Discussion about the phenomenon of a lean business model, its basics, and its benefits.
What is a Lean Business Model?
“The concept of a lean business model is misunderstood by many people, when in fact the basics are very simple. If you stop to think about it for even a second, a person who is lean has no fat, no excess. Lean meat also has no fat, or at least very little, so fillet steak, for instance, is almost fat-free whereas other parts of the animal have a lot of fat. Partly this will depend on the feed that the animal has had and how much exercise”, says Business Astrologer Hirav Shah.
“When it comes to businesses, lean means almost the same. There are some articles that you can read about it that use terminology which actually makes you wonder exactly what it is that they are talking about, but in essence, a lean process is one in which the business maximizes customer value while at the same time minimizing waste. Think about the vegetable, the leek. If you go into the average greengrocer, you will only be able to buy a leek with a large part of green at the top.”
“The leek is preferred to be white, and lower down it will be, and that is the part that you cook and eat, not the part at the top which is where the leaves are hard and dark. So you pay for the leek as it is, take it home, and promptly cut off and throw away the top part which is perhaps a quarter of the weight and for which you paid good money! If you are a good gardener, you will compost the top part so that at least it is not totally wasted. The same thing applies to many other vegetables if you think about it: you peel off the skin of potatoes, carrots, parsnips, and so on, and the outer leaves of lettuces and cauliflowers, all of which you pay for and then throw away.”
Hirav Shah adds, “Lean is the part that you want, and the only part that you want. And that is the perfect way to run a business process: eliminating all waste and reducing the production line to the most perfect way that it can run. Or if you are providing a service, such as accountancy, ensuring that all your staff is operating at peak level with no time wasted.”
“Lean has been described as not a cost reduction program or a tactic, but a way of thinking and acting for an entire business. In fact, the term lean thinking was coined by Jim Womack and Dan Jones of the Massachusetts Institute of Technology in their book of the same name in the late 1980s when they used it to describe the performance of the Toyota Motor Company.”
Hirav Shah further explains that, “Another view of lean says that it is the process of introducing changes in an organization with the objective of maximizing the flow of value for the customer: as a result, wasteful activities are reduced or eliminated, but this is simply a by-product of improving customer value and should not be regarded as an end in itself. This is different from simply removing random waste supervisors, managers and teams in their work area, without focusing on the flow of value to the customer. Focusing on value flow provides razor-sharp direction. In other words, any improvement activity that does not remove obstacles to flow may itself be wasteful.”
What is the idea behind a Lean Business Model?
“If you wish to transform your business into a lean model you need to be certain that you have explained to your management team and staff exactly what it is that you are going to do and why. Nothing is going to change unless your managers and team adopt a new mental approach that will transform the way that they work.”
“In fact, it has been said that in lean transformation everyone is a leader and that to some extent every team member must be allowed to make decisions, even if they are not major ones, without having to ask a supervisor for specific permissions. If you think about it, this makes sense, because it offers every team member the opportunity to contribute to the overall plan and produce a better result at the end of the day.”
“What you do need in order to make a lean transformation is a consultant who knows all of the steps that are needed to make sure that you are and stay on the right track and maximize your progress.”
The lean business model offers a series of benefits to businesses of all sizes in both the short term and long term.
- Improved leadership skills
- Engaged employees
- Continuous growth
- Puts customers first
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 organization the power to think lean is an important attribute. A switch to a less lean way of doing things can deliver immediate and measurable results across a range of KPIs quicker than you think.
Concluding the discussion, Hirav Shah says, “You’re free from the more established structures and processes that large organizations function in, within a lean framework. There’s less of the time-draining bureaucracy those kinds of businesses deal with, as a result. In its place are more direct contact, less lengthy planning horizons, and an ability to respond to opportunities more readily without any fuss.
Lean, after all, is not about reinventing the wheel, it is about promoting effective yet simple working practices at every level of the business, and at every stage of the process.”
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