The first three months of 2023 have been… interesting. The Fed continues to raise interest rates despite lowering inflation numbers, we remain in the midst of a quasi banking crisis, and large companies like Amazon & Accenture have announced additional layoffs, with Amazon CEO Andy Jassy writing to his staff that more than 9,000 more employees will be laid off in the coming weeks. Against this backdrop, it is more important than ever for your business to be agile and efficient to remain competitive. This week we’ll discuss the Lean Business Model.
In simple terms, a Lean business is one that seeks to maximize value while minimizing waste. The Lean business model concentrates on enhancing processes across the value stream to eliminate waste and offer optimal value to the customer. Within the last decade, this model has more or less been forced upon certain companies due to technological advancements such as AI, which can automate processes and eliminate layers of the workforce. Today, however, many companies (especially within the tech sector) have no choice but to adopt this strategy to stay afloat.
The Lean business model is a modern approach that emphasizes efficiency, cost-effectiveness, and innovation. This model aims to streamline operations by reducing unnecessary expenses and minimizing waste, such as middle managers, thus enabling companies to operate more efficiently and with fewer resources. One of the main advantages of the Lean business model is its agility, which is ironic as CEO of Meta Mark Zuckerberg announced that this year would be the “year of efficiency” for this company and laid roughly 13% of his company. The advantages of a Lean business, however, extend far beyond agility. Here are some additional benefits:
- Greater efficiency through increased productivity and throughput
- Lower operating costs by reducing lead times and cycle times
- Improved team productivity and morale by reducing firefighting and focusing more on quality and value
- Better project visibility for stakeholders and team members
- Enhanced delivery of customer value through increased quality and predictability, leading to higher customer satisfaction
Ultimately, The decision to choose between the “Bigger is Better” business model or the Lean business approach largely depends on the financial status of a company. In today’s economy, many tech companies have shifted from the former model, which involved hiring sprees and a focus on growth at any cost, to a leaner approach that prioritizes efficiency and profitability. Regardless of the size of a business, its ultimate goal should be to generate profits and sustain growth rather than decline. To determine the best course of action, companies must evaluate the efficiency of their processes and whether they are delivering value to their customers. Whether you opt for a larger or smaller workforce, it is important to stay agile and adapt to changing market conditions in order to stay competitive and successful in today’s fast-paced business world.