The No. 1 Thing All Companies Need to Avoid Flaming Out in 2017
An old friend sells products that are aimed at a depressed part of the economy. The company had found a customer in a healthier industry, and my friend wondered if I might know of a strategic planner who could say whether a big move into that segment would be worthwhile.
That was a terrible idea. Instead, I thought he might interview the current client for insights on customer needs. This way was cheaper, faster and in his control.
To my mind, if he were making a move to another country, a study would be warranted. But when he's merely pivoting to another industry, not really.
Inspired by "The Lean Startup"
Perhaps you detected the word "pivot" above? It was popularized by Eric Ries in his pathbreaking book, "The Lean Startup." Ries likes the concept of home-grown, team-based attacks on practical problems. His book even suggested that a startup's reason-for-being could be subject to fast thinking/fast acting. All a startup needs, he says, is a minimum viable product and a determination to keep pivoting until it finds success.
Ries based his methodology on large-company techniques that were famously put into effect at Toyota. 'Lean' made Toyota's complex operations both efficient and ubiquitous. So, in a way, "Lean Startup" was a kind of sly joke--advocating large-company techniques for creative companies that hadn't really started yet.
I love the idea of lean as a creative force. But let's remember, those original efficiency roots can be huge for smaller companies, too.
Lean Process Improvement
"Efficiency" to our-sized companies usually means "process improvement." Take the recent company looking for improvements to an ordering process. Mistakes were expensive, so savings from process improvements could add 50% to the bottom line.
An accounting firm had already suggested a bunch of changes, detailed in the form of a beautifully-produced booklet that nobody read.
By contrast, lean suggests working in teams to get business results. No one needs to read a report--they just create results.
How to Make It Work
First, we set up a team of interested individuals of varying functions and seniority. We asked for 3 hours a week of commitment--two hours for conferring with colleagues on next steps, and one hour of reporting to the group as a whole.
Then we set up a process-improvement plan. First came:
- Writing down the current process, then
- Identifying blockages,
- Discovering root causes, and
- Clearing those blockages.
After we agreed on what the current process looks like, we discussed the current blockages, ranked them by perceived importance, and discussed the root causes. And because our group was comprised of leaders ("volunteer" is a great indicator of leadership) people started to suggest how we might change. Dramatically.
This kind of work is really fun, by the way. And it works. We took both time and dollars out of the process.
Why? Because we got the do-ers to weigh the pros and cons and identify priorities. There's no need to ask permission from the powers that be.
Another reason it works is that nobody is saying that performance improvement has to be perfect.
The lean startup has "minimum viable product" as a business proposition. The rest of us have minimum viable improvements. And that is a concept you can really use in the coming year.