“Don’t Try to Be Better, Be Different” 5 Startup Strategies With Richard Lebovitz, CEO of LeanDNA

Yitzi Weiner
Jun 7, 2018 · 8 min read

“If you’re trying to be better than the biggest competitor, it’s almost impossible to win as a start-up. If you really want to compete and grow, you need to focus on being different, not better.”

I had the pleasure of interviewing Richard Lebovitz. He’s the CEO of LeanDNA. For the last 25 years, Richard has been leading manufacturing digital transformations worldwide for supply chains working with some of the largest aerospace and automotive companies in the world.

I originally started in lean manufacturing about 25 years ago with a Japanese firm. I was primarily focused on how systems and physical manufacturing could be improved. With that, I began exploring ways to implement better systems for manufacturing companies. During this time, I founded a company called Factory Logic that built systems to help lean factories become more automated and complement their existing ERP systems. We built this company into the leader for lean manufacturing systems, and won the Shingo Prize.

Ultimately, Factory Logic was acquired by SAP. Following the acquisition, I spent five years working with global manufacturing companies to develop improved systems and analytics to drive reduced inventory and improved delivery performance. It was during this time that I found most companies were spending months or even years developing their own homegrown solutions to solve the exact same problems. Even after 30 years, most manufacturing companies primarily used Excel for their factory analytics

So we started LeanDNA to provide an out-of-the-box solution that can do much more at a faster pace. Since then, LeanDNA has grown from just a couple of employees to over 25 and we work with some of the largest aerospace and manufacturing companies in the world.

When we first started the company, we changed offices several times in the first 12–15 months. At one point we had to leave a space abruptly because the owner sold the building. For a short time after that, a friend and fellow CEO offered to let us office in the same space as his company’s sales team.

When we got there the first day, the first thing we noticed is that it was a large room with glass walls so everyone could see us, like we were zoo animals! The second thing we noticed after about an hour is that our new office mates were extremely loud.

So our lead engineer was trying to write code to finish out the product and I was trying to talk to other CEOs on the phone — all with a bullpen full of caustic salespeople yelling in our ears. If all that wasn’t enough, I remember being on the phone with an executive when I heard plink, plink, plink behind me. I turned around to see a couple of salespeople playing ping pong about 15 feet away. Needless to say, we didn’t stay in that space long.

LeanDNA brings together three unique worlds. One is the world of manufacturing, the industrial side. We understand lean factories and the strategies that make them work. The second world is innovative analytics solutions, and the third is combining all of that with SaaS and the cloud. We’ve found that a lot of companies are able to do one or two, but we’re the only one that brings all three together.

That puts us in a unique position. We’re the only company in the world providing these kinds of sophisticated applications for manufacturing. The needs are often overlooked by developers who are more focused on social media apps, mobile apps, big data, etc. But we’ve found a real need in the world of manufacturing — the need for better data that drives better decision making. And they need a single solution that equips them to improve their inventories and eliminate waste.

What we do may not seem sexy on the outside, but our solution generates measurable results for manufacturing systems, which are historically an important part of what makes countries strong.

One exciting area we’re working on is improving cross-site analytics to make it easier for companies to identify opportunities for improvement. We’ve found that as we optimize individual sites and then connect them to others within the same company, there’s a network effect. In a value sense, one plus one doesn’t equal two; it equals three. As we connect more and more sites, the company not only gets the improvement of the single site, but more improvements through the sharing of information between multiple sites.

The most successful companies will have a few metrics they use to drive and align the entire business. At LeanDNA, we align our metrics to our customers’ success. We treat every customer as they are only customers, and we measure our success by helping them to achieve their business goals, not just how good our sales numbers look. It’s always difficult to pick only a few measurable things to drive the whole company, but it’s important to align them with delivering value to your customers and hold your employees accountable to that standard.

For me it’s Rony Kahan, the founder and chairman of Indeed. He and I have known each other for many years. He was focused more on business-to-consumer applications, which are designed to be easy to use and require no training. In fact, customers expect to just log into a web application and use it with the first five or ten seconds. On the other hand, I was in an industry that required two or three months of training for almost anything.

A few years ago I commented to him that we were really good at training because it only took three or four weeks, and he asked me why we needed to train people at all. He said that if you have a good, intuitive product, you shouldn’t need to train. His comment got me thinking about the need to build a product so simple that people can log in, use it, and immediately see the value.

If you look at other enterprise systems, there’s a big focus on training and onboarding, but LeanDNA is driving a new approach: How do we get our clients using our system with no training? So we rethought our product and how it was used. Users don’t have to go through training to use their everyday Web apps — why not give that a try with data analytics? So we’ve attempted to apply Indeed’s simple approach to an enterprise platform and it’s been a revolutionary concept in our space.

I’ve had the opportunity to travel to developing countries and help turn around businesses that support local communities. Many were close to laying off large portions of their workforce, or maybe even closing. But getting to work with them step-by-step to improve their business practices through lean has really had an impact. I’ve seen jobs created and businesses turned around, which is exciting for everyone involved. I am excited to do this for a living!

There are a lot of misunderstandings about what Lean is. Many people think it’s about eliminating people’s jobs, but this is not the case. Lean is about adopting a different way of thinking in order to deliver higher quality products at lower cost with faster delivery. It’s about delivering more efficiency and competitiveness which will in turn grown market share and develop healthier companies.

  1. Strong Attention to Detail — As the CEO, you don’t want to do every job and you don’t even have to be an expert at every job, but it’s really helpful to understand the different roles in the business. The responsibility is theirs to run with, but understanding their roles helps the CEO understand what makes the company successful.
  2. Set Clear Objectives Week-By-Week — There have been times when we’ve gone after huge goals without thinking about the daily steps it takes to get there. It’s important to have long-term goals and short-term steps to drive results.
  3. Don’t Try to Be Better. Be Different. — If you’re trying to be better than the biggest competitor, it’s almost impossible to win as a start-up. If you really want to compete and grow, you need to focus on being different, not better.
  4. Choose Your Board Carefully — When people are raising cash for their businesses, I often hear things like, “It’s more about the people than the money.” But in many cases they just focus on the money or valuation. It’s important to have investors who are aligned with your goals and share a common passion to change the world.
  5. Watch Your Pennies — I’ve seen many CEOs who raise a lot of money but don’t pay attention to the nickels and dimes. You need to to treat the money you raise as if it were your own. This will also keep you focused on generating revenue which means you’re delivering value to happy customers.There’s nothing more important than revenue. As soon as you lose site of watching the dollars, it’s easy to not only burn cash but lose sight of what’s critical for any healthy business, which is revenue and customers.

I’ve always liked this one: “Set tough goals and be a good coach.” I’ve lived by this in my career as well as in my personal life, with my own kids. Help people set clear goals, understand how they’re struggling to reach them, and be a good coach along the way. It’s one of the things I did with consulting — helping people see how they can improve and coaching them to reach their goals. That’s how you can best help people achieve their full potential.

The best way to make radical change is to set radical goals that make people rethink the way they’re doing things.

Elon Musk would be cool! Not only is he doing interesting things, but he’s taking things that have been unchanged for so long and completely changing them. Things like electric cars and reusable spacecraft. It would be interesting to learn about his culture and how he rallies people behind such innovative things where people have been struggling for so long.

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