I’ve found myself in situations, mainly related with the startup environment, where people talked about “Lean” as something only associated with concepts like MVP, Kanban, measure and test, etc. but I think that staying there is only touching the peak of the iceberg. Through this post I would like to make a brief introduction to the Lean Thinking philosophy to put in value a set of ideas with enormous potential for any business and to encourage you to get a bit deeper on the concepts which underlie Lean.
First of all, one of the criticisms I’ve heard about Lean is that it doesn’t apply to all kind of businesses because it’s focused on industries with very specific characteristics, like the car industry. Despite being true that “Lean Manufacturing” was born by the hand of Toyota in such industry, the underlying philosophy is built based on a series of universal concepts which are applicable to any business. Let’s see some of the principles of this school of thought, which we’ll call from now “Lean Thinking”.
In order to illustrate each of these principles I’ll take an insurances agency as an example. We’ll see that, although it doesn’t have much in common with a car assembly line, both models share a common ground.
Focus on value
There is no doubt that this is one of the most important principles. First of all, Lean Thinking invites us to clearly define what means to provide value for our customers. It is, what things they are really willing to pay for. At a first glance it may seem something trivial, even obvious, but I encourage you to think about it deeply because, surprisingly, it’s very frequent to find out that we are not able to provide a clear answer to this question.
Starting with our insurances agency, what we might think first could be: “my customer would pay for insurances”. Yes, of course. But, what would they really want to protect? Under which concrete circumstances? Which are the risks that really worry my customers? We might think about creating some kind of predefined insurances which allow some flexibility, but, wouldn’t a complete flexibility provide more value for my clients? What if I allow them to configure their insurances as they want ensuring that they don’t pay for what they don’t care about?
But we can go even deeper. What takes my customers to buy insurances? If what they need is to stay relaxed because they know that their goods are in good hands, shouldn’t that tranquility be part of my value proposition? Would the client pay for that tranquility? And here we aren’t talking about the concrete service to provide, but how to do it. We could focus on educating all our agents to ensure that they really listen our customers’ concerns so they can offer them a product which really cover them.
And we can go even further with this thought and translate it to the relationships with our providers. It’s not enough trying to provide as much tranquility as possible to our customers if we work with an external insurances experts agency whose workers are more focused on reducing losses for the agency than the actual tranquility of their customers.
The main idea is to convert the concept of value in the cornerstone of our business decisions. From something as simple as what services we provide, to how we define our internal processes or how we work with our providers to maximize our value.
A continuous flow
Once we have clearly defined what value means for our customers, the next step is to create that value. Lean Thinking is based on the idea of value creation through a continuous flow. It is, by continuously reviewing and improving the overall process to ensure that each of the steps work smoothly, with no interruptions and removing anything that doesn’t provide real value.
The solutions we may consider could go from rebalancing the workload among the steps of the process, to review the communication among our teams or even to train our employees to be able to easily adapt to different kinds of tasks.
Thinking again about our insurances agency, we should evaluate the complete process. Our goal is to ensure that everything works smoothly. From the first contact or request from our customer, until the creation of the custom insurance or even the attention received from our customer support. Is information being passed efficiently among our departments? Are we generating an excess of documentation which doesn’t provide real value? Does our payments provider serve efficiently the customer invoices? When a customer informs about an issue, how long does it take for us to send them an insurance expert?
The pull system
One of the most important wastes for any business is the excess of inventory. It is: everything we produce but which stays waiting or even doesn’t get sold. One of the proposals of Lean Thinking to palliate this problem is the pull system.
I’ll start talking about push systems. When working with push systems, the decision to create products or provide services is based on estimations about the potential customers’ demand of them. For example, following with our insurances agency: we make our investigations and estimate that, during this year, the sports cars sales will be greatly increased. Then we start working on insurances packs focused on that segment and a marketing plan to sell them. The downside of this approach is that it depends on previous estimations and has a high chance of generating unsold inventory. In our case, allocating resources to create these insurances packs and then find out that they are not what customers really want this year or that they don’t fit to their real needs (keep always in mind the focus on real value).
On the other hand, when working with pull systems, demand is evaluated from the end of the chain. It is, from what customers really demand at every moment. Returning to our insurances agency, instead of preparing insurances packs for this year, what I would do is to setup ways to continuously analyze and understand the market needs and create services in real time. What if, by half of the year, I find out that a new iPhone has been released and suddenly a common need to secure it emerges? Instead of foreseen what customers will want, we follow a model focused on understanding their needs at every moment and providing a product which fits them. The final goal is to avoid producing or storing material which may not be sold.
Focusing on a pull system requires us to correctly prepare our organization to be able to respond efficiently and adaptively to the customer demand on real time. From thinking about the interactions with our providers, to the ability to adapt our internal processes and change our management and strategies smoothly.
For those who are interested in knowing more, I recommend you to take a look at the “Just in Time” production model.
People are the cornerstone
But we won’t get everything we’ve talked about so far without taking into account the most important factor: people. People are who actually do the job. Who serve the needs of our customers. Who keep the complete gear working.
Lean Thinking defends the crucial role of people and promotes a culture based on teamwork, collaboration, empowerment, respect and personal development. People are no more pieces we can move or tell what to do. We must boost them, teach them to learn, give them autonomy and help them to grow and evolve.
Following with our example, an insurance may give the customer a sense of tranquility but there is no doubt that the human treatment and attention of our agents play a crucial role. We must give them a goal (“I want that you get our clients to really trust and feel safe with us”) and autonomy to accomplish it. Let’s remove scripted selling and minimize supervision. Every customer has their own concerns and needs and we must trust our employees to do their best to satisfy them. Let’s also offer ways for our employees to improve: from communication courses until training on areas they are not specialized in. We won’t only reduce management costs but also get a much higher motivation and multidisciplinary staff. And, in the end, all of these benefits and experience of our employees will be perceived by our customers.
But this approach on the human side doesn’t end in our teams. We must foster these principles to create long-term trust relationships of mutual benefit with our clients and providers.
Again, returning to our agency, we must think about the people we collaborate with and our clients. We must focus on building a strong relationship which goes beyond providing a simple service. To create a joint vision and to walk a common path where all parts are benefited. To achieve that the goals of every part are aligned and to get them in the same direction. And this way we will end up building a much more stable and enduring environment around us than if we only focus on a “sales number” metric.
And we’ve got maybe to one of the most important principles: continuous improvement. Lean Thinking defends that every organization must seek for ways to become a bit better every day. It invites us to pursue perfection and converts continuous improvement in an essential pillar to avoid becoming stagnant.
In order to survive, every business must be able to innovate, to be up to date and to offer new products adapted to the market needs. And also offering those products always taking into account the customer experience, from the first contact to the final payment or the maintenance period.
And this is a never ending process. New technologies emerge, customer needs and habits change, ways of working evolve… We cannot allow ourselves to accommodate. We must boost as much as possible a culture of adaptability and continuous improvement.
In the case of our insurances agency it’s essential to be able to continuously understand the market and to adapt to our customers’ needs. New products appear, lifestyle and concerns of people evolve, risks perception changes… and we must be able to correctly react to all of these situations. New technologies which make insurances more accessible may emerge. Or disruptive work models which get better productivity for our teams. Every improvement, be it bigger or smaller, will contribute to keep high value delivery and customer satisfaction standards.
Adopting Lean Thinking philosophy
I hope this brief introduction to Lean philosophy has helped you to see that, despite its origins, it’s based on universal principles which apply to any business. In the end, everything is focused on the concept of value for our customers. It is, those things they are really willing to pay for.
Lean Thinking leads us through a path focused on continuously improving our value delivery process at the same time we boost the capabilities of people and convert them in the cornerstone of our organization.
On the other hand, I willfully avoided talking about concrete Lean-related aspects like Kanban, MVP, PDCA cycles, etc. Despite it’s true that they all are really interesting, my goal was to offer an integral vision about the philosophy which underlies them. In future posts I’ll talk about concrete methodologies or tools which can help us to implement these Lean principles in our organizations.
I would also like to recommend you to take a look at this very interesting post from my teammate Hyun, where he speaks about his own experience looking for an adaptation between the branding and Lean worlds.
And, as always, I encourage you to ask any question or doubt you may have and to share your own experiences and opinions!