Lean does not mean bare bones. It does not mean minimize expenses at any cost. It does not prohibit raising money.
In biology, lean refers to the proportion of muscle to excess fat. In business, lean means getting more value for fewer resources.
Reduce waste. Be lean, not skeletal. Don’t cut the muscle.
It’s about efficiency. And sometimes being efficient actually means scaling up and using more resources. Elite athletes eat more than the rest of us. Michael Phelps needed to consume 12,000 calories a day during the Beijing Olympics.
Too often, I hear people talking about how they are being lean by limiting their resource consumption, instead of putting those resources behind the right purpose.
It can be tempting to focus on the resources part of the equation, and eliminate all sorts of things just because we can. The problem lies in forgoing activities that actually create value. Just because something is expensive, doesn’t mean it’s wrong. Don’t stop doing things, just stop doing the wrong things.
What are the wrong things? Anything that doesn’t contribute to creating incremental value. Value should not be confused with cash, unless the sole purpose of your organization is to produce cash. Most organizations define value differently depending on their industry.
|Industry||Increments of Value|
|Manufacturing||high-quality physical goods|
|Software development||working code in the final product|
|Nonprofit||social or environmental change|
Lean startups don’t have to be bootstrapped. They can raise funding. They just need to be deliberate and focused about how they spend the money they raise.