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What Is Lean Management? Definition and Benefits

Lean management has become a universal management tool for delivering value and optimizing workflows. Learn what the Lean methodology and its benefits are.

You have probably heard of the Lean management concept and its growing popularity in the business world. But don’t worry if you didn’t. In the next few paragraphs, you will get familiar with the Lean methodology.

Actually, there is no surprise that Lean management is now widespread across industries. Thanks to its core values and positive impact on companies’ overall performance, the Lean concept appears to be a universal management tool.

You can apply the concept of Lean in any business or production process, from manufacturing to marketing and software development.

The Lean methodology relies on 3 very simple ideas:

  1. deliver value from your customer’s perspective
  2. eliminate waste (things that don’t bring value to the end product)
  3. continuous improvement

So now, when you know the core idea, let’s dig deeper and get to know the basic principles of Lean management and where it comes from.

What is Lean Management, and How Did It Start?

Before you start with the basic Lean principles, you need to realize that the Lean methodology is about continuously improving work processes, purposes, and people.

Instead of holding total control of work processes and keeping the spotlight, Lean management encourages shared responsibility and shared leadership.

This is why the two main pillars of the Lean methodology are:

  • Respect for people
  • Continuous improvements

lean pillars"The Lean Pillars"

After all, a good idea or initiative can be born at any level of the hierarchy, and Lean trusts the people who are doing the job to say how it should be done.

Currently, Lean management is a concept that is widely adopted across various industries. However, it has actually derived from the Toyota Production System, established around 70 years ago.

The Birth of Lean

In the late 1940s, when Toyota put the foundations of Lean manufacturing, they aimed to reduce processes that don’t bring value to the end product.

By doing so, they succeeded in achieving significant improvements in productivity, efficiency, cycle time, and cost-efficiency.

Thanks to this notable impact, Lean thinking has spread across many industries and evolved to 5 basic Lean management principles as described by the Lean Management Institute.

Indeed, the term Lean was made up by John Krafcik (currently CEO of Google’s self-driving car project Waymo) in his 1988 article “Triumph of the Lean Production System”.

Lean software development

In 2003, Mary and Tom Poppendieck published their book “Lean software development: an Agile Toolkit”. The book describes how you can apply the initial principles of the Lean methodology to software development.

At the end of the day, Lean software development comes down to 7 principles. In the beginning, it didn’t gain popularity, but a few years later, it became one of the most popular software development methods.

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The Lean Startup (What is Lean in Business?)

Eric Ries, an engineer and serial entrepreneur developed a methodology based on the Lean principles to help startups succeed. In 2011, he packed his ideas in a book called “The Lean Startup”. The concept consists of 5 basic principles that aim to help startups be more flexible and responsive to changes.

From a business point of view, Lean's is to shorten product development cycles and rapidly discover if a given business concept is viable. This methodology is also employed by government structures, marketing professionals, and others.

As you can see, Lean management was not created in a moment. Instead, it is evolving gradually, thanks to many observations and people's desire for continuous improvement.

So, let’s get to the basic principles of Lean management.

The 5 Basic Lean Principles (How to Create a Lean System?)

principles-lean-management1. Identify Value

What does every company strive to do? To offer a product/service that a customer is ready to pay for. To do so, a company needs to add value defined by its customers’ needs.

The value lies in the problem you are trying to solve for the customer. More specifically, in the part of the solution that your customer is actively willing to pay. Any other activity or process that doesn’t bring value to the end product is considered waste.

So you first need to identify the value you want to deliver and then proceed to the next step.

2. Value Stream Mapping

This is the point where you literally need to map the workflow of your company. It has to include all actions and people involved in delivering the end product to the customer. By doing so, you will be able to identify what parts of the process bring no value.

Applying the Lean principle of value stream mapping will show you where value is being generated and in what proportion different parts of the process do or do not produce value.

When you have your value stream mapped, it will be much easier for you to see which processes are owned by what teams and who is responsible for measuring, evaluating, and improving that process. This big-picture will enable you to detect the steps that don’t bring value and eliminate them.

3. Create Continuous Workflow

After you mastered your value stream, you need to make sure that each team's workflow remains smooth. Keep in mind that it may take a while.

Developing a product/service will often include cross-functional teamwork. Bottlenecks and interruptions may appear at any time. However, by breaking up work into smaller batches and visualizing the workflow, you can easily detect and remove process roadblocks.

4. Create a Pull System

Having a stable workflow guarantees that your teams can deliver work tasks much faster with less effort. However, in order to secure a stable workflow, make sure to create a pull system when it comes to the Lean methodology.

In such a system, the work is pulled only if there is a demand for it. This lets you optimize resources’ capacity and deliver products/services only if there is an actual need.

Let’s take a restaurant, for example. You go there and order a pizza. The baker pulls your order and starts making your pizza. He doesn’t prepare tons of dishes in advance because there isn’t actual demand, and these tons of dishes can turn into a waste of resources.

5. Continuous Improvement

After going through all previous steps, you already built your Lean management system. However, don’t forget to pay attention to this last step, probably the most important one.

Remember, your system is not isolated and static. Problems may occur at any of the previous steps. This is why you need to make sure that employees on every level are involved in continuously improving the process.

There are different techniques to encourage continuous improvement. For example, every team may have a daily stand-up meeting to discuss what has been done, what needs to be done, and possible obstacles—an easy way to process improvements daily.

Benefits of Lean Management

The growing popularity of the Lean principles comes from the fact that they actually focus on improving every aspect of a work process and involve all levels of a company’s hierarchy.

There are a few major advantages that managers can benefit from.

  • Focus. By applying the Lean methodology, you will be able to reduce waste activities. Therefore, your workforce will be focused on activities that bring value.
  • Improving productivity & efficiency. When employees are focused on delivering value, they will be more productive and efficient because they won’t be distracted by unclear tasks.
  • Smarter process (pull system). By establishing a pull system, you will able to deliver work only if there is actual demand. This leads to the next one.
  • Better use of resources. When your production is based on actual demand, you will be able to use only as many resources as needed.

As a result, your company (team) will be much more flexible and able to respond to consumers' requirements much faster. In the end, Lean management principles will let you create a stable production system (Lean system) with a higher chance of improving overall performance.

In Summary

Lean management is more like a guide for building a stable organization that evolves constantly and helps to identify actual problems and remove them.

  • The main purpose of Lean management is creating value to the customer by optimizing resources.
  • Lean management principles aims to create a stable workflow based on actual customer’s demand.
  • Continuous improvement is a major part of Lean management, ensuring that every employee is involved in the process of improving.

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