your organization toward a stronger, more sustainable future.
Optimize the Whole
In any business, two things are true: There are many moving parts, and resources are limited. The moving parts are your multiple business functions, the different markets you may be playing in, and the wide variety of ideas within your company about the direction your organization should be moving.
The term “resources” could mean raw materials, in the context of manufacturing, construction, or engineering. But in knowledge work, resources are intangible, and even harder to manage: They’re the skills, knowledge, time, and energy of your employees.
The Lean principle of Optimize the Whole is absolutely essential for Lean business development. We have to ensure that all of those moving parts are aligned so that we are make the best use of our limited resources. This is a challenge for any growing business, but it’s something for which Lean is perfectly suited.
Optimizing the whole requires organizations to understand how value flows through their many moving parts. This can be achieved by participating in a company-wide value stream mapping exercise.
But it doesn’t stop there: In order to tap into the potential of all of our employees, we have to build the infrastructure to communicate, share, and align around common goals. We cannot afford to operate in functional silos, optimizing our teams and departments while suboptimizing the whole.
Your goal should be a Lean enterprise, where all of the moving parts are successful by their own measures, but also contribute to the greater goal of the organization.
The Lean principle of Eliminate Waste is often mistaken to mean “cut jobs”, “cut budgets”, and ultimately — destroy innovation. This is a misguided interpretation of what is actually an essential concept for growth and innovation. Waste, in Lean business development, is defined as anything that does not add value to the customer; anything that the customer would not willingly pay for. Depending on your industry, department, and team type, waste may look very different.
In knowledge work, waste is any process, function, or activity that does not add value to the customer, or enable the business to add value to the customer. Waste can be context switching, overburden of employees, tedious processes, or technical debt. Waste can be lengthy feedback loops, unnecessary complexity in decision making, or premature planning. There is no single kind of waste to be eliminated in Lean business development.
In order to sustainably Eliminate Waste in a Lean organization, we must build the identification and elimination of waste into our daily activities. At the team level, we must hold each other accountable for designing, practicing, and continuously improving processes in order to maximize the delivery of value to our customers. We have to discuss not only the work, but how the work is being done — and how we can deliver more value to our customers in faster, more sustainable ways.
This has to start at the top: Inefficiency at the executive level trickles into every other part of the business. Leaders need to show by example how to make decisions that are focused on the customer.
Build Quality Into the System
Revisiting an idea from above: In organizations, two things are true: There are many moving parts, and resources are limited. This is precisely why the Lean business principle of Build Quality Into the System is essential for Lean business development. This concept is fairly simple: In order to create a system that is built for growth, we error-proof the system by standardizing and automating as much as possible. We standardize and automate those things that are tedious, repeatable, or prone to human error, so we can focus the skills and efforts of our employees on innovation, growth, and continuous improvement.
Lean business development encourages organizations to build quality into the system by documenting, sharing, and aligning around good practices, credible sources of knowledge, and strong processes. Lean organizations create environments that guide employees to Build Quality In. They sponsor the tools that enable organizations to move faster and make better use of their talent. Our favorite tool for this is Kanban — learn more here.
Deliver Fast by Managing Flow
It’s not uncommon for organizations to measure utilization by a percent of capacity — i.e., this team is working at 90% capacity. Imagine a road at 90% capacity: If you’re picturing an road at a near standstill, you have a perfect illustration of why maximizing capacity impedes speed and the flow of value delivery. Now imagine that same road at 50% capacity: There are fewer vehicles on the road, but they’re moving faster — allowing more cars to reach their destinations in a reasonable amount of time.
This is the Lean concept of Deliver Fast by Managing Flow. Completed work in the hands of our customers is valuable. Until then, it isn’t. The goal of every Lean organization is to get value into the hands of customers as quickly as possible. However, most organizations struggle to deliver value quickly, because they’re plagued with overburden: Because they have so much to do, they’re rarely able to really do anything.
If we want speed and value delivery in our organizations, we have to reward speed and value delivery. We cannot reward long hours, context switching, people who take on too much, or overburden. Of course, in order for employees to be able to sustainably deliver quickly, they have to operate in an environment that permits them to focus. Limiting work in process (WIP) at the organizational level is absolutely critical if we want to limit WIP at the team and individual levels. We can only deliver fast if we manage flow.
Many organizations were started by a few people, operating in homegrown systems, relying on tribal knowledge to do a majority of their work. This type of infrastructure is necessary to get started, but unsustainable for any organization wanting to grow.
The Lean principle of Create Knowledge charges organizations with the challenge of designing, documenting, and continuously improving repeatable processes, in order to reach the level of speed and accountability necessary for sustainable growth. This depends entirely on your employees: You need to hire and retain talent that is motivated to continuously grow, share, cross-train, and identify more areas for learning. Lean organizations must create policies that retain high-quality employees and favor team stability, so that the knowledge that’s created can continue to grow.
The Lean business principle of Defer Commitment is critical for Lean business development. This principle encourages organizations to make decisions at the last responsible moment, in order to continuously make decisions based on the most up-to-date, relevant, comprehensive information. Here’s why this is important: A key component of giving customers what they want is making decisions based on real, customer-driven data. If we make decisions prematurely, we aren’t making decisions that accurately represent the needs and desires of the customers. This is a practice that can be costly in the short-term, but in the long term, it significantly balances technical risk and market timing realities.
Lean business development relies on hiring and retaining the best people and creating environments to make sure that the best ideas are heard. This cannot be accomplished without a fundamental respect for people.
Lean aims to eliminate the overhead between the customer and the people responsible for delivering value to them. Lean organizations respect their employees by creating environments to allow them to do their best work. Focusing all company efforts on respect for people creates an environment where the best ideas are heard, where good employees are retained, and where leaders are better able to understand the needs of their employees and their customers. Learn more about the role of Lean management in Lean business development here.