Lean Start-Ups: are they possible?

The short answer is “Yes” it is possible to start Lean and stay Lean. Here’s how:

It is important to keep it simple and stay organised. This can be achieved by adopting Lean 5S principles, which is a system to reduce waste and optimise productivity through maintaining an orderly workplace and using visual cues.

This includes making sure anyone can find anything quickly and easily. Keep things simple and visual – can people easily see at a glance what’s OK and what isn’t?

Focus on the following main three business areas:

• Sales – getting the work in / engaging with the customer
• Operations – getting the work done / delivering
• Finance – managing the cash, funding the growth

Employees should be made aware of how they fit into the company structure and what their contribution needs to be to make the business run smoothly, effectively and efficiently.

To achieve this:
• Write down each role and give it a name or a description
• Write down the main purpose of the role and exactly how its provides value to the customer
• Outline “what a good job looks like” – the best way / tricks of the trade, and pitfalls to avoid

Next draw up a grid with the roles along one side and people’s names along the other. For each job show with an R who is Responsible, with a D who Deputises, and with an A who Assists so employees know at a glance what their duties are.

Regular communication is key. For at least one hour each week talk about what’s going well, what’s not going well and what ideas you have to make things better.

By consensus, pick one improvement idea that is easiest to implement, has the highest impact and is affordable. Agree who will make it happen, and when, and get on with it.

Hire slowly, fire quickly. Be clear about values, expectations, Do’s and Don’ts. With new staff, have a one-to-one review for 15 minutes each day, then one hour per week, then one hour per month.

Make a conscious decision to retain or part company at the end of the first day, the first week, the first month. If it isn’t working in the first month, it probably never will. Let people take risks, make mistakes and fail, but expect them to learn and not to repeat their mistakes.

Do the absolute minimum required to add value for the customer – everything else is waste. Keep it simple, keep it electronic, and automate it.

Store data in only one place, share it and organise it so that anyone can easily find what they need.

Seriously consider scalable, cloud-based “pay as you go” systems. Use non-proprietary open systems where you can.

Similarly, do the absolute minimum that you need to do with a new product or process to see if it works. This is what Silicon Valley entrepreneur Eric Ries calls the MVP – the Minimum Viable Prototype.

Experiment quickly, fail early, learn as you go and keep on learning.

The key to Lean is the improvement cycle Plan-Do-Check-Act. In a start-up the most important thing is to get along the learning curve as quickly as you can.

Therefore, you need to cycle through these stages as quickly as you can. You’ll need some sort of plan to start with, but also be prepared to be flexible. This is because the reality is likely to be different from your original plan, so you have to learn as you go.

Have a tight control on costs by keeping fixed overheads to a minimum, outsourcing non-core tasks, “paying as you go” and avoiding long-term tie-ins.

Continually question the reasoning behind any action plan. Always ask yourself ‘does this add value for our customer’, ‘does it make us more profitable’, and ‘does it make things easier for us?’

Manage the cash every day, without fail. This can be easily one by using a simple spreadsheet.

The Lean process is all about keeping it simple, focusing on what matters, learning quickly what works and having the courage to ditch what doesn’t.

Do we all have to fail before we can succeed?

The value of going Lean is easy to quantify: in forensically examining a firm that is experiencing problems, Lean experts can identify what is going wrong and suggest solutions for the workforce to put in place.

But what if it is a new company, that doesn’t yet need a solution?

At a recent summit from the Lean Enterprise Academy, Lean guru Jim Womack summed it up like this: “Is it possible for an organisation to start up Lean from Day One, or must an organisation grow until it becomes inefficient, and only then learn from its mistakes?”

This challenge helps us re-examine the Lean principles we use every day at Nicholson Consultancy and realise their value as independent tactics that are transferrable to a number of situations.

We might think that the simple answer is to learn from other people’s mistakes, but current thinking is that Lean is situational – we can transfer the skills, but we need to tailor our approach for each organisation and each unique set of circumstances.

The question of where Lean fits into a business strategy mirrors various conversations I’ve had recently with friends and colleagues who are business owners and entrepreneurs.

We’ve all made many mistakes over the years and most of us would like to think that we wouldn’t repeat them. But how do you get it right until you’ve had the experience of trying it and getting it wrong?

The challenge is to create a business that is Right First Time – and having done that to keep it on track so that it never needs major work. Of course, there will always be improvements to be made because the manufacturing landscape changes so often, but an appreciation of Lean strategies can be a solid foundation to build on.

This is an interesting approach that many Lean practitioners and their potential clients will have missed out on. Let’s get the message across that Lean is not only a repair option, it can also be one of the first things on the list when a new business is being planned.

Maybe we don’t have all the answers and maybe we can’t get everything perfectly right from Day One, but surely there’s more than enough experience and accumulated knowledge out there now to at least aim for “More Right than Wrong, Most of the Time!”

Not the snappiest of slogans, but maybe it’s what we should be aiming for.

Business Growth Service (England)

On Friday 5 December, the UK Government announced the launch of the Business Growth Service which integrates the existing GrowthAccelerator and Manufacturing Advisory Service (MAS) programmes, along with the Intellectual Property Office Intellectual Property (IP) Audits and the Design Council Design Mentoring.

The Business Growth Service will make it easier for businesses with the potential, capability and capacity to improve and grow to access expert advice and support. Depending on the support they need, businesses will also be introduced by the Business Growth Service to experts from other Government services including UK Trade & Investment, UK Enterprise Fund, Innovate UK and local growth hubs.

Further details will be announced in the next few days but the following are important changes to names, brands and websites:

1. Introduction of new name and brand: Today the Government will make a formal announcement about our new brand name and look. As we move towards the full transition in April next year, this new brand will be used alongside our old brands in our marketing collateral. Next week you will receive further guidance about available marketing collateral.

2. New website address: As of today both the MAS and GrowthAccelerator websites have closed. The new website homepage is www.greatbusiness.gov.uk/businessgrowthservice and individual services have been relocated to www.greatbusiness.gov.uk/ga and www.greatbusiness.gov.uk/mas

Factory fortnight? I think we need it!

The annual closure of factories across Britain always arouses some interesting debate.

Do we all need the break, is it good for strategy planning… or is it an anachronism past its sell-by date?

Bearing in mind the latest manufacturing figures, maybe the timing this year has been a good thing.

A burst of energy in the three months leading up to July dragged us back into a positive figure – but well below what we needed and the headlines were all about bad news and how the smiling service sector was overshadowing gloomy manufacturing.

So maybe we should call a time-out. Take a deep breath, refocus, re-energise and crank up the country’s production lines to grab back the headlines and reclaim our place at the controls of the manufacturing powerhouse.

It’s a marathon, not a sprint, but this isn’t the Commonwealth Games. We’re not working hard month after month for one medal ceremony.

Our companies have their final dash for the line every day. They reach their performance peak and then have to do it again the next day. And again. And again.

It’s been a frenetic time – an exhausting and demanding responsibility for tens of thousands of workers.

So my advice would be: take that time out, use it wisely and then be prepared to rewrite the headlines when you’re back on the factory floor.

Manufacturing growth continues to drive economy

Figures released by the Office for National Statistics have given the UK manufacturing industry cause for optimism.

It has been revealed that factories far exceeded growth expectations for the month of February as the recovery continued to gather pace.

Manufacturing output expanded by 1 percent, its third consecutive monthly rise and its largest increase since last September.

Overall industrial production rose 0.9 percent and saw almost every sub-sector grow.

The strong performance provided hope for those who have been concerned that a recovery led by household spending would be unsustainable.

George Buckley, UK economist at Deutsche Bank, said: “Were industrial production to remain flat in March, then output would be around 1 percent higher in the first quarter than the previous quarter. This in turn, would be the best quarterly performance of the sector since spring 2010.”

Samuel Tombs, of Capital Economics, added that the figures “provide reassurance that the economic recovery has remained strong and broad-based.”

Andrew Nicholson, Managing Director of business improvement consultants Nicholson Consultancy, commented: “We’re seeing a definite upturn with most of our manufacturing clients – in fact, we’re currently helping three UK manufacturers to cope with unprecedented levels of customer demand.

“Successful manufacturers are adopting the principles of Value-Driven Manufacturing – they’re using Lean principles not just to drive down costs but to get closer to their customers and to add more and more value to their overall offering. And in some sectors customers are actively seeking to bring back to the UK products that were previously outsourced to low-wage economies.

“From the point of view of the UK economy we still need to drive up levels of investment and exports but so far the signs are very encouraging”.