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Use Lean Planning to Optimize Management

Use Lean Planning to Optimize Management

By Tim Berry, Guest Blogger
Published: March 24, 2015

If you own a business then you have a lot to gain by adopting lean business planning to help you manage better. Don’t bother to do a full formal business plan unless you have to have one for a bank, investors, partners or some other real reason. Instead, do a lean business plan – it’s easy, just a few critical bullet points and lists and essential numbers – and use it to manage better.

“Lean business planning” is what I’m calling a new kind of business planning that’s appropriate for the short attention spans and rapid change we live in.

Why lean? The business meaning of the word lean started last century with lean manufacturing, which was also called “the Toyota way.” That focused on a cycle of continuous improvement that was called PDCA, for “plan-do-check-adjust.” It was adopted in this century by Eric Ries and Steve Blank with their work on lean startups, which is also a process of continuous improvement in steps or cycles, in that case related to starting with what they call a minimum viable product and building a business Plan Do Check graphicwith frequent reviews and revisions.

I say lean business planning because I think it makes perfect sense to apply the same idea of starting with the minimum and reviewing regularly and improving over time to business planning.

It’s especially applicable to business owners because we tend to dismiss business plans as something that only startups need. They take a lot of work. They become obsolete very quickly. But what if we redefined business planning as a streamlined simple lean plan as part of a process that redefines the PDCA idea into a planning version that I’d call PRRR for plan-run-review-revise.

To make that work, the plan itself has to really be easy to do and simple, while its content should be very meaningful and useful in moving the business towards goals. Here’s what I propose:

  1. Strategy is simple bullet points serving as reminders of target market and business offering. Strategy is focus. Don’t do wordy explanations for outsiders – just the bullet point reminders for the team.
  2. Tactics, more simple bullet points, serving as reminders of the main tactics to execute strategy. These would be the key points of marketing plan and product plan, like pricing, channels, features, messages, media, etc. No long descriptions, just bullet points and key numbers.
  3. Concrete specifics include dates, deadlines, performance metrics, assumptions, milestones and task responsibilities. These are lists to be used by management to make ongoing performance more collaborative and more manageabPlan Run Review graphicle.
  4. Sales forecast, expense budgets and projected cash flow.

With my idea of lean planning, that original lean plan is just the first step in that PRRR cycle. It’s a process, not a plan. The plan is reviewed every month in a management meeting that looks at performance and goals, develops collaboration and accountability, and revises the plan.

That makes a business plan not a long boring formal document, but a useful set of lists and tables. It’s what’s going to happen and when; who’s responsible for what; and what’s expected for sales, expenses and cash.

It’s short, simple, streamlined, just big enough to steer the business. Just big enough to meet the business need. It’s about results. It’s about managing a business. Accountability. Metrics. Priorities. It starts simple and grows organically.

If you’re curious about it, I’ve put up a website that lays it out in detail, at leanplan.com. It will eventually become a book, but it’s always going to be a free website, with all the contents of the book remaining on the web for free.

(Images: from leanplan.com) 

About the Author:

Tim Berry
Tim Berry

Guest Blogger

Founder and Chairman of Palo Alto Software and bplans.com, on twitter as Timberry, blogging at timberry.bplans.com. His collected posts are at blog.timberry.com. Stanford MBA. Married 46 years, father of 5. Author of business plan software Business Plan Pro and www.liveplan.com and books including his latest, 'Lean Business Planning,' 2015, Motivational Press. Contents of that book are available for web browsing free at leanplan.com .