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November 9, 2017

Lean Thinking: Lessons from packing envelopes

Organisations are increasingly looking to the optimise how they operate, and to instil a sense of innovation in how their employees work. They are looking to stay agile and nimble, in today’s fast-paced and ever-changing world.

This post is about how one community in particular has embraced this type of thinking, and what we can all learn from the principles of what we shall call “lean thinking”.

Start up sage

Within the glitzy world of new start up businesses, one book has emerged as the de facto Bible for new entrepreneurs.

The Lean Startup was published in 2011 by engineer-cum-entrepreneur Eric Ries and specifies a methodology for how companies can take an almost scientific approach to promoting innovation and smart choices within an organisation.

The principles behind the methodology are found here.

What’s particularly interesting is the number of non-intuitive practices that are recommended, especially when viewed through the lens of “traditional business”.

Many of these are geared specifically towards testing and validating new business ideas which, whilst useful, have less direct applicability with running and improving an existing business there are, however, some fundamental concepts which can serve as powerful reminders for approaching business in a nimble manner.

The power of small batches

One such example is the way in which one might look to undertake a repetitive task.

This is best described through an example of a father packing letters with his daughters. From this short blog post by Eric Ries:

Every envelope had to be addressed, stamped, filled with a letter, and sealed. The daughters, age six and nine, knew how they should go about completing the project: “Daddy, first you should fold all of the newsletters. Then you should attach the seal. Then you should put on the stamps.” Their father wanted to do it the counterintuitive way: complete each envelope one at a time. They told him “that wouldn’t be efficient!” So he and his daughters each took half the envelopes and competed to see who would finish first.

The father won the race, and not just because he is an adult.

Why does stuffing one envelope at a time get the job done faster even though it seems like it would be slower? Because our intuition doesn’t take into account the extra time required to sort, stack, and move around the large piles of half- complete envelopes when it’s done the other way. It seems more efficient to repeat the same task over and over, in part because we expect that we will get better at this simple task the more we do it. Unfortunately, in process-oriented work like this, individual  performance is not nearly as important as the overall performance of the system.

The key things to take from this are:

  • Underestimation: of the time required in sorting, stacking and moving half-filled envelopes. This isn’t present when the whole process is done in one go
  • See improvements quicker: whilst it might feel like increasing efficiency of particular steps is superior, what if the letters didn’t fit in the envelopes? Going through the whole process uncovers ways to improve

More explanation is given in the blog post including a link to a video demonstrating the speed in taking different approaches.

Reduce the time to learn

The other main principle that we’ll cover (an extension of the second point) is how the overall goal in instilling a “lean approach” is to reduce the time it takes to learn whether an idea might work.

Many times when you, or someone in your team, has a brainwave for making an improvement, or a new way to expand the business, there is a tendency to cradle the idea and spend time refining it.

Hours of time is devoted to drawing out plans, cross checking with people within the organisation and undertaking meetings about the relative merit of this idea of another, and what the potential impact or outcome could be.

When it comes to launching the great idea, it seems only natural to use it with as many people as possible so as to generate the maximum impact in the minimum time.

The power of small trials

Whilst there is a chance that the above scenario could pay off, it is laden with unnecessary risk

  • What if no (or only a few) customers resonate with the idea?
  • What if there’s something which you’d not thought of which would make their life even easier?
  • What if the method of launching the idea falters?

Of course, it’s easy to gloss over and say something like “no one got anywhere in business without taking some risks” however by doing things iteratively, The Lean Start Up approach teaches how to get feedback as quickly as possible from real customers, rather than expending time and resource on something that doesn’t resonate.

For example, let’s imagine you think your customers would pay to have software which automatically converts their sales data into intuitive dashboards.

One approach might be to talk with some customers (who all sound open to the idea) and then go away and hire some software engineers to build up the features that you think are necessary. After months of perfecting it, you can then go to the market and sell the package.

This was there are no bugs in the software and you’re able to confidently go to start selling knowing that what you have works on a technical perspective.

An alternative approach is to take a more iterative approach.

After speaking with customers who sound open to the idea, you ask if they are willing to send over some of their sales data for you to then manually turn into a dashboard.

This will doubtless take longer than it would if fed into the automated solution, however in the process you’ll learn what it is that is important to them in their dashboards.

It may be that just one or two of the features are particularly important, and the others they wouldn’t really feel happy with paying for.

With this you discover that actually what they have most difficulty with is tracking their sales pipeline, and so building a solution that improves this would be much more valuable.

As a result, when you bring in the software engineers to build the product you have much higher certainty in customers going on to pay money for.

Also, because you’ve gone through the whole process quicker (taking sales data and building a dashboard manually, rather than the big upfront cost of building an automated solution) you got to the point of customers paying much quicker.

How to apply this to your business

As with many broad philosophies such as this, there are numerous ways in which it can be brought into the workplace.

The book (The Lean Start Up) is centred around building a software company, however the principles are applicable to all types of business. For an insight into what every new entrepreneur will be using as their reference point, it’s an essential read.

For the here and now though, these are some takeaways you can seek to apply in your business from today:

  • Test and iterate: if you have an idea, start experimenting with it as soon as you can. Feedback from real customers trumps internal discussions
  • “Pack individual envelopes”: go through the whole process to see where efficiencies can be made before committing to an efficient deconstructed approach
  • Derisk decisions: most choices needn’t be big bets if you test the essential element in a scaled back form

The closing thought of the book is that building new ideas for a business needn’t be a random assortment of gut decisions and luck. By taking a structured approach to the decisions that are made, a business can limit the downsides of big investments in time and money that typically come with growing out new areas of a company.

And that feels like something we can all subscribe to as we seek to grow our enterprises.

 

We hope that you found this post informative and thought-provoking. If you’d like to be notified of the next post, or learn more about how Inspira UK can help your business grow, then you can sign up to the newsletter and contact us here.

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