Studies consistently show that start-ups and scaleups adopting Lean significantly improve productivity, employee satisfaction, and overall financial performance.
For example,
- Harvard Business School found that startups employing Lean methodologies reduced initial development costs by as much as 60% (Link).
- The University of Kentucky found that Lean startups that rigorously tested assumptions and pivoted based on validated customer feedback had a 30-40% higher chance of surviving their first three years than those that did not employ Lean methodologies. (Link)
- According to Alistair Croll’s book Lean Analytics, using Lean Analytics helps startups find their product-market fit more effectively by identifying which metrics are most critical at each stage.
When people think about Lean, they imagine reducing waste, streamlining processes, or improving efficiency. While these factors are crucial, they overlook what I believe is the most decisive factor in Lean's success: effective teams. “True” Lean is driven by people who are motivated, skilled, and empowered to take ownership of their work. Even the best processes and tools fail to deliver results without their engagement.
Balancing Speed
In startups and small businesses, where flexibility and speed are essential, embracing Lean tools and processes can often seem like a double-edged sword. Too frequently, attempts to scale through process lead to slowed operations demotivated front-line employees, and a stifling of the agility that keeps startups competitive. This can lead businesses to deprioritise any such tools or processes - or worse yet, as a business scales, a division between those in the company who want to embrace the process and those who want to avoid any formal process. These are understandable and vital concerns, but they typically stem from applying these tools in a vacuum without focusing on the ‘social systems’.
Lean's social systems provide a blueprint for growth that avoids these pitfalls, ultimately leading to better business outcomes such as increased efficiency, reduced costs, and improved team morale. In this post, I’ll explain how you can use Lean thinking to foster effective teams and build a culture that reduces waste and enhances collaboration, ownership, and innovation.
Why the Human Side (Still) Matters
Lean is fundamentally about increasing customer value, and value doesn't necessarily mean the lowest cost; it means whatever is valuable for the customer (both external and internal).
But in today's world of rapid decision-making and AI-enhanced tools, what can easily be forgotten is that people create value, not processes, tools, or software. A culture of collaboration and a clear shared vision is crucial for creating this value. A company might have the best-designed value stream or the most sophisticated Kanban board, but these tools can become nothing more than bureaucratic exercises without motivated and empowered employees. In a startup environment, where adaptability and creativity are crucial, Lean's focus on social systems becomes even more relevant.
Organisations, particularly start-ups, often fail in their Lean initiatives because they see Lean as purely a mechanical system for improving operations. Successful Lean adoption requires understanding that Lean is both a technical and a social system - a dual focus on the tools and the people using them. A systems thinking approach reinforces this idea, encouraging leaders to view their organisations holistically rather than focusing solely on individual components.
So, what are some of the key tools of Lean social systems?
Intentional Hierarchy
One of the most important aspects of Lean thinking is emphasizing employee empowerment. Hierarchical models that emphasize employee empowerment, like the Inverted Pyramid Leadership, are often misunderstood; many leaders fear they allow lower-level employees to avoid accountability. In reality, this leadership style encourages more accountability by ensuring employees have the support they need to succeed while being held responsible for their contributions.
In startups, this shift in perspective can mean the difference between a culture that stifles innovation as it grows and one that encourages every team member to take ownership of improvements.
Gemba Walks
Gemba Walks means going to where the work happens to understand it first-hand. Some leaders might argue that Gemba walks are time-consuming or unnecessary. However, numerous case studies have demonstrated that leaders who regularly engage in Gemba walks gain better insights, make more informed decisions, and ultimately see improved operational outcomes.
For example, A Harvard Business School study on MBWA (management by walking around) highlights that organisations using this approach saw improved performance through resolving high-value problems, developing employee problem-solving skills, and increasing understanding of work conditions by leaders. The involvement of senior managers in Gemba walks and their support for frontline workers’ problem-solving efforts significantly improved operational outcomes (Link).
Too often, leaders make decisions based on what people report that they do, or even worse, rely on second-hand information. Gemba walks teach us that the most effective way to understand what is happening ‘in reality’ is to observe directly rather than relying on hearsay. In startups, I’ve seen this concept applied by sitting with the developers, the customer support team, or anyone on the front lines. This approach helps leaders understand their teams' real challenges more effectively and identify opportunities for improvement from the ground up, helping to build a shared understanding and encouraging learning at every level. More importantly, it shows employees that their insights matter.
Video about Gemba Walks:
The '5 Whys'
Another critical aspect of empowerment is enabling teams to solve problems themselves. This not only gives employees a sense of dignity and ownership over their work, but it also prevents leaders from becoming bottlenecks in resolving problems.
But how do we ensure our team members focus on the right things?
Lean tools, such as The 5 why's, can provide teams with a tried and tested method to understand the true causes of their problems. The 5 Whys encourages employees to identify the immediate causes of a problem and identify and resolve the root causes simply. What's more, this tool helps us to avoid blaming a person - often our reflexive instinct - which, whilst psychologically satisfying, is almost always an inaccurate assessment of the issues caused. The 5 whys process helps the team grow their 'problem-solving muscles,' enabling them to become more effective and resilient in addressing challenges. Rather than telling employees what to do, which can inadvertently discourage the discretionary efforts and responsibility of frontline staff, leaders support them in finding solutions, giving them the autonomy to grow and contribute.
Psychological Safety
Different businesses and industries will have different tolerances for 'failure'. To encourage innovation, leaders must understand the areas in which employees should be free to experiment and improve without fear of reprimand and, importantly, continually communicate and reinforce that it is safe to do so.
The concept of psychological safety is crucial here. Many leaders mistakenly believe that fostering openness requires grand gestures, but often, the more minor, everyday interactions make a difference. For instance, if leaders consistently seek feedback only from their peers and neglect their subordinates - or worse, provide feedback without inviting it in return - they risk reinforcing the idea that feedback is only welcome within one's own level. This can lead to 'feedback silos,' where critical insights are not shared across different levels of the organisation. Given leaders' asymmetric influence on strategic decisions, coupled with a cultural tendency to agree with authority figures, leaders must actively work to rebalance the tendency for feedback to flow down and not up an organisation. By fostering an environment where honest, open communication is encouraged at all levels, leaders can access more accurate information, ultimately leading to better decision-making.
To shift this requires significant self-awareness from leaders to ensure their actions consistently support an open culture. It is crucial to create an environment where employees are not only not afraid to speak up, share their ideas, or admit their mistakes but that they feel a sense of responsibility to do so.
Objections are often raised that the efforts in promoting psychological safety may lead to complacency, a lack of focus on the day-to-day, or that this effort might not lead to tangible business results. However, evidence from companies like Google, which has been vocal about the importance of psychological safety, shows that teams with high psychological safety perform significantly better, innovate more, and achieve higher levels of innovation, performance and engagement.
For example, according to research conducted by Google in their “Project Aristotle,” psychological safety was identified as the most crucial factor contributing to the success of high-performing teams. This study examined over 250 team-level variables and found that teams with high psychological safety were more successful, as members felt safe to take risks, voice their ideas, and openly contribute without fear of negative repercussions. These behaviours are essential to fostering innovation, higher performance, and more robust engagement among team members (Link).
Startups that foster this environment are far more likely to succeed because they can adapt quickly to new information and learn continuously.
Toyota, often cited as the gold standard of Lean, is an example of psychological safety in action. Toyota's employees are encouraged to pull the Andon cord, a mechanism that allows them to stop the production line when they spot an issue, ensuring problems are addressed immediately and thoroughly without fear of reprimand.
Video about the Andon Cord:
In a startup, psychological safety might involve encouraging open feedback sessions, hosting blameless retrospectives after projects, Netflix's farming for dissent, or rewarding team members for proposing big and small new ideas, even if they don't always work out.
Transparent Communication
Startups thrive on speed and adaptability, but without transparent communication, these qualities can quickly lead to chaos. Transparent communication is at the heart of Lean's social systems. Tools like visual management boards can help, but they must be accompanied by a culture that encourages regular dialogue, trust, and accountability.
Effective teams require leaders who communicate, involve team members in decision-making, and provide visibility into successes and failures. Transparent communication is a crucial driver of trust and cohesion within teams. Leaders might fear being too transparent will lead to vulnerability or a lack of authority. However, research indicates that teams led by transparent leaders are more motivated and experience greater alignment with company goals, leading to tangible improvements in performance.
In a startup, this could mean weekly stand-ups where everyone shares updates or regular strategy reviews where leadership shares the company's progress and challenges. The key is ensuring everyone knows where the company is headed and how their work contributes to that vision.
Continuous Improvement
One of the fundamental tenets of Lean is Kaizen, or continuous improvement. Building effective teams requires instilling a mindset where everyone (every day) looks for opportunities to improve processes, even in small ways. Startups, in particular, benefit from this as they navigate constant change and growth.
For instance, setting aside regular time for Kaizen events, where teams gather to discuss improvements, can help embed this mindset into the company's DNA. These events don’t have to be formal - startups can keep it light with weekly brainstorming sessions on reducing inefficiencies in day-to-day work. What matters is that the culture values and actively rewards those involved in continuous, incremental improvements, making Lean more than just a methodology but a way of thinking. Studies indicate that companies that embed continuous improvement into their culture consistently outperform competitors in terms of adaptability, employee retention, and financial outcomes.
Lean is About People First
The tools of Lean - A3s, Gemba walks, Kaizen - are necessary but secondary to the social system that supports them. This human-centred approach can unlock untapped potential for startups, empower teams, and drive sustainable growth. Behind every successful Lean implementation are people who are supported, heard, and trusted.
Focusing on Lean's social systems is the key if you're a startup founder or leader looking to create a culture that values efficiency and innovation. Lean is not just about eliminating waste - it's about building a better, more engaged, and more effective team.
