Can Lean Transformation Thrive in Small Businesses? Expert Opinions
Lean transformation presents an opportunity for a fundamental shift in how your business operates. While some might interpret it as a buzzword, our following examples show that lean transformation can enhance your business’s operational efficiency and reduce costs, ultimately delivering more value to your customers.
However, the path is not as smooth as it sounds.
A whopping 70% of transformation efforts end up unsuccessful. Why these numbers are so high?
The answer: the word transformation seems to scare people off. Indeed, when the topic of transformation is raised, it’s natural to have initial thoughts around questions like, “How might this impact my team’s positions?” or “Is this another undertaking I must support, and what are the potential advantages for my department?“
In enterprises, transformation is often associated with slow, long-term projects that don’t adapt well to changes, don’t test things thoroughly, and require a lot of resources before showing any real business benefits. But today, we are here to answer the question: Can small and medium-sized businesses break free from this cycle? We asked several experts from different industries to help us answer this question.
Stick around while we unpack the concept of lean transformation and its best practices that you can already start implementing in your business today!
Understanding lean transformation
In its essence, Lean Transformation is a holistic approach that aims to improve an organization’s entire value chain. It doesn’t discriminate between manufacturing, logistics, or service delivery; it aims to optimize processes across the board.
The primary objective?
To maximize customer value while minimizing waste. Think of it as a question: How can you offer better products and services in shorter timeframes and at a lower cost?
The lean transformation concept originates in the Toyota Production System (TPS), which ingeniously used lean manufacturing principles to eliminate wasteful practices and boost operational efficiency.
To address these issues, they made several changes:
- Reduced Inventory: They reduced the amount of raw materials and work-in-progress inventory, allowing them to free up valuable floor space and reduce carrying costs.
- Improved Workflow: The company reorganized the production line to minimize unnecessary handling of materials and streamline the workflow, ensuring that each piece of furniture moved smoothly from one station to the next.
- Preventive Maintenance: They implemented a rigorous maintenance program for their machinery, reducing equipment breakdowns and downtime.
After implementing these changes, Toyota has significantly improved its production efficiency. Following the successful implementation, the question arises: Can the same principles be applied to smaller-scale businesses? Absolutely, they can!
Industry professionals from small to medium-sized businesses across different fields have shared their opinions about lean transformation in their practices.
Cyrus Partow, CEO of ShipTheDeal
Early in our lean journey, an inventory reduction initiative significantly decreased holding costs, improving our bottom line. This positive outcome was a turning point, further driving our commitment to lean principles.
The following section will explore how this methodology applies to smaller-scale businesses.
Lean transformation and SMBs
While conducting this research, I have reached a conclusion: if you run a small business, the significance of lean transformation is even more profound. Lean Transformation is not just a choice; it’s necessary for those aiming to stay ahead in today’s dynamic and challenging market.
Jon Morgan, CEO of Venture smarter
As for small businesses, absolutely, lean transformation can thrive! In fact, the principles of lean methodology, focusing on eliminating waste and optimizing efficiency, are often more impactful in smaller setups. The key is to tailor the approach according to the specific needs and scale of the business. Small businesses can be nimblers in adopting changes, making them ideal candidates for successful lean transformations.
The critical point is that while Lean is a universal methodology, its successful implementation requires tailoring to each business’s specific context and scale. Failure to do so might result in the opposite effect.
Why so often does lean transformation fail?
In short, traditional business structures can’t handle today’s challenges.
As we’ve seen already, two-thirds of companies that consider implementing lean methodology fail. This significant number invites us to learn why this happens so often and what we can consider while considering our company strategy changes.
Lack of innovation
To stay competitive in a global economy, continuous innovation is essential. This also includes leadership, adaptation, and eliminating excess inventory and unnecessary tasks, which conserves resources and reduces costs, making the business more competitive.
Parker Gilbert, CEO of numeric.io
Implementing lean methodology is not a one-size-fits-all proposition. One challenge we faced was resistance to change, particularly among team members accustomed to traditional methods. As Lean insists, there was also the challenge of defining value from the customer’s perspective. We strategized by starting small—a pilot program, if you will, within one department. The concept was to incubate lean principles in a controlled environment, monitor the outcomes, and then scale those principles horizontally across the organization.
Customers, as we know, now hold more influence primarily due to information accessibility, consumer choice, social media, and online reviews, so businesses must focus on them. Companies that do implement such a strategy see success in lean transformation.
A successful implementation delivers products or services that are better, cheaper, faster, smaller, more personalized, and more convenient.
Cultural resistance
One more factor contributing to the failure of lean transformations is their gradual nature, which is in line with the reality that cultural shifts generally take time to materialize.
Tracy Kennedy, COO of Tasmania.com
The initial challenge was cultural resistance. Lean methodology fundamentally changes how tasks are approached, and there was initial resistance from team members accustomed to old methods. To tackle this, we implemented a phased approach, beginning with smaller teams and scaling upward as each became comfortable.
To stay competitive in a global economy, continuous innovation is essential. This also includes leadership, adaptation, and eliminating excess inventory and unnecessary tasks, which conserves resources and reduces costs, making the business more competitive.
Lean methodology, with its focus on efficiency, waste reduction, and continuous improvement, represents a significant departure from traditional business methods. Providing comprehensive training and educational resources can help team members better understand Lean and its potential impact.
One more factor contributing to the failure of Agile transformations is their gradual nature, which aligns with the reality that cultural shifts generally take time to materialize.
Shawn Plummer, CEO of The Annuity Expert
Managing Employee Resistance: Addressing employee resistance and ensuring their buy-in was crucial. We achieved this through effective change management and training.
Also, remember to engage team members in the process of lean implementation. Celebrating small wins and successes related to lean implementation can go a long way. That said, addressing cultural resistance requires effective communication from leadership, which leads me to the next point.
Uncommitted leadership
Lean transformations often fail due to insufficient leadership commitment, resistance to change, inadequate training, unrealistic expectations, and a lack of sustained improvement efforts.
Jon Morgan from Venture Smarter highlights the need to recognize people’s role in change and the importance of clear communication for successful transformation: “Implementing lean methodology at Venture Smarter was indeed a transformative journey. One of the significant challenges we faced was resistance to change. People tend to get comfortable with their existing processes, and convincing them to embrace a leaner approach was tough.“
Wayne Mills, Head of Operations at Seven Seas Worldwide
One crucial challenge we at Seven Seas Worldwide faced while implementing lean methodology was measuring and tracking progress. It is important to be able to measure and track progress when implementing lean methodology. This allows you to identify areas where you are making progress and areas where you need to improve. However, measuring and tracking progress in a service-based industry, such as international shipping, can be difficult. To overcome this challenge, we developed several key performance indicators like shipping time, accuracy, customer satisfaction, and costs to measure our progress, and we have been improving ever since.
Resistance from employees can arise when significant changes are introduced, such as implementing new processes, technologies, or restructuring. This adaptation showcases the flexibility of Lean principles, as they can be customized to suit different industries and business models.
Example of a Lean Principles in practice
Based on what we’ve learned about lean transformation, here is an example of a journey in a SaaS company that involves a series of best practices to optimize processes and deliver greater value to customers.
Here’s how the transition process might look:
- Start with Value Stream Mapping: Analyze the entire software development process, from the initial feature conception to release. Identify bottlenecks, delays, and unnecessary handoffs that create waste.
- Reduce Work in Progress (WIP): Implement a “pull” system that limits the number of concurrent development tasks based on team capacity. This practice reduces strain on developers and minimizes the amount of unfinished work, enhancing efficiency.
- Continuous Integration and Deployment (CI/CD): Embrace CI/CD pipelines to automate testing and deployment processes. This automation expedites feature releases, enabling faster delivery to customers.
- Customer Feedback Loops: Establish clear feedback channels with customers to align new features with their needs. Regular communication with customers reduces the risk of building unwanted functionality and ensures product relevance.
- Cross-Functional Teams: Foster collaboration between development and quality assurance teams. Cross-functional teams accelerate issue resolution and improve time to market for new features, enhancing overall efficiency.
- Kaizen (Continuous Improvement): Hold regular retrospectives and improvement meetings to make incremental enhancements to your company’s processes. Continuously strive for improvement and adapt to changing circumstances.
Once these lean principles are applied, expect to achieve the following results:
- Reduced Churn: Actively listening to customer feedback and delivering relevant features will lead to a reduction in customer churn, increasing customer satisfaction and loyalty.
- Faster Feature Delivery: Streamlined development processes, CI/CD pipelines, and reduced WIP will result in quicker feature releases. This accelerated delivery enhances your company’s competitive edge in the market.
- Cost Efficiency: Operational efficiency improvements will lead to reduced costs and better resource allocation, contributing to overall cost efficiency.
- Higher Employee Morale: Cross-functional teams and continuous improvement practices will empower your employees and boost their engagement and motivation. A motivated workforce is more likely to contribute to the company’s success and innovation.
Andrew Griffith, Founder at Garden Furniture
In a small interior design company focusing on furniture and gardens, one key way to implement lean transformation is to adopt a “just-in-time” (JIT) inventory system. This means ordering materials and products only as they are needed for production, reducing excess inventory and associated costs.
Summary
Follow the simple rule of lean transformation: If it doesn’t bring value to your customer, it’s simply waste. This simple yet powerful idea should be the guiding light of your Lean journey, the lens through which you can view and make every decision.
Firstly, adopting a customer-centric approach by providing personalized services and products enhances customer satisfaction and loyalty. The principles of continuous improvement and employee engagement further contribute to productivity and quality. Cost efficiency is achieved by identifying and eliminating sources of waste and organizing the workplace for efficiency and safety. Lastly, embracing a value-driven purpose allows businesses in any industry to achieve sustainable growth, as it aligns the organization with its customers’ needs and fosters long-term success.
In pursuing best lean transformation practices, it’s crucial to have the right tools that align with your goals.
Teamhood provides a platform that enables organizations to adopt a customer-centric approach. Teamhood’s value-driven purpose resonates with the lean transformation philosophy, as it encourages organizations to align with their customers’ needs and foster long-term success. Make Teamhood your companion in your journey towards lean transformation.
2019 - Present Marketing specialist
Innovative content marketeer with MSc in International Communication, Mindaugas brings fresh ideas and inspiration about project management and beyond.
