Operational Excellence
Lean Start-up today are associated with innovative business models such as Uber and Amazon. This achievement has made many business owners question: How to realize such creations? How do they manage risk with a growth rate of more than 3% per year?
This article will help readers to see through the cause of that miraculous growth. Know how to learn and apply the strengths of this method. From there, find a new market, a blue ocean, or crush rivals like Uber and Grab do with traditional taxis?
With Business Startup, customers are the center of the universe.
We always have the slogan “The customer is king”. But have we built our entire business to create value and satisfy customers? Or just pleasing the boss? Have we spent billions developing a product line or product feature that customers don’t buy?
In 2005, Steve Blank first introduced in his book about customer discovery process – a platform of Lean Startup. The goal is to understand and be aware of customer problems as soon as possible in the product – service development cycle. Including the steps:
Step 1. Discover customers: Test assumptions about the problems customers are having. Are they interested in the new solution and the way we do business based on it?
Step 2. Customer confirmation: Test the viability of the business model through a funnel of customer acquisition and transformation – a proven formula. Discover and verify customers blended together in Business Model.
Step 3. Create customers: The process of replicating customers, creating demand and attracting customers about the company’s distribution channels.
Step 4. Develop systems and processes to standardize the company’s operations.
In the process, you see important words such as Lean Manufacturing – testing,validation, etc. – similar to Lean Manufacturing from Toyota. Since then, lean manufacturing and Steve Blank’s customer discovery perspectives have become the foundation for Lean startups.
The main principles of Lean method
Factors for customers to spend money
Lean’s main principle lies in eliminating all waste. And wait to focus all resources on value creation – what customers agree to pay for:
– Quality: What solves the needs and problems they are facing.
– Progress: At the right time they need.
– Quantity: Exactly the amount they need.
The foundation of Lean’s system
The lean system is also based on Deming’s problem-solving and continual improvement of PDCA:
– Plan: Understanding the situation and the problem. Find the root cause, develop a solution, plan action as an assumption.
– Do: Deploy the test, a scientific experiment to verify the assumption in the Plan step.
– Check: Measure, check the results of the test.
– Adjust: Adjust to come up with a new solution, keep trying and learning.
Lean Start-up is based on Deming’s 4 key elements: Plan – Do – Check – Adjust.
With this method, we are able to solve problems in the most scientific way. As a result, businesses adapt to all changes of the external environment like lizards hundreds of millions of years old.
These systematic small tests are also mentioned in a famous book by Jim Collins – Building For Longevity. Long-lived companies fired small bullets to explore the market, minimizing risks before pouring all of their energy into a large bullet.
So what exactly is Lean Startups and how to deploy them?
In the book Lean Start-up – Eric Ries briefly introduces and optimizes the product development process, to know if the new business model is really feasible. The method includes loops and continuous development:
– Idea: Observe and constantly ask why to understand customers’ problems and solutions for them.
– Building Minimum Viable Product (MVP): A new product with a minimum function but enough to receive feedback from customers. The goal is to pay as little as possible, and learn as quickly as possible, as much as possible.
– Measure: Measure important indicators, support to make decisions and take action afterwards. This is also a point many businesses stumble upon when measuring KPIs that do not help with decision making.
– Learning: This is the biggest difference between Lean Startup and conventional business models. Lessons are most important because they are integrated into the next product development and testing rounds.
– The above steps are repeated until the Hinge Point – Pivot point. When businesses have to make decisions based on indicators of action is to continue to grow or redirect.
Lean Entrepreneurship is a constantly evolving loop
This method helps limit the resources for a product or service to know whether the market accepts it or not. For example: Toothbrush products do not need to use hands within 1 year, with a budget of 1 billion. If that fails, we will just lose the limited resources available, and motivate the development team to take advantage of all the creativity and resources they have.
Does Lean Startups work for B2B businesses?
Frequently asked questions: Lean Startups are often applied to technology businesses, e-commerce with Big Data, Artificial Intelligence. So B2B businesses – businesses with customers are businesses What about small businesses?
My answer surprised many people: It is even more amazing because there is less one layer of “translator”.
E-commerce models have a large amount of raw data about user behavior such as views, clicks, likes, etc.They then use algorithms or artificial intelligence to convert this data into information. to make a decision. In the B2B model, we build a personal relationship with our customers. Therefore, you can consult them directly about products and services.
One method we often use to better understand customers’ issues and needs is called Focus Group Discussion. When we have a small group of customers (3 or more) we can do it. Customers are grouped with common characteristics, experience of testing the company’s products and interviewed by qualified people.
With open-ended questions: “How do you feel about this feature of the product?”. Instead of the guiding question, “Do you like the features of this product?” The interviewer will continue to ask based on the answer to better understand the customer experience. What we normally don’t know if we only rely on raw data like likes or stars.
How Does Lean Save the Depression of Enterprises?
The stage of a business “soon blossoming”
In How The Mighty Fall, Jim Collins mentioned the reasons the company once grew up, there are mainly 5 stages that we have seen in the booming businesses for a while:
– Phase 1: Pride after success
– Phase 2: Expanding undisciplined, spreading investment into areas without competitive advantage
– Phase 3: Denying the dangers
– Phase 4: Try to save
– Stage 5: Get out of the game and disappear
Lean application in each stage
By integrating Lean in every cell of the business, we can completely avoid these falling steps:
1. A business that values learning and customer service never becomes arrogant. Customers are always demanding more than what we currently meet.
2. We still have too many problems to solve. New products and services are tests. New customers and markets are the most accurate and fair judges.
3. We always encapsulate size and risk within a set framework, with specific measures.
4. When an idea is not accepted by the market, we have pre-determined milestones to let it go peacefully.
5. Always be humble, balanced and flexible.
We will take advantage of the lessons of Lean Start-up to both have persistent resistance, both agile and flexible to adapt to the changing pace of the times.
To answer these questions, you can find more articles about Lean at opexvn.com. Or contact OPEX for specific advice on the case of your business.
Business is our brainchild. It experienced many joys and sorrows together It appears in the dream every night and is the alarm bell every morning. If you give it a few dozen percent more chances to live, grow and last, do you take another step?
OPEX Consulting – Operational Excellence Your Business
