Category Archives: Current in Entrepreneurship

Create a Continuous Innovation Machine

How to Engage Everyone to Create a “Continuous Innovation Machine”

by Jim Morgan
January 12, 2021

The Lean Product and Process Development (LPPD) system comprehensively and uniquely combines the three elements of innovation — people, processes, and tools — to create new products and services in concert with the value streams for delivering them to customers. In contrast, traditional development methods create new products and services in functional silos or rely on a “lone-genius approach,” according to Jim Morgan, an engineering PhD, a former product development executive at Ford, and most recently COO of electric vehicle startup Rivian.

In a presentation to hundreds of engineers at a Fortune 100 manufacturer, Morgan, who now is the senior advisor for product and process development at the nonprofit Lean Enterprise Institute, explained which of the three elements – people, processes, or tools – he believes is paramount and why. (The following excerpt from the talk was edited for length.)

Among the three critical and interdependent elements of new product and service development — people, processes, and tools, I’ve always felt strongly by far that the most important part is people. I’ll always take the right team over any technology. And I agree with Pixar Co-founder Ed Catmull’s quote, “If you give a good idea to a mediocre team, they will screw it up. If you give a mediocre idea to a brilliant team, they will either fix it or throw it away and come up with something better.”

So, what I want to talk about today is this idea of “people first” because Lean Product and Process Development (LPPD) is not a “lone genius” model of product development. LPPD is about engaging everyone in the entire enterprise and building people’s capabilities to create a continuous innovation machine.You have to create an environment where people feel safe to surface “red” issues. But the next part is: What’s your plan to get to green? People must know that it’s okay to be red, but it’s not okay to stay red.

Product development is not an engineering thing; it’s an enterprise thing that requires engagement with people in manufacturing, supply chain, marketing, etc. The whole organization must collaborate in a way that very few other activities require. Engaging everyone in the enterprise is a very unique perspective that LPPD has. It doesn’t view new product and service development in isolation. LPPD thinks about the entire value stream, meaning everyone involved in all the steps required to bring value to the customer.

A lot of organizations talk about people being most important; it’s what they do about it that counts. And it starts with hiring. One bad hire can wreck a team, so it’s important to put a lot of energy and effort into the people that you hire, that you bring into the team. It’s not just about hiring the most talented or people with the best grade point averages, who went to whatever school you happen to favor, it’s about fit. It’s about whether someone is a  fit with the organization, the culture, common values, common perspectives, and the purpose of the organization. As Menlo Innovations CEO and Co-founder Rich Sheridan, says, “It’s nearly impossible to figure that out by looking at a resume.”

You need to take time in the way you bring people on board. And then once they’re hired, you have to continue to invest in people. And there’s no organization I know that’s better at that than Toyota. And I think the quote by Mike Massaki, former president of the Toyota Technical Center, is just awesome: “We develop people and product simultaneously.”

So, this idea of developing people is at the core of the way they think about their work. It’s not an extracurricular thing like sending you for college-credit courses. It’s focused on mentoring; on how do you learn from your work assignments? My personal bias is that you can go to school to study engineering, but you learn how to be an engineer at work. And if you really value people, you have to lead like you value people. In this regard, I had a tremendous experience working with Alan Mulally when he was CEO of Ford.

Management by Table-Pounding

I experienced Ford before he got there and after he got there. The difference was dramatic. In fact, I was one of the people who felt that what could just changing a CEO do to a 300,000-person organization? I mean, it’s still just one person. And then I found out. The kind of impact that he had on people’s lives was just incredible. His approach to leadership inspired us to do and be more than we ever thought we could.

You can hear him describe in his own words his approach to leadership and the role of senior leaders in a lean product and process transformation in a podcast I did with him.

I asked him what does “people first” mean because he talked about it all the time. He said it’s code for “I love you as a person and everyone’s included.” That attitude was also a big change at Ford.

His saying of “One Ford” was not just a slogan. There are lots of companies now putting “one” in front of their names to get people to work together across the company. But for us, it was the way we went about doing our work every day. He told his leadership to take fear and intimidation out of their toolboxes because it was no longer a part of the way we were going to work. That was a big change at Ford because table-pounding, fear, and intimidation were big parts of the way people got things done there at the time.

There’s a great story in American Icon: Alan Mulally and the Fight to Save Ford Motor Company about Ford executive team meetings where all the key indicators were always green, yet the company was going out of business. Finally, an executive marked an indicator red, and it was transformative. The lesson is that you have to create an environment that’s safe, where people feel safe to surface red issues. But the next part is: What’s your plan to get to green? So, people must know that it’s okay to be red, but it’s not okay to stay red.

Courtesy of UK’s Lean.org

Disciplined Entrepreneurship, Lean Startup & the BMC

Startup is a word that gets tossed around a lot and its definition takes on many forms. It’s a state of mind, a disruptive business, a new budding venture, and many other things. Yet there are no set of rules to the game, no magic recipe for success, nor scientific approaches, in spite of all the thousands of books and gurus that address this topic.

Growth vs Scalability – Typical brick and mortar businesses usually aim for steady revenue. They think about the best ways to get and maximize profit. To grow, they have to hire new people and get new resources, which makes the growth stable and linear. You’ll rarely see exponential growth in their case.

The startup approach is a bit different. Most startups rely on building technology products. This means that growth is not proportional to the number of employees or physical resources. Scalability is almost always top-of-mind, that’s why everyone dreams of becoming a unicorn in the startup world.

These differences make startup building a rather adventurous and unsuccessful activity. Luckily, in the past decade, frameworks that are more tailored for startup’s specific needs, have emerged. The most popular ones are:

  • Business Model Canvas (2010) created by Alexander Osterwalder and Yves Pigneur (the BMC).
  • Lean Startup (2011), Steve Blank’s “Customer Development Model” and Eric Ries agile based on lean manufacturing.
  • Disciplined Entrepreneurship (2013), developed by Bill Aulet based on his experience nurturing startups out of MIT for more than 9 years.

Steve Blank wrote the book Four Steps to the Epiphany establishing the customer interaction for evidenced-based design and used the Osterwalder BMC as his tool. Eric Ries was in his first class at UC Berkeley.  The percentage of startups failing still goes as high as 90%. Is it because of existing flaws in these methodologies or just human nature? Unlike religions, there is little room for one startup bible. And Marius found out that blindly following only one of these methodologies creates exposure to their flaws and increases the risk of fragility.

The Business Model Canvas is a chart that allows you to create a more visual representation of what the business should look like. It maps out key features, the product design, and, once completed, it tells you the exact key points that you need to address when building your company.  The same products, services or technologies can fail or succeed depending on the business model you choose. Exploring the possibilities is critical to finding a successful business model. Settling on first ideas risks the possibility of missing potential that can only be discovered by prototyping and testing different alternatives.

Lean Startup is a methodology that encourages you to always ask and never assume. To push forward your minimum viable product, to test things and adjust as required, and to keep your user at the center of it all. The Build—Measure—Learn (Agile) feedback loop is a core component of this framework. It emphasizes more on having the right attitude and mentality, rather than what steps need taking.  “The ability to learn faster from customers is the essential competitive advantage that startups must possess.”

Disciplined Entrepreneurship is a structured approach that guides the starting entrepreneur through specific actions that need to be taken before jumping into developing the product or service. This methodology shows how innovation-driven entrepreneurship can be broken down into discreet behaviors and processes which can be taught in just 24 steps.

The methodology introduces to the startup world useful concepts such as beachhead markets, personas, high-level product specifications, quantifying value, decision-making units, and many more. They are not only presented in an easy to understand way but are linked with the author’s experience as a serial entrepreneur and highly adapted to tech innovation. DE evolved from MIT entrepreneurship is probably more suited for engineering concepts.

The combined approach

Start planning your journey by using the Business Model Canvas or the Lean Canvas. Understand your destination before anything else, and your motivation (because that is what is going to keep you and your team together on the path when things get hard). A moonshot or North Star is more important than anything. But then what matters are the first steps.

Understand how Lean Startup works, how to start discovering customers. Get out of the building and talk to them, no framework or toolbox is going to replace that. Create the profile of your persona using the structured framework Disciplined Entrepreneurship provides. Get to know your customer. Your “beachhead market”, and your TAM (DE terms). The information that results from following the first steps of this framework is more detailed and provides more insights into user/client needs and it will make it easier for you to work with the Value Proposition Canvas (Osterwalder) or the empathy maps from Ideo, CA design company used by Silicon Valley.

Startups are all about the unknown. And flexibility. And testing. There is no one right formula for becoming successful and any entrepreneur looking to start an innovation-driven enterprise should know in advance that fixating on one tool to solve all problems is rarely the answer. You wouldn’t leave on an expedition taking only one thing with you (as long as it’s not a spiritual or religious one), so don’t be a blind follower or zealot of any startup trend.

Lean Entrepreneurship Guide

In January 2019 at the Annual USASBE Conference in St. Petersburg FL the Lean Entrepreneurship Guide (or chart) was introduced and each attendee left with a copy of the 6-page, laminated guide:

Shortly after the conference teachers began to use pieces of different lean startup methods in the guide (they are all 14 in the guide) to help students design more successful startup businesses.  It was not much longer that users discovered the final business model was stronger and the business more thriving when two to three methods were combined.  One professor in Tennessee starts with Blank’s lean launch using the BMC, then shifts to the first half or 1 through 13 of Aulet’s DE steps until returning to customer development and interaction.  After DE’s steps 14-24, the class finishes with lean launch and stays with the BMC and customer inputs on a continuous basis.

The Lean Entrepreneurship Chart can be bought for $10 on Amazon using this link, cut and paste (bulk sales are less expensive and brand the institution on them):

https://www.amazon.com/Lean-Entrepreneurship-Guide-Clinton-Day/dp/1423242017.

Thanks to base article by Marius Ursache (founder of Metabeta and Disciplined Entrepreneurship Toolbox November 22, 2020).

What PPP Round 2 Means for Your Small Business

Congress extended the Paycheck Protection Program as part of its economic relief bill finalized on Monday, allocating $284 billion to it. The changes to the PPP are a mixed bag: Some parts of the new bill will set the program back, while others will likely make it more effective. My expectation is that history will judge the program a success and that Congress was right to include a second round in its $900 billion relief package.

The new PPP “second draw” loans are very similar to those under the original plan, passed in March as part of the $1.8 trillion Cares Act. The second round will allow eligible small businesses to take out loans of up to $2 million that can be forgiven — essentially, converted into grants — if businesses meet certain conditions, including attempting to avoid layoffs and wage cuts, and if funds are used on payroll and other variable costs.

There are problems with three aspects of the current version.

First, the bill allows companies to deduct expenses financed by the PPP. For example, a business that paid its electric bill using a grant from the program can deduct the cost of that bill from its taxes. But since the business didn’t pay the expense out of earned revenue, it shouldn’t be deductible.

The second mistake is that eligibility for “second draw” loans is restricted to companies that experienced at least a 25% reduction in gross revenue in one quarter in 2020 relative to the same quarter in 2019. This focuses loans on businesses that have been hardest hit, which many will interpret as a feature, not a bug. But it will also give preference to businesses that are the more likely to fail, making the program less effective by not putting funds to their best use.

Third, the program should do more to help the economy adapt to post-virus realities. Instead, it remains too intent on preserving the pre-virus economy. For full loan forgiveness, businesses still must spend at least 60% of PPP funds on payroll costs. But it would be better if the focus was more on replacing lost revenue, and allowing businesses the flexibility to adapt the size of their workforces to their post-pandemic needs.

The new round of the PPP allows restaurants to receive loans equal to 3.5 times their average monthly payroll costs, while businesses in other industries are restricted to loans of 2.5 times payroll expenses. Restaurants have been hurting, of course. But if consumers are going to want to eat out less in the post-virus economy, the government shouldn’t attempt to interfere by giving restaurants special treatment.

Even given these flaws, extending the Paycheck Protection Program was the right thing to do. My research with economist Glenn Hubbard shows that it supported employment and improved the financial health of eligible business over the spring and summer, with the strength of its positive effects growing over time. We also found some evidence that the program kept businesses from closing their doors. I expect that the new round will have similar effects.

Despite indications that the PPP was working over the spring and summer, the jury is still out on its ultimate success. While the program was widely touted as a way to preserve jobs — a goal it likely met through at least August — it also has two other important objectives.

The first is to preserve the productive capacity of the small-business sector by preventing a wave of pandemic-related bankruptcies. Small businesses possess a lot of knowledge about their neighborhoods and customers, and have valuable relationships not just with employees, but also with suppliers, customers and other local institutions. If these companies were not passing the market test, then losing these networks and this capital would not necessarily be wasteful. But losing it because businesses couldn’t weather a pandemic would be.

The second goal is to quicken the pace of the economic recovery by supporting labor demand as the vaccine is distributed. If the program prevents businesses from permanently closing, then the unemployment rate can come down faster because laid-off workers won’t need to wait for new businesses to form in order to find jobs.

Supporting small businesses has been the right thing to do during the pandemic. But once the vaccine is in wide distribution, the government should not prop up these companies. They will need to sink or swim on their own.

Explorers, Pioneers and Settlers

Who is Pascal Finette?  Chair of Singularity University# CA. –  Blogger under The Heretic. –  Brilliant Thinker   https://su.org.    Editor:  Met him on trip to Silicon Valley on the old Moffitt Field university campus. Told he was in a WWII Navy building no. so and so, I ventured down.  Opening the door, a gentleman across the room said Pascal was over in a corner.  As I approached, a robot swung around and moved toward me.  This live face was a TV screen with a smile and movement on it.  Pascal was working with a graduate student from home on robotics.  After our meeting, he “escorted” me to the door to say goodbye!  Never forgot him.

https://heretic.substack.com/p/explorers-pioneers-and-settlers?utm_campaign=post&utm_medium=email&utm_source=email

2021 USASBE Conference, “Be Boldly Unscripted”

     

 

 

 

 

Today in the 3rd day of the 2021 virtual USASBE Conference we uncovered a diamond in the rough, Tawnya Means from the University of Nebraska College of Business.  She gave a presentation on the Value of Teaching under the Growth Mindset that sparkled.  In 2020 many thing changed  -anything can be taught online, there were advantages to online instruction, things will never go back to they way they were before, and online requires a different toolset.

Learnings were never lecture longer than 20 minutes, require attendance with standards (on camera, in touch, organized), use chat for polls, bring-out the “wallflowers” through chat, support the students, make sure they can interact, and they understand the meaning of every session.  Everyone needs to make connection -student-to-student, teacher-to-student, and most importantly student-to-content. Stay current, do not resist change, and remain open to opportunities in a digital world.  Per the ASU’s 3rd-party tools, there are 5 content creation sites, 12 meaningful video sites, 4 feedback sites, 9 polling sites, 2 proctoring, 2 plagiarsm detection, 4 collaboration, 6 discussion, and 16 miscellaneous function websites.

The concept of “let learn’ means a teacher needs to decide what to teach, where, when and how. In other words the right activity, right space, right time and right way.  The point of technology is to connect, belong, to engage, to support, to humanize, and to learn.  We must be open to constant innovation, experimentation, redesigning courses and the student experience to enhance teaching and learning, creating communities of learners who support and motivation each other.

. From Tawnya Means, Ph.D., Asst Dean, Director Teaching and Learning Center, Professor of

  Practice, Management, College of Business, University of Nebraska-Lincoln, @Tawnya_Means

Lean Innovation Educators Summit Dec. 2020

  

Lean Innovation Educators Summit

The Godfather of Lean Startup, Steve Blank, and his Lean Launch Pad team held their third Lean Innovation Educators Summit on December 16th.  There were over a thousand registrants, 220 institutions and 65 countries represented.  These educators are global, primarily from the U. S., and practitioners of evidenced-based startup planning using Steve’s customer development process.  Timing was to build community and resiliency in these challenging times.  While two prior summits shared best practices and discussed tools to put to work, this gathering was meant to explore how best to succeed in the “new normal” and how to build back better both main street and high tech.

The format was the same as used in earlier summits, key speakers, a keynote interview, and twenty breakout sessions to engage in peer-to-peer sharing.  As a participant, I can say it was the best we’ve had yet.  As example the “big idea” from Columbia President Lee Bollinger’s keynote was a new, fourth purpose to strategic university planning.  To existing research, education, and public service, Bollinger has added a fourth purpose of direct action to impact a better world.  The concept is to partner universities with other major institutions to use science and tech to solve major problems.  A major one is global climate change.

He feels universities have become too remote, too isolated from the real world, and both they and society would benefit from applied academic knowledge.  Part of the process aligns university activities with problems facing society through use of scholarships and other tools to promote direct action.  Besides the climate crisis and clean energy, there is public health front and center now with the COVID-19 pandemic, human rights, marine conservation, and social economic development.  The United Nations has set 17 goals to achieve by 2030 adding food security, good health (involving clean water and sanitation), primary education, gender equality, and the global environment.   In words of Steve Blank, Bollinger’s initiative is a “Big Idea”.

Because the COVID economy dramatically changed business for entrepreneurs, there were new ideas to share and many problems to brainstorm.  While high tech has sustained and grown during the pandemic, Main Street businesses have contracted or shut down.  Part of the reason for this Lean Innovation Educators Summit was to help small business and communities recover.  The lean launch model uses a business model canvas to “iterate” and “pivot” interacting with customers who have changed needs and demands.  Both Pete Newell and Steve Weinstein of BMNT (innovation with engineering students at universities), spoke. Their “Begin Morning Nautical Twilight” (BMNT) organization (Army term) combines bright university students with general grade officers to solve/improve national defense projects.  The basic course, Hacking for Defense or H4D was featured in Entrepreneur www.entrepreneur.com/article/354342.  A sister company, Common Mission, uses a network of international entrepreneurs to create solutions to “the critical challenges of our time from national security to natural disasters”.

One cannot predict topics nor inventive ideas might emerge from the breakout sessions.  A sampling from sessions this year include pre-university training, pros and cons of virtual education (overall it improves mentoring and increases customer development), training prisoners in unfilled jobs, and a bust of the myth distance learning does not work.  While jelling might take longer, the social diversity is broader owing to global students.  Diversified inputs from 65 countries and ideas from So. Africa, Germany, Britain, Spain and Australia made for a rich, “crazy quilt” to quote Dr. Saras Sarasvathy.  Virtual education has required change; more entertainment to keep attention spans, and collaboration has been greatly expanded.  Phil Weilerstein, Venture Well, gave the example of African students participating in an Australian lean launch class.

Zoom has allowed students to interact with funders/VCs, created new solutions to internet access (e.g., colleges boosting wifi into parking lots for underserved communities), enabled mentors and investors to participate, seemed to bring out “wallflowers” more (via chat), and made finding guest speakers easier.  Virtual also re-designed classes increasing the need for planning, started the practice of video lectures ahead of class to give breakrooms and homework discussion more time, and, most importantly, made customer development more impactful.  Quantity and quality of questioning has escalated.

The breakout groups pointed out the role for a good MVP (minimal value product) is more important (needs to be further along), it is meaningful to include more Main Street and less Tech, good to role reverse (students ask questions of teachers), and there is a demand for translations overseas.  One interesting request was for a modified version of the Lean Launch for use at SBDCs (Small Business Development Centers) where classes are shorter, broader based, and currently traditional business planning vs. startup.

Bob Dorf, who co-wrote the Startup Owners Manual with Steve, said he would like to see the group tackle problems accelerated by COVID-19 like homelessness, strive for more diversity in founders (recruit girls), offered the University of Buckingham UK requirement to build a startup to graduate, and gave the example of Ryerson University (Toronto) opening their incubator to everyone (not just students).  By far Dorf’s most personal comment to this writer was to keep in mind when teaching entrepreneurship, we are teaching life skills.  My article in this winter’s NACCE Community College Magazine (below) deals with the importance of entrepreneurship now more than ever.  Trends underway before the pandemic have been accelerated by COVID-19,  chiefly automation of labor (more artificial intelligence of white collar work) and expansion of the Gig Economy as large corporations move to save costs with more independent contractors.   Joblessness has become a large problem, and is only going to get worse.  Entrepreneurship can be a mass solution and needs to be taught at every school and college and used extensively in adult re-skilling programs.  Lean launch has made teaching and learning entrepreneurship possible for anyone.  People need only desire (via Dr. Martin Seligman’s Learned Optimism) to add resilience to overcome challenges during the process.

 

What a Biden Presidency Will Mean for Small Biz

Many anticipate increased support for small businesses under the new administration.

Rumors about President-elect Joe Biden’s policies have been circulating for months. Still, questions remain about how small businesses will fare under the new administration.However, we can look to some of Biden’s broader plans and his past positions for trends likely to impact small business in the next four years.

A Focus on Economic Recovery

“I suspect that he has every intention to grow the economy and assist small business owners,” says Vincent Hutchings, a research professor at the Institute for Social Research at the University of Michigan. “After all, Biden has been supportive of efforts in the House of Representatives to provide a larger stimulus package to Americans. This would, at least according to its supporters, definitely provide relief to small businesses and allow the economy to weather the negative effects of the growing COVID-19 pandemic.”

Ryan Reiffert of the Law Offices of Ryan Reiffert shares a similar upbeat forecast, at least in the immediate future. “In the short-term, my outlook is very positive,” he says. “I think you will see additional stimulus due to COVID, which will help out businesses a lot. However, over the longer term, there may be some headwinds.”

The Effect of Tax Increases

Biden has stated that he will increase taxes on workers earning more than $400,000/year. Since the average small business owner makes just under $70,000 annually, according to PayScale, and 83% make less than $100,000, this increase is not likely to have much of an impact either way.

Biden’s plan to raise the corporate tax rate from 21 percent to 28 percent could negatively impact C corporations. It should not affect sole proprietorships, partnerships, or S-corporations, which are the structures most small businesses fall under.

The Moving Forward Act and What it Could Mean

Biden’s support for this act, which designates $1.5 trillion for infrastructure improvements, means the estimated 700,000 small and medium businesses with ties to the construction industry may see more work coming their way.

Minimum Wage Worries

Although major retailers have already started to increase worker pay above the federal minimum wage, some smaller businesses think instituting a higher minimum wage may put them out of business.

“Many of my small business clients are, in particular, worried about Biden’s commitment to the $15 federal minimum wage,” says Reiffert, who shares that smaller businesses, especially those in rural areas, fear the impact of such a move, which is likely to force them “either to do without or make expensive investments in automation.”

A More Liberal Look at Immigration

Small businesses have been hit hard by President Trump’s anti-immigration efforts, which have created worker shortages in a number of lower-paying industries, such as agriculture and food services. Biden’s proposed immigration policies may provide such businesses some relief by allowing potential workers back into the country.

A Positive Outlook

While there are many unknowns in the month and years ahead, Sean Nguyen, director of Internet Advisor, says he anticipates strong support for small businesses under a Biden presidency.

“Small businesses will be fine, and they are likely to receive financial aid in the first half of 2021, as the pandemic will still be impacting us for a while,” he says. “I think a Biden presidency can mean great things for these small, local businesses [since] they’re not the ones targeted by tax increases and other policies that can impact them negatively. If anything, we’re going to see a larger effort to save local economies. Small mom-and-pop shops and other small businesses are essential, now more than ever.”

Courtesy of Legal Zoom, written by Marcia Layton Turner

The Lean Digital World Event

The Other Side of “Lean”, A World of Major Enterprise Applications

Having studied “lean” related to small business startup as designed by Steve Blank’s customer discovery process and its “agile” offshoot from his student Eric Ries, one tends to forget how Taiichi Ohno, Toyota’s production chief after WWII, changed the world of manufacturing too.  Yesterday, rising at 6 AM to participate live in a worldwide discussion and sharing of “lean production” gave this  entrepreneurship educator insights for growing small businesses beyond inception into maturity.

The host organization was leanUK.org who run the Lean Enterprise Academy and coordinate a vast group of lean purveyors.  Participants on their smooth global webinar were from the United Kingdom, Spain, South Africa, Germany, France, Bulgaria, Ukraine, and Canada to name many.  Their combined knowledge blew this entrepreneurship educator away.  Lean is being applied to large engineering projects, bakeries, and automotive after markets. Just one individual is Christoph Roser, a professor of production management at Kalsruhe University in Germany. He based his research and teaching on decades of experience implementing lean manufacturing including five years working for Toyota Japan.

Taiichi Ohno would hardly believe the influence his production changes to eliminate waste and increase efficiencies have wrought.  Almost every major corporation in the world embraces some form of lean philosophy, and entrepreneurship is just one of many systems that co-oped his principles to improve a process.  Ours happens to be the design of a successful new, never-seen-before way of doing business. Think of those digital enterprises that have changed old needs into more efficient and less wasteful ways in transportation, temporary lodging, communication, on and on -Uber, AirBnB, Facebook, and Dropbox to name a few.

The only entrepreneurship books and authors I know of who bridged both worlds of “lean” -startup and manufacturing, are James Womack and Daniel Jones, two of whose books are sold on the leanUK.org website.  Their first The Machine That Changed the World was first published in the fall of 1990 was to wake-up organizations, managers and investors stuck in an old-fashioned world of mass production.  It detailed how the approach pioneered by the Toyota company did more and more with less and less.  Their book tour around the world sold 400,000 copies and convinced many audiences, but raised the question, “how do we do it”, “what are the key principles to guide our actions”?   Lean Thinking was written to address such questions

Because Japanese build from the ground up, bits and pieces of Toyota’s system were confusing to others without an understanding of the whole.  Womack and Jones summarized lean thinking into five principles specific value by specific product, identity of the value stream of each product, make value flow without interruption, let the customer pull value from the producer, and pursue perfection.  These principles are the guiding model for lean manufacturing to this day.  Intrapreneurship speaks of pioneer models (original one that became big) and greenfield plants (built in the countries repeating the production model) from the Womack-Jones book.  Through four years of digging and a networking with lean thinking executives the two authors gained an understanding of the work needed to convert mass production organizations into leanness.  Specifics were gleaned like periodic evaluations, demand immediate results,  let momentum expand your scope, eliminate the “muda” of errors and waiting at the source, remove anchor-draggers, and make everything transparent.

Eric Ries, on the other hand, showed how constant innovations creates radically successful businesses by “just-in-time” change or iterations using the Steve Blank customer development process as partner.  Whereas traditional business planning had used pro-forms projections, secondary research, and basic guesses, the customer development questioning of end-user or personas who would buy the product or service established facts.  The concept or idea was either validated or it was not, allowing changes to improve the idea for the target market or showing the idea would not work and a pivot was necessary (to another idea).  The notion of a prototype or MVP (minimal viable product) to show the end-user as early as possible brought the customer into the partnership early to gain insights.  Through the basic two tools of the business model canvas (BMC), a one-page, nine-component chart, or the BML, “agile” loop to build-measure-learn each in continuous repetition an entrepreneur pushes feasibility.

The production version of “lean” makes manufacturing more efficient and less costly whereas the entrepreneurship version changes how new companies are built by learning what customers want. We owe a large debt of gratitude to Steve Blank for putting the tool with the customer into a process of discovery.  HIs original class at UC Berkeley still operating today makes a startup team complete sixteen different weekly canvas inputs to improve a concept and make sure it appeals to a market.

The dynamic lean digital event forced a comparison of the two “leans”, and it is interesting for those of us in entrepreneurship education to pause and recognize the large corporate use in addition to new venture planning.  Some of lean manufacturing can be applied to the scaling of a small business.  As a startup passed from early success through transition to scaling the company, each component of the BMC needs to be expanded and move to completion at the same time new product-market fits are designed to create new revenue streams allied with the original concept.

Thanks to terrific panel leaders, Nigel Dalton (Sydney), Laura Motkola (Toronto), and Basil Petrov (Sofa) for guiding the speakers through a plethora of information and to www.leanUK.org for sponsoring.