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What is Lean Product Management and How is It Applied?

Posted by Maggie Millard

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Jan 27, 2022 9:42:00 AM

Male hand on dark background showing drawn light bulbProduct managers fulfill a critical role in translating customer needs into product features and improvements. Unfortunately, often internal pressures, external commenters, and poor product management practices hinder managers' ability to deliver products that customers truly value. Another sad reality is that it is common for organizations to make product decisions without really understanding what matters most to the customer. The result is wasted resources, low satisfaction scores, and disengaged team members.

Lean product management addresses these challenges by applying Lean thinking to product development and strategy. It offers a framework for making product decisions that align with company goals, performance indicators, and customer desires.

What is Lean Product Development?

Lean product development and management ensure that a product is ideal for a particular market and audience. The methodology focuses on making products as valuable to customers as possible. The only features added to the product are those for which a customer would happily pay.

Lean product development addresses the entire lifecycle by applying a structured approach to customer analysis, financial viability, outcome-driven innovation, business modeling, and behavioral economics. 

Lean product management focuses on a few core tenets:

  • Minimizing or eliminating waste
  • Improving efficiency
  • Shortening cycle times
  • Maximizing profitability and ROI
  • Adding customer value when creating new products

 

The History of Lean Product Management

Lean product development got its start at Toyota in the late 20th century. Toyota recognized a need to adapt to the varying tastes of car buyers. From this challenge came the Toyota Production System. The Lean manufacturing business and sigma methodologies became popular in the 1960s when other automotive manufacturers couldn't keep up with consumer demand for cars.

Customers were no longer satisfied with the limited selection. Instead, they wanted many colors, shapes, sizes, and features to choose from. This meant that manufacturers had to re-think their approach to materials, productions lines, and labor.

Toyota's focus was on building systems that minimize waste and improve productivity while at the same time improving value for the customer. Since then, Toyota's values have been applied to other manufacturing processes, software development, consumer goods, healthcare, construction, and more.


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The Principles of Lean Product Management

1. Define value to the customer

By focusing on the customer first, lean leaders ensure that they produce something that the customer truly needs. In lean product management, this process is often called product ideation. Product ideation is a set of strategies focused on how customers will receive a product. It answers the question, how will this product add value for the customer? Lean product managers don't just guess about how to solve customer problems. Instead, they engage in an in-depth understanding of the customer's needs. This customer centric-approach avoids the common situation where a product is looking for a problem to solve.

2. Identify the Value Stream and Reduce waste

The lean product development approach leverages a streamlined product development process to understand and reduce risk, eliminate bottlenecks, and create efficient workflows. The lean principles of pull and flow are embedded in the product development process.

Documented, standardized processes help keep teams on the same page and allow for easier cross-functional collaboration and handoffs between teams.

3. Employee Empowerment

One of the ways that lean product management becomes "lean" is by removing complex bureaucracy that can limit innovation and slow the rate of experimentation. If an organization has a culture of transparency and the goals of the product team are well aligned with the overall long-term business strategy, employees can be trusted to make intelligent decisions about what to try without a lot of red tapes.

4. Continuous Improvement and Iteration

The goal of lean product management is not to create the perfect product on the first try. Rather, the team builds the minimum viable product (MVP) and gets it in the hands of the customer as quickly as possible. Then, based on feedback, the product is improved and tested again. This process continues until a market-worthy solution that can be produced at a profit is achieved.

How is Lean Product Management Applied?

Whether applied to process improvement or product development, the lean methodology offers several valuable tools and techniques that product managers can use to minimize waste, increase efficiency and decrease cycle times.

Market Analysis

For lean product managers, market analysis is not a one-time event. Instead, continuous market analysis is needed to understand the changing needs of customers, the buyer landscape, and competitive offerings. Applying critical thinking to the market helps lean product managers know when to change direction, stop promoting a particular product or slow down production.

Business Process Maps

Business process maps are an effective way to visualize any operation's current and desired future state. When creating the current state process map, it is imperative to include all steps that are currently being performed, even those that are outside the standard work. Process operators should be involved in creating the current state map, as they are in the best position to know the difference between what is documented and what is actually happening.

Gemba Walks

Gemba walks are a continuous improvement practice where leaders go to the workplace to show respect for workers, ask questions, and observe. Gemba walks can help create and validate the current state process maps.

Value Streams

Value stream mapping is similar to business process mapping, but instead of focusing on activities, they focus on the flow of value to the customer. Visualizing the flow of value with value stream maps helps product managers identify wasteful processes, features, and activities. Once the elements that don't add value are defined, they are targeted for elimination.

PDSA Cycles

The PDSA, or Deming cycle, is a structured approach to change that can be applied to process improvement or product development. The steps in the cycle are:

Plan: Define the problem and explore potential solutions.

Do: Implement experiments or build prototypes that might solve the problem.

Study: Evaluate the critical performance metrics and speak with customers about their experience and perceived value.

Adjust (Act): If the product or improvement was successful, implement the new standard. If not, adjust and reiterate the Do and Study steps.

The great thing about the PDSA cycle for product development is that it is iterative. If the prototype does not meet the customer's needs, it can be adjusted as many times as necessary before a product that the customer values is created.

Catchball

The lean technique called Catchball involves moving ideas from one person to another for improvement and feedback. The idea ( or ball) is set in motion when a product manager or process operator identifies a challenge or improvement opportunity. The idea then moves back and forth, up and down across the hierarchy, until a plan for additional experimentation is developed.

Lean Software

Because lean product development relies on quick decisions and constant experimentation, having a central repository for all project information is crucial. Cross-functional collaboration and continuous improvement are best supported by online technology designed for this purpose. In addition, creating a repository of knowledge is essential so that each experiment builds on the lessons from the last.


[WEBINAR] Bottom-Up Improvement Software Demo

Lean product management is a process-driven methodology for bringing innovative ideas to the market with as little risk and expense as possible. With constant experimentation and the drive to deliver customer value, your team can outpace the competition and reach the organization's most important goals.

Topics: Innovation Software, Lean, Improvement Process, Improvement Methodology

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