‘Lean’ vs. Traditional Business

5 years ago

Many of our Sage One customers are just starting out on their business journey. Starting or growing a business, whether it deals with technology or is a high street grocery business, has always been a hit-or-miss proposition. Even when you are up and running you live in conditions of high uncertainty.

Traditional advice will tell you to stick to a familiar approach: write a business plan, pitch it to an investor or get a loan, assemble a team, introduce your product, and start selling. However, unless you are lucky, somewhere along the line you are very likely to suffer a setback.

Recently, these rigid traditional rules for managing growth have been challenged by a simple new approach which goes back to the basics of the scientific method – hypothesise, test and amend. It is known as ‘Lean Methodology’ – favouring experimentation over either intuition or lengthy research, and iterative building over traditional up-front development of your product or service.

At the moment lean methodology is still not mainstream in much of the business world but has grown in popularity due to to global success of ‘The Lean Startup’ book by Eric Ries and other similar titles. But lean practices are succeeding in helping small businesses by encouraging them to play to their strength: embracing their agility or ability to adapt to keep their product relevant to their chosen customers. Ambitious businesses of all kinds and sizes are attempting to improve their chances of success by following its principles of failing fast, and learning.

3 Lean Principles

As a mini-introduction to the lean methodology, consider the following three key principles of the lean approach and how introducing them could help your business.

1. Plan Less: Act More: Rather than engaging in months of planning and research, accept that all you have are a series of hypotheses which need to be constantly tested for relevance. So instead of writing an intricate business plan, summarise your hypotheses in a loose illustration of how your company creates value for itself and its customers.

2. Feel the Feedback: A lean business will use customer feedback to test their hypotheses, all the time. They go out and ask potential users, purchasers and partners for feedback on all elements of the business model, including product features, pricing, and affordable customer acquisition strategies.

The emphasis is on nimbleness and speed: focus strictly on producing your minimum viable product. Then, using customer feedback to revise any assumptions, you start the cycle over again, testing redesigned offerings and making further small adjustments (iterations) or more substantial ones (pivots) to ideas that aren’t working.

3. Tweak and Tinker: Lean companies practise something called agile development. Agile development works hand in hand with customer feedback. Unlike typically long and overly considered product development cycles that assume knowledge of customers problems and needs, agile development eliminates wasted time and resources by developing the product incrementally, and only in accordance with feedback.

Applying the logic behind these principles at the early stages of your business to all your activities can help ensure that you don’t waste resources engaging in the wrong activities or developments at the wrong time. The lean methodology constantly reminds business owners where the core value of their business lies.