People talk about Lean start up, that is starting up a business in a Lean way. We even have a book on Lean start up by Eric Ries. This is of relevance to start up companies who are always strapped for capital. This article seeks to examine why start up’s fail and how the application of simple Lean principles can help a start up focus more on customer value and reduce wastage.
As we all know, the beauty of the Lean methodology is that it is not confined to one industry, one staff size or one nation, the principles of Lean are universal. This is no different in the case of a start up. Unfortunately many companies dismiss the principles of Lean as being too simplistic, not realizing that there is great power in simplicity. The Lean start up philosophy though simple can be used as a guide by the entrepreneur as they navigate their way from an idea to building a successful startup.
Why do start up’s fail?
Before we see how Lean principles can be used by start ups, let us see some of the reasons why start up’s fail. A few obvious ones are listed below :
- Businesses tend to focus more on making new products and technology without really understanding the Voice of the customer. In other words :
Most startups fail, not because they did not build what they planned to build, but because they build the wrong product
Not being client-focused. Not being able to respond quickly to the clients’ needs and aspirations.
- Many companies try to improve their operations with fancy equipment,software etc without much thought. Lean is all about thought
- Start ups tend to get ambitious and expand too fast across geographies.
- Many entrepreneurs have misinterpreted the Lean startup model as an excuse to rush incomplete products to market with few features. These features matter to no one.
- They try doing too many things and have too many metrics many of them being vanity metrics without much value.
- Having a big and complicated business plan that runs into several pages. Investors get bored of big documents.
How to apply Lean principles in your start up?
Listed below are some ways start ups can use to deliver more value to their clients and minimize wastes:
- Move at the pace of your client’s needs, not your companies desires. There is always a temptation to move faster. Basically the Lean principle of Pull needs to be applied.
- Have a simple crisp one page business plan. No investor is interested in reading a huge report. In other words, eliminate the unnecessary so that the necessary may speak.
- Wherever possible do face to face usability tests with the client. Direct client feedback is the best way to change course when things are not going fine.
- While continuous improvement is desirable , do not set a frenetic pace and burn yourself and your team. Go for a more sustainable pace. (This is one of the 5 S principles of Lean)
- Identify a single macro goal that drives what you do in your company
- Keep just a few critical actionable metrics and ignore the rest. Vanity metrics have no value
- Observe and measure customer behavior
- ‘Stay Lean’, meaning be agile and flexible. Lean is not about cutting costs but adding value to the client. A reduction in cost is a byproduct of Lean.
I know a newly founded company in Bangalore, which is a good example of a Lean start up. Given below is a brief on Sheerfish :
SheerFish is a new age Indian startup banking on the lean model for scaling up and growth. Sheerfish is an interior design firm which is currently bootstrapped and yet doing wonderfully well in its space owing to minimalistic operational costs. This startup focuses on one particular parameter which is quality and continuously fine tunes the same to achieve excellence. Rather than housing its own interior designers Sheerfish has tied up with freelancers. They scrutinise some of the best interior designers in bangalore and provide them with clients. They in turn have a quality management team in place which scrutinises the work. They also control the manufacturing process ensuring minimalistic error during the whole process. Leveraging the principles of lean have truly done wonders for this small business.
About the author:
Rajesh Subramanya is a Business advisor & he his speciality is ‘Lean’ training & consulting, Continuous improvement, Business transformation and Process optimization to deliver maximum value to clients. He has also worked in MNC”s across the global.
Vikram Mg 