Did you know that 75% of venture-backed businesses just starting out are likely to fail? In order to make sure your company and business plan succeeds, you may need to begin innovating with different ideas and not follow the same blueprint that has led many organizations astray. A new way of doing business has blossomed in the last several years known as lean methodology in which successfully running a company becomes less of a risk for the everyday entrepreneur.
What is Lean Methodology?
According to the Harvard Business Review, lean methodology focuses more on customer feedback and experimentation instead of the usual careful, long-term planning. The type of product design required with this new business planning method is one that is incrementally improved and changed over time based on consumer feedback. This type of product design does not focus on a major investment up-front. Instead, entrepreneurs are expected to have more of a small-scale model that can be easily changed based on the feedback they receive from investors and their market base.
Changing things on the go is an important part of lean methodology and this has taken off in the business world. In fact, business schools have even begun to teach this new process. Companies are only starting to understand the innovation surrounding lean methodology and how it may improve their bottom line.
Essentially, lean methodology is the complete opposite of the static business plan in which the problem-and-solution format does not change or take feedback into account. Too much thought is put into a five-year plan including the input of money and the expected return. However, forecasting such plans often does not line up with reality and assuming the issues associated with running a business ahead of time often does not work well.
In addition, the average business plan often has entrepreneurs or inventors spending weeks or months on their own attempting to develop a complete and fully functional product that solves a common problem encountered by customers. However, this type of product design plan does not consider investor or customer feedback, which is why the lean methodology process may be a more beneficial route to take.
Instead of getting feedback upfront before a finalized version of a product has been prepared for sale, the typical product design plan lands entrepreneurs learning after months or years of work that many features of their product are either unnecessary or do not satisfy consumer needs. A more successful business plan actually fails over and over in order for entrepreneurs to learn from their mistakes and make incremental changes to improve their product. Next, we will look into how lean methodology was first introduced to the business world.
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Where Did Lean Methodology Come From?
The concept of lean business principles first started as Toyota’s Lean Production model being applied to running a business, according to an article from Forbes. The Japanese automaker incorporated this system after World War Two to improve the efficiency of production management. In the book The Lean Startup by Eric Ries, businesses are shown how to improve their productivity while lowering costs and the time spent on bringing a product to market by using lean principles.
This book focuses on teaching entrepreneurs how to continually improve their product line and review their production processes so that everything is optimized and customer feedback is taken into account.
This type of business plan has been embraced by the software and tech industry especially since minor bugs are common problems that pop up in various applications and need immediate fixing. The lean methodology process is also incredibly useful for various aspects of business management. Along with industry and manufacturing fields, lean principles are useful for the Software as a Service (SaaS) field since technology is a major aspect of the idea behind lean methods. Saas tools as well as business intelligence systems are vital for this business methodology to blossom.
The Benefits of Lean Methodology
Some of the biggest benefits of the lean principles include ways to minimize waste in manufacturing and business management. For example, inventory that is not immediately needed for customers is often reduced or completely eliminated. Additionally, processes that have interruptions in flow are often fixed to reduce the wait time. Overproduction is also eliminated and defects are reduced through quality control.
Another waste is related to human potential where certain employees and staff members are not being utilized to match their skills and abilities. Lean principles guide managers to better utilize the potential of their workers and reduce waste in a number of different ways.
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How to Implement Lean Principles in Your Company
If you believe that the lean business plan would work well for your organization, there are a number of steps you will need to take in order to implement lean principles in your company. First, you will want to specify value, according to the Lean Enterprise Institute. Essentially, you need to define what value is to your target customer. Value should involve solving a customer’s problem at a certain time and at a specific price.
The next step is to define the production stream and all the actions needed to bring a product to market. This part involves the actions surrounding problem-solving, information management, and physical transformation of the product life cycle. Additionally, you will need to find all waste in your current production stream and remove it.
The third step involves flow and making sure all processes related to the value of product manufacturing move smoothly. Reducing manufacturing time and eliminating all potential obstacles is key for improving the production flow.
The fourth step requires your company to have consumers pull products when necessary in order to ensure a sales forecast is no longer needed. The final step is solely to go back to the first step in order to ensure your product is at its best and your company continually improves its management processes. Continual reduction of mistakes, waste, space, upfront costs, and time is necessary to successfully implement the lean methods. This will ensure customers receive the type of products they need.
Many of the principles in lean methodology have correlated to the agile manifesto commonly used among software developers. Agile development is key for rapid software development that is based on various lean principles. Since agile software development is focused on fast delivery, it uses lean principles based on managing flow, receiving feedback from customers, and continually improving the product. In addition, agile methodologies as well as lean principles offer a variety of practices for streamlining everyday processes. The agile manifesto and its 12 principles are described in detail below.
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The Agile Manifesto and Agile Methodologies
The agile manifesto helps entrepreneurs improve their software development by prioritizing individuals and interactions over tools, responding to weaknesses over sticking to a plan, and customer collaboration over negotiating contracts.
Agile methodologies include factors such as accommodating changes at any point in the development cycle, little bureaucracy and administration overseeing product design, time of development measured in weeks instead of months, little upfront design, ongoing consumer involvement/feedback, and complete buy-in among investors.
There are also 12 key principles behind the agile manifesto, according to the Agile Alliance. These are outlined below.
1) The first principle includes keeping customers satisfied through early software delivery.
2) Next, a major principle is to welcome changes at any point in the product development life cycle.
3) The third principle involves delivering software rather frequently ranging from every few weeks to every few months.
4) Developers and business managers need to work together every day throughout the project timeline.
5) You need to provide the support and proper environment needed for ambitious and motivated individuals to continue the product development life cycle.
6) You will have to take part in face-to-face communication for a more effective way of conveying information.
7) Another important part is measuring progress through working software.
8) Software developers must maintain a constant workflow continually to produce sustainable development.
9) Entrepreneurs will have to pay attention to superior design and technical excellence.
10) You’ll need to keep the production/design processes simple and straightforward.
11) Self-organized teams produce better software products and designs.
12) Spending time reflecting on ways to improve product development activities and adjusting processes accordingly is also important.
These 12 principles behind the agile manifesto play a major role in how business entrepreneurs can implement lean methodologies in order to improve work processes and product design. With a greater focus on customer feedback and making continual changes and improvements to a product, business owners and managers can run their company more successfully and obtain a greater profit.
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Software Tools Will Help Your Company Implement Agile Management and Lean Principles
The right software systems and tools can make a big impact on helping you implement lean business practices as well as agile management. Runrun.it software, for example, will allow for you to implement agile principles such as working with developers on a daily basis to keep the workflow moving through the project’s life cycle.
This type of software includes workflow and task management features that will allow you to continually improve and change your product design as well as work with team members to set face-to-face meetings. Best of all, the software allows you to create a more self-organized teams with important deadlines, work tracking, and project management dashboards.
You will be able to track your timeline for delivering products more frequently with these new tools. Runrun.it has a time tracking functionality that will ensure your work processes are more agile and follow key agile methodologies due to tracking your project development and assignment distribution in real time. In addition, this system can help your team brainstorm ways to complete projects in more effective ways. This type of project management software will provide the perfect environment and support for your team to succeed. Additionally, you can try out a free trial of this software by clicking here: http://runrun.it