How can “Lean” practices be applied to a startup software business?

Applying "Lean" thinking to a software startup business can be highly beneficial for optimizing processes, reducing waste, and improving overall efficiency. However there are some misperceptions about “Lean” and it’s application to business. Contrary to popular thinking, being lean isn’t about being efficient (at least not at the beginning.  It’s not about cutting costs or corners.  In fact, it’s exactly the opposite - a lean organization focuses obsessively on two things - quality and the customer - many times at the expense of efficiency at least in the moment..  

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In my last engagement, I was fortunate enough to work with a CEO who was 100% committed to operating as a lean company.  His summary of “lean”?  Lean is a learning tool, where every day an individual or a team and its leader can identify one challenge or problem, focus on solving that issue, if systemic, create a new standard solution and then find another problem to solve.  These small wins add up to BIG gains overall - and THAT is when the efficiency benefit kicks in. It was a pleasure to learn about this approach to managing a business.

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Here are ten steps to incorporate Lean principles into your software startup:

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1. Focus on two things above all else - Quality and your Customer:  Every decision you make, from the product features you develop down to every bullet point used in an executive business review, should be evaluated with the question “Is what we are presenting or doing valuable to the customer, and how?”.  Too many companies spend too much time thinking up features a customer may never use, or in the latter case, too much effort chest thumping and self justifying during the EBRs with customer senior executives.  

2. Engage with customers: Actively engage with your customers to understand their needs, pain points, and preferences. Leverage techniques like customer interviews, surveys, and usability testing to gather valuable insights that can guide your product development and decision-making.

3. Define your value proposition: Clearly articulate the value your software product or service will bring to customers. This will help you focus your efforts and ensure that you are delivering something that solves a problem or meets a need.

4. Visualize your processes:  This is a core component of lean.  Take your sales motion out of a slide deck and visualize it - on paper, on a whiteboard or in a tool like Lucid or Miro.  As you look between departments or functions, determine who each department’s “customer” is.  You’ll find that in nearly all cases, in a lean sense, it’s not “The Customer”. 

5. Build-Measure-Learn feedback loop: Embrace a feedback-driven development processes. Build a basic version of your product, measure its performance and user feedback, and learn from the data. This iterative approach allows you to quickly adapt and make improvements based on real user experiences.

6. Improve Quality: Identify and eliminate any activities or processes that do not add value to your product or customers. This could include unnecessary documentation, excessive meetings, or over-engineering features. Streamline your operations to focus on delivering value efficiently.

7. Embrace continuous improvement: Encourage a culture of continuous improvement within your software startup. Regularly reflect on your processes, gather feedback from customers and team members, and implement changes that increase efficiency and deliver better outcomes.

8. Optimize flow: Identify bottlenecks and areas where work gets stuck or delayed. Use techniques like value stream mapping to visualize your processes and find opportunities to improve flow and reduce cycle times.  

9. Don’t ignore “old work”:  In terms of lean, people tend to think of solving tickets or addressing feature requests.  But what about evaluating opportunities in the forecast; oldest to newest.  Your salespeople have a natural focus on the shiny deals for the quarter. When looking at opportunities in your forecast in particular - go from the oldest created date forward, evaluating every deal.  These were all, in theory, “good” opportunities at one point. You’ll be surprised how much “real” pipeline you will rekindle.

10. Empower your team: Foster a culture of autonomy and empowerment among your team members. Encourage them to take ownership of their work, provide regular feedback and suggestions, and collaborate to solve problems collectively. This can lead to increased engagement, creativity, and productivity.