The 5 Lean Principles work for any business (Part 1)

Five principles govern the process of Lean thinking. Defined by Womack and Jones, these principles look simple as written, but together act as the intricate foundation of continuous improvement by way of driving constant change.

But change for the sake of change isn’t the name of the game.

The 5 Lean principles are intended to govern how a business “thinks” about what it does, who it serves, and why it exists. And through this, drive new behaviors that change the mindsets inside that business, leading to operating for better results.

Steven Covey has this to say about Principles: “a principle is a natural law like gravity. It’s different than a value. Values are subjective; principles are objective. Gravity… if you drop something, gravity controls. If I don’t tell you the truth, you won’t trust me-that’s a natural law. If I tell you the truth consistently and try to live it and apologize when I don’t and try to get back on track, then I’m living a natural law-repentance, making improvements, showing change.”

A common misuse of the Lean principles occurs when they are translated into manufacturing terminology and thought to apply only to the production processes in a factory. This leaves a huge portion of the business to function with a different set of principles. That’s like instructing the offense to always use game film and stats for preparation and the defensive to stick to drill repetition only.

The “natural laws” must apply universally across the entire enterprise.

When this is broken, consistency across the organization is lost and leads to confusion among the teams. In business it also confuses the message to the customer.

For example, if the front office takes sales calls and communicates typical queue-and-wait order processing, but the back of the house prioritizes by quantity to optimize machine efficiency, there are different principles at work. This jeopardizes the ability of the business to deliver exceptional value to its customers.

How?

Quoting lead times: pad and hope instead of lock and load

Pricing: cost-plus “guestimates” instead of pricing-to-please

Managing expectations: apologizing for misses instead of up-selling on great performance

These are just a few typical symptoms of disconnected principles across a business.

The 5 Lean principles address the risk of these symptoms. Packaged together and infused throughout all facets of decision making and planning, these principles act together as a strategy for increasing marketability, performance, and profitability.

When applied this way, they are an extremely effective set of natural laws with which to govern a business, shift mindsets, and drive positive change.

By contrast, when split up and deployed individually across different scenarios or departments or product lines, the outcome is confusion, mixed messages, and ultimate breakdown of any improvement or change initiative inside a company — this is why it’s common to hear things like “Lean doesn’t work here”, or “we tried Lean and it’s not really for us”, and one of my favorites, “Lean is good but it doesn’t work for this business…we’re different.”

>> THIS JUST IN! >>

You’re NOT different.

You have customers. You have employees. You sell products, services, and value. You have operating costs. You manage expectations and measure performance.

You run a business.

And the 5 Principles of Lean work for ANY business.

Here’s how.

Principle 1: Know your customer and what he or she values

What’s that mean? Know your customer? Don’t they just place orders and we make it, ship it, bill for it?

Hopefully you’re far more sophisticated than that, as I’m sure you are. But knowing your customers doesn’t just mean figuring out what they’ll order and determining what they’ll pay.

Yes, those are very critical aspects of making a business make money. But that’s what everyone else is already doing. The research is not difficult. Those who don’t even bother will struggle to stay alive, period. But among those who do bother, they are playing in the weeds.

Separate yourself by trying to understand why your customer exists in the first place. What’s his or her purpose? As a business, an organization, or an individual? Knowing the answer to that question will help you to imagine the problems they deal with, the market’s response to their use of your product or service, or their plans for growth that you should be trying to support.

I wrote about this in a previous post about knowing your Customer’s Purpose.

The first Lean principle is the starting point for any kind of improvement or change initiative. Once you understand WHY they buy what you sell, and WHY they chose YOU, you’ll be able to reconstruct your business processes to do nothing other than delivering more (and better versions) of what they truly need.

The price you charge will then become an arrangement between you and them, not a competitive bidding result between you and the other companies fighting for the same business.

I started this article by saying that the 5 Lean principles look simple when written. Here they are:

Principle 1: Know your customer and what he or she values

Principle 2:Define the ways you deliver value to your customer

Principle 3: Remove anything from your process that prevents your ability to deliver the value

Principle 4: Structure your process to supply value at the rate of demand

Principle 5: Continue improving your process until it’s perfect (which means forever)

They look simple, but are anything but.

Improving a business is not simple, but having a guiding set of rules that support your mission make it simpler to stay on track and align your teams to the same goals.

The first principle addresses new thinking about who your business serves and why your business exists.

The other 4 address what your business does and how to improve it, which can only be done effectively after the first principle becomes law. Not until you truly understand who you serve and why, can you begin to change how you do what you do with the goal of better results.

In Part 2 I’ll explain how the next 4 principles can be used as rules for any business to guide its mission, even yours.