LEAN won't grow your business

LEAN: It is important but it won’t grow your business.

I see a lot of emphasis these days on LEAN and productivity activities pitched as what is needed for business and industry to grow their markets and opportunities.
LEAN and the associated activities are important and relevant methodologies which almost  every business can benefit from and can be applied in every part of a business. However,I do not believe LEAN can grow your business, unless your business is in the business of selling LEAN.

That is, LEAN focuses on waste reduction, productivity improvements, efficiency gains, improves transparency and communication; it is an approach which helps and aids a business operation to run more effectively. 

There are many LEAN practitioners who can help you access government funding in the name of LEAN and will come into your business and implement a standardised tool-kit, provide you a standardised findings report and move onto the next client….”Ka-ching Ka-ching

Business growth, is achieved through a company’s products or services either by:
- penetrating its existing markets further
- breaking into adjacent markets with its current offering
- expanding its current offering with something new to either penetrate the existing market or move into adjacent markets. 

Hence, growth comes from INNOVATION and not LEAN.

Growth, defined as “The process of increasing in amount, value, or importance” (Ref: Oxford Dictionary). In the context of a business, it is easy to comprehend that Growth is associated with increasing the market share, capability and profitable revenue.

LEAN, defined by SAI Global as “an approach to reduce waste and streamline operations. Lean is based on the concept of continually increasing the proportion of value added activity to a business through ongoing waste elimination. A Lean approach provides companies with the tools to survive the demand for higher quality, faster production time and lower prices in a global market.” (Ref: SAI Global )

I have defined innovation previously as any “activity which adds value”. This must not be confused with the term “value add” as used within the definition of LEAN. The term “value add” is used to define the actions within a process which are contributing value to the final product as apposed to those actions with the process that do not contribute value to the final product, also referred to as waste.
This brings me back to my opening point; Why is there such a strong push or emphasis on LEAN? 

I can think of three plausible reasons for this:
1. LEAN is identified as a means to reduce cost and improve profitability? 

2. LEAN is confused or assumed to be what is needed to grow your business?

3. It’s quicker and easier to implement improvement and measure the associated cost reductions compared to implementing growth initiatives.
From my experience, LEAN offers the greatest impact when a business operates in a healthy market and may also have a strong or healthy market position along with a good revenue line in the P&L. This is usually underpinned with a sound or robust strategy and supporting business plan.

LEAN has a significantly lesser impact on your business when it doesn’t have a strong market position or have a vulnerable revenue line. If your business doesn’t have a future focused strategy, a business plan and an innovation pipeline, then LEAN principles won’t solve your fundamental issues.

The Wrap Up.

LEAN does have its place and offers “real” cost saving outcomes and good practices for businesses which have a healthy revenue in a sustainable market.

In most cases LEAN will not save your business. This can only be achieved through innovation and conducting and implementing relevant strategies delivered through business plans.

The challenge for every leader is to really understand your business and what it needs. 

If you need help with designing your business strategies or identifying innovation opportunities to deliver growth, contact me at ANBA Solutions.

What do you think?

Andrew Baldacchino
Director - ANBA Pty Ltd

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Andrew Baldacchino, applies his industry experience and world class practises in simple, logical and effective ways to help businesses and their people to develop innovative solutions and implement strategies to improve sustainability and brand value in the market place.

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