The lean startup: How to stay lean when your company takes off

The Lean Startup concept, developed by Eric Reis roughly two years ago, has been embraced by the startup community. And though I think it’s the best and most consistent framework available for entrepreneurs to methodically evaluate their ventures, what happens when you get a product into the market that customers actually want and your business starts to grow? Does the “lean” focus end there?

So far, there isn’t enough data to show what happens next. But I would bet that as soon as sales, marketing, HR, IT, help-desk and other departments in your company start to grow, most of the lean principles that guided you during the startup phase will be diluted, and may even vanish completely.

Can lean scale up? A lean startup should strive to follow the path to becoming a lean organization by using its founding DNA to focus building a lean culture. By embracing leanness as an organizational and cultural philosophy, and incorporating principles beyond those found in the Lean Startup model, you can ensure continuous value as you grow beyond the startup mode into a successful business.

What it means to be lean

The Lean Startup model shares some conceptual tenets with the Lean philosophy adopted by Toyota in its manufacturing operations, and which has been employed frequently in software application development. The focus on adding value, simplifying processes, working in small batches, removing waste, the build/measure/learn concept and asking the “five whys” are shared by the Lean manufacturing model. However, for the most part, that’s where the similarities end.

The Lean approach used by Toyota encompasses far more than these basic — and fundamental — concepts, and many of its principles can be extended throughout the startup’s life and woven into its cultural and organizational fabric. In Reis’s “Lean Startup” book, he states: “Lean Startups, when they grow up, are well positioned to develop operational excellence based on lean principles.”

I couldn’t agree more, but there’s a big gap between being “well positioned” and ready. How can a Lean Startup close this gap, and ensure that the new company is built to deliver continuous innovation and value? By considering the following tools and methods.

Use these tools to move beyond the basics

The lean philosophy emphasizes an endless journey of organizational learning. My advice as a lean practitioner and entrepreneur is that any entrepreneur should learn about the following ideas and tools as soon as their company starts to grow, and adapt them to the company’s specific situation.

Here are some of the tools that, once embraced and implemented, can help a Lean Startup become a lean organization:.

Value Stream Mapping:  This is a method that creates a big picture of all processes occurring during the various steps of a company’s relationship with its customers. The goal is to map material and information flow through the process and measure both waste and value-added timing. It’s a fundamental tool for identifying bottlenecks and sources of waste.

The 5S’s: A set of five very simple workspace organization principles that, unfortunately, many organizations tend to ignore. They focus on promoting visual order, organization, cleanliness and standardization:

• Sort: The first step in making a workspace clean and organized.
• Set In Order: Organize, identify and arrange everything in a work area.
• Shine: Regular cleaning and maintenance.
• Standardize: Make it easy to maintain; simplify and standardize.
• Sustain: Continue what has been accomplished.

Visual Displays & Controls: This is the use of visual displays for quick recognition of the information being communicated within the organization, in order to increase efficiency and clarity. They include the following:

• Andons: Signboards with embedded alerts, crucial to quality control systems.
• Kanbans: Visual and physical signaling system that ties together the JIT (just-in-time) production.

Continuous Improvement and Planning: These fundamental processes and rituals are crucial to a lean organization, as they allow the company to create consensus among all stakeholders about optimization needs, solutions and goals. They include:

• PDCA (plan-do-check-act): An iterative four-step management method used to control and optimize a process. PDCAs are a great way to formalize the “build-measure-learn” iterations of a Lean Startup.
• Kaizen: Practices and rituals designed to involve stakeholders in the discussion of issues, to find solutions and to create changes in the processes to ensure the issues do not occur again.
• A3 Management: A simple-to-understand mechanism for fostering deep thinking, thorough analysis, a problem-solving attitude and follow-up action. A3 eases consensus-building and paves the way for the quick and easy implementation of changes. It’s applicable to all areas of the business, including HR, finance, IT, help-desk, production and others.
• Hoshin Kanri: A method that helps the organization to focus on a shared goal, to communicate the goal to its leaders and Involve  leaders in planning to achieve the goal, and to hold participants accountable for achieving their part of the plan.

Seem daunting? This is just the beginning. There are a host of other processes and tools in the lean toolkit. But remember — the path to lean is a journey, not a quick fix. The principles outlined above, and the others that comprise the lean arsenal, should be implemented methodically and in a way that makes sense for each individual company.

Take it from someone who’s been there: once you start implementing lean principles in your own company and begin reaping the rewards, you’ll want to continue down the path toward becoming a fully lean organization.

Make lean your philosophy

The Lean Startup approach is great, but it’s also relatively new as a concept and lacks data to support its effectiveness. For this reason it has yet to produce a true juggernaut of a success story. As more and more startups using the Lean Startup approach become successful companies, the question of which organizational process is best to employ will become increasingly important. Eric Reis points the way toward embracing additional principles in “The Lean Startup:”

As a successful startup makes the transition to an established company, it will be well poised to develop the kind of culture of disciplined execution that characterizes the world’s best firms, such as Toyota.

The word “culture” is key here. Above all, lean is a philosophy wrapped around a big set of processes and tools. It’s not just a set of guidelines to optimize a company’s operation, but a way of thinking that needs to be woven into every aspect of the organization. By embracing lean principles and introducing the processes and techniques I’ve listed here, startups can ensure that they continue to deliver value and eliminate waste as they scale into viable, successful companies.

Marcio Cyrillo is head of mobile services and senior business manager at Ci&T, a software product engineering company that delivers application services using lean principles and agile methodologies. He also is a member of the Ci&T Entrepreneurship Program, from which he launched the program’s first mobile app, runens, in early 2011. As a result of his success developing runens, Cyrillo now serves as a mentor to Brazil-based Ipanema Games, a mobile gaming start-up.

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