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Lean – Not Just for Manufacturing Anymore

Although manufacturers have embraced lean and continuous improvement for decades, the concept is still relatively new in the entrepreneurial world. Led by Eric Reis and his groundbreaking 2011 book, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, innovators across the globe are using lean startup methods to launch new ideas and new companies.

The tenets of the lean startup are based on the production philosophy of lean manufacturing. And like lean manufacturing, the lean startup is focused on eliminating wasteful practices while increasing value-producing practices. But where lean manufacturing focuses on preserving value with less work, lean startups focus on reducing risk of business or product failure. To do this, lean startup practitioners live by the 5 Lean Startup Principles:

Entrepreneurs are everywhere – You don’t have to work in a garage to be in a startup.

Entrepreneurship is management – A startup is an institution, not just a product, so it requires management – a new kind of management specifically geared to its context.

Validated Learning – Startups exist not to make stuff, make money or serve customers. They exist to learn how to build a sustainable business. This learning can be validated scientifically, by running experiments that allow us to test each element of our vision.

Innovation Accounting – To improve entrepreneurial outcomes and to hold entrepreneurs accountable, we need to focus on the boring stuff: how to measure progress, how to setup milestones, how to prioritize work. This requires a new kind of accounting, specific to startups.

Build-Measure-Learn – The fundamental activity of a startup is to turn ideas into products, measure how customers respond and then learn whether to pivot or preserve. All successful startup processes should be geared to accelerate that feedback loop.

By focusing on these core principles, lean startup practitioners believe that entrepreneurs have a greater chance of being successful without relying on outside funding or elaborate business models. And they have a list of testimonials in support of their belief. Companies like Intuit, Dropbox and Wealthfront have spoken publically about their success with lean startup methods and Harvard Business School recently added a Lean Startup course to their MBA program.

Only time will tell what the future holds for the world of the lean startup, but if it’s anything like lean manufacturing, we should expect great things.

Lean Startup Resources:

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