Opportunity in Disruption: What Lean Manufacturing Can Learn from Lean Startups

Henry Ford’s legendary remark, “You can have any color you want as long as it’s black,” would not go over well on today’s Internet.

It was a time of limited recourses and rapid upheaval: The aftermath of World War II. That is when Lean manufacturing developed. In order to compete with American automotive giants like the seemingly invincible General Motors, a struggling Japanese manufacturer called Toyota took what it needed from established quality management techniques, adapted them to their situation, and changed the game. Just look at Toyota today, and think of that whenever you feel underfunded or challenged by change. The moral of this story is that you can find opportunity in change if you know how to react to it.

Today, the people who embrace this concept the most are often not automakers, or even manufacturers. Small tech startups and software developers are using existing product development principles, adapting them to their situation, and changing the game, just like Toyota did half a century ago. As the name implies, Lean Startup principles are based on or inspired by Lean Manufacturing principles. Although Lean software development and Agile UX design have branched off into their own communities and methodologies, traditional manufacturers should still take note of their innovations.

With Moore’s Law in mind, the computer industry has thought of market disruption as practically a law of nature for decades. As processing power has doubled every two years, innovative companies have adapted to the needs of emerging markets. Those that didn’t adapt didn’t last long. Those that did adapt made rapid progress. Computer technology is now a major part of every imaginable industry. With the potential of 3D printing and the “internet of things” growing larger on the horizon, computer technology won’t just help people make products; it will be in integral part of the products themselves. Mass production is looking more like a dinosaur every day, and Lean principles like Just-in-Time production and Production-Preparation-Process (see Introduction to 3P) are more relevant than ever.

Online distribution has already made consumers more particular about the products they buy. This has boosted demand for highly customizable, small batch products. 3D printing options are likely to further this trend in unprecedented ways. Henry Ford’s legendary remark, “You can have any color you want as long as it’s black,” would not go over well on today’s Internet. People still want good deals, but they no longer want to compromise their unique tastes. Just look at the “build your own” option on just about any automaker’s website (including Ford) to see how things have changed.

The proliferation of options and information on the Internet has done more than just change customer demands; it has seriously damaged the reputation of some of the world largest companies. From GM, to Monsanto, to Wal-Mart, industry giants are becoming the big bad wolves in an online PR battle. Customers are demanding locally and ethically produced products that fit their unique tastes. Whether they know it or not, these consumers are demanding Lean principles like never before. Local companies in advanced economies might not be able to compete in terms of cheap labor or materials, but they can compete in terms of sustainability, agility, creativity, and respect for workers. In other words, they can compete by embracing Lean. This doesn’t just mean improving processes, it means improving the product and even the business model that the processes support. It’s time to look beyond 5S and waste elimination. It’s time for everyone to get serious about Lean policy deployment (Hoshin Kanri) and Lean product development. Lean tech startups might just be the model to look at moving forward.

July 9, 2015

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