Lean management has become a hot topic among venture capitalists and entrepreneurs.
Investors are asking startups to apply Lean manufacturing concepts to reduce waste from day one, thereby cutting both the business's risk of failure and the investor's exposure to loss.
The customer-focused definition of value that is integral to Lean has broad applicability across industries.
However, some leaders have lost sight of the origins of Lean management.
In a Business Insider interview, author and serial entrepreneur Steve Blank admits, "Most people don’t remember that agile development, lean manufacturing, and customer development was actually invented by Toyota in the 1960s."
Companies that fail to acknowledge and appreciate the critical importance of the automotive industry in Lean management are losing out on valuable business insights.
Lean Startups Must Update Processes Continuously
Toyota's Lean managers are tasked with the perpetual examination of every movement on the manufacturing floor. It is not good enough to know that a method of shelving or a curve in an assembly line saved labor when installed 18 months ago.
Every item on the floor at any given time must have a clearly defined purpose and be the best possible device for saving unnecessary movement and reducing waste.
Lean startups, particularly those dealing with online business, often develop one process and build upon it until they are suddenly confronted by a legacy process that has become completely unworkable.
Developers may become emotionally invested in their past work and reluctant to tear down and rebuild something that was ideal for its purpose when initially developed. To succeed, companies must overcome any aversion to the continual reworking of even their most successful processes.
Diversify Customer Base
There is a Toyota for every driver, from sensible minivans to sporty coupes easily modified for weekend racing. Automotive companies generally start from the baseline of one strength, such as the Subaru's reputation for producing affordable sedans that handle well in all weather conditions, and expand rapidly into every niche possible.
Diversification is sometimes lost on lean startups focused on serving a niche. Certainly, it is wise to allow your first and most devoted customers to define product value.
As companies grow, however, they will rapidly discover the limitations inherent in serving a single niche. Instead of trying to expand an existing customer base, consider whether or not you have exhausted your potential market share in that community.
It may be time to reach out to a new customer demographic and learn how it defines value.
Look at the Bigger Picture
It is easy to become so passionate about a particular industry that one follows only industry news and considers only the opinions of experts who understand one's own industry.
Lean startups should curb these impulses. Lean management consists of a set of concepts that transcend function, focusing instead on core philosophies.
Many of the most important takeaways of Lean management for any company are found where it began, in the ever-evolving manufacturing industry.
