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Lean methodology for companies: why it is so important

08 Mar, 2021 Methodologies
Lean methodology for companies: why it is so important

We have made it our custom and a central topic in our talks. In this article, I'll explain why the Lean methodology should also be important for companies.

Risks and “blinkers” 

Kodak invented the first non-professional camera in 1888 and, despite having held a leading position in its market for years, it was declared "insolvent" in 2012. 

What happened?

The main causes of this bankruptcy were the inability to innovate its production line and thinking that the leadership role would have protected it from the market eventualities. 

Wrong... yet frequent!

In fact, many companies entrust their fate to traditional and “solid” strategies, planning and implementation of known and “tested” marketing techniques, industrialization or marketing plans plagiarized from some competitor or some “authoritative” text. And then fail miserably, simply because they have underestimated the market's very first law: unpredictability.

Entrepreneurs carefully evaluate all environmental, competitive or managerial threats, but they fail to see the production and distribution process itself as a real risk. The market itself is looked upon, I would dare to say always, as a delicious “piece of cake” to grab at the earliest opportunity, never as a prompter - perhaps the most precious one - as an optimizer or a source of ideas.

And right here, however, the Lean methodology is needed.

The Lean methodology

Nothing new, the Lean methodology was born within Toyota at the time of the automobile industry boom. But it’s still very timely today.

It is a strategy that has 3 goals:

  1. streamline business processes, from production to management;
  2. reduce waste, of time, money, materials and resources;
  3. increase the value for the customer.

And 5 basic rules:

  1. produce only what customers are willing to buy (customer-centricity);
  2. the sequence of activities is defined depending on the value they can generate (elimination of waste);
  3. no operational interruption, with a production based on the processes, not on the functions (offices, departments, lots, etc.).
  4. the flow of activities follows a pull-type logic (from the market to the company);
  5. the ultimate goal is perfection (constant improvements). 

The Lean method allows you to implement construction, design and management processes with fewer resources, with better information management and without affecting the output quality, indeed often improving it.

And above all, it guarantees a rapid response to market changes, thus avoiding breakdowns and immobility.

Learning, changes, data

The first concept of the Lean methodology is to learn, to continuously improve, drawing also on failures.

In this regard, I have another story for you. Did you know that Instagram was originally a photo-review application for commercial spaces, with the ability to apply special filters to photos? Only after several launch failures on the market and after analyzing the collected data, his managers realized that it was the functionality of the filters to please the users: thus they transformed their project into a photo-sharing app.

A Lean company moves in small steps, with rapid experiments that do not cause structural problems should they fail but, on the contrary, offer great advantages: they increase the knowledge and awareness of the entire business system, improving future productive and decision-making processes.

In an economy that is so fast and fraught with uncertainty - especially these days - it doesn't matter how innovative or cheap a product is: if there are no customers willing to buy it, it will still be a failure.

So, the question that entrepreneurs should ask themselves today is not "can we produce it?", but rather "is anyone interested and is it economically viable?"

Listening to the market, understanding its needs and wishes, offering products capable of taking root on that field and growing together with it. In short, finding your place and never being caught unprepared in the face of unpredictability, through continuous and careful supervision. This is Lean. 

Third and last principle: abandoning all preconceptions and "personal opinions" on the market, on the needs and strategies previously held by one's managers, being guided by the numbers and by people’s words, as well as by the analysis and insights derived from these data.

Basically, the company must see itself as some kind of scientific laboratory.

How to become a Lean company

Converting to Lean thinking is primarily a matter of mindset and process. As we said, it is necessary to open up to experimentation and have a proactive approach.

As in a research lab, even within the company, certain characteristics are required to be able to effectively apply a product development and creation process that is based on frequent interactions, constant and continuous data acquisition, a build-measure-learn product optimization cycle. Without overlooking the entire team’s great visions and ambitions.

Perseverance, a healthy environment, adequate financial resources, awareness, competence and an open mind. Without these characteristics - which may seem secondary - the implementation of a Lean mindset becomes very critical. On the contrary, you might have a boomerang effect: the use of this methodology, could make structural problems that have never really been addressed before, even more evident.

The first step to take to transform a traditional company into a Lean company is to drastically change the corporate mindset, making it a fertile ground for ideas to grow.

Mirko Maiorano

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