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Lean Startups

Adopt lean startup model to boost output

Adopt lean startup model to boost output
Image credit: edie.net
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

‘Kaizen’, ‘Jidoka’ or ‘Kamban’ might sound Greek to you, but they are quite important Japanese words in the entrepreneur circles globally.  Invented in 1936 by Kiichiro Toyoda, these words are part of the glossary of ‘The Lean Manufacturing’ model. Toyoda, frustrated with production issues in his automobile factory, observed and extensively studied the flaws, thus bringing into existence this model to maximise the output.

The primary focus in this model was on a systematic method for the elimination of waste, created through overburden and unevenness in workloads, within a manufacturing system. Often called ‘Lean’, this model works from the perspective of a client who consumes the product or service. Essentially, lean is centred on reducing everything else and simultaneously enhancing what adds value.

Eighty years on, Toyota Production System has become a case study for entrepreneurs worldwide.

After listing quite a few failed startups, serial entrepreneur Eric Ries implemented, as he like to puts it, a ‘proven scientific formula’ for entrepreneurial success. He founded the concept - ‘The Lean Startup’, which caught on like a house on fire in startup meetings globally.

The essence of this concept is to enlighten entrepreneurs that the management of an idea does not restrain the creativity. It also aims to eliminate the colossal misconception about management and idea generation being diametrically opposite professions. A lean startup focuses on being well managed, continually innovating and user centric with a focus on using data for constant innovation and improvement.

Even with promising ideas, teams comprising best minds who are highly capable and skilled and resources at startups’ disposal, why is there still an increase in the failure rate? What is this ‘proven scientific formula’ which Eric Ries has been talking about? How can your entrepreneurial idea adopt the Lean Startup Model?  Here’s how!

  • Entrepreneurship is not limited to starting your own company. It is restrained to starting small yet a world class brand. It is not only limited to starting out from a garage and moving into plush offices. An entrepreneur is anyone who has an idea which will help solve problems. It is anyone with an idea which will help the organisation reduce workload, costs or improve their working conditions. Working in a corporate setting or from a garage is irrelevant as long as you are innovating.
  • Your idea is not just a product but an institution and every institution needs to be managed! But here, there is freedom to customise management and keep changing when there are modifications or reconstructions in any particular area. Having processes in place allows maximum output within a dedicated time frame with least wastage.
  • The simplest and most effective way to become successful is to keep experimenting. Innovation should be at the core of your execution. Change the mindset about what a startup is “supposed” to be. You idea exists- not to earn money, serve customers or build a crazy product. It is only to build a sustainable business. Validate this by testing every element of your vision and converting it into a profitable segment.
  • So you want your team to be cool. Management work may sound old school but is quite an important task. Micro-managing, setting up deadlines or prioritizing work at the end of the day is a beneficial way to sustain your startup. These help you track employee contribution, account entrepreneurial outcomes and even be liberal. But this kind of management should not be “How Microsoft did it” or  “The Google Way”. They all were customised around their mission statement and continue to do so. Define your aim and lay down fundamental processes based on the company's needs.
  • Accelerate innovation, pivot or persevere, but be active when there is a feedback. Measure customer response, understand pain-points and gear up for another ride which may become successful. So, when Youtube started as an online video dating site and fell flat post funding, they decided to allow users to share all kinds of videos. It soon became the most visited site and eventually got acquired by Google at $1.65 billion in stock! Thus, the power of pivoting lies in the little details of your idea and how swiftly you innovate.

The Lean Startup model also helps you reduce cash burn rate. Most of which is because of long term investments both in the form of money and time. This methodology helps avoid this by introducing a reiterative process that emphasizes on creating smaller product roadmaps and continuously improving from feedback at every stage. One of the most important learnings from the lean startup movement is the concept of “Minimum Viable Product”. Here is what it entails:

  • Launching product in phases to get market feedback throughout the development stage
  • Understanding market requirements based on feedback and implementing it progressively
  • Developing a synergy between the market and the product
  • Using analytics to drive the development process through a clear understanding of traction between the product and the early adopters of the technology

Achieving the product/market fit comes with its own risk and technicalities. Many startups tend to scale up quite fast; faster than their learning rate and end up failing to extract crucial learning points from the failures. This results in uneven scaling without a clear understanding of the problems that exist for the customer and the limitations that are present in the market.

Decades later, Toyota still implements the foundation processes laid by its founders and the company has stood the test of times disguised as innovation, rapidly changing markets or recessions. Focus on being a sustainable business, manage your idea with care and precision and you never know, you could be the next successful startup in town!

Edition: December 2016

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