Even if you’ve heard the term lean with regards to business models, what it entails may be unclear to you. But as it implies, businesses that use this methodology strip away the unnecessary elements, needing only the essentials that suit them and their customers and using them to grow.
And it’s been shown to be a methodology that can yield many benefits for small businesses when implemented correctly. Here, we’ll delve into the definitions of the model and its numerous advantages, providing valuable, professional insights along the way.
A lean business model means making continuous improvements in a business operation, and the implementation of processes to guarantee optimum business efficiency. This can be achieved by changing or removing ineffective practices, identifying and getting rid of unprofitable products and measuring and improving the productivity of teams.
Sometimes recognised as operational excellence or continuous improvement strategies, the model is centred around identifying the areas which are not aiding business growth and addressing them effectively. Doing so offers significant benefits to both the business and their customers – with improved operation affording increased growth and better quality output.
Many businesses now implement the lean business model, using either in-house professionals or employing the assistance of external consultants. However, many businesses find the former more conducive to success – due to the ongoing and ever-changing nature of achieving a truly lean business.
The biggest hurdle to overcome for many businesses considering a lean business model is ensuring that their new processes and new model won’t have a negative impact upon their customers. Changing certain teams, products or services may seem a profitable move, but could impact a significant section of the customer base in the immediate or distant future – something which could have disastrous long-term effects.
So, the first step for any business looking to implement the lean model is to fully identify and understand the operation’s processes and how they match what the customer base demands and wants.
Identify the start-to-finish process of building services and products to delivering these to the customers – can any sections of the process be streamlined or cut completely without affecting the delivery stage? If the answer is yes, these sections could be the focus for those responsible for the lean implementation.
The lean business model offers a series of benefits to businesses of all sizes in both the short term and long term.
From top-level directors to middle managers and shift supervisors, lean encourages a more pro-active and considered approach to management, demanding that non-beneficial practices scrapped.
With the lean model in place, every level of management will begin to identify where their part of the business could be made more effective to ensure greater efficiency, quality and profitability. Having a clear goal in mind can add clarity to a management role, helping managers develop their own skills and work towards creating a more harmonious and effective team.
Within the lean model, employees can see their value to the wider team, engaging their attention and encouraging increased participation.
Employees who can identify that they’re part of a well-oiled team are more likely to buy into the business’ aims and targets. Share what your efficiency goals are for your business with all colleagues as early as possible because communication is key. And involve everyone, the performance of a business is dictated by the performance of everyone in it.
Employees will recognise that the wider business is efficiently managed and operated, encouraging them to match this in their own output.
Because lean businesses are concerned with the essentials, any business using this methodology functions almost holistically. That is to say, it shines a more well-rounded spotlight on the business. It allows the people who are responsible for a business’ effectiveness and quality of output to proactively seek out and eliminate non value-adding waste from the work they do. Whether it’s leadership skills, employee engagement, individual process efficiency or customer value, lean businesses support growth in all areas.
It allows you to get into your customers’ shoes in order to find out what matters to them. By valuing their feedback and thoughts, and acting on it, it puts the customer journey at the heart of everything a business does. Understand the customer’s needs from the very beginning; spend time with them, use surveys, hold forums and events. Everyone is different – it’s important to meet those individual needs.
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Even if you don’t go entirely lean, elements of the model can easily be introduced through small, continuous improvements to your business. Giving every member of your organisation the power to think lean is an important attribute. A switch to a leaner way of doing things can deliver immediate and measurable results across a range of KPIs quicker than you think.
For example, at Gazprom Energy, we are targeting eight types of waste we are looking to reduce: Transport, Inventory, Motion, Waiting, Over-production, Over-processing, Defects and Skills. Using the acronym TIM WOODS, the business remains mindful of examples of these types of waste, along with their potential solutions around the workplace.
These quick-to-implement changes are ‘Kaizen’ (change for better) events, and can be things as simple as standardising current processes, providing consistent training to a team or rearranging work areas to improve process flows and communication.
Larger-scale changes require more input. The Plan, Do, Check, Act methodology is something many businesses use to ensure improvements are being properly realised and – more importantly – your colleagues are continuously improving.
An iterative approach to continuous improvement of products, people and services, it consists of four stages that are as follows:
As the name suggests, this stage involves planning what needs to be done. Depending on the size of the project, it can be a major part of the process, but it’s an important element in defining what the project’s scope is.
In determining a plan, ask your team some of the following questions:
Apply what was considered at the planning stage and put things into action. You may encounter problems here, which is why it may be a good idea to try out your plan on a smaller scale in a more controlled environment.
Considered the most important part of the cycle, the check phase ensures your plan is clear, reduces the number of mistakes and maintains continuous improvement.
Audit your plan’s execution and see if your initial plan worked. It will become clear what the more problematic parts of the process are, which can be eliminated later down the line.
Depending on the outcome of the check step, this final part involves deciding what to do next. If everything went according to plan, then you can create a standardised, stabilised process than can be successfully integrated. If things didn’t go so well, you’ll need to begin the cycle again.
Within a lean framework, you’re free from the more established structures and processes that large organisations function in. As a result, there’s less of the time-draining bureaucracy those kinds of businesses deal with. In its place is more direct contact, less lengthy planning horizons, and an ability to respond to opportunities more readily without fuss.
After all, lean is not about reinventing the wheel, it is about promoting simple yet effective working practices at every level of the business and at every stage of the process.
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