Implementing a lean business model is only partly about reducing waste.
In fact, the core value of lean business is maximizing value for customers while minimizing waste. (That's according to The Lean Enterprise Institute, a Cambridge, Massachusetts, nonprofit research and education organization.)
The difference between waste reduction and customer satisfaction is efficiency and effectiveness, says Todd Little, CEO of Lean Kanban, a Seattle-based management consulting company.
“Process improvement is about efficiency," Little says. “Product improvement is about how effectively we're serving the market. Both are important and a really well-run organization will do both well."
Terence Burton, CEO of The Center for Excellence in Operations, a Bedford, New Hampshire management consulting firm, likes to see customer satisfaction come first in a lean business model.
“Customer satisfaction should be the engine that drives all your lean strategic improvement initiatives," he says. “When it's driven by efficiency, it can be very efficient, but totally miss the mark on customer satisfaction."
Addressing Customer Satisfaction in a Lean Business Model
To incorporate customer satisfaction concerns in a lean business model, it helps to get lots of customer feedback.
One way to do this is by putting experimental product ideas in front of customers early and often.
“Test out small incremental pieces so you're validating that customers are satisfied," Little says.
—Todd Little, CEO, Lean Kanban
It's also important to research customers so you understand the problems and needs of various customer segments, he adds.
“Each customer segment will be different," Little says. “Which segments are we trying to serve and are we serving them well?"
In practice, addressing customer satisfaction in a lean business model can be straightforward and intuitive.
Bonnie Lau, CEO of San Francisco's Yoconut Dairy-Free, sells coconut yogurt to health-conscious consumers. When she was preparing to introduce a new pineapple flavor, she followed lean business model principles and made small batches for customers to try. Then she used the tasters' feedback to adjust the product formulation.
“Initially we had pineapple chunks," Lau says. “Customers sometimes gave me feedback that they wanted pineapple in every bite, but some bites had pineapple and some [didn't]. So we worked with the size of the pineapple chunks."
Testing samples with smaller pineapple pieces showed customers were more satisfied with that formulation, Lau says. So when they began producing the new flavor, they used smaller pieces.
With each of the company's five flavors, Lau says, they tested until customer feedback showed an 85 to 90 percent satisfaction rate before producing it in bulk.
“Taste wins," Lau says. “If it doesn't taste good, no matter how healthy it is, it won't sell."
Results of Addressing Customer Satisfaction
Switching to a lean business model can help generate improvements in customer satisfaction.
Little says that when he first began addressing customer satisfaction via a lean business model at a software development operation, they initially had customer satisfaction ratings in the 70s.
Those gains are not likely to happen overnight, however. Lean business models are about incremental and gradual improvement. It can take years to generate significant boosts in customer satisfaction, so business owners need to commit to making long-term changes to get there, Burton says.
“It's going to require constant attention until you get this to a point where it's internalized as a cultural standard of how you conduct business," Burton says. “Even then you still need to go back and reinforce. People are human and have a tendency to backslide. But the cost of not doing this is probably 100 times more than the cost of doing it well."
In addition to leadership commitment, businesses may be motivated to change operations when employing a lean business model. For example, outsourcing customer service functions to reduce cost may be incompatible with a lean business model that uses customer feedback to support customer satisfaction.
Also, it may be harder to retrofit existing established businesses with a lean business model addressing customer satisfaction than it is to start a new one, Little says.
However, introduction can be gradual, which can help reduce the disruptions.
“If you try to solve too many problems at once, it becomes impossible to manage," Little says. “Lean business models are incremental. Take on one or two experiments at a time so you can work on that."
Burton emphasizes that a lean business model built on customer satisfaction is not a one-and-done project. Rather, it both calls for and enables long-term change to the way a business operates, its corporate culture and how satisfied its customers are.
“No matter how good you think you are, you can always get better," Burton says. “You can try harder. You can build upon the success you already had. Then the world changes, which opens up new opportunities for improvement."
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