What is a Lean Strategy and How Can it Benefit Your Business in 2023?



With a recession in sight, many businesses are looking at ways to cut costs and maintain margins while still delivering the same value to customers.

Recession or not, our goal should be to maximize the effectiveness of our business.

Are you looking to improve the efficiency and culture of your business? If so, stick with me in this post.

I will cover what lean strategy is and the key factors for its successful implementation. By the end, you’ll better understand what a lean strategy can do for your business.

If you are ready, let’s get going!

What is a Lean strategy?

The first step is defining what Lean Strategy means.

A lean strategy is a business approach that aims to optimize efficiency, reduce waste, and improve organizational workflow to deliver more value to customers. 

It is based on the principles of lean manufacturing, which was originally developed in the automotive industry as a way to streamline production and eliminate waste. 

In the 1980s, Toyota’s production system, which was based on lean principles, became widely known and studied, and lean principles have since been applied in various industries beyond manufacturing.

The core principles of lean strategy are based on the idea that organizations should strive to create value for customers by identifying and eliminating waste in all business areas. 

Waste, in this context, refers to any activity that does not add value from the customer’s perspective. 

If you want to know more about lean waste, I put together an amazing guide. You should check it out!

The last thing to mention about lean strategy is that businesses need to walk the walk. It’s all well and good to say we are a “lean business”, but the proof is in the pudding.

It can be extremely frustrating for your Lean champions to try and implement new things if they are not listened to or supported.

What are the 7 lean principles?

Now that we know what lean strategy and waste are, we need to define the building blocks of the whole strategy so we can implement them.

Womack and Jones originally defined 5 principles, but further work, especially around technological start-ups, has increased the count to 7.

These are the 7 key principles we need to ensure as part of our lean strategy to ensure its effectiveness:

  1. Identify value: The first principle of lean is to identify value from the customer’s perspective. This involves understanding what customers value and are willing to pay for. This is extremely important to identify ourselves as unicorns in our industry and to move away from commoditized services or products.
  1. Map the value stream: The second principle of lean is to map the value stream, which refers to the activities required to create value for the customer. So we first identify what customers are willing to pay for, then we break down into steps how to deliver that. This includes everything from raw materials to the final product or service. By mapping the value stream, a company can identify areas of waste and inefficiency and work to eliminate those to streamline the process.
  1. Create flow: The third principle of lean is to create flow in the value stream. This involves ensuring that each process step is completed as efficiently and effectively as possible, with minimal delays or disruptions. This can be achieved in different ways, and there are a lot of lean techniques we can use, like implementing just-in-time or kanban.
  1. Establish pull: The fourth principle of lean is to establish pull in the value stream. This involves setting up systems and processes that allow the customer to “pull” products or services through the value stream as needed rather than pushing products through the system whether or not there is demand. 
  1. Continuous improvement: The fifth principle of lean is pursuing perfection by repeating the steps above continuously. New technologies and methodologies can be used to enhance our work further. Marginal gains can be really powerful, and I always like to give the example of the British cycling team. First, I like to prove that lean concepts don’t only apply to manufacturing; second, they reap the rewards after committing to the process for a long time.
  1. Respect for people: The sixth principle of lean is respect for people, which means treating all people with dignity and respect. In a lean organization, everyone is encouraged to contribute ideas and participate in continuous improvement efforts.
  1. Create knowledge: The seventh principle of lean is to create knowledge by continuously learning and improving. This involves constantly seeking new knowledge and learning from both successes and failures. It also involves sharing knowledge and best practices within the organization to continually improve processes and eliminate waste.

Even the principles themselves follow the “flow” principle!

These principles allow us, the change leaders, to have a clear pathway to deliver the lean strategy.

How to implement the Lean principles in an organization?

Now that we know what the 7 principles are, we can then look at the company’s overall strategy and what’s required to embed the principles into it.

Normally, an organization would at least have a mission, vision, and core values that are then cascaded down to the rest of the employees.

This allows senior and middle management to make decisions based on those.

Now, If an organization decides to pursue a Lean strategy, we need to embed the principles into it.

How do we do it? Let me elaborate.

The mission is the alma mater of the company, it’s the reason for its existence, and the strategy must be the catalyst that allows us to fulfill that mission.

To incorporate a lean strategy, we must be honest and evaluate what’s working and not at the top level.

This means we must analyze how we operate and define our strengths, weaknesses, threats, and opportunities (normally known as SWOT analysis).

The main purpose of this analysis is to define what gaps we have at the core of the business. We are looking at how we operate before we analyze how our managers implement the strategy in their teams.

Once we know what can be done better, we can look at what cultural changes are required to introduce the Lean strategy. 

At this stage, the organization should understand its reason for being and its current, accurate situation (through the SWOT analysis).

This work is what’s required to understand if:

  1. The company is providing value as intended.
  2. The organization needs to focus on areas to deliver more value.

If you recall from our previous section, these 2 points link quite well with the first 2 principles.

First, we identify if the original assumptions on value are correct, then we evaluate the company’s current status at a high level so that we can lead our value-stream-map transformation effort efficiently.

This allows founders, CEOs, or managing directors to create a deliberate strategy for change with the 2 first principles embedded in the traditional strategy structure.

The commitment from the most senior members of the organization is key to the success of the lean strategy implementation, and as we saw, it all starts at the top.

Now that we have a new strategy focused on creating value, we can ensure the information flows downstream, ensuring senior and middle managers focus on the value stream of their respective departments.

The information flow gets us to the third principle of the lean strategy. A strong internal communication flow will allow us to implement changes with less resistance, especially if people understand “the why” behind each decision.

At this stage, I would suggest getting input from as many employees as possible to improve the value stream continually.

Involving the workforce in the change is the other key step to ensure the success of the lean strategy. We need to work with people and bring them on the journey.

We have embedded 3 principles in this last step:

  1. Involving people shows our respect for them and our willingness to make them a part of the transformational effort. (Principle 6)
  2. By continuously reviewing the value stream, we understand what works and doesn’t. (Principle 5)
  3. We identify key talent and members in our business to move to higher positions and create a solid knowledge base (Principle 7)

If you haven’t seen it yet, the strategic approach is pyramidal. Let me summarize it with the following graph.

Before you go…

Many organizations pursue lower costs to affect the bottom line and increase margins. In this article, I wanted to show how the focus should be on value creation rather than costs to drive growth in the organization.

If you liked this article, you would love my mega guide on lean waste.

Let me know what you think in the comments section below. Do you think you can implement the principles in your organization? If not, what’s preventing you from doing so?

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