For Starters #49: How the 8 Deadly Wastes Show up in Startups

If the customer didn’t ask for it - it’s waste.

Some people binge watch the latest series on AppleTV, I prefer lean transformations on YouTube.

The connection between the building new ventures and lean manufacturing improvements in a cabinet factory is not difficult connection to make.

Both are about delivering the maximum customer value with constrained resources.

Value = Transformation

If ‘value’ is sometimes a bit vague and amorphous, I’ve been preferring ‘transformation’ lately, as I think it provides a more tangible reference to judge value creation (Was something transformed?)

In Lean, there are 8 well-documented deadly wastes, let’s take a look at each the see how they show up in startups.

Overproduction

This is the easy one. This is the most common one. This is the one plaguing most founders I talk to.

This is what I refer to when I say: Product - Sales = Waste.

In the software space it’s so easy to overproduce, partially because of our enthusiasm to build and our ambition to overbuild.

Confidently banging out code - even the wrong code - from the comfort of our own home - is more immediately rewarding than the vague, awkward work of developing relationships of deep understanding with potential customers.

This is also evident in the tech stack. I saw this alot in the early days of AWS, where fairly low volume sites would have inconsistent server fees month-to-month because they were on plans presuming AWS was cheaper than a VPS. When at a small scale it is often the most expensive option. The initial digital product doesn’t need to five 9s reliability globally. Nor does it need Microsoft Dynamics 365, a spreadsheet in Numbers is probably sufficient.

Extra-Processing

This is the waste so subtly encouraged in the phrase “underpromise and overdeliver”.

Providing more than you’re being compensated for, more than the customer values is waste. Sure, your heart is in the right spot, but the extra effort also delays your customer’s time-to-value and time-to-value itself is a definition of quality.

I’ll never forget the client project where, on a whim, I decided to send over my draft recommendations in a plain text email ahead of making them polished and presentable. The response from the client was, “this is great, thanks. here’s the next thing we’d like your help with.” I was flabbergasted and delighted. Wait, the effort to spit and polish just might be unnecessary - how very interesting.

From that point on, I stopped making assumptions about how polished my clients expected recommendations to be, and started delivering early drafts via plain text email.

Defects

Until you hit some notion of consistent demand (cough product market fit cough) a significant portion of the offering is likely defective - not working exactly the way your customers want.

It matters less that these defects exist and more that you resolve the individual issue quickly. Defects could also be a sign of overproduction, where you built on guesses rather than customer need, customer pull.

Inventory

In lean, the idea is that the customer pulls the product through the manufacturing process and there’s just enough inventory available to address current demand. Excess inventory is waste because it ties up capital - both in materials and in storage space that could be used for something else.

Inventory as a waste and expense is easy to see in hardware startups, tougher in software startups. In both however, there’s aways an expected duration between when a customer orders something and when they expect to take delivery of it. That duration is most likely 1-10 business days. Presuming assembly/deployment and testing takes less than 2 weeks, focus on selling - not creating inventory in hopes of customers appearing.

Unused Talent

Unlike an employment job, Entrepreneurship calls on all of your abilities - strengths and weaknesses, creativity and persistence.

The waste of Unused Talent shows up when startups bring on co-founders or other talent too early, or hire the wrong talent altogether. Imagine the CTO co-founder twiddling their thumbs - or worse, over-producing - while the CEO co-founder struggles to sell.

Startups need many bases covered lightly, so bringing on a specialized expert full-time is a waste. This is one reason why people that spent the bulk of their career in corporate roles can have such a difficult time in startups - they presume demand exists (it doesn’t) and they presume they can be narrowly focused (they can’t).

Motion

This is less about physical motion and more about the whipsaw of changing requirements coming from a combination of responding too quickly to customer demands and a bias for overproduction.

One of the benefits of my ‘start with a professional services’ approach is that the variance between customers is accommodated by the founder as a service offering, not the product. The product itself is non-existent or very, very rudimentary. The service offering is say, 95-100% human and 0-5% product. Overtime, as the human sees patterns consistently repeating themselves, the repetition moves into the product.

I would also bucket attending trade conferences here. Visiting customers and prospects in-person at their location is always a good thing.

Waiting

In a manufacturing setting, the waiting is often waiting on earlier steps in the production line. In a startup, this can still be the case - waiting on a decision from a stakeholder, waiting to get access to some technology, some information, some anything. However, the speed and urgency most founders operate at means this is less the case…even when the waiting is on demand…for an enthusiastic founder will likely fill the waiting time with overproduction and over-processing.

Transportation

This is the least likely waste in a startup, it’s unlikely we’re regularly moving materials from place to place - and in this day and age we’re likely using SMS, Slack, email, Whathaveyou to collaborate and communicate to moving physical bodies is also unlikely. But this waste can be very subtle (as all the wastes can), for example, on the data side - are we copying-and-pasting at a volume where we should consider a more reliable integration?

Operatiosn look very different when these eight wastes are cut out, when all the non-value, non-transformative pieces are removed.

That’s what makes trimming them so exciting, we discover what the truest form of this business looks like.