Lean Digitization℠* - A Lean and Safe Way to Digital E-Business Transformation

 

Priciples of LEAN DIGITIZATIONIt seems likely that principles of lean management can be applied to digitization projects. The only problem is that they won’t work in isolation. Lean management was developed in an environment where well defined processes were continuously optimized to higher and higher standards. The lean six sigma approach takes this concept to its highest level. Statistical methods help to increase standardization and to reduce error rates to almost zero.

Digitization is a process as well. But in contrast its goal is not to produce well defined results. The aim is to transform a business model. New ground will be broken. All this requires openness towards unforeseen results, which will be impossible without exploratory movements, errors and tolerance of mistakes. Such an exploratory procedure can be supported by methods that have been developed and deployed by start-up companies all over the world, whether in California, London, Tel Aviv or Berlin. Within these methods exists a lean approach, the lean startup concept that Eric Ries presented in 2011. It is quite pragmatic and based on experiences of start-up companies that were searching for the appropriate business model and growth strategy.

Lean startup provides a huge advantage. Besides the principle of lean management to avoid waste, its greatest strength is certainly that innovation processes can be measured and therefore controlled.

Nevertheless lean startup does not always fit the demands of companies striving for digitization. Lean startup requires comprehensive freedom to act when searching for a business model and conducting experiments with test products and real customers. Both can be detrimental for a well-established company when applied in the wrong way or the wrong place. Incomplete and faulty products can very quickly damage the image of a company that is known for the highest quality and reliability. Besides that, products which don't fit the overall essence of the brand can weaken the its image.

The combination of methods of both worlds, classic lean management and agile lean startup, can help to make digitization a safe, resource-saving and successful process. Digitization will be more manageable and provide enough freedom for exploration. The following table shows the essential differences and similarities of the three approaches: lean management, lean startup and lean digitization.

 

Lean management

Lean startup

Lean digitization

Situation des Unternehmens

Established company with clear business model and defined processes

New enterprise in phase of self-discovery, searching for business model, processes, team, customers,…

Established company on its way to extending its business model

Challenge

Improve existing processes and make them safer

Find successful business model (engine of growth)

Develop new digital processes without jeopardising the existing business

Customer focus

All customers

Early adopters, new customers

Existing customers, new markets

Process

Ensure and increase quality (CIP: continuous improvement process)

Test and optimize business model variants (validated learning; pivot)

Test and optimize business model variants; maintain fit to existing business

Lean aspect

Avoid waste, effort and costs

Build an enterprise fast and with the least possible expenditure and effort

Make digital business aspects accessible fast and with limited effort

Culture of failure

Zero-defects approach

Conduct early, frequent and cheap experiments to learn from them – errors are a part of the learning process

Conduct early, frequent and cheap experiments to learn from them – errors are a part of the learning process

Product status pursued

Mature and almost flawless product of highest quality

Iteratively created minimal products (MVP: minimal viable products) that may be faulty and will be optimized step by step

MVP: minimal viable products –minimal but nevertheless mature products that support the brand instead of jeopardising it

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published: August 17, 2018, © Uwe Weinreich

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