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Jeff Liker

Jeff Liker: The challenge for a startup is Sales

By Jeff Liker, - Last updated: Tuesday, May 21, 2013 - Save & Share - Leave a comment

I am not sure there is a special category or set of circumstances that make a start-up a unique organizational form for lean. What does make it different?
1. The company is brand new so there is a chance to start to build a lean culture from scratch.
2. People can be hired who fit the culture and philosophy the company is striving for.
3. It is a time of unique challenges to make the business viable, and if successful a time of tremendous growth which has pluses and minuses for lean.
I am on the board of directors for a lean startup from a number of years ago called Peopleflo that makes complex pumps for highly viscous fluids. They asked for help on lean development and we provided a small number of days. They ran with it and in 8 months had a complete product designs and patent applications for all critical components. They set up the PD visual wall in the same room as the factory which became a lean cell making a pump at a time. This took tremendous creativity to develop patented fixtures which can hold all the parts in place to machine them for a single pump and then the pump is immediately assembled. Lead times were tiny compared to competitors, features were greater including a sealed chamber without leakage, and the price was lower for comparable pumps. Sales were difficult as they were the new kid despite all the advantages. They sold trial pumps in many places. Finally they sold the entire manufacturing process and the product to a larger pump firm, setting up the entire cell as is in the competitor’s factory. They converted their business model to developing turnkey products and cells. It is too early to tell how well this strategy will succeed. It is still a very small company with the original CEO and engineers who bleed lean and put it into every part of the enterprise. It is fun to see and the performance is acceptable, though the market is difficult. They have hired in people who fit the culture though with very slow growth.

The leadership team had learned lean at a larger pump company with an excellent consultant, but felt constrained by the corporate bureaucracy. So they set out to make their own lean startup without constraints. Everything was a success except sales were slow and got slower in the recession. This suggests three things: 1) The degree to which the startup will be true lean, rather than lean tools, depends highly on the leadership. In a startup there are usually a small number of leaders who dictate the culture. 2) Even a lean enterprise is not enough without cash and a good market to sell into. 3) Once you sell the company or a considerable part of its intellectual property you have not control over whether it becomes part of a lean culture.

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