What It Really Means for Businesses to be Lean in 2016
In the spirit of just about everyone’s New Year’s resolutions, let’s talk about getting lean. No, we’re not talking about renewing that gym membership; we’re talking about your company getting lean. In the context of business, lean can be a scary word. It has a connotation of cutbacks and layoffs, and that’s a frightening road to go down no matter where you sit on the org chart.
So if we aren’t talking budget-slashing and uncomfortable conversations, what are we talking about when we talk about getting lean? It’s time to clear up the misconceptions and start looking at the opportunities that going “lean” can create for your business.
Lean is creating value, not reducing investment.
According to the Lean Enterprise Institute, lean means “creating more value for customers with fewer resources.” Still sounds ominous, right? But let’s examine that statement a little deeper. First, a lean strategy focuses on the customer/buyer experience. After all, the customer is the source of all money (hopefully)! You can’t get more out of your resources if those resources don’t have a revenue-generating impact on the customer.
Second, “fewer resources” can mean many things. Reallocation of resources is one way to look at it. You don’t have to cut employees to increase value, but you do have to examine where and how to maximize the value of each employee. In addition, creating more value doesn’t mean you can pull money out of the business. It means your investment is paying off. Once again, this is an opportunity to reallocate resources. Which areas of your business could you bolster with some additional cash?
Lean is a growth strategy, not a Band-Aid.
As noted above, lean is about creating value. When you create value, you create opportunities for growth. Too often we think of businesses as “getting lean” only when they are in dire straits; like “lean” is a Band-Aid meant to stop the bleeding. It’s accompanied by massive layoffs and severe downsizing. There’s nothing growth-oriented about it. That’s not what a true lean strategy should set out to accomplish.
Lean is a process, not an event.
Implementing an effective lean strategy takes time. You need to evaluate resources over time to determine their current and potential value. You need to research and implement additional resources like tools and technology that can help bring even more value to the process. You need to think about management structure and oversight. Then, of course, there needs to be constant re-evaluation of every change you’ve just initiated. You won’t “achieve” lean out of the gate, and you’ll always be evolving your strategy based on any number of inside and outside influences—what is an effective lean strategy one quarter may not be the next.
Now that we know what it really means to be lean, how would these changes play in specific departments and functional areas (Operations, IT and Sales, specifically), and what resources are available to help you implement and manage lean strategies? Over the next few weeks, we’ll help you answer these questions here on the Cincom Blog, so stay tuned!