Lean analytics:

the complete guide to the systematic method for the

use of data to manage and build a better & faster startup
business by cutting costs and adding value to the
development process

JOSH WRIGHT
 Table of Contents
Copyright Page
Introduction
Chapter 1What is Lean Analytics, A General Overview and a Little Bit of
History about It
Chapter 2Lean Thinking
Chapter 3The Lean Methodology
Chapter 4Data Driven Approach
Chapter 5Types of Metrics
Chapter 6How to Recognize a Good Metric
Chapter 7The One Metric That Matters (omtm)
Chapter 8Correlation and Causation
Chapter 9Lean Framework Stages and Cycle (hypotesis, experiment, etc..)
Chapter 10Benefits of Lean
Chapter 11Drawbacks of Lean
Chapter 12Revenue and Calculations
Chapter 13Lean Analytics to Succeed
Chapter 14Implementing Lean Management in Your Office
Conclusion

© Copyright 2020 - All rights reserved.

The content contained within this book may not be reproduced, duplicated or
transmitted without direct written permission from the author or the publisher.
Under no circumstances will any blame or legal responsibility be held
against the publisher, or author, for any damages, reparation, or monetary loss
due to the information contained within this book. Either directly or indirectly.
 Legal Notice:
This book is copyright protected. This book is only for personal use. You
cannot amend, distribute, sell, use, quote or paraphrase any part, or the content
within this book, without the consent of the author or publisher.

Disclaimer Notice:
Please note the information contained within this document is for educational
and entertainment purposes only. All effort has been executed to present
accurate, up to date, and reliable, complete information. No warranties of any
kind are declared or implied. Readers acknowledge that the author is not
engaging in the rendering of legal, financial, medical or professional advice. The
content within this book has been derived from various sources. Please consult a
licensed professional before attempting any techniques outlined in this book.
By reading this document, the reader agrees that under no circumstances is
the author responsible for any losses, direct or indirect, which are incurred as a
result of the use of information contained within this document, including, but
not limited to, — errors, omissions, or inaccuracies.
 Introduction
The central idea behind Lean Analytics is to enable a business to track and
then optimize the metric that will matter the most to their initiative, project, or
current product.
Setting the goal of focusing on the right method will help you see real
results. Just because your business has the ability and the tools to track many
things at once, does not mean that it would be in your best interest to do so.
Tracking several types of data simultaneously can be a great waste of energy
and resources and may distract you from the actual problems. Instead, you will
want to focus your energy on determining that one vital metric. This metric will
make the difference in the product or service that you provide.
The method in your search for this metric will vary depending on your field
of business and several other factors. The way that you’ll find this metric is
through an in-depth understanding of two factors:

The business or the project on which you’re presently working.

The stage of innovation that you are currently in.

Now that we have a basic understanding of Lean Analytics and what it

means, let’s take some time to further explore and see its different parts.
Lean is a method that is used to help improve a process or a product on a
continuous basis. This works to eliminate the waste of energy and resources in
all your endeavors. It is based on the idea of constant respect for people and your
customers, as well as the goal of continuously working on incremental
improvements to better your business.
Lean is a methodology that is vast and covers many aspects of business. This
guidebook will spend sufficient time discussing a specific part of Lean, Lean
Analytics. Here, you can learn how to make the right changes. Of course, you
will need a working understanding of where to start, and Lean Analytics can
help.
Lean is a method that was originally implemented for manufacturing. The
idea was to try to eliminate wastes of all kinds in a business, allowing them to
provide great customer service and a great product while increasing profits at the
same time. Despite its beginnings, the Lean methodology has expanded to work
in almost any kind of business. As long as you provide a product or a service to a
customer, you can use the Lean methodology to help improve efficiency and
profits.
For instance, how will you determine which metric will help you succeed?
Which metric will prove to be the best and result in the most improvement
compared to others? How will the metric help, how should it be implemented,
and how can you ascertain if it’s successful in the end? Lean Analytics can help
you gather the necessary information to find and work with the right metric.

Lean Analytics
Lean Analytics is part of the methodology for a lean startup, and it consists
of three elements: building, measuring, and learning. These elements are going
to form up a Lean Analytics Cycle of product development, which will quickly
build up to an MVP, or Minimum Viable Product. When done properly, it can
help you to make smart decisions provided you use the measurements that are
accurate with Lean Analytics.
Remember, Lean Analytics is just a part of the Lean startup methodology.
Thus, it will only cover a part of the entire Lean methodology. Specifically, Lean
Analytics will focus on the part of the cycle that discusses measurements and
learning.
It is never a good idea to just jump in and hope that things turn out well for
you. The Lean methodology is all about experimenting and finding out exactly
what your customers want. This helps you to feel confident that you are
providing your customers with a product you know they want. Lean Analytics is
an important step to ensuring that you get all the information you need to make
these important decisions.
Before your company decides to apply this methodology, you must clearly
know what you need to track, why you are tracking it, and the techniques you
are using to track it.

Focus on the fundamentals

There are several principles of Lean that you will need to focus on when you
work with Lean Analytics. These include:

A strive for perfection

A system for pull through
Maintain the flow of the business
Work to improve the value stream by purging all types of waste
Respect and engage the people or the customers
 Focus on delivering as much value to the customer as effectively as
possible

Waste and the Lean System

One of the most significant things that you will be addressing with Lean
Analytics, or with any of the other parts of the Lean methodology, is waste.
Waste is going to cost a company time and money and often frustrates the
customer in the process. Whether it is because of product construction, defects,
overproduction, or poor customer service, it ends up harming the company’s
bottom line.
There are several different types of waste that you will address when
working with the Lean system. The most common types that you will encounter
with your Lean Analytics include:

Logistics: Take a look at the way the business handles the

transportation of the service or product. You can see if there is an
unnecessary movement of information, materials, or parts in the
different sections of the process. These unnecessary steps and
movements can end up costing your business a lot of money,
especially if they are repeated on a regular basis. This will help you
see if more efficient methods exist.
Waiting: Are facilities, systems, parts, or people idle? Do people
spend much of their time without tasks despite the availability of work
or do facilities stay empty? Inefficient conditions can cost the business
a lot of money while each part waits for the work cycle to finish. You
want to make sure that your workers are taking the optimal steps to get
the work done, without having to waste time and energy.
Overproduction: Here, you’ll need to take a look at customer demand
and determine whether production matches this demand or is in
excess. Check if the creation of the product is faster or in a larger
quantity than the customer’s demand. Any time that you make more
products than the customer needs, you are going to run into trouble
with spending too much on those products. As a business, you need to
learn what your customer wants and needs, so you make just the
amount that you can sell.
Defects: Determine the parts of the process that may result in an
unacceptable product or service for the customer. If defects do exist,
decide whether you should refocus to ensure that money is not lost.
Inventory: Take a look at the entire inventory, including both finished
 and unfinished products. Check for any pending work, raw materials,
or finished goods that are not being used and do not have value to
them.
Movement: You can also look to see if there is any wasted movement,
particularly with goods, equipment, people, and materials. If there is,
can you find ways to reduce this waste to help save money?
Extra processing: Look into any existing extra work, and how much
is performed beyond the standard that is required by the customer.
Extra processing can ensure that you are not putting in any more time
and money than what is needed.

How Lean can help you define and then improve a value stream
Any time that you look at the value stream, you will see all the information,
people, materials, and activities that need to flow and cooperate to provide value
to your customers. You need these to come together well so that the customer
gets the value they expect, and at the time and way, they want it. Identifying the
value stream will be possible by using a value stream map.
You can improve your value stream with the Plan-Do-Check-Act process.
This strategy can be used upfront so that you can design the right processes and
products before they reach their finished form. Additionally, the strategy helps
you to create an environment that is safe and orderly and allows easy detection
of any waste.
Another method of creating this environment is the 5S+ (Five S plus): sort,
straighten, scrub, systematize, and standardize. Afterward, ensure that any
unsafe conditions along the way are eliminated.
The reason that you will want to do the sorting and cleaning is to make it
easier to detect any waste. When everything is a mess, and everyone is having
trouble figuring out what goes where, sorting and cleaning can address waste
quite fast. There will also be times when you deem something as waste and then
find out that it is actually important.
When everything is straightened out, you can make more sense of the
processes in front of you. Afterward, you can take some time to look deeper into
the system and eliminate anything that might be considered as waste or unsafe,
and spend your time and money on parts of the process that actually provide
value for your customer.

The Lean Analytics Stages Each Company Needs to Follow

To be successful with Lean Analytics, you’ll need to follow several different
stages. You won’t be able to move on to the next stage if you do not complete
the preceding step. There are five in particular that you will need to focus on to
get work done with this section of the Lean support methodology. The five
stages are:

Stage 1: The initial stage is where you will concentrate on finding the
problem for which people are searching for a solution. A business that
focuses on business to business selling is going to find this stage
critical. When you address this problem, then you can move on to the
next stage.
Stage 2: For this stage, you are going to create an MVP product that
can be used by early adopter customers. This stage is where you are
aiming for user retention and engagement, and you can spend some
time learning how this will happen when people start to use the
product. You can also learn this information based on how the
customer uses your site and how long they stay. You’ll take some time
at this stage because you will need to experiment and also may need to
go through and choose from a few different products before you get
the one that is right for you. Once you have this information, you can
move on.
Stage 3: Once you find out how the early adopter customers are going
to respond to a product or service, it is time to find the most cost-
efficient way to reach more customers. Once you have a plan ready to
get those customers, and then more of them start purchasing the
product, then you can move to the next stage. You would not want to
go with a product that may be popular but costs a ton of money, which
will cut into your revenues and can make it difficult to keep growing
in the future.
Stage 4: You are now going to spend some time on economics and
focusing on how much revenue you are making. You want to be able
to optimize the revenue, so you need to calculate out the LTV:CAC
ratio. LTV is the revenue that you expect to get from the customer, and
the CAC is the cost that you incurred to acquire that customer. You
can find this ratio by dividing your LTV by the CAC. Your margins
are doing well if you get an LTV that is three times higher than the
CAC. The higher the margins you get, the better because that means
you are going to earn more in profits from the endeavor.
Stage 5: In the final stage, you will then take actions that are necessary
to grow the business. You can continue with your current plan if you
are making a high enough margin from the previous steps, or you may
need to make some changes to ensure that you can earn enough
revenue to keep the business growing. You can also spend time
making plans on where you would like to concentrate on in the future
to increase the growth of your business and help it expand. The main
goal for your business is to keep growing and increase revenue. This
step helps you to reevaluate what you have in your current plan and
decide if it is working for you or if you need to go with a different
option.
 CHAPTER 1 What is Lean Analytics, A
General Overview and a Little Bit of History about
It
What is Lean?
The lean concept is nothing new. It has roots tracing back to the 1950s when
Toyota shifted its focus to optimizing product flow through the entire production
process. The company introduced machines that both met the needs of the
volume and demand as well as monitoring machines that would ensure the
proper quality of each product. As a result, Toyota was able to reduce the cost of
production and increase quality and output (A Brief History of Lean, ND).
The key principles of lean, as presented in James P. Womack and Daniel T.
Jones book, Lean Thinking, are described as:
[Link]: Having specific values that are desired by customers.
[Link] stream: Being able to identify the unique value stream for a product
as it relates to customer value and eliminate unnecessary steps.
3. Flow and Pull: Ensuring the product flows smoothly through additional
value-added steps.
[Link]: Constantly focusing on reducing the amount of time, steps,
and information needed to supply the product to the customer.
These steps should continuously flow from one to another, starting with
identifying the value, mapping out the value stream, then creating the product
flow, determining the pull, working toward perfection, and then returning to
identifying the value.
The lean Start-up offers a similar approach with its feedback cycle or loop:
•Build
•Measure
•Learn
Here, you create a plan that defines what needs to be tested and what you
think the results will be. Then, you determine how you will measure those
results and collect data. Next, you build a product that is small so that you can
test out your thinking. Once the experiment is conducted, you measure the
results you gathered. How do these results compare to your initial thinking?
Finally, you learn what to do next and repeat the process when necessary.
Keep the following concepts in mind:
[Link] the type of business you are.
 [Link] where your business is at.
3. Track the One Metric That Matters and optimize this metric.
4. Repeat the process.

The fundamentals of Lean Analytics

Lean, Lean Start-up, and Lean Analytics all have different methods, cycles,
and stages. While they rely on different approaches, they do have a few
fundamentals in common. The three fundamental issues that should guide
businesses are the purpose, process, and people.
Purpose: Focuses on the problem they will solve for the customer.
Process: Assesses the value streams to ensure it is valuable, capable, and
available as well as adequate and flexible. A value stream is similar to a map that
tracks all the business actions taken that in some way, create a product or value
for the customer. These should help link each step of the process with the flow,
pull, and leveling.
People: Who will be responsible for evaluating the purpose and process?
How can engagement be increased and encouraged among those involved in
each value stream?
The ultimate goals and focus of implementing the lean Start-up method and
lean analytics are to minimize waste, continuously improve upon the business
idea, and always have the big picture in mind.
The lean Start-up runs off a simple cycle of collecting and measuring data to
help improve on the key fundamentals. Lean analytics is the process of not just
gathering data but also knowing when and how to analyze that data to
understand where your business is and where your business is headed.
Lean analytics takes a more scientific approach to develop a product or
business idea, where you first address the problem that needs to be solved, then
go about trying to find a solution and ultimately create experiments that will
allow you to test and measure the results.

Waste and the lean system

The goal of the lean process is to eliminate waste completely. Waste,
according to the lean Start-up method, is anything that doesn’t lead to validated
learning. Instead of keeping all things separated for the development and growth
of a business, things are instead able to flow together in a more unified way.
This results in reducing the need for space, time, and effort, which, in return,
lowers the cost.
Minimizing waste in this manner increases the response time when new
customer needs or desires are discovered. More emphasis can be placed on the
quality and variety of products or services offered.
Waste can include:
•The overproduction of a product or service, when something is produced
before it can move onto the next process. This can occur when the product is
made too quickly or in excess.
•Inventory waste refers to producing large quantities of a product and then
having to manage this surplus of inventory.
•Motion waste occurs when there is a poor design in the work environment.
•Transportation waste refers to the poor system of moving parts of the
business from one place to another.
•Over-processing waste results from confusion with the customer when items
or materials are overly complicated.
•Defect waste includes poor labeling, inadequate information, poorly written
instructions, and other details that do not fully disclose or explain parts of the
product or service.
•Waiting waste can be incurred from the customer who either has to wait in
line for customer service or has to wait for an extended period of time before
they receive their product. It also relates to the production side of having to wait
for one team or member to complete their job before another can begin.
•Underutilizing staff waste can occur when there is a lack of communication
or a flaw in the managing system.
Waste can hinder and significantly slow done project development. When
you find a system, like lean analytics, to greatly minimize waste, you speed up
the Start-up process. Since lean analytics stresses the importance of focus on one
metric at a time, you do not get distracted or waste time in areas that won't move
the process forward.

How can lean help define and improve the value system?
This lean approach helps you identify where your system has flaws and stops
flowing. A good value system is one that is predictable and moves through each
stage or phase without halting. A consistently good flow is one that moves faster
and offers customers greater reliability.
The value stream identifies either how your vision or the value you have
ultimately reaches the customer. When directing this path, a useful tool to guide
you is a Kanban board. Through a Kanban board, you will be able to map the
direct steps of the value stream visually. Kanban boards help divide the value
stream into the following three components or columns:
•Requested
•In progress
 •Done
These boards are an easy way to visually see where workflow is becoming
backed up and what needs your attention to continue to progress forward. These
boards are ideal to use with lean analytics because they help you stay focused on
the tasks that need to be done. When it comes to the value stream, these boards
provide you with clear visuals on where the stream is being stopped or slowed
down.
Lean analytics puts the customer as the first step in understanding how the
stream will flow. It is the customer which in the end, will be the driving force
and decide on the flow of the stream.
In 2004, he and a few aspiring individuals decided to come up with an
instant messaging market. Instant messaging was still fairly new at the time, so
the potential for creating a successful business in this industry seemed
straightforward and easy to navigate.
Immediately, the group began to create a product that would incorporate all
instant messaging services around at the time and allow users to choose avatars
to chat with one another online no matter what messaging network they or the
other person was on. The creators thought that not having to learn a new
platform or switch to a new one would greatly appeal to users. They also
believed the product would take off virally and quickly gain users from those on
every messaging platform.
For six months, the group worked on a website that integrated all messaging
platforms into one place. When they finally launched it, they eagerly waited to
see users quickly jump on board. But nothing happened. They could have easily
blamed this on the fact that this was the first edition and it still had a few bugs
that needed to be fixed, but the fact was that no one had even bothered trying the
product.
While the group still worked on improving the site on a nearly daily basis,
only a few users had bothered to sign up. To try to understand what they needed
to do to improve the site, they asked people to come in to try out the site. After
allowing a small group of individuals to try out the program, they realized where
it was flawed.
They had believed that creating a completely new messaging service would
deter users because they assumed users wouldn’t want to have to learn a new
program. It turns out, that’s actually what users wanted. The users enjoyed being
able to create and customize the avatars, but they didn’t want to have to go
through the process of integrating it on the eight or more messaging channels
they were already on.
What Ries realized through this experience was that they wasted a lot of time
and energy creating a product they thought users would love, but never once did
they think to ask the users if they would use it. Had they started the process by
first finding out the customer's needs, they would have been able to avoid
wasting their effort on a product with little chance of success and instead could
have immediately begun coming up with a product that fits what users were
looking for.
This is how the Lean Start-up idea began. Ries found a major flaw in the
project development system. Instead of focusing on first creating the perfect
product, entrepreneurs have first to begin to understand what that perfect product
is.

Getting started
Having the right tools to assist you can be of great help. Lean Canvas is a
tool that helps you organize your business idea from beginning to end and helps
you identify key metrics to test through each stage.
The lean canvas approach allows you to identify key factors from the
beginning to the end of your project development or business ideas. This can be
done in a few simple steps:

Step 1: The Problem

The problem is the whole reason you are beginning your business. There is a
problem that the customer needs to have resolved. By now, you already know
what the problem is, but do you also know three existing solutions for that same
problem? List your problem first, and below that, list the three existing solutions
you know your customer already uses.

Step 2: The Solution

After the problem, you will list the solution you have come up with. For
every problem that you write in the first step, you should have a relating solution
in this step. You also want to write down the top three key features or functions
your solution offers that further help solve the problem.

Step 3: The Key Metrics

As you just learned, metrics are the most important factors in your business.
In this step, you want to list the key metrics that are both relevant to where you
are in your business and that you think you will need to keep track of in order to
stay focused on the solution.

Step 4: The Customer Segments

 After all the research you have done, this should be an easy section to fill in.
Here you want to identify your intended audience. You should be able to easily
come up with three to five key customer characteristics of your early adopters.
These individuals are the ones who are eagerly awaiting the launch of your
product or service. Understand what makes them so interested in what you have
to offer.

Step 5: The Unfair Advantage

You likely have a few things that put you ahead of your competitors. These
unfair advantages that you possess shouldn’t be easy to copy or acquire. They
can include things like inside information or an in-depth understanding of the
problem, being an expert in the industry, having a large supporting network or
community, having the ultimate team, and having a highly respected reputation.
These are things that you will want to use to your advantage through the process.

Step 6: The Channels

What are all the ways you can contact or reach customers? List all the social
media sites, people, networks, and touchpoints. Touchpoints are where
customers will most likely encounter your product or brand. There are three
main time frames that you will want to break this up into:
•Before purchase
•During purchase
•After purchase
In each time frame, you want to list the top three channels of how you will
contact or connect with your customers.

Step 7: The Unique Value Proposition

This statement answers the “how” and the “why” of your business model.
This should be a clear statement that highlights how your business stands out
and places value above any other alternative. You want to write your unique
value proposition and look at it as a high-level concept as it will be the statement
that helps show customers what they should expect from your business.

Step 8: Cost Structure

Here you will list all the costs you can think of that will occur when doing
business. Look at each step you have completed so far and consider the cost that
can be attached to each step. One of the main reasons start-ups fail is because
they do not properly plan for how much it will cost for them to launch and start
their business. Using lean analysis can greatly reduce these costs, but you still
want to address all. Some cost can include:
•Customer acquisition
•Distribution
•Product development
•Services to launch
•Connecting with customers
•Branding
•Researching your market
•Marketing

Step 9: The Revenue Streams

What are your sources of income? How will this source of income continue
to keep your business running? Some of the most common revenue streams
include?
•Asset sales
•Usage fees
•Subscription fees
•Delivery and installation fees
•Advertising
Once you have completed all the steps, you will have a simplified business
plan that will get you started and help you stay focused on your business idea.
 CHAPTER 2 Lean Thinking
Best Practices in Lean Thinking
Like every project management methodology, lean thinking comes with its
best practices. As mentioned before, the purpose of this book is not necessarily
to introduce you to general Lean thinking, but to help you understand Lean Six
Sigma and how it can be applied to your team and projects. However, you can’t
understand Lean Six Sigma and the way it functions before you understand Lean
thinking - so following, we will present you with some of the basic best practices
connected to Lean project management and thinking.

1. Focus on demonstration, rather than explanations. This is one of the

fundamental rules of Lean thinking and, in general, a rule that can be
applied to many other project management methods.
2. Encourage Kaizen activities. Workshops, team quality circles,
suggestions you receive from the team members, and general exercises
focusing on continuous improvement - they all help the team grow in
the spirit of Kaizen, Lean thinking, and, in general, in the spirit of
constant improvement. Do keep in mind that this kind of activities
should be thoroughly planned and that they should not be left at the
bottom of your priority list: they can truly make all the difference in
the world in terms of how your team perceives Lean project
management and thinking.
3. Kanban. If Lean thinking is the philosophy, Kanban is the foundational
practice (also used at Toyota originally, and these days, all around the
world in multiple industries and contexts). Kanban helps managers
determine what is necessary to be done now so that the customer is
provided with the best value in an ongoing way. For instance, if you
are a writer and you have to write books, create blog posts, and answer
emails, you can use Kanban to determine which of these tasks are
more current in terms of customer satisfaction. Is it mandatory that
you finish another book by the end of the month when the old one is
still selling, or would you much rather focus on PR and promotion
activities, such as writing on your Social Media channels or replying to
emails?
4. Autonomation. In a world that seems to automate everything, there are
still many instances when it is absolutely crucial that humans are
 involved in the production process. Autonomation enables human help
to be asked for only when the machine “feels” it has done something
wrong. This way, team members can focus on other tasks, machines
can work properly, production can be kept at high levels, and
customers can be kept happy.
5. SMED (Single Minute Exchange of Die). This Lean thinking concept
is all about flexibility and training team members to change their tools
in under 10 minutes. In other words, SMED encourages team members
to quickly switch between activities.
6. Standardizing the work. While Lean thinking holds flexibility sacred at
its core, it is also very important to note that standardizing the work is
crucial when it comes to this project management approach. The
reason standardized work is so important is because it creates a smooth
flow - one team members can follow and one that can be easily
predicted, so that you can constantly plan ahead new inventories,
according to the current demands of the client.

Lean Thinking to become Lean Enterprise

Lean is a journey: a never-ending pursuit for perfection. Lean Thinking
improves the processes by the reduction of the wastes. A philosophy which
focuses on the removal of the unnecessary steps or procedures involved in the
process. It is customer-oriented and the steps which need to be eliminated are
determined based on the customer's perspective. It is focused on the business
transactions, but this thinking can be easily implemented in our daily lives to get
the maximum amount of efficiency out of it.

Specify Value
The value is determined by the customers. Value is what the customers
demand and what they are willing to pay for. The voice of the customer is very
important to know what the customer is willing to pay for, the rest which the
customer does not want counts as waste. Let us consider an example, company
XYZ makes headset. The sales manager thinks that the sales are effected due to
the high price of the headphones. While according to the customers the
headphones do not provide radio and bluetooth connection and hence they are
moving towards another manufacturer. So the XYZ company should make the
changes in the headset according to the customers demands. The product will
have value only if the customer approves it. Value plays an important role in
focusing the organization on its goals and helps in designing new products that
match customers' needs and give profit to the company.
 An organization must reduce waste and save the costs from different
business processes, so the costs demanded by the customers lead to maximum
profits for the organization.

Identify value stream

Value Stream is the flow of all the processes which include all the steps from
the initial design, development, launch, and order delivery of the products and
services. Although 100% perfection can not be achieved yet, lean methodology
reduces the wastes to the minimum value and maximum value added processes.
According to Lean Thinking there should be a constant communication between
the customer, producer, and the management to reduce wastage.

Value Stream mapping

Value stream mapping is an amazing tool that helps to identify major non-
value add activities (wastes), which must be removed from the process to make
it lean.

What do we mean by a value stream map?

A value stream map is a graphical representation of all the activities which
constitute any process under consideration. The activities represented in the
value stream map can be essential activities, wastes or non-value add business
activities. It contains a lot of information regarding the process under
consideration and is extremely helpful in understanding the flow of the
procedure.

What do we get by drawing a value stream map?

When a value stream map is constructed, understanding of the mechanism of
the flow of activities and their significance becomes clear to the management
and anyone studying the value stream map. It also helps to identify nonessential
steps in the process that must be eliminated from the process to make it lean.

Tips for developing a value stream map

The value stream map is a simple tool for making the business lean. If
applied efficiently, it can result in great value generation with minimal
investment of time, mental capabilities, and physical efforts.

Use Sticky notes

 Sticky notes are fun to work with, but that is not their main appeal or
attractive feature. You can comfortably make changes in them and you can
color-code them as well. For instance, you can designate green colored sticky
notes only to be used for essential activities, red sticky notes for wastes, and grey
colored sticky notes for non-value add business activities. This way, it becomes
easy to identify the different types of activities when the value stream map is
studied.

Make sure that your workstation is spacious

When developing a value stream map, things can become very messy very
fast. If you are working on a value stream map in a congested space, it will
become very difficult to avoid cluttering up different things. The more spacious
the workstation is, the easier it will be to manage it. It would be much preferable
if you work on a big whiteboard or a giant desk when you are developing a value
stream map.

Don't develop the value stream map all alone

It is best to develop the value stream map with a team of professionals who
are personally involved in the process. It eliminates or reduces the possibility of
overlooking a step or classifying an essential activity as a waste or vice versa. It
also allows you to have an eagle's view of all the steps involved in the process
and find the loopholes in the process.

Benefits of value stream mapping

Highlighted dependencies
Identify opportunities
Understanding of the highly complex systems
Synchronized and prioritized continuous improvement activities

Types of value stream maps

Production: raw material to the customer

Design: design to concept launch
 Administrative: order-taking to delivery

States of value stream :

There are two states of the value stream, which are as following:
Current state:
The existing conditions in the value stream is called current stream.
Steps for making a Current state map

Determine the type of map using the flow chart. At first be very
general and add uniform details as you go along. Pay particular
attention to the critical paths. Add the elements such as inspection and
test, also include the waste for its productivity is of equal importance.
Add inventory, transportation, vendor facilities and customers
endpoints.
Attach functional groups and information flows.
Develop and attach data to all elements such as lead times, setup time,
and process times.

Future state:
The Future state reflects the future vision of the value stream.
Steps for making a Future state Map and Work plan

Use the current state map as base line.

Using the 7 Waste type definitions and analyze one at a time to see
which element contains waste and attach a measurement of the waste.
Estimate the use of resources required to accomplish the changes.
Calculate the human resources requirements and don't over-estimate
the available resources.
Redraw your map consistent with your change selection.
Make a detailed work plan of who, what, when and how the processes
and activities would occur. Processes should be reviewed regularly, if
the planned should be changed, it should be discussed in advance.
At the end of the plan, adjust the map to reflect the changes. This will
now be the current map. Decide whether to go for another cycle or to
change the map subject.
 1. Make Value-Creating steps flow

Flow includes all the steps through which we go along through the value
stream with no wastage or faults to achieve the desired goal. Flow reduces the
waste that creates hindrance which stops the value chain to advance forward. An
efficient value stream should not hamper the manufacturing process. All the
activities from design to launch of the products or the services should be
synchronized, which will help in the reduction of waste and will improve the
efficiency. Customer happiness is the most important to make value flow.

2. Pulls Customers towards product or services from value stream

Traditional business systems are such that they produce products in large
bulk, hence the quality of the product falls. The bulk of the product is then stored
away hoping it would find market. This is known as "push system". While the
Lean Thinking promotes the "push system". According to this system the
manufacturers do not make a large amount of product and store it, rather they
make goods which the customers demand. The value stream pulls the customers
towards the products and services. There the manufacturers would not make
anything unless it is demanded by the customers. If a company is following Lean
Thinking then it should perform quick actions and a lot of flexibility. As a result,
the cycle time required to plan, design, and deliver becomes very short. The
biggest advantage of the pull system is that no values activities can be
minimized.

3. Perfection

To attain perfection is the main goal of lean thinking. This is because

continuous improvement is required to sustain the process. And to sustain a
process it is important to remove the reasons which are behind the low quality of
the products and services. Lean masters who are individuals from various teams
with a common goal. The goal to achieve efficient results. The results benefit
either the organization or the customers. The most effective way to achieve
perfection is by the collective effort of engineering, supplier associations and
value stream mapping between customers and suppliers. It is significant that the
lean principles should be followed to reduce waste, deliver quality goods to the
customers and gain maximum profit. The organization and the customers should
work together to achieve the desired goals and the visible efforts to reduce waste
and improve efficiency. Lean Thinking can be applied with the help of
committed leadership, a persuasive change agent, and well-informed employees
and suppliers.

The same idea that we can apply to process improvement can also be applied
to product development and vice versa. So the idea of optionality can be applied
to both process improvement and well as product development. You can assign a
bunch of teams, they all try different things and see what works and what does
not and then gets adopted by the teams.
For product development impact mapping about the idea we state what are
the measurable customer outcomes that you can achieve. Then we come up with
various people potentially involved in achieving those outcomes. Then come up
with the hypothesis as to which ways we can achieve those outcomes, except
what the outcomes of the hypothesis would be. Instead of analyst writing stories,
we write hypothesis.

Making business agile

Start with the business objective. If you don't have the business objective,
you don't know how to do things. It is less important how the teams work but it
is important how the teams work together. Figure out organization optimization
and to bring value to the customer.
Make sure that at the enterprise level, whatever level it is, you decide where
the teams can engage with the executives and transform the business. It needs a
continuous improvement process. Rather than writing done hundreds of stories,
sit down and plan out strategically what you are trying to accomplish as an
organization, then it will start to add value.
If the teams know that there is something on the list that they need help with,
then they will be able to access the resources that are available in the
organization and to help them get done. If there is nothing in the priority list,
then the teams keep doing what they are doing at the team level. It is a nice
combination of tops and bottoms up. It gives a strategic direction going and
gives empowerment to the teams.
In order to achieve a milestone, the teams and the programming staff gather
together and talk about the steps to take to achieve the goal, what should be done
and what they learned, the data they collected and then draw out the rough draft
of what they thought the objectives would be. Rough draft contains the opinions
at the time which need to go through staff meetings, organizations and forms to
see if they are not missing anything. The objectives should have everything that
an organization is aiming to deliver but should also include a continuous
improvement process.

Hypothesis-driven delivery
The concept of hypothesis-driven delivery is that we believe that building
some features for the customers with achieve their desired outcome, hence we
make a prototype and receive the outcomes from the experimentation that
whether out hypothesis is correct or not. Then we feed these things in our target
conditions along with process improvement goals, we have product
improvement goals which we have defined through customer outcomes.
The key things that huge companies like Google and Amazon do, they run
experiments on processes in production through tests, gather data and often build
whole features. The reason they do that is in general the data they gather shows
that only ⅓ of their ideas were successful.

Changing the culture (high trust culture)

The heartbeat of what's happening within the team, they outline the
aspiration of what's happening within the team, they outline the aspirational
vision of what they are trying to achieve, what are the goals, what are the
hypothesis they are trying to test and get them in front of customers. What
experiments they are going to run this starts to map or design the picture of how
their product or story fix together but before that they collect the data and define
the measure of success to validate how they can run those experiments and what
are they going to learn.

Aspirational vision
Customer hypothesis
DESIGN experiments
Story mapping
Data/feedback to validate

The introduction of such processes and practices in an organization changes

it because of the changes in the way people work. In order to change culture
people's behavior should be changed. In order to change people's behavior,
change the system of work in which they operate within. Make a system in
which they are happy and they can start to operate to achieve the goals.
 Building the Lean culture is the key to innovation. Creativity must flow from
everywhere in the organization. Whether it is an intern or a CTO all the ideas
must be exposed to objective testing, experimentation and preferably a test that
exposes the idea to real customers. Everyone must be able to experiment, learn,
and iterate.
 CHAPTER 3 The Lean Methodology

Nowadays, information spreads very fast. It is true that we live in our world
that is well advanced in terms of technology than before. Despite that, we still
continue to struggle.
It is important at this moment for us to have all the tools that we need at our
fingertips, but why is it that it is still hard for us to set the strategic direction of
an organization? As the day closes, we seem to have drowned in a sea filled with
non-relevant information. The question asked has always been how an
organization can rise up and move forward?

What is the best breakthrough for a better future?

Lean processes are considered as the means for realizing process
improvement. Regardless of what your organization does, it is very essential that
there is some room for enhancement. Top companies use the term Lean to refer
to a business methodology related to the customer and working back for the sake
of making sure each step adds value.

Why is Lean Methodology Important?

Lean is among the best business methodology that anyone can apply to help
cut down the cost of delivering a great service, enhance delivery, and boost
product quality. No other type of methodology can result in these benefits.
 The Six Sigma deals with the top-down driven force to reduce costs, but
usually, these gains describe a one-off and unless it is merged, they need to be
sustainable. Total quality deals with quality alone. Lean, however, if it is
implemented correctly, it helps managers become heroes in the eyes of the
employees and customers. This will add an unprecedented level of transparency
that most companies can only think of. This makes companies remain on the
path that leads to more value with each activity undertaken.
To ensure that this looks more tangible, consider your personal life. Would
you be okay to pay for something that was present in a different place for a
better price? Some years back, these kinds of offers were not easy to find for one
to review. During that time, you had to drive across town and move from store to
store. But today, there are offers from eBay or Amazon that one could view in
the privacy of your home. In addition, online ordering and transparency during
the time of purchase and delivery process eliminate the risk of your transaction.
In your specific business life, do you think that your customers will feel the
same way? All that customers want is value for their money. Lean is simply the
most surefire means to show that consistency adheres and reliability exists to
improve the value. All of these factors combined contribute to the general
success of the business in the long run.
Maybe Lean appears like Utopian. In fact, about 30% of companies that
decide to adopt Lean report success in their efforts. The other 70% that fail often
fail because they were quick to give up, or because they didn’t have the support
from the top management to help them implement and ensure that it is
sustainable. There is a big complexity to ensure that Lean can work within your
firm, however many surveys carried out show that the end will always justify the
means. Additionally, the benefits outweigh the costs.
The lean processes describe the waste out of processes, to ensure that they
are the best in class. A journey in Lean will never come to an end though
because the overall goal is often relentless search for perfection. The lean
workers never look at work as a chore. Instead, they look at the value at which
they dedicate to the entire organization, this way they spend most of their days
boosting the ways of working. Leaders will allow this change by empowering
and training their workers using tools to slowly and steadily enhance their means
of working daily.

Both Agile and Lean methodologies are wildly popular these days. More and
more organizations are adopting Agile and Lean practices. However, many
teams struggle to describe the similarities and differences between the two. The
question is: Are you Agile? Are you Lean? Can you be both?
 The primary focus of Agile is to provide maximum business value via
incremental and iterative development, while the primary focus of Lean is to
improve existing processes, eliminate waste, and optimize the flow.

Both methodologies are different. Can they co-exist? Large organizations

that are Agile are leveraging Lean methods to scale Agile to the enterprise. With
Lean, the entire system is organized into different sequential or parallel value
streams that are then optimized to improve the flow efficiency of the system as a
whole. Today, Agile teams are adopting Lean thinking.

The best-suited methodology is Lean for:

Improving operational efficiencies

Performing repetitive tasks with shortest sustainable lead time
Improving existing processes
Eliminating waste
Optimizing the end-to-end flow
Maximizing productivity
Reducing the average lead time
Reduce the average cycle time

The best-suited methodology is Agile for:

Promoting frequent customer collaboration

Supporting emergent design
Adapting to change
Delivering highest business value
Developing incrementally
Driving innovation

Both lean and agile methodologies will work for:

Driving Quality
Creating a culture of collaboration, trust, and respect for each other
 Just-in-Time development
Continuous Improvement
Making decisions at the Last Responsible Moment (LRM)

Customer-centric approach
Lean is a customer-centric methodology that focuses on delivering the best
quality and value in the shortest sustainable lead time. Agile methodology is
customer-centric as well.

Just-in-Time approach
Both Agile and Lean methodologies encourage the Just-in-Time approach.
One of the two pillars in the Toyota House of Lean is ‘Just-in-Time’ that
encourages to produce only what is needed, when it is needed, and in the
quantities needed. Agile development, too, promotes ‘Just-in-Time’ planning,
design, development, and documentation. Agile encourages teams to refine,
design, and document only the prioritized work items. Agile concepts such as
incremental development and emergent design reinforce the ‘Just-in-Time’
approach.

Waste Elimination
Though Lean is the major proponent for waste elimination, Agile
methodology, too, supports this concept by delaying decisions until the last
responsible moment (LRM). Thus, with LRM, possible rework, caused when
working on an incorrect feature or an incorrect design, is minimized.

Differences in Agile and Lean

Let’s look at some of the core differences between Agile and Lean.

Origin
Lean management was originated in the manufacturing sector with the
intention to reduce waste and improve the efficiency of the existing system,
whereas Agile methodology was conceived by the software development
thinkers to solve problems with the traditional software development approach.

Nature of work
 Lean methodology is best suited to optimize simple, repetitive tasks that flow
through different workflow states. On the contrary, Agile is best suited to build
complex products that require research, experimentation, ability to adapt to
change, and collaboration.

End Goal
With Lean, the end goal is to deliver a high-quality product in the shortest
sustainable lead time, in the most economical way, while eliminating
redundancies and waste. With Agile, the end goal is to deliver the maximum
business value, respond quickly to the changing business needs, and develop
incrementally in an iterative way.

Team Size
Lean methodology is applied to improve processes in large enterprises and
teams. Value stream mapping helps to visualize the end-to-end journey or steps
required to deliver value to the customer. On the other hand, Agile is most
effective when applied to small teams with a team size of 5-8 people.

Lean methodology wipes out waste through such practices as choosing just
the really important highlights for a framework, organizing those chosen, and
conveying them in little bunches. It stresses the speed and proficiency of
improvement work process and depends on quick and solid criticism among
software engineers and clients. Lean uses work product being "pulled" using
client demand. It centers basic leadership authority and capacity on people and
little groups since examine demonstrates this to be quicker and more proficient
than a various levelled stream of control. Lean additionally focus on the
proficiency of the utilization of group assets, attempting to guarantee that
everybody is beneficial however much of the time, as could be expected. It
focuses on simultaneous work and the least conceivable intra-group work
process conditions. The Kanban Method is utilized by associations to deal with
the making of products with an accentuation on persistent conveyance while not
overburdening the improvement group. Like Scrum, Kanban is a procedure
intended to assist groups with cooperating all the more adequately.
Applying the lean startup methodology in a business (whether it’s a typical
business setup or a startup) significantly changes its landscape. And the ensuing
effect will depend on how yours adapt to the process. It certainly isn’t a one-
size-fits-all kind of thing, and that’s why it’s called a methodology in the first
place. There is a system in place that you will need to follow, otherwise your
efforts may be for naught.
 In a nutshell, the lean startup approach is all about finding out what it is your
customers want right away (or perhaps as soon as you decide to start a business).
It is also about adapting to the needs of your customers through continuous
testing and feedback-gathering without wasting any of your financial
investments.

Key Takeaways from the Entire Book

The lean startup methodology is all about creating or developing

products or services that customers actually want.
This innovative methodology aims to do away with wasted time,
effort, and money by making sure products or services only come out
for actual consumption or use once these are deemed marketable.
Otherwise, the products or services will go through a special cycle.
The leans startup methodology’s groundwork is the build-measure-
learn process. This means after producing something, you take the
time to measure how it will fare with your target customers by going
through a testing period. This testing period will let you know whether
or not the products or services you offer need further enhancements or
improvements.
The only time actual products or services are launched or released to
the public is after these have gone through a series of continuous
improvements. That ensures no money or time was wasted in the
actual production.
The build-measure-learn system helps you see whether you should
stick to the initial direction you planned to take or whether you should
go on an entirely new direction. This is referred to as pivoting.
Deciding when to pivot may be difficult, but if you don’t want to fail
in your endeavors, then you need to be open to the possibility of
pivoting or turning to a new path.
The lean startup approach is proven effective because of five
principles that govern how it works. These same principles are what
you need to apply in your business if you want it to succeed and
especially when you apply the lean startup methodology.
Accelerating the growth of your business is possible when you adopt
the lean startup methodology.
The lean startup method can also be used to efficiently manage your
employees.
 These are just some of the important points of this book. Hopefully, as you
plan your business, the knowledge gleaned from this book can help you journey
on the right path towards success. After all, that’s the reason I came up with this
book – to help you succeed by applying the lean startup methodology, just as I
did.
The Lean Startup Methodology
Eric Ries said that startups could be a success if they follow a certain
process. This means that the process can always be learned and those who have
experience can also teach them. Every entrepreneur will always wonder whether
a startup will fail.
If you wish to begin a lean startup, you must identify a small gap in the
market using time and money effectively.
You will need to use different techniques to ensure that your product or
service reaches the market in a faster way while also avoiding the production or
manufacture of products that no consumer will want.
Most amateur entrepreneurs feel that they are taking a shot in the dark when
they are identifying a product or service they can offer to their potential
consumers.
But, it does not always have to be a trial and error proposition. If you adopt
lean thinking, you will be able to develop ideas and refine them to meet market
standards.
Let me show you some principles that will give a start-up a greater chance of
making a profit and becoming a success within a limited budget.

Principles of Lean Start-Up

Controlled Use and Deployment of Resources

One of the most important principles of a lean startup is that the startup must
use every one of its resources effectively and efficiently. Since most startups do
not have enough investment, they use the lean business model to encourage the
effective deployment and continuous development of the resources that the
company does have.
A lean startup must continuously evaluate how the initial investment can be
used to meet their targets and their customer requirements. The startup must also
ensure that it does not spend more than what is necessary to test, evaluate, and
refine its products.
If the costs are kept at a minimum, the startup can maximize its profits
whenever there is a sale.
Every lean startup is dependent on organic growth since it does not have a
huge capital investment. When the profits made at the early stages are reinvested
in the company, the startup can scale its operations up in a controlled manner
without sacrificing quality. This is commonly called innovation accounting.
Entrepreneurs are everywhere
Eric Ries believes that every individual in the world is an entrepreneur.
There are some successful entrepreneurs who have built their organization in
their garage. You can find entrepreneurs in Hollywood, in the IRS and even in
well-established organizations. These people are always looking for a way to
develop products that increase value to the customer.
Entrepreneurship is management
It is important to remember that every startup is not defined by its products
but is an institution. Therefore, there must be a management team in place to
understand and develop the startup.
Validated Learning
A startup does not exist only to build products for the customers or to make
money. It exists only when the management learns how to build a sustainable
business. The learning can be validated through statistic measures by running
experiments that test the startups' vision.
Innovation Accounting
A startup must focus on the following to improve outcomes and also hold
every entrepreneur accountable:
• How can progress be measured
• How can milestones be set
• How can work be prioritized
Build-Measure-Learn
Every startup looks for ways to convert its ideas into a product or service and
measure how its customers receive that product or service. When they
understand the response, they will understand whether they need to pivot or
persevere.
 CHAPTER 4 Data-Driven Approach
Data Driven Approach removes the bottlenecks in a workflow environment
by gathering all the data affecting the flow. We feed this into the computer and
use advanced Lean Analytics to understand the nature of the problem and get the
possible solutions. The use of data helps to uncover hidden facts that a manual
inspection might overlook. This is the primary motivation behind using data-
driven analytics.
The second thing in Data-Driven Approach is the change and the amount of
change that the system will take for best functioning. Changing the value of the
parameter one way might improve the profitability of the business. But, it might
prove detrimental to the other aspects affecting the flow. We use data analytics
to understand the impact of the changes and how we can govern the individual
aspects to suit the working of the business.
Improvement in the work must arise from the betterment of the individual.
This is the basis of the Lean approach. It transforms the thinking to such an
extent that the thoughts of money and gain will vanish before that of adherence
to quality and addition of values. So, where does one draw the line? This is the
vital question that the lean expert faces when he tries to use the data-driven
approach at the workplace.
Building the Framework for the Data-Driven Approach Lean
Transformation
You have many readymade models to use to build your framework. These
evolved over the years through continuous use and change and so they have a
good degree of consistency and dependability built into them. You can build
your own framework by addressing the issues that you want to solve through the
framework.

1. Which is the issue that affects us in a big way?

2. What is the basic structure of the culture at present? Do we drive it or
change it?
3. What is the type of change we bring to the actual work?
4. Does the new way of working need any changes in the management
systems? Do we need changes in the behavior of the leadership?
5. What method do we use to improve capability?

These questions apply to the framework at the micro and macro levels. The
individual responsibility changes at each level depending on the framework size.
The system must address all related questions, including ones that deal with
interrelationships among the issues. If it does not, the transformation may lose its
momentum.
Addressing the issues
First, address the issue that you face. This might be getting established in the
local market, finding a good place for the business, or choosing a good name.
Create hypothetical solutions and apply Lean methods to drop the inefficient
ones. Often, this is the starting point of the business, so you will need to address
this and solve it completely.
If you are not satisfied with your present place or you do not have a place to
operate from, then you must check the locality for another place. You can rent
out an existing place or share space with an existing business. If you want
suggestions for the name, you can check the internet. There are many sites that
give you suggestions for names.

Structure of the existing culture

This remains based on the place where you are. If you are a local person,
then you will not have any problems fitting in. The method of movement and
distribution of goods depends on the practices of the place. If you are not
familiar with these, then you will not find many customers here.
The process of implementation is simple. The user gathers the metrics to use
with the site. Usually, the pattern of usage will change for each different user.
You can add features to the website to improve usability or conversion. So, a
framework gets made. User testing feedback will give an idea of how well the
site works and what improvements you need.
We analyze the work detail information for one kind of user. Lean
programming helps us choose the right parameters for the use of the system. The
performance gets tested and if this has a positive response, the number of users
gets increased. When the performance is satisfactory, the other users get
included in the testing. The testing carries on until there is a uniformly positive
response from the user.

The Data for Your Analytics

Analytics is a measure of progress toward one’s goals. You need to learn
your goals first before you can consider a metric. It’s been iterated before, but
here are some extra things that you should learn.
The first and most important step in creating a good metric is to gather good
amounts of proper data. The data should pass certain qualities and requirements.
And those qualities and requirements are:

Comparable
A single point of data only gives little information. For example, selling
three products today provides little and useful information. It can’t help you
measure your progress alone.
It gives you a starting point. Yet, it needs another point of data for it to be
actually useful in measuring your progress.
Say that you sold three products today and sold nine products yesterday. You
can generate much more measurable information from that situation.
You can synthesize the two data points and evaluate it. You can learn that
your product performed poorly today compared to yesterday. Collect comparable
data points to measure your progress.

Understandable
If you don’t understand a data point, it becomes irrelevant. For example, if
you live in the UK, you’ll be much more familiar with kilometers rather than
miles.
Ask an American how far a place is from where you’re standing. Expect that
he will give you a distance value using the Imperial miles.
The answer you'll get is correct and true. But, it becomes irrelevant because
you might have no idea how far a mile is.
Because of that, you should know how to process data to make it
understandable and relevant. Here’s a quote often attributed to Einstein, “It
should be possible to explain the laws of physics to a barmaid.”
Actually, Ernest Rutherford said that. Anyway, if it’s possible, then you can
understand and explain the data you got.

Rate-able
A data point is convertible or translatable to numbers. It should always be in
the form of a ratio or percentage. After all, you can always process raw data or
numbers to ratio or percentage.
For example, you sold three phones yesterday and nine phones today. It’s
easier and informational if you interpret the data by using ratio or percentage.
You can say there is a 300% increase of phone sales in your retail store today.
But of course, play safe with this one. As William Bruce Cameron said it
best in his book Informal Sociology: A Casual Introduction to Sociological
Thinking, “Not everything that can be counted counts, and not everything that
counts can be counted.”
 Relevant
As mentioned before, the metric or data must be relevant. A relevant metric
can make you think of improvements and changes. An irrelevant metric is
something good to know.
A customer bought three things from your company today. Sure, you can
understand what it means. But does it tell you anything? Is it relevant? What did
the customer buy? It’s true that it is understandable. The data is simple:
customers bought three things from you.
It becomes irrelevant because it doesn’t provide any context. It doesn't have
any accompanying information to make it relevant as a metric. When gathering
understandable data, it’s much better to have your data points to be specific and
detailed.
For example, the customer bought three iPhone units from your retail store
today. The context changes and you understand the relevance of the information.
You can evaluate that your iPhone units are getting more popular than other
phones in your store.
Remember that it’s much better to have more data and discard the excess.
Having less data only restricts you to what you can learn.

Eight Types of Data

This is where it gets interesting. You should know that there are at least eight
types of data. You can use those to create a business metric to measure your
business’ progress. Most lean analytics use the first two types for the one metric
that matters.
But it should help you out if you know the eight data types to prevent you
from improperly using them. Other types, aside from qualitative and
quantitative, can help you create unique metrics. Those metrics might not help
you measure progress, but can help you in other things such as marketing,
company management, and the likes.

Qualitative
This includes customer interviews or anything that doesn’t involve numbers.
It can be in the form of gut feeling or personal feedback. This gives you insights.
This allows you to think about how you can gather or collect data for the next
type of metric.
Qualitative data is often converted to quantitative. For example, feedback
can be converted into numbers: 5 for positive, 0 for negative. A product’s
success can be measured this way.
 However, data in its qualitative form is useful in lean analytics. The
comments from customers can help in the development cycle of your products.

Quantitative
This is mostly numbers. It’s the most used type of data that businesses use
regardless if they’re running lean or not. The data you get from this type of
metric allows you to know the data you actually need to gather.
Unlike qualitative, you can’t easily revert quantitative data to qualitative.
What you can do is to interpret it. Data can be reformed or skewed through
interpretation.

Vanity
It only makes you feel good. It does not help you create actionable plans that
matter for your company. And it’s often wrongly used as a metric to measure
progress. It still serves as a good motivator and marketing material for
businesses.

Actionable
Actionable often comes internally from your organization. But it can be
gathered from customer feedback, too. Actionable data and metrics can provide
you with insights. These insights can directly affect and influence your business
decisions.

Exploratory
This is speculative data, one that’s generated using currently available data
on hand. This can involve predictions on how metrics will change over time. It
can also show how the metrics can be influenced to achieve the result you want.

Reports
Data gathered from reports can be actionable, vanity, exploratory, or lagging.
It can be generated internally or you can source it from third parties. It is often
acquired by businesses periodically, depending on how you set it.

Lagging
People usually call lagging data as historical data. Not all data can be
acquired instantly. Some of your business actions require some time to see
results. These results can be interpreted as usable data.

Leading
 The biggest difference between leading and exploratory data is the time
range it predicts. Exploratory data are often predictions set to the far future.
Leading is predicted for data in the near future.
 CHAPTER 5 Types of Metrics
There are two metric types that you are able to use when doing Lean
Analytics. These include qualitative and quantitative metrics. To start,
qualitative means that the metric has a direct contact with your customers. This
would be things such as feedback and interviews. It is going to provide you with
some detailed knowledge of the metric.
You can also work with quantitative metrics. These are more of a number
form of metrics. You can use these to ask the right types of questions from the
customer.
Of course, both of these methods have other things under them that make
them easier to use. You will find that both of these methods have actionable and
vanity metrics.

Vanity metrics will not end up changing the behavior of the thing you
are concerned about. These are a big waste of your time, and you
should avoid them as much as possible. They seem to provide you
with some good advice and something that you can act upon, but often
they don’t lead you anywhere and can make things more difficult. If
you are working with a company to help you determine your metrics,
be very wary if they start touting the benefits of following any of the
vanity metrics.
Actionable metrics are going to end up changing the behavior of the
thing you are concerned about. These are the types of metrics that you
want to work with on your project. They are metrics that can lead you
to the plan that you should follow and can make it easier to come up
with a strategy to make your business more efficient.
Reporting metrics is a good way to find out how well the business is
performing when it does even everyday activities.
Exploratory metrics are going to be useful for helping you to find out
any facts that you do not know about the business.
Lagging metrics are good to work with when you want more of a
history of the organization and you want as many details as possible to
help with a decision. The churn of a company can be a good example
of the lagging metrics. This is because it is going to show you how
many customers have canceled their orders for a specific amount of
 time.
Leading metrics are good because they can help provide you with the
information that you need to make future forecasts for the business.
Customer complaints can be a good example of leading metrics
because it can help you to predict how a customer will react.

You will need to determine which kind of metric you want to use based on
the problem or project that you are working on. Working with one metric is
usually best. Doing so will help keep you on track, so you know what to look
for. Don’t waste your time trying to work on more than one metric. You will
only get confused and end up with no clear idea about the strategy to follow.
What are the advantages of metrics?
Well, read John’s story again. As we all know, you’re in business first to
make a profit, when this fails to come to fruition or is just taking some time
(even though you envisaged it) you become worried, angry at yourself and may
decide to quit. It is important to note that the importance of metrics cannot be
overemphasized.
Metrics give you an edge over seeming minute occurrences which may
render your company bankrupt.
To get the best out of metrics, here are some guidelines and also some
advantages
- Follow the steps: Metrics have lots of advantage but first you must
follow the steps, you must know first consider what data to track. Selecting the
right metrics involves some processes which include:

1. Define your business’s governing objectives; it is often said that “when

the use of a thing is not known, abuse is inevitable”. To be able to
accurately know what to track, your objectives must be clearly
defined, without this you would just keep going in circles and this
could be very frustrating. It would look as though you are putting in so
much work and having so little progress.

2. Know what drives your business success; you must come to an

understanding of what enables you to make progress and turn out
successful because this will determine what you should put more effort
into. For some companies, it is the customers, this means they must
provide quality services and have an outstanding marketer-customer
relationship; this will improve feedback coming from the customers,
which is good for business.
 3. What can the employees do to meet the governing objectives; After the
objectives have been outlined, it is very important to outline the things
each employee can do to meet these objectives, if these are outlined
specifically for each employee, it will reduce the case scenario where
the employee doesn’t know the job description i.e. the employee
doesn’t know what should be done at a given time.

4. Statistics re-evaluation; Regularly, statistics should be re-evaluated to

check if the governing objectives are congruent with the activities of
the employee, it could be re-evaluated every month or every two
weeks to be sure the right activities are being carried out.

- Causality and convenience: when causality can be proven beyond doubt

and when it can be accessed with ease for progress to be tracked between the
employers and employees, it serves as an advantage. Once the analysis isolates
critical variables for success, everything is in place and is perfect. If the effect of
a certain marketing effort is what needs to be measured, isolate and unravel how
those products influence the bottom line as compared to your regular approach.
If same-product sales are a predictor of revenue growth, be sure to implement it.
A dashboard approach is used most times for tracking purposes; it gives an
instant look at the numbers which “call the shots” – this method is preferable as
it alleviates you off the stress of having to go through a large report or a certain
complicated spreadsheet repeatedly. If this approach will be taken, be sure to
align your business and its goals to suit what is expected, a one-size-fits-all
would not suffice for your business in this case as certain errors could be
encountered and this is bad for business.

- Choose carefully: Once you’re able to choose carefully, the advantages

abound; employees and resources will be pulled towards objectives which will
grow business and measures to be chased will reflect company goals, employee
compensation will not take over and numbers will no longer be the focus
because metrics will reflect the exact state of the business, if it is faring well or
not and not how well employees can guess what is being searched for hence they
won’t be able to manipulate the data to suit themselves. For example, a
salesperson who has an idea that judgments are made on yearly volumes may
decide to place orders a day before the reporting period with prior knowledge
that it will be canceled or returned later just so he can boost numbers. This will
not occur because metrics will reflect exactly the exact state at which business is.
- Data should decide: Metrics will be used to your advantage if it has the
greatest utility for your business. Metrics will not exist and then you place your
“knowledge” over it, you must let data decide. For example, you may think the
number of people logging onto your website equates to the amount of money
you get in a day. If metrics doesn’t prove it as such, then it is not so and will
never be. If metrics are in place, it should be the marker for growth and progress
in your business, this way you will maximize profit and avoid unnecessary
stress.
- Not spend time and money on the wrong things: Once you focus on the
right things, you take your hands off other stressful and unimportant things. This
is made achievable with metrics, it gives you an easy way out.
- Helps prioritize your tasks: you no longer lack priority like doing the
unimportant but urgent things, metrics help you prioritize accurately and
effortlessly. With metrics, you know exactly what to do to get the best results.
What happens when you toss metrics away?
We all know too well that whatever has an advantage also has a
disadvantage; the goal is in determining which one outweighs the other. Water is
essential for growth in the human body, it is also essential to meet the daily
needs of man, I mean, we all need to have our bath, wash clothes, cook, etc.
When there is a flood, that’s still water, but this time around it will have a
devastating effect on those who will get affected. Houses could be torn to shreds,
river banks would overflow, etc., this doesn’t mean water is bad, it is having the
right quantity that matters. The same can be said also for metrics, can they be
used to an advantage? Yes, can they also have some disadvantages? Yes.
There are different types of metrics, all of which employ numbers and
economic principles to explain business performance. All business metrics have
setbacks anyway, if not in the way they are designed, then it could be in how
analysts can misuse them thereby producing incorrect results.
The disadvantages of metrics include but are not limited to;

1. Specificity: The high degree of specificity in which certain business

metrics set up can be a disadvantage. The use of data on security to
create a result may be useful in learning about a sector of the business
and likely ignores others, relegating them to the background hence
they are seen as unimportant. For example, the market position reveals
how much of a given market a certain business controls through its
sales. As a gauge or marker of general stability, however, this is a poor
metric analysis since it doesn’t tell about the growth potential of the
market or whether a business competes in several markets at the same
time. Focusing a lot of effort on one facet could lead to other
 components being ignored and this will be terrible for business

2. Inaccuracy: The goal of business metrics is to break down complex

realities in different facets of an organization’s existence into minute
chunks of data that can be easily comprehended, recorded, and
compared with former or subsequent data. Some metrics, however,
include the risk of inaccuracy, making them totally dangerous to use
when there is money to be sought after or even heightens doubt about
results instead of them being doused. This majorly is the case with
metrics that rely solely on forecasts or estimates. Predictions based on
research and past results, could be the information originating from a
company’s static budget and may look like sound financial
information; when actual data is finally inserted by analysts, there
could be a humongous change in industry growth as a result of
incorrect assumptions which have previously been made on areas
including inflation, expenses, etc.

3. Over-reliance: The benchmarks for evaluating performance for some

metrics such as profit-and-loss statements, the cash asset ratio could be
overly relied upon and in the end be outrightly wrong. Inasmuch as
these metrics have value, the illusion is also formed that other metrics
amount to no good and are less reliable neither can they be trusted.
The responsibility of evaluating business metrics within the context of
what those metrics represent are foisted exclusively on individuals,
what other metrics reveal and how information works in sync to give
information about a business are also subject to what individuals make
of them.

4. Wrong numbers: When metrics are used improperly and not in line
with your objectives or won’t have the desired effect on the bottom
line, it would be a disadvantage. Metrics need to be predictive and
persistent for them to be useful and a regular comparison of the
statistic measures to the desired outcome. If massive importance is
placed on metrics which do not guarantee any progress as regards your
strategic objectives and the mission of your organization, it means
you’re going the wrong way.

If you also measure events which occur out of sheer luck and consider them
to be benchmarks for success in the future, you’re slowly running into error and
will fall sooner or later – a man who stays in an area where the weather is pretty
cool around September and his sale of umbrellas are fair and in the month of
March which is hottest, there is a political campaign and the party involved use
umbrellas as a campaign strategy, it would be wrong for him to outrightly equate
his massive sale of umbrellas in march to the political campaign, ignoring the
weather, for he would only later realize it was less effective than planned and the
metric put in place was useless.

5. Easy to manipulate: If your metrics can easily be manipulated, it

would be a disadvantage to the growth of your business. If your
employees find out that as a radio presenter, your main goal is to gain
listeners, they may just get friends to write down fake names, sign up,
and eventually unsubscribe almost immediately. It is pertinent to look
for metrics that are safest and will not be manipulated. A superficial
metric is no man’s friend.

6. Contrasting goals: When your interest is not taken to heart and your
employees careless, they would do the opposite, and a negative
outcome will ensue. Once the interest of the employer differs from that
of the employee, clashes are imminent. If an employee is judged based
on the number of goods sold, he might try to game the system by
hiring “customers” to come buy so that he will be duly compensated,
as they return the goods sooner or later.

7. You are not your metrics: it is quintessential that you don’t get caught
in the web of assuming you are your metrics. You are the first human,
business involves lots of highs and lows, and sometimes you could be
at the lows. While it is important to track your metrics, never tie your
value to numbers because it will destroy you emotionally. When
metrics don’t look good, as humans, we think and feel, this could lead
to uncoordinated acts on the part of the individuals involved.

8. Human factors: Metrics could make you ignore human factors and all
you do is stay focused on numbers. If human factors are responsible
for a dip in business, there’s no need focusing on numbers, the human
factors should be fixed, are the employees happy, do they get enough
rest, are they burning out? Human factors are as important as data and
numbers, do not get one at the expense of the other
9. Vanity metrics: These include metrics like social media attention,
shares, and page views. While these have no role to play in your
bottom line, they could make you feel good, who doesn’t need a little
boost from something like that anyway, the morale it gives could be a
boost to the team. Focusing excessively on metrics will take this away.
Learn to enjoy the little “pointless” numbers.
 CHAPTER 6 How to Recognize a Good Metric
Recognizing and Choosing a Good Metric
Part of the Lean Analytics methodology is finding a good metric to help you
out. The Lean Analytics Cycle is a measurement of movement towards a goal
that you already defined. So, once you have taken the time to define your
business goals, then you must also think about the measurements you can make
to progress towards the goals.
This can be hard to do. How are you supposed to find a good metric that can
make sure you go towards the goals that you set out? Some of the characteristics
that you can look for when searching for a good metric include:

Comparable: You know that you have a metric that is good if it is

comparable. You want to be able to compare how things have changed
in the last year, or even from one month to another. This gives you a
good idea if there have been any changes, positive or negative, with
your business process, customer satisfaction, and more. You can ask
yourself these questions about the metric to help test for this:
How was the metric last year, or even last month?
Is the rate of conversion increasing? You can use the Cohort
Analysis to help with conversion rate tracking.
Understandable: The metric that you use should never be complex or
complicated. Everyone should be able to understand what it is. This
ensures that they know what the metric is measuring.
Ratio: You should never work with absolute numbers when you are
working with metrics. If you find that you have those, you should try
to convert them to make comparisons easier, which in turn makes it
easier to make decisions.
Adaptability: If you have chosen a good metric, it should change the
way that the business changes. If you notice that the metric is moving,
but you have no idea why it is moving, then it is never a good metric.
The metric should move with you, not randomly on its own, or it
won’t be a secure one to use.

Use Metrics for Your Automation

Automation means letting the machines, here computers, do the work. This
will involve three big steps other than the calculation and the setting up of
metrics. They are as described below.

Put a Global Strategy based on Lean into Place

To be a global player, the businessman must have access to the foreign
markets. It is easy to build the market through the supply chain network or the
sub-network if you invest enough money. This step is crucial and once this is in
place, you have the means to merge your gains through Lean.
Every market has its risks and international exposure brings its own share
with it. Use Lean methods of testing and placing new footholds in the market.
Eliminating wasteful methods and time-consuming processes will be the starting
point in the process.
Many companies used low-risk and low-cost strategies to enter in the market.
One example of this is export. This proved fruitful for those companies that did
not face much competition. Using the Lean strategy of labor reduction and cost
optimization proved beneficial to the businessmen.

Use of mobile app monetization

Applicability of media sites
Balance the inventory
Create website content

You can hire local delivery services to take care of making deliveries in
foreign lands. This is the first basis for expansion. The second is to establish an
online presence that helps you become a household name. You need to use
mobile-friendly content and ads. This will get you to most of the people in the
world because they all use mobile phones.

Completing the Transformation

Create an SEO friendly website that has links to heritage sites. Only this
helps you establish your product on the internet. Facebook, Twitter, Tumblr,
Instagram, WhatsApp, and others provide more exposure for your product.
Provide the links for all these on your website. Conduct contests that give
rewards to the users that link your website to the most number of sites. The
publicity is cheap but effective.

Get your customers and suppliers into the Lean chain

Integrating the supply chain and the delivery network through the market and
finding the best point of entry and delivery for your product is the first step.
Value stream management has lots of interest among Lean users because of the
way it gives the best solution. To maintain market viability, you need to have a
good delivery system.
The supply chain will succeed if your end users remain satisfied. Value-
adding activities for your product will depend on the choice and deployment of
the decoupling points. While agile systems are best applied to the downstream
side of the decoupling point, the Lean system gets applied to the upstream side.
Use good bookkeeping software to keep track of the inventory and bill
management. Also, add good content to your website to attract more visitors.
Use well-written content by a professional to add real value to the website.

Step 1 of the Lean Analytical Process: Understanding Your Project

Type
Now that we have taken a look at some of the different parts of Lean
Analytics, it is time to take a closer look at how the process works. These can
help you to get started with the Lean Analytics stage for your business and
ensure that you are getting the most out of Lean.
The first step that we are going to look at is understanding your business or
your project type. How are you supposed to pick out the right metrics if you
have no idea what kind of business or project type you are working on? You
must really understand the project at hand so that you can choose a fantastic
metric that can show you results.

There are six general business types that you can fit into, and they all will
have metrics that are going to work best or matter the most, for each one. If you
see that your business or project is on this list, your job will be simple. You just
need to focus your attention on understanding the priorities of what needs to be
measured. This can include in-depth external research.
However, if you have a business that is not on this list, this doesn’t mean you
are out of luck and can’t do anything.

E-commerce
The first type of business is going to be e-commerce. These are growing like
crazy right now as many customers are looking for the things they want to buy
online more and more. And many companies find that they can make large
profits by offering their products and services online to these customers. An e-
commerce business is going to be any that has their customers buy from a web-
based store. This could include businesses such as [Link], [Link],
and more.
The strategy for this type of business is that you need to understand the
customer relationship that you want. Does this mean that you are going to focus
either on new customer acquisition or customer loyalty? You have to decide
between these two because this is going to help with all the other decisions that
you make with this type of business.
There are many metrics that you can choose to go with in an e-commerce
business. Some of the typical ones that other companies have chosen in this
industry include:

Inventory availability
Shipping time
Mailing list and how effective it is
Virality
Search effectiveness
Shopping cart abandonment
Revenue that you make on each customer
The amount you spend to get new customers
Shopping cart size
Repeat purchase
Conversion rate

The best metrics

Of course, there are several metrics that will work the best and will provide
you with the best return on investment when working with an e-commerce site.
The best metrics to use here include:

Conversion rate: This is the percent of all visitors to your site who
also purchase something. The average conversion when it comes to
online retail is 2%. There are some that can do better though. For
example, [Link] is over 11%, and [Link] is at almost
10%.
Shopping cart abandonment: It is typical that 65% of the shoppers to
your website are going to abandon their carts. Many of these are
because of the high costs of shipping, and others are from the high
price of all the items in their cart. You should definitely take some
time to analyze any shopping cart abandonment that is happening in
your business so that you can learn why you are losing these
customers.
 Search effectiveness: The majority of your buyers are going to have
to search to find what they need. If you make your search more
effective, it can help your customers find what they want, rather than
having them leave in frustration. Remember that about 79% of your
total shoppers will use the search engine for half of the goods they
want.

Software as a service: These types of companies are going to sell

software in downloadable form or as a subscription. These can be
things such as Skype, Evernote, Basecamp, Adobe, and more. They
are not selling a physical product to someone, but these software
programs are still pretty important for most people to get work done or
to do other things on their computers.

The strategy with this one is that most part of the software is going to consist
of products that are on a subscription, which means that retaining the customers
is important. Your success is going to really depend on building up a loyal base
of customers faster than those customers disappear.
There are some metrics that you can use to make this happen. Some of the
most common metrics that are used with this type of business model include:

Reliability and uptime

Upselling
Virality
Customer churn
Customer lifetime value
Cost of getting new customers
The amount of profit you make per customer
User conversion
User stickiness
User enrollment
User attention

The best metrics

Just like last time, you are able to use any of the metrics that are above, but
there are some that could be the best for helping you reach your overall goals.
Some of the best metrics to use with a software company includes:

Paid vs. free enrollment: You will find that your enrollment rate is
 going to change depending on whether or not you asked for credit card
information in the free stage or not. The former is going to get an
average signup rate of 2 percent, and then 50 percent often end up
buying. When you do not ask, the average may increase to ten percent,
but only 25 percent purchase the product.
Growing revenues and upselling: Some of the best software
providers are able to get 2 percent of their paying subscribers to
increase what they pay each month. Being able to grow your customer
revenue by 20 percent in a year can be achieved if you work towards
it.
Churn or attrition rate: This is the percent of your customers who
are leaving. Going across the industry, the top companies usually have
an attrition rate between 1.5 and 3 percent each month. If you have a
percentage that is higher, then you need to find ways to make the
customers stay.

Mobile app companies: These are companies that are going to

provide apps to be used on mobile devices like Android and iPhone.
Some of the companies that can fall under this category would be ones
like WhatsApp and Instagram.

The strategy that you want to go with here is to find the right target audience.
There are a lot of ways for your app to make money, but you will find that the
majority of your revenue is going to come from a smaller group of customers,
rather than from the population as a whole. You should focus your analysis as
well as the metrics you use to help you better understand those customers.
There are many metrics that you are able to use as an app company. Some of
the most common options include:

Customer lifetime value

Churn rate
Ratings click-through
Virality
The revenue you make from each paying user
The revenue you make for each user
Percentage of users who end up paying
 How much it costs to get the customers
Launch rate
Downloads

Best metrics
Of course, there are many metrics that you can choose to look at when it
comes to being an app company, but a few of them are going to provide you
with the most information and can help your business to really grow. Some of
the best metrics you can use include:

Downloads and the app launches: The number of people who

download the product and then activate it will fit in here. It is known
that quite a few people who decide to download an app will then never
activate it or use it at all, especially if the app is free.
The cost to get new customers: You can follow a general rule to have
a budget of 75 cents per user in your marketing initiatives to help
attract new customers. You should always make sure that the cost to
get new customers is lower than what you will earn on them. So, if you
will only earn 50 cents on a customer, then you shouldn’t spend 75
cents on each one.
The average revenue you earn per customer: This is often going to
be determined through the business model. For example, Freemium
apps, or apps that you receive revenue from engagement in the app,
will often have a higher revenue per user compared to those that are
premium apps.

Media site companies: If you are in this industry, you have a website
that is going to provide some information, such as articles, in return for
earning advertising or any other type of revenue. These would include
most blogs and other sites like [Link], CNET, and more.

Media sites need to really understand the source of their revenue. It is not
coming directly from their readers or the people who use their “product,” but it
is coming from advertisers who are trying to reach those readers. So, if you are a
media site company, you would get revenue from affiliates, click-based
advertising, display advertising, and sponsorship. You would want to design
your key metrics to work for this.
Some of the different metrics that you can choose to work with for a media
site company include:
 Page inventory
Pages per visit
New visitors
Unique visitors
Content and advertising balance (you don’t want too much advertising
on the page, or it takes away from the content and keeps the customer
away).
Click through rates
Ad rates
Ad inventory
Audience and churn

Best metrics

Click through rate: This is the number of users that are going to click
on a link out of all the users who check out the page. The average
click-through rate for a paid search in 2010 is 2 percent, but some
companies can get higher. If you see that you are at one percent, then it
is time to make some changes. But if you are above that number, you
are doing really well.
Engaged time: This is how long your reader will stay on the site and
look through the content and the ads. Most media sites are going to
aim for 90 seconds for content pages, and a little less with landing
pages. If you find that your visitor is not spending more than a minute
on the content pages, then it is likely your content is not engaging
them.
Content optimization for media: This one means taking the content
that you already have and changing it so that it works on other venues,
such as podcasts and video. You should track how others are using the
materials you have because this can help you find some new
opportunities to use.

User-generated content business: If you have a community that is

engaged, they are going to contribute free content. And this same
engagement is going to provide you with ads as well as other revenue
 sources. Some examples of companies that work with this include
forums, [Link], [Link], [Link], and [Link].

The strategy that you should use is one that takes into account user
engagement. This business is going to be successful when its visitors become
regular contributes, and they interact with others in the community and provide
quality content. User engagement tiers to measure involvement can be good as
well.

Some of the different metrics that you may want to use with user-generated
content include:

Notification and mail effectiveness

Content sharing
Value of the content that is created
Content creation
Engagement funnel changes
How many engaged visitors you have

The best metrics

Time on the site each day: Here you are going to measure how long
the average user is on your site and engaged on a typical day. This is a
good thing to measure for engagement and stickiness. The average
number is about 17 minutes a day, though Facebook is usually an hour,
and Tumblr and Reddit are 21 and 17 minutes respectively.
Spam/Bad Content: With these kinds of communities, you need to
make sure that good content is always uploaded. You will have to
spend time and money to keep bad content and fraudulent content off
the site. You can measure what you think is good and bad and then
build up a system to help keep up with this. You can also spend your
time watching out for quality decline and then fix it before it ends up
ruining your community.
 CHAPTER 7 The One Metric That Matters
(omtm)

These simple steps summarize what the main focus of lean analytics is.
Though it can be summed up simply enough, many businesses are failing to
implement the process in a way that allows them to reduce the risks that most
businesses face in the early stages of growth. Many other companies take
advantage of this process to build a solid foundation for their business with
clearly defined needs and solutions that place customer satisfaction as a priority.
The method requires companies to agree on a build, measure, learn cycle.
Each team puts together a Minimum Viable Product or MVP of a potential
product. The performance of this product is measured, and any information
gathered from these experiments is applied to the end design. This results in cost
reduction and a more efficient production process with faster results.
The main idea is to place more value on the customer while relying on
minimal resources by using a system that optimizes the process of product or
service creation from beginning to end through all departments. As a Start-up,
these departments will be small, but as your business grows, these departments
can become quite large. Implementing a lean approach from the very beginning
of your business will ensure that your business runs at maximum capacity for its
entire lifespan.
Lean analytics teaches new entrepreneurs how to be more data-informed and
data-driven, how to recognize the stage they are at within their Start-up, and how
to purposefully choose a data metric relevant to the stage they are in. While data
collection is a part of nearly every business, it is often not used to correctly
identify the best path for a business to take to avoid risk and increase growth.
It’s important to focus on one goal and metric at a time. Choose the metric
based on where your business is at. This is referred to as the One Metric That
Matters (OMTM). As you transition from one stage to the next with your
business, your OMTM should also change.
For instance, if you are starting a blog, you might think your focus should be
on building an email list or getting more subscribers. This makes sense;
however, if you are just starting a blog, gaining subscribers should not be your
first focus; creating content or knowing what your blog will cover should be the
focus. This is how you will bring subscribers in. Focusing on simply building a
subscriber list will result in putting time and effort where it is wasted based on
where you are at with your blog.
The lean analytic structure is quite easy but can become overwhelming if you
veer off the main focus. Because it is so data-intensive, this data can cause you
to shift focus too quickly. Always remind yourself of what your business is and
what stage it is at. These two factors assist you in choosing the right metrics and
goals as you progress. The main business types include:
•E-commerce
•Software as a service
•Mobile app companies
•Media site companies
•User-generated content business
Two-sided marketplace business
Regardless of which business your Start-up will fall under, you have to
understand who your customers are and what impacts their buying or spending
process. Remember, this is a model to build around your business. There is no
right or wrong way to set up your system, and what works for one business may
not work for another even if they are in the same industry.

Learning to use Lean resources and principles is half the battle. Also, you
will come across questions such as, “Is Lean better than Six Sigma?” Or, “Is it
better to use the Theory of Constraints?” When you use more than one method,
you will get lost. One may get over the arguments over philosophical or even
technical differences with ease. You only have to stick to the basic Lean
principle of avoiding excess and getting rid of waste.
Overview of Over-Production
 The production cycle has in-built questions to start the next cycle. The first
one is to please only the customer and stop when you reach the target. Have I
achieved today’s quota? If the answer is yes, then stop production. Until the
customer places a new order, do not make anything.
This principle applies to all departments in the organization. The idea is to
achieve the perfect value stream. Other than this, there is nothing you need to
worry about. In Lean, we reduce the steps we use to help cut waste, while the
Six Sigma principle checks for variation. The more variations there are in the
process, the more chances there are for waste to accumulate. You need to follow
only Lean principles of keeping the number of steps down.

Choose to Operate the Pull

You have many aspects affecting how to operate the Pull. The Pull is
important because there will be instances where the workflow gets interrupted.
One of the ways to use it is to address the question or problem from two or more
perspectives. Pull exists at the nodes or joints of the structure in the
organization.
The workflow question is, “Have you finished this work?” The problem
question is, “Where is the box of material I am supposed to deliver?” And the
Pull question becomes, “Who is the driver delivering the box to the work spot?”
You can change the Pull in many ways until you have got rid of the externality
existing in the structure.
So, you see the work proceeding, but there is a lag due to the lack of the box.
The Lean principle tells you to cut the waste. Here you are wasting time. To cut
this, you must address the issue by finding out who is bringing the box. The
truck needed to deliver the box must undergo preparation. And then the box
must get loaded onto the truck. But, since there is a problem, you shift the focus
of the problem by diverting the loaders to a new place to do new work.
The problem is now resolved at two or three levels. One is the basic worker
level where you give new work to the worker. The second is at the management
level where you identify what caused the lack of the box. The third is at the
deployment level where you keep alternatives ready to prevent any further
occurrence of this event. Lean, thus, operates at many levels.

Make Comparison of the Steps

As the value stream progresses, the number of options keeps on adding up.
Many businesses keep these options open in the hope that some good will come
of it. But, it ends up as a waste of space and effort. So, it is wise to get rid of all
but one working option. When you have more than one option, it will end up in
confusion.
If you have to make a choice list out the options, then compare the merits
and demerits of each one. Try reducing the steps in each and see which one gets
done first. This will prove to be the best choice.
 CHAPTER 8 Correlation and Causation
Data are often related or linked in one way or another. Two types of data
relationship are causal and correlational.

1. Correlational: Two data points behave in a similar way because of

another data point. For example, the number of umbrella sales goes up
and the number of people getting flu goes up, too. You know that
people buying umbrellas do not actually increase people getting sick.
But you can say that it’s the rainy season, which can cause umbrella
sales go up and flu victims go up.
2. Causal: Two data points behave in a similar way because one of the
two causes the other to change. The two data points can be considered
independent or dependent. For example, it’s rainy and it causes people
to get sick. The independent data is the rainy weather. And the
dependent data is people getting sick. People getting sick does not
cause rainy weather, but rainy weather can cause people to get sick.

What does data relationships have to do with Lean Analytics?

1. Correlational data can help you predict events. For example, next
month is the start of the rainy season. You can predict that the number
of people buying umbrellas and getting sick will skyrocket.
2. Causal data can help you affect the future. If you sell umbrellas before
the rainy season starts, you can help prevent people from getting sick.

Data Link Testing

Unfortunately, the relationship between data is not always obvious. You can
just say that two data points are causal or correctional.
To know the relationship between your data, you must perform these
processes.

1. Find correlation
2. Test causality
3. Optimize causal factor

You now have a full grasp of lean startup and analytics. You are also more
data-driven than ever. The next step is to learn more about the technical side of
things. We’re going to talk about Minimum Viable Product. And we will apply
what you have learned so far using examples.

The Relationship Between Lean and Agile Development

Both Agile and Lean are popular practices in the software development
industry. Lean and Agile help teams deliver fast and more productive results.
Most teams in the software developers have little knowledge about the
difference between Lean and Agile. Usually, the terms are used synonymously
to explain or refer to a given set of practices. So, do you think you are Lean or
Agile? Is it possible to be both Lean and Agile?
First, let’s provide you with a brief answer: Agile development is a
methodology that facilitates the rapid delivery of a software, and it applies a lot
of Lean principles.

The Connection Between Lean and Agile Principles

Agile development is associated with any development method that relates to
the concepts in the Agile Manifesto. This is a foundational document written by
fourteen top software experts. The Agile Manifesto provides directions in the
way Agile software development should be implemented. It has three key
concepts: an iterative approach to development, disciplined project management
process, and short feedback loops. Below is a description of the way all the three
concepts have a connection with Lean principles.

Iterative Approach
When you examine the Agile software development, teams use an iterative
approach to manage software projects. A working software is produced as fast as
possible instead of waiting for large batches. Constant code deployment provides
an opportunity for teams to practice Agile quickly and receive feedback from
customers and stakeholders. This feedback is important because it determines
how the future product will appear. Therefore, teams can apply late changes in
the development process.

Connection with Lean: Deliver Fast and Delay Commitment

Iterative development is similar to the Lean principles of delivering fast and
delays commitment. Lean advocates for teams to deliver fast by taking control of
the flow and reducing the work in progress. By reducing work in progress, it
helps limit context switching and enhance focus. Agile teams control the flow by
working in collaboration to generate one iteration at a time.
 The principle of Lean to delay commitment encourages Lean organizations
to function like just-in-time systems, it waits until the last moment to make a
decision. This allows Lean organizations to develop the agility to make
important decisions using relevant and up-to-date information.

Disciplined Project Management Process

Agile depends on a disciplined project management process that advocates
constant review and adaptation. This type of approach facilitates software
development teams to concentrate on completing high-quality as well as high-
value work fast. As a result, valuable insight is generated after each release.
Towards the end of the iteration, teams take time to review opportunities for
improvements based on the feedback from stakeholders.

Connection with Lean: Develop Quality

When you have a disciplined process, teams can practice the Lean principle
of developing quality. This concept is very simple. It involves automation and
standardizing any tiresome and repeatable process. Or any process that is
vulnerable to human mistakes. This principle makes Lean teams reduce errors in
most of their processes. Therefore, teams are able to concentrate their effort and
energy on creating value for their customers.

Short Feedback Loops

A short feedback loop makes teams concentrate on work that fulfills the most
up-to-date business requirements. A popular principle in the Agile manifesto
requires close interaction between customers, stakeholders, and developers. This
allows Agile teams to take into consideration and complete a task depending on
the goals of the company, and remove anything that is not important to the
customer.

Connection with Lean: Remove waste

The concept of Lean advocates for this concept. If a customer is not going to
pay for something, then it is a waste. A short feedback loop between Agile
developers and their stakeholders makes teams develop a formula for eliminating
processes, products, and activities that cannot generate customer value.

Lean and Agile Development

Agile will provide a chance for a software development team to deliver high-
quality work, move faster and remain aligned with the business stakeholders.
There are different ways that you can apply Agile methodologies such as XP,
Scrum, and Kanban.
No matter the methodology your team selects, it is critical to understand the
principles behind the method so that you can achieve sustainable and disciplined
practice. In case you have a team that is implementing Agile but not familiar
with Lean principles, take some effort to find a way to enlighten them.
 CHAPTER 9 Lean Framework Stages and
Cycle (hypotesis, experiment, etc..)
The Lean Analytics Cycle is vital in helping you get started on this part of
the Lean support methodology with your business. There are four steps that will
come with this process, and following each one can be crucial in ensuring that
this works for you.
The best way to think about the Lean Analytics Cycle is like the scientific
method. You need to do some thinking to determine what needs to be improved
in your business, form a hypothesis to help lead your findings, and then perform
experiments to see if that is the right process for you to keep following. If things
don’t work out, you don’t just give up. You will continue to find new
experiments, going with the same hypothesis if it works (otherwise you’ll need
to form a new hypothesis) until you find the right solution.
The Lean Analytics Cycle will be incredibly helpful when you begin going
through the entire process. Let’s take a look at the steps that you need to fulfill to
use the Lean Analytics Cycle.

What do I need to improve?

Before you can do anything with the Lean Analytics Cycle, you must really
understand your business. You need to know all the important aspects of your
business, in addition to knowing what you want to change.
During this first step, you may need to talk to other businessmen to help you
find what metric you should use, based on what is most relevant to your business
right now. You may also want to take a look at your business model to find out
what metric will work best for you.
After you have time to choose a metric, you should connect it to the KPI or
the Key Performance Indicator. An example of this is the metric that is seen as a
conversion rate if the KPI is the number of people who currently purchase the
product.
To make this step easier, the first thing that you would want to do is write
down three metrics that are important for your business. Afterward, write down
the KPI that would be measured for each metric.
Never try to implement the Lean system without understanding the most
important processes that need to be improved. Sure, you could probably make a
long list of things that you may want to improve in your business. But you won’t
really see the benefits of the Lean system if you don’t pick things that are
important to the overall functioning of your business. Look closely at what your
business needs to improve, and pick the one that is the most important before
moving on.

Form a hypothesis

This is a stage where a level of creativity needs to come into play. The
hypothesis is going to give you the answers that you need to move forward. You
will need to look for inspiration, and you can find it in one of two ways. You can
look for an answer for something, like “If I perform ___, I believe ____ will
happen, and ____ will be the outcome.”
The first place you can look into is any data that you have available. Often,
this data will provide you with the answer that you need. If you do not have data
at all, you may need to do some studying of your own to come up with an
answer. You could use some of the strategies from your competitors, follow the
practices that have worked well for others, do a survey, or study the market to
see what the best option will be.
What you need to keep in mind here is that the hypothesis is there to help
you to think like your audience. You want to keep asking questions until you
understand what they are thinking, or learn to understand the behavior of your
audience or customer.

Conduct an experiment

After you have taken the time to form a hypothesis, it is time to test it out
with the help of an experiment. There are three questions that you need to
consider to get started with an experiment:

Who is the target audience? You need to carefully consider who

your customers are and whether or not they are the right customers, or
if you should look somewhere else to get better results. Also, think
about some of the ways that you reach them, and if there are better
ways to do this.
 What do you expect the target audience to do? This often includes
purchasing the product, using the product, or something similar. You
can then figure out if the audience understands what you want them to
do; is it easy for them to do this action, and how many of the target
audience are completing the task?
Why do you think they should accomplish the action? Are you
providing them with the right motivation to accomplish the task? Do
you think that the strategy is working? If they aren’t being motivated
enough by you, are they doing these things for the competitors or
otherwise?

Answering these questions is vital because they may help you understand
your customers better than ever before. Creating your experiment during this
stage does not have to be difficult.
If you have gone through and come up with a good hypothesis in the
previous step, then it shouldn’t be too hard to create a good experiment as well.
Then, once you have the experiment, you can go through and set up the Lean
Analytics so that you can measure your KPI and carry on in the experiment.

Measure your outcomes and make a decision

You can’t just get started with an experiment and then walk away from it.
You need to measure how well it goes to determine if it is truly working, if some
changes are needed, or if you need to work from scratch. You can then make a
decision on the next steps you need to take. Some of the things to look for when
measuring the outcomes during this stage include:

Was the experiment a success? If it is, then the metric is done. You
can move on to finding the next metric to help your business.
Did the experiment fail? Then it is time to revise the hypothesis. You
should stop and take some time to figure out why the experiment failed
so that you have a better chance at a good hypothesis the next time.
The experiment moved but was not close to the defined goal. In this
scenario, you will still need to define a brand new experiment. You
can stay with the hypothesis if it still seems viable, but you would need
to change up the experiment.
 How to Create a Lean System
To help your business create and implement a Lean system, and to ensure
that it lasts, the first thing that you must do is consider the absolute simplest
means that you can use to get the service or product you provide out to the
public and put that into effect. From there, you will need to always monitor the
processes that are in place to help support your business because this makes it
easier to have improvement breakthroughs from time to time.
From here, we reach the last step which is to implement any of these
improvements when they come along. While there are a lot of tools and theories
that you can use to make these steps happen, the fact of it all is that creating the
Lean system is actually easier than you may think.
When you are ready to create a Lean system in your business, there are a few
things that you need to take note of. First, you must always remember that
profits aren’t everything and that there is more to the business than just making a
ton of money. When you use the Lean system, the end goal here is to determine
the many ways that it is possible to improve the amount of efficiency that you
have inside. While an increase in the profits that you see is going to occur with
this process, don’t fall into the trap of that becoming your motivating factor.
Instead, focus on streamlining the process as much as possible, even if there
are some costs that you have to deal with upfront. While it may seem like you
are spending money when you want to save money, you can be confident that
every dollar you spend while using the Lean system is going to come straight
back to you in savings and profits later on.
Of course, there are going to be some limits that occur with this, and there
are times when the gains aren’t necessarily going to be worth the amount that
you spend on them. To figure out where this line is, you can use a value curve
that shows you how any changes are going to affect, either positively or
negatively, your bottom line. Companies often work with this value curve when
they would like to compare several services or products based on the data they
have and many other relevant factors. This can help make decision making much
easier to handle.
The next thing to focus on is treating tools as what they are. While there are
countless companies who switch over to a Lean style of doing things, they may
find that it is an easy trap to slip into when they take the available tools to the
extreme, even to the point of following them with a near-religious fervor. It is
important to keep in mind that the Lean principles, while very helpful and can do
a lot of things for your business, are just guidelines and any of the tools that you
choose to use are just added bonuses to help your company complete its work as
efficiently as possible.
 This means that if you need to use these tools to get more out of the process
and to provide some added benefit to your customers, then go ahead and do it.
But it is also important to know the limits of the tools and their purpose, and
then use them in the proper manner.
Finally, you must be prepared to follow through on this system. Lean isn’t
going to work if you just pick and choose the parts that you want to work with.
And it isn’t going to work if you try it out for a few weeks and then abandon it
without a look back. Even if you bring over a professional who is trained in Lean
in the beginning, the system can still fail if the team leader does not use it
properly or you just leave everything to the side.
Remember that this is a brand new way of doing things, different from what
you may have seen with some of the processes that you used in the past. It is
going to take some time to form these new ideas into habits. But if you show the
team how Lean is going to benefit everyone, if you train them in the Lean
process in the proper manner, and you let the employees voice their opinions and
ask questions, then you will find that it is easier to follow through with Lean
development.

Use of Lean Principle at Work

To separate technicality from work, it is important the workers understand
and use Lean principles. Often, there are problems that seem technical in nature
but involve real people. You begin to use the Lean principles at the core, the
place where the problem arises with only one man. Then, expand the core team
to as many as you need, until the problem gets resolved.
It takes some time for the principles to go into operation because there is a
learning curve involved. If you do not have the Lean thinking, then there will not
be much progress. Also, the team must know if the circumstances are right. If
they are not, they must identify the cause and size of the problem. It may be due
to one or more of the following:

1. Lack of commitment: The worker does not feel there is a need for
Lean methods. He uses traditional principles but gets foxed when
others seem to feel something is extraneous. Shift the focus and
reexamine the problem.
2. Performance not aligned with commitment: This is more serious
because work is ongoing and the value is not reaching the expected
level. We need a change in the attitude because the worker wants to
get measured according to the performance parameter. He is not
worried about the process parameter.
 3. Lack of training: The workers get deployed before they have got
trained. So, they keep looking at the others when the work proceeds.
Change the worker to another place and keep the work going. Wait
until the person addresses the problem by confronting it.

We see that the Lean working method is not a toolbox we can pick from to
achieve our ends. It is a total perspective that involves the entirety of the work
process. When you see a segmentation of the workforce, say the people on the
shop floor working at a different pace from the rest of the workers, you face a
problem. Here the plant manager has to hit the stop button. Slow down the
process, check where overproduction occurs.
He has a target to meet and must keep the workforce occupied. But, he can
do other work and still meet the target. This is the Lean principle. Any
extraneous work gets eliminated first. By moving the focus of the work to a new
place, any kind of waste, in material or labor, is got rid of. The people need to
have a Lean eye to develop the perspective they can depend on. This helps them
understand how the factory works with each component getting linked to the
next. They learn to recognize the elements that are important and work with
these first.

Getting Started with Lean Software Development

The manufacturing industry largely benefited from the Japanese ideas and
philosophy that originated from the Toyota Production System. In this system,
there was evidence to demonstrate that Lean practices increased production.
Currently, the term “Lean” is used to refer to functions that extend beyond
the manufacturing industry. But it is not long before this term was adopted in the
software industry. Now, it is common for one to hear that businesses have a
Lean ethos and Lean promotions to enhance processes and cut down on costs.
However, it is critical to note that prefixing any activity or process with the word
“Lean” will not automatically result in a cost-effective process. Therefore, it is
important to be clear when referring to something as Lean.

Origin of Lean
The Toyota Production System (TPS) was developed in Japan in the 1940s.
The TPS is basically a model of manufacturing that redefined the automobile
industry and created a way for the Japanese to be a giant global force in the
industry.
One key factor behind the success of Toyota was the ability to create
advanced vehicles at the end of the production that didn’t need any modification.
This was realized by detecting defects early and an immediate action taken to
remove the cause of the defect to prevent it from happening again. Hence, this
idea was easy to transfer to other areas. In the software environment, the same
can be equated to identifying a bug in the code and fixing it immediately. This
implies that for every bug noticed by a programmer, it should lead to the
following questions.

1. Which way could the bug be detected?

2. Which way could the bug be prevented from happening?

Not only is Lean focused on detection and removal of defects, but it is also
concerned with the surrounding functions and ensuring that the workflow is
smooth in the entire process. Even though this is not hard to visualize in a
manufacturing environment, one can still apply it in a product development
environment.
 CHAPTER 10 Benefits of Lean
Organization adopting Six Sigma business stratrgy will have the following
benefits:
1. Effective management decisions due to heavy reliance on data and facts
instead of gut-feelings and hunces. Hence costs associated with firefighting and
misdirected problem-solving efforts with no structured or disciplined
methodology could be significantly reduced
2. Increased understanding of customer needs and expectations, especially
the critical-to-quality (CT) service performance characteristics which will have
the greatest impact on customer satisfaction and loyalty.
3. Increased cash flow by making processes more efficient and reliable.
[Link] knowledge across the organization on various tools and
techniques for problem-solving, leading to greater job satisfaction for
employees.
5. Reduced number of non-value-added operations through systematic
elimination, leading to faster delivery of service, faster led time to production,
faster cycle time to process critical performance characteristics to customers and
stakeholders, etc.
6. Reduced variability in process performance, product capability and
reliability, service delivery and performance, leading to more predictable and
consistent level of product quality and service performance.
7. Transformation of organizational culture from being reactive to proactive
thinking or mindset.
8. Created new customer opportunities, improved market position relative to
competitors, etc.
9. Improved internal communication between departments, groups, etc.
10. Lean Six Sigma creates an infrastructure of Champions, Master Black
Belts (BBs) and Green Belts (GBs) that lead, deploy and implement the
approach.
11. Lean Six Sigma emphasizes the importance of data and decision-making
based on facts and data rather than assumptions and hunches.
12. Lean Six Sigma utilizes the concept of statistical thinking and encourages
the application of well-proven statistical tools and techniques for defect
reduction through process variability reduction methods (e.g. statistical process
control, Value Stream Mapping, and design of experiments).
Lean startup has an inherent close connection with its custumers because of
the core principle of lean-measure-build. Also, lean startups can evolve on the
basis of this strong connection.

How to Maximize this Benefit

Make all employees available to the customers, give them the role of
the owner of the startup.
Develop feedback channels between the sales team and other
departments of your startup.
Monitor customer service interactions.
Incorporate the feedback in your product
Make sure that the customer feedback is available to every member of
the startup.

You can Evolve Quickly

You can react to market conditions and opportunities in minimal time. On
the other hand, fat organizations are shackled by their company's colossal
structure.

How to Maximize this Benefit

Choose some product market which is speedily evolving or has an

ever-changing demand and taste.
Choose some product market that has a lot of long-term potential for
innovation.
Evolve and modify your startup at breakneck speed.

The L.S.: Benefits and Criticisms

It portrays another methodology for new businesses and endorses practices
they ought to adjust to improve the probability that they will succeed. While the
idea is most appropriate in an innovation or Internet setting, it has a more
extensive application for all startups.

So what are the key precepts of the approach?

In numerous regards, the idea begins with a redefinition of what a startup is.
For Steve Blank – a startup is basically 'an association shaped to scan for a
repeatable and adaptable plan of action.'
I have reverberated this subject that depicts how a startup needs to
concentrate on finding a feasible plan of action while working in a climate of
'extreme vulnerability.' Framing a startup along these lines causes move the
concentration to a progressively logical methodology where activities attempted
are seen as tests that rapidly assist you with approving presumptions (or
something else).

Scanning for a suitable business model

Given that you are in examine mode, it is imperative to grasp some
straightforward procedures to guarantee the quest for an adaptable business
model is a productive one. From numerous points of view, these are lessons in
hyper – proficiency, where time and money are valuable, and the reason for
basic educated leadership is essentially on the rear of building what they call a
Minimum Viable Product (MVP). An MVP is an essential rendition of the
product that can be sent to certain clients (in a perfect world early adopters) who
will give you input, which will enable you to choose what to do straightaway.
The accompanying example perfectly delineates the concept: As opposed to
building the service and giving it a shot on clients, make a sign-up page that
vows to convey this weighty ability. At that point, present it to some
forthcoming customers. Contrast their enlistment rate and that of a benchmark
group given the standard indication-up page. The outcomes will give the group
the certainty either to continue or toss the thought into the round record. Nobody
would get the new element yet, obviously, because it hasn't been manufactured.
As a result, it has been proposed that you search for 'proof of interest' before
building the total product, and a simple method to test for this is to watch
genuine client conduct on the state, a web page. Each snap-on a catch signals
plan, paying little heed to whether the product in the back end is there or not, and
this information causes you to survey likely request.

Additional Lean Startup Concepts

The accompanying speaks to a short portrayal of a portion of the
fundamental ideas related to the L.S. approach.
1. Test Frequently and Learn Quickly
As the above case of the MVP approach illustrated, they prompt that you
don't assemble a detailed product before you have embraced various tests along
the way (They are large supporters of A/B testing).
2. Watch and Measure Real Customer Behavior
 Eschew focus group and watch how genuine clients carry on. Getting the
MVP under the control of genuine clients right off the bat and rapidly gaining
from what they do supports their entire methodology.
3. Concentrate Exclusively on Capturing Actionable Metrics
Maintain a strategic distance from metrics, for example, measurements that
make an ideal impression about execution when they are fanciful. For instance:
what great is 1 million page impressions if none of them convert? Rather
business people need to concentrate on noteworthy measurements, for example,
genuine measurements that can advise choices.
4. Be Comfortable Pivoting dependent on Key Learnings
The suggested you turn or stop what you are doing if the underlying
arrangement isn't working (and your discoveries support the view that changing
tack is bound to be effective than proceeding with the first arrangement). This
view is especially steady with the perspectives on business arranging Guru John
Mullins as portrayed in his book, getting to Plan B.
5. Grasp New Accounting Methods
Generally Accepted Accounting Principles (GAAP) have supported financial
representing numerous years. In any case, it is contended that L.S needs to grasp
'innovation accounting' before they arrive at where traditional accounting kicks
in. With this technique, he recommends that progress is best followed by
watching things like client movement, commitment, maintenance, and virality.
As it were, if client numbers are expanding, and they are being held with the end
goal that Life Time Value (LTV) is developing fundamentally, this is a superior
pointer of 'progress' than traditional accounting strategies.
6. Stay Lean
The word 'lean' alludes to speed and agility and not 'cost savings' as certain
per-users confound (although that stated, they are against misuse 'all things
considered'). Again it is prescribed that new businesses exploit the disclosure
mode to rapidly realize what isn't working so they can make changes right away.

Some Criticism
Like every single 'new concept,' the methodology has a lot of critics too. A
few people refer to the absence of fruitful examples as problematic, and others
center on author's generally disappointing profession before composing the
book. Others center on the risks of putting up a substandard product to market
(MVP). In the meantime, Ben Horowitz has contended the case for the fat-
startup:
"Quite a bit of what has been composed and said about lean beginning up's
bodies well. In any case, that exhortation is regularly inadequate, and a portion
of the things left inferred the least instinctive. There are just two needs for a
beginning up: Winning the market and not coming up short on money. Running
lean isn't an end. So far as that is concerned, nor is running fat. Both are
strategies that you use to win the market and not come up short on money before
you do as such. By making "running lean" an end, you may lose your chance to
win the market, either because you neglect to support the R&D important to
discover item/advertise fit or you let a contender out-execute you in taking the
market. Some of the time, running fat is the correct activity. Thin is in, yet once
in a while, you gotta eat."
For me it feels that paying little mind to the idea, individuals will
consistently discover defects and have solid counter contentions to specific
components of the methodology. The consciousness of these contentions assists
business visionaries with settling on progressively educated decisions in regards
to whether they grasp elective methodologies. They are simply assessments of
all things considered.
 CHAPTER 11 Drawbacks of Lean
Pros and Cons of Lean Software Development
There has been a significant change in software development in the last
decade. New methods have been invented to help to reduce the development
time and handle costs. These new methods include rapid application
development, spiral model, dynamic system development, and Agile
development.
Lean is a subset of Agile software development. Its main focus is to increase
the development cycle by adopting different principles. The first two important
principles include waste elimination and improve learning. No need to mention
each principle. A seamless design allows one to resolve any issues. All the seven
principles of Lean discussed in this book sound pretty good. The principles
improve development and speed of delivery while ensuring that fixing problems
becomes easy.
Unfortunately, Lean software development is not different from other
methodologies. It has both advantages and disadvantages.
Among the advantages of Lean software development include the removal of
waste that helps save money and time. Furthermore, it supports additional
functionality that shortens the period of delivery. In addition, it empowers the
development team in making decisions related to processes. The end result is
that there is an increase in motivation among team members.
The Lean methodology is scalable, this makes it a good option to apply in
conventional software development methods which are mainly designed for
large projects. Besides that, Lean works well with Agile because it fits across
different teams as well as it integrates teams and promotes cooperation.
Although Lean seems to be an amazing software development approach, it
has its own drawbacks. For example, it mainly depends on the team. This means
that one should always have a team that is well trained with the right skills.
Given that the whole team has many different responsibilities divided into
smaller sub-teams, there is a chance to lose focus. In addition Lean development
calls for quality documentation, especially when the development contains
business requirements to be fulfilled. So, any area that is documented poorly can
result in a poor system.
All in all, the advantages of Lean software development surpass the
disadvantages. This is very true when the time for upgrade and addition of
features comes. Therefore, make sure that you have the right team and let them
adopt Lean.
 CHAPTER 12 Revenue and Calculations
Lean Metrics help the organization in achieving the goals of the lean
initiative while monitoring the organization's progress. There are three categories
of lean metrics: financial, behavioral, and core process which will be explained
in the later topics. Lean metrics inform the employees how the company is
performing and encourages them to perform better by keeping their focus on the
lean goals. Lean metrics calculate, evaluate and take actions accordingly without
the sacrifice or waste of company's product and service's quality. Lean metrics
also consider the factors that are necessary for the success of the company.

Purpose of Lean Metrics

Lean metrics verify that the company meets its lean goals using the
lean metrics the organization must use the data which is collected to
determine the existing problem and can determine and prioritize the
issues which must be dealt with first. On the basis of the identified
problems, determine what steps should be taken for improvement. The
company should evaluate the progress made to achieve lean goals.

Before collecting the data, a few questions need to be kept in mind of the
team such as:

What is the purpose of collecting data?

Will the collected data help us in our task?
Will we have any practical use of the data?
Lean metrics determine business issues such as excessive inventory
that increase the cost and poor quality leads to dissatisfied customers,
which results in delayed deliveries and lost orders.
Lean metrics are different from traditional metrics which can work
against the company's goals to achieve profit. For example, machine
efficiency can result in overproduction hence waste and lack of
efficient performance.
Lean metrics determine the best way to utilize the resources by asking
various questions such as "What errors or defects which occur the
 most?" or "Which process costs the most?"

The goal of using the metrics is to make an easy to use and efficient system
which has minimal human involvement and high accuracy level of collected data
and minimum wastage of time.
The metrics developed by the organization should answer the following
questions:

What type of metric is it?

Reason for its selection?
Source of the collected data?
Formula for the calculation of the metric?
How often will it be calculated?
How often is the metric used?

Revise the company's definition form and draw charts, graphs and use
statistics charts to analyze data. These charts give an insight whether the data
which is being collected is useful for our cause or not. Other data analysis
techniques might be required to conduct effective problem-solving.

Designing a Data-Collection Process

In an organization the involvement of every employee is a must for
effectively achieving the lean goal. When collecting data, the company should
keep the following points in mind:

All the employees of every department must be involved in the data

collection process.
There should be an environment where employees should encourage to
improve rather than discourage each other.
The employees should be well informed as to how the collected data
will be used.
Make the data collection forms user-friendly.
For the development of the data collection procedure, explain to
employees how the data can be collected, who will collect data and
how it will be recorded.
As mentioned before automate the data collection process and chart
 data whenever possible.
Involve employees to interpret data.
Avoid measuring everything. Use critical thinking and measure only
those activities which measure performance and can guide
improvement efforts
The data which is collected must not be interpreted; the employees
should be well aware of the reason why the data was collected and
how it can be helpful to achieve company's lean goals.
Do not collect useless data which will not help in the company's cause
because data collection is a time-consuming process and collected
should be useful.

One thing which should be kept in mind that appropriate tools should be
used for analysis. There should be no or little defect in the product or service for
a little defect is a rejection and failure from a customer's perspective, and as a
result 80% of the time is spent fixing 20% of the things went wrong.
Now we will discuss in detail the lean metrics which were mentioned
earlier.

Financial metrics
In order to improve the financial performance of the company, lower the
total cost of the operation without lowering the quality of the products and
services, and increase revenue. This will strengthen the performance and market
position of the business. It is important to avoid cost-shifting that is moving cost
from one account to another without any effective saving. Cost shifting adds
waste instead of removing it. The following table shows examples of the costs
and revenue.

Cash flow
Direct and indirect labour cost
Total cost of ownership
Information system
Costs
Facility and operational cost
Inventory carrying costs
Direct or indirect material cost
Production systems
 Sales
Product profitability
Gross margins
Revenue Return on assets
Warranty costs
Return on investment
Earnings before interest and taxes

Behavioral metrics
Behavioral metrics are measurements that help the company to analyze the
actions and attitudes of the employees. The organization is hugely affected by
employees' commitment, communication, and corporation. The behavioral
metrics alone can’t assure the success of the company. The company's long-term
success is possible if the behavior of the employees align and the work together
for a single goal, which is the success of the company. Customers’ and
employee’s satisfaction surveys and core process metrics measure behavioral
performance only indirectly. More effective ways to measure behavioral
performance are project feedback, meeting evaluation, employee appraisal, and
peer evaluation. To improve communication and cooperation perform teamwork
training.
The following table shows the behavioral categories and metrics:

Availability and dedication of the human

resources department
Adherence to policies and procedures
Commitment
Efforts to train employees as needed
Participation levels in lean improvement
activities

Formal recognition of employees'

communication efforts
Surveys regarding quantity and quality of
company communication effort
Communication
Error reporting accuracy and timeliness
 Elimination of products or services which
have no effective value

Joint recognition activities

Formal recognition of employees'
cooperation efforts
Cooperation
Shared financial risks and rewards
Effective efforts to improve results and
resolve problems

Core process metrics

Core process metrics measure the performance of the core processes of the
organization. For productivity and results the measurement of core processes is a
must. The effectiveness of the metrics can be measured by the comparison of the
input and output. Tracking the results and comparing them to the outcomes
shows the effectiveness of the processes.
Some core process metrics are shown in the table below:

Design cycle time

New product extensions
Product failures
Core-Process Metrics
Time to market
Product life cycle profitability
New product launches

Health and safety

First time through
Dock to dock
Result Metrics
Rolled throughput yield
Order fulfillment lead time
On-time delivery

Overall equipment effectiveness

 Productivity Metrics Value added to non value added ratio
Build to schedule
Inventory turnover rate

1. Health and safety metrics

Health and safety metrics measure the impact of the processes and activities
of the business on the employees’ health and safety. The availability and
performance of human resources are improved by a healthy and wholesome
organization. Lowering the insurance cost, reducing the replacement of workers
and availability of assets improve the operational cost. Health and safety metrics
can be measured by using metrics such as counting days lost in accidents,
employee turnover and experience modification ratio.

2. First time through (FTT)

It measures the percentage of the units that go through the production

process without any alterations, return, and retesting. It improves quality and
reduces the waste. This improves the overall equipment effectiveness. The
formula to find FFT is given below.

FFT= units entering processes - (scrap+reruns+retest + repaired off-line

+ returns) /units entering process

3. Rolled throughput YIELD (RTY)

It is a measure of the probability that a process will be completed without a

defect occurring. RTY measures the number of defects per opportunity. An
opportunity is anything that can be measured, tested or inspected. FFT measures
the quality of the units of products you create. While RTY measures how well
you create quality. FFT measures at a unit level and percentage of defective
parts. RTY measures defect level and how many defects a part has.
To calculate RTY there is first a need to measure defects per unit (DPU).

DPU= number of defects per unit/total number of units

Defect per opportunity (DPO) is the probability of the defects occurring in a
product, service, or process step and it is calculated as:

DPO= DPU/ opportunities per unit

Then RTY is calculated as

RTY=1-DPO

4. On-time delivery (OTD)

It is the measure of the units that are produced to meet the customers'
deadline. For this term the unit is a line term on a sales order or delivery ticket.
OTD measures how to meet customers' expectations for obtaining the right
product at the right time and place. OTD ensures that you meet optimum
customer service level. OTD is measured by the formula:

OTD=line items received on time by the customer/total line items

received

Dock-to-dock (DTD)
DTD= total number of control parts/end of line rate

5. Order fulfillment lead time (OFLT)

Sales order (SO): The time from when an order is received until the
time it is entered into the production-scheduling system.
Production scheduling (PS): The time from when an order enters the
production-scheduling system until the time actual production begins.
Manufacturing (M): The time from when a manufacturing order is
started until the order is released to the shipping department.
 Shipping (S): The time from when an order is received in the shipping
department until it leaves the dock.
Invoice (I): The time from when accounting is notified of a shipment
going out until it sends the invoice to the customer.

Thus, OFLT = SO + PS + M + S + I.

6. VA/NVA ratio

The value added to non value added ratio is a metric that compares the
amount of time in your work process spent on value added activities to the
amount of time spent on non value added activities. It makes non value added
activities evident. It focuses on the improvement of lean efforts on the
elimination of waste without wastage of time.
The formula for VA/NVA ratio is:

VA/NVA=TOTAL VALUE-ADDED ACTIVITIES TIME/TOTAL

OFLT
 CHAPTER 13 Lean Analytics to Succeed
Set the Flow Path
Implementing the Lean Analytics envisages the use of change in the thinking
at the workplace. The first step to achieve this is to make a pivotal point in the
hierarchy. When we use this, the clarity in the workplace remains enhanced. In
most normal cases, this occurs by implementing the agent for change. This
person remains responsible for all changes brought into force through Lean.
By choosing one leader, it becomes possible to revert any changes that do
not work. This happens by streamlining the work through this central point.
Also, we make the responsible person take action for all the work-related
activities. So, if there is no action from the responsible person, the downstream
activity ceases. Only when the leader agrees and approves of the changes, the
rest of the work undergoes implementation.
The work then proceeds forward and the same condition gets applied to
further activity. The change remains regulated by streamlining it through the
central point of activity. And when any change gets detected that is not normal
or expected, all the further downstream activity ceases. Once this flow path has
come into force, it is easy to govern the natural evolutionary process for the
downstream activity.

Use the Services of a Lean Consultant

Learning the Lean Path is essential. It is easy to govern the workers once the
process has begun. But, only the people who are conversant with the method of
Lean will know when to make the needed changes. The knowledge is needed for
the parallel working types in Lean that control each other. All the decisions and
management principles remain data-driven and systemized through actual use.
For instance, you have two or three HR situations which do not yield direct
answers in normal analysis. One is the case where the turnover is low and the
number of employees leaving the firm is rising. Next, the budget for training is
big, but there is no clear-cut region where employee deployment will be
profitable. And third, the hiring expense rises all the time due to attrition among
the employees at the workplace.
To arrive at the solution, get a snapshot of the metrics. This will give a view
of the nature of the problem. Check the metrics in related areas and see if there is
any correlation. The use of KPI gives you the answers needed to make the
changes. You can make use of pre-designed KPI software to do the analysis. It
helps you to centralize the data related to the business and simplify real-time
reporting. Actionable work gets broken into smaller pieces and removed until
only those relevant to the work remain.

Use a Lever to Begin the Transformation

Most of the hardships one faces are situations begging for alternatives. And,
every business undergoes these situations often. Rather than wait for a crisis to
begin to make the change, begin the movement towards Lean by initiating the
change yourself.
When you face a troublesome situation, one must change. The Lean
philosophy anticipates changes and makes provisions for each. By preparing for
the change, it is possible to overcome the negativity and create the positivity that
will take the business to a profitable end. This situation applies to the client, the
business owner, and the suppliers involved in transacting business.
The other alternative is to change the focus so that the problem does not
seem as large. The Lean expert waits until the crisis has passed before he seeks
the solution. In doing so, he gets a solution with ease.

Do Not Aim for Grand Solutions

The idea is the avoidance of the key issues that precipitate the issue and look
for solutions away from the hotspot. Many business problems solve themselves
if you give them enough time. With this in mind, the Lean expert tries to figure
out how to keep the mechanism of the business moving without overlapping in
the key problem areas.
The first thing to do is to stop thinking of grand solutions. You will not get
anything that will heal the situation instantly. And if you continue to think along
those lines, you will only become disillusioned. It is better to think of small
actionable solutions that have a better chance of working.
If you consider applying growth metrics in the workplace, you need to apply
the Lean Analytics related to this metric. This includes the acquisition to growth
employee life cycle and the lifecycle during retention. You must then consider
the cycle after attrition to reacquisition.
One may improve the bottom-line impact in the HR department by using
better resource applications. Also, use cross-training across all departments.
Using Lean, you can improve the sensitivity of the training program by a huge
amount.

Make a Map with the Implementation Timetable

 The scientific approach to the problem of making the map involves the use
of the positivist perspective on one hand. And, you use the hermeneutic
perspective on the other. In the first, the user remains distanced from the aim and
the research problem.
The problem gets divided into smaller pieces so that there is the possibility
of refining the process and cutting out the waste. In the second method, the
researcher remains central to the problem. All the flow processes get importance
relative to him and those processes that lose their importance get eliminated.
The creation of the timetable helps to improve the flow value and the
perspective. Each work function becomes more important or less important
because they have to meet the time check. When the tasks fail to meet the time
check, we check for alternative solutions that have a better possibility of meeting
the timetable.

Take the First Step Immediately

It is important for progress in any business to begin the activity immediately.
This means that one uses any one of the scientific approaches existing between
theory and reality to come through with an action plan. In the most normal case,
one uses the induction-deduction method. These are opposing methods of
analysis and find applicability to any kind of work situation.
If you have the reality worked out, then there is no need for any deep
analysis. One may put into action the plan in a step by step approach. Inductive
reasoning finds a use for most of the cases where there are no real results, and
the opinion remains needed to take the next step.
In the deductive or scientific method, there is an existing theory. This means
that the reality is apparent. So, you can use it to proceed to the next step. The
main focus is to show visible activity. This will set off the process and the chain
reaction will continue until there is no more productivity. To see the result, one
must begin the first step immediately.

Check for the Results Immediately

It is important to check the results fast and see the amount of progress one
has made. Changes to the amount of working capital show in a clear way to all.
But, the deeper metrics such as the Return on Equity and Vendor Expenses may
not come to light as fast. Yet, these will impact the business in a big way.
You make use of Lean thinking and methods to improve profitability through
timely action. You also cut the redundant processes. By concentrating on the
processes that have more value, you improve the efficiency and lower the labor
overheads.
 Use Progressive Results into Value Stream Building
One side of the Lean method is where one cuts the unneeded processes. The
other side is where one builds the processes that show positive results. When
implementing qualitative processes, there is a lesser amount of control. You can
improve the formalization and grade of control by the use of quantitative
structures.
The use of real-time targets will cut the amount of uncertainty and bring
more cohesiveness into play. For practical values one must use tests and
questions, then one must study documents and information registers before using
the suggested values. But, once you do this, you have a viable working system
that you can depend on.
 CHAPTER 14 Implementing Lean
Management in Your Office
The technologies that come with Lean production have been able to drive a
revolution in productivity in many businesses, but especially in the
manufacturing world. The basic methodology of DMAIC, or Define, Measure,
Analyze, Improve, and Control, has already proven that it is really remarkable
and versatile in terms of all the applications and how it can help with a wide
range of engineering problems that show up.
Even more recently, many businesses have been able to apply the concepts
and tools of Six Sigma to a wide variety of service environments and customer
interface, both in the private and public sectors. There is going to be a natural
and clear analogy between what happens on the factory floor, what happens in a
hospital, and what happens in a modern call center. All of these are going to
involve some kind of process that needs to be repetitive and reliable, and that is
designed in order to deliver the outcomes that the customer is looking for from
that business.
Even when it is misapplied, to justify a pre-existing pet project, the rigorous
nature of Lean analytic approaches is able to provide the company with a lot of
benefits and some improvements. This shows just how great Lean Analytics can
be and how powerful the whole system is.
Traditionally, companies are going to see that progress will stall the further
away they get from their roots in manufacturing. In high-end roles for both
creative and professionals, processes are going to be more bespoke and less
quantifiable. This is not something that you want to have happened when you
work with your processes to reduce waste and increase profits.
Now, you may be asking how the philosophies that come with lean
production can be applied to this kind of non-repetitive, discontinuous, and
sophisticated environment. To keep it simple, you may be wondering how you
can take the concepts of Lean and then apply it in the creative industries, in
manufacturing, in a finance department, and in a law firm?

Flow
One of the fundamental concepts that come with Lean is the idea of flow.
This talks about the seamless and uninterrupted progression of your product or
service down the line of manufacturing. The same concept of flow can also
apply to project-based work, deals in corporate finance, and idea development. It
is going to work with any setup where the intelligence needs to be applied in
order to achieve an outcome. Even here, you will find that a partial adoption of
these techniques can provide you with a substantial amount of dividends.
You can start out the process of flow by making a map of either the whole
project flow or a daily workflow. The prime goal for the company here is to
figure out where any roadblocks or delays are located and then concentrate on
the biggest ones to figure out the best way to increase productivity. If you are
doing this inside a factory, the constraints or bottlenecks need to be identified
and then the output can be optimized by working on the production up to where
the bottleneck is and try to fix it from there.
Doing this is important because it prevents the wasteful stockpiling of
inventory that can happen before that bottleneck occurs. Then the team is able to
elevate that roadblock to ensure that the whole system can increase the
productivity that it sees.
For this step, you need to focus on the constraints and the bottlenecks that
can occur in your organization. Are you able to think about a few to get started?
Think about the dependencies existing in any part of the process. You can then
think about the scope and what you can do to reduce the dependencies that are
there. In fact, your goal needs to be finding ways to permanently elevate and
then eliminate the bottlenecks that you see in the process.

Takt time
The next thing to take a look at is the takt time. In a factory this type of time
is going to represent the heartbeat of the process, it is also known as the pace of
workload that your team can handle and that they need to handle to take care of
the customers. Products and materials move between the various work stations
with a regularity determined by the customer of the process.
You will also find that people are not going to be any different. They will be
able to adjust the approach and their work intensity depending on the timing and
quality of the demands that the end customer is sending out to them. Here, you
need to consider what your takt time should be or what your daily workflow
should be for each product. And to figure out this number, you need to figure out
what the critical quality outcomes that the end customer wants, how much of the
product they want, and how much time and products it takes to create that
product.

Waste
One of the biggest things that you will try to work on when you implement
the Lean system is to eliminate the amount of waste that you have in all of your
processes. Many companies are going to have a lot of waste that is present in
their system, and this can lead to problems with unhappy customers, employees
who aren’t able to do their jobs as efficiently as possible, and they end up
spending more money to get things done than they need. Being able to reduce
the amount of waste that shows up in your system can make a big difference in
how happy the customers are and how much profit you can earn.
The Lean system focuses on what is known as the seven forms of waste. It is
your job during this process to learn these seven wastes and then look for them
in your own business. From there, you are able to go through and try to
eliminate, or at least drastically reduce, the amount of waste that is occurring in
your own business. The seven forms of waste that a business can deal with, and
often they will deal with more than one, include rework, conveyance, motion,
overproduction, inventory, processing, and waiting time.
Transitions that occur between the different projects, the locations, and the
personnel, are one of the most frequent causes of waste that you will find inside
your company. Those who have a background in manufacturing are going to be
familiar with some of the techniques of Shiga Shingo’s Single Minute Exchange
of Dies.
This is an important technique to work with because it reduces change over
time between manufacturing products to a tightly controlled period of time.
These techniques and more were pioneered in the Toyota firm, and this has been
able to reduce this time of transition between the workspace and the other parts
that come with a project by up to 40 percent.
There are a lot of different ways where you are able to reduce the amount of
waste that you will deal with. You need to focus on the different areas in your
business where the waste occurs, and then figure out what you are able to do to
reduce this waste. Start with the waste that is causing the most problem, whether
it is costing a lot of money, making your team inefficient, or making products
that don’t fulfill the expectations of the customer.

Managing the Workload

It is one of the ironies of modern life that a lot of professionals are going to
be given little training or support when they get started, and many of these
professionals are not able to work with the basics of document control, email
management, personal workflow optimization, and more. The fact that they are
not able to do this can lead to a lot of problems in the business.
Most of these professionals are going to be entrusted by their employers to
learn how to do this on the job. They are expected to maximize their
productivity, and they are going to be deprived of a typical modern office
without any help of support for the workflow or for secretarial help.
In short, when the application of these concepts and techniques of Lean has a
wide scope, this can lead to some issues. You need to make sure that your
company and all of the teams are going to be able to manage the workload that
you give them in a proper manner.
Adopting the basic philosophies of flow, elimination of waste, takt time, and
more can help you to do better with Lean Analytics. If you are able to use them
in the proper manner, you will find that it is going to really make some changes
and revolutionize the daily workflow management in any office.
 Conclusion
Sometime in the 1980s, one of the greatest movies about martial arts was
created. Karate Kid came like a storm - and even well into the 2000s, televisions
still broadcast the movie, with nearly the same periodic recurrency as Home
Alone.
There is a very good reason people loved that movie (as bad as it may be): it
was endearing, it was about martial arts, and it gave everyone hope.
Sometime in the 1980s, one of the greatest project management methods
ever created was born. Lean Six Sigma came as a result between Lean and Six
Sigma - and it took the world by such amazing power that even today, people
keep perfecting the theory, people keep learning the rules, and people still use it
to save companies thousands of dollars after thousands of dollars.
Aside from the decade they were born in, and aside from the fact that they
both took the world by storm, Karate Kid and Lean Six Sigma have one more
(very important!) thing in common: their reliance on martial arts philosophy.
Sure, Karate Kid is but a sketch of what it actually takes to win a martial arts
competition - but even so, the endearing messages and the best moments of the
entire movie are the ones connected not to actual martial arts theory, but to the
more romantic aspects of fighting for your title.
In Lean Six Sigma, just like in martial arts, you start low. Like Daniel-San
sweeping the windows of the car in imperfect hand collaboration, you will first
find that handling all the aspects of Lean Six Sigma feels a bit overwhelming -
and, at times, you might even feel as if you are writing with your left hand.
The similarities don’t stop here. Just like in Lean Six Sigma, Daniel had a
teacher - a mentor to show him the intricacies of martial arts. And just like
companies using Lean Six Sigma, Daniel-San’s teachings were all about balance
and routine processes that help him find his inner core of strength.
Given the fact that even the titles in Lean Six Sigma are inspired by martial
arts, the comparison between this methodology and Karate Kid is not far-fetched
in any way.
In fact, it can be fairly assumed that if you are ever in doubt about Lean Six
Sigma theory and philosophy, you can simply think of a martial arts master and
think of what they would do in your given situation.
Chances are that you will find an answer that is at least close to what Lean
Six Sigma would propose.
 Lean Six Sigma is fascinating to people for a billion reasons - and its martial
arts-based nature is one of the reasons that attract curious minds towards this
project management approach. It makes sense that everyone wants to become a
Bruce Lee of the project management world, right?
Lean Six Sigma is a truly amazing method to employ - as long as it suits
your company, of course. As it has been shown in this book, not every business
and every project is meant to be applied to a Lean Six Sigma approach. In some
cases, this theory is just not suitable, and it would not bring anything valuable to
the table - so if you find yourself in this situation, keep the information learned
in this book for “later.” The chances are that you will, sooner or later, use it to
fix some sort of process error in your company.
Not only is Lean Six Sigma pretty awesome from the point of view of the
symbolism it employs in its naming and methods, but it is a very modern
methodology as well. Back in the 1980s, people might not have cared as much
about the waste reduction from an environmental point of view - but these days,
this is the main buzzword you hear everywhere. And Lean Six Sigma was there
long before “it was cool!”.
We truly hope the book at hand has opened your appetite for Lean Six Sigma
and everything it comes with.
While this is not even by far everything there is to Lean Six Sigma (we could
talk about it for another 100 books), we hope the book at hand has helped you
understand the high-level theory around this project management and problem-
solving method.
We did not aim to uncover all of the Sigma secrets (or the Lean ones, for that
matter). We aimed to give you a taste of just how useful, just how interesting,
and just how awesome this entire framework can be. Hopefully, you have
enjoyed your journey with us.
This is the second time we are using the word “journey” - and it is a very
carefully chosen one, mind you.
The first one is related to the fact that once you embrace Lean Six Sigma,
you will fall in love with its intricacies, with its symbolism, with the way it can
actually help businesses grow bigger and healthier in so many respects.
The second one is related to the fact that Lean Six Sigma is all about
continuous improvement - and what advocate would you be if you decided one
day that you cannot or simply don’t want to proceed further with your
improvement in the art of Lean Six Sigma?
Last, but not least, the third important reason that makes Lean Six Sigma a
life-long affair is the fact that it will keep surprising you, every time you use it.
Sure, the theory might not seem like much when you look at it from afar - but
when you see the kind of results Lean Six Sigma can bring with it, you cannot
but feel really excited and productive!
Obviously, every person has their own motivation to choose the project
management method we have described in this book. Some do it because it
sounds cool and because it helps them relate to a younger team that might show
interest in the naming paradigm of the method (saying “My Black Belt has told
me to do something” sounds way better than “My boss has told me to do
something”.
Others stick with Lean Six Sigma purely because it shows results - and oh, it
does! There is a very good reason this is one of the most popular methods in the
world - and that reason is simple to understand: it works. It actually does.
Lean Six Sigma is not about empty promises of the kind you see on
teleshopping advertorials. It’s not a one size fits all recipe for success. And it is
most definitely not a scam.
Lean Six Sigma is a way of thinking and a way of seeing life itself. When
you filter actions through processes and learn to get to the root cause of things,
you will be more tolerant, you will understand people better, you will have more
empathy, and you will know how to treat even the more delicate situations in a
way that doesn’t upset anyone.
Lean Six Sigma is a method, a strategy provider, a system. Its roots may be
based at Motorola and Toyota - but the system it creates is more than suitable
everywhere around the world, for businesses in multiple areas of activity and of
many different natures.
Six Sigma speaks internationally. It helps people from all over the world. It
pushes businesses forward and, maybe more importantly than anything else, it
pushes people forward, helping them be better, act better, grow better.
The main goal of the book at hand was not to scare you off with the myriad
of information available on the topic of Lean Six Sigma.
On the contrary, actually. As mentioned above, our main goal was that of
stirring your interest in this methodology and helping you understand its basics -
precisely because we know that diving head-first into the more advanced
techniques would feel downright scared.
The book at hand was meant to open the world of Lean Six Sigma to you and
help you see that, no matter who you are and what you work, you can always
pick up this theory and embrace it from the comfortable sands of a Greek island
or from the comfort of your team.
Hopefully, we have provided you with the key to a new world: one where
you don’t have to constantly run guesswork operations on what is going wrong
in a company. One where you don’t want to have the responsibility of what
would normally be ten other roles in a company. One where you can find actual
solutions to your problems and stop “patching” them as if they are scratches on
the knee.
More than anything, we genuinely hope the book here has answered your
questions on what Lean Six Sigma is, how it functions, and why it can be of the
utmost importance in your future.
If you are the owner of a startup, you will find this method for process
improvement to be really useful.
If you are a project manager in a large company, you will definitely find
Lean Six Sigma to be beneficial too!
If you are a healthcare worker, you will find that Lean Six Sigma can help
you reduce the waste in your hospital so that you can focus on what you know
best: saving lives.
Lean Six Sigma can be just the framework you are looking for, no matter
who you may be and where you may work.
Therefore, we truly hope this book has helped you shed some light on the
steps you should be following from here on, on the main philosophy behind
Lean Six Sigma, and on the main techniques of its employees.
Last, but definitely not least, we hope this book was fun for you - because
what would a learning process be without a bit of entertainment in it? Your
future is about to become better because you will implement Lean Six Sigma -
so what is there not to be happy about?
We wish you a cheerful, successful Lean Six Sigma road ahead of you.
There might be bumps along the way, but trust us when we say that it is all
worth it!