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Inside Lean CEO
Copyright © 2011 Lean CEO.
From the Editor
Welcome to the Lean CEO newsletter!
Bill Waddell returns this month with an article explaining how the U.S. Post Office could use a dose of lean accounting.
Over the past couple months I've visited China and also attended the World Business Forum in New York City. Both, but especially the twenty-one speakers at the WBF, gave me many ideas for change. You can read my notes on China here and the WBF here. I'm off to India today... so stay tuned!
Gemba Academy is also running a photo contest called "Gemba Academy Around the Globe", giving away a 12 month subscription extension. More details here.
Finally,I encourage all of you to register for the AME Annual Conference in Dallas later this month. This is the largest lean conference in the world, with tours, speakers, and workshops on lean in many types of industries. It's not just manufacturing anymore!
- Kevin Meyer
Poster Boys for Lean Accounting
By Bill Waddell
The Post Office cost structure is pretty much all fixed. Buildings, labor, trucks with steering wheels on the wrong side, fuel, and maintaining bulletin boards with many of my friends and family members pictures on them costs the same thing whether they bring me 1 piece of mail, or 20. In fact, the cost doesn't change on a day when they bring me nothing at all.
When someone says the cost of a first class letter is X, while the cost of a piece of junk mail is Y, the only way they could have arrived at those numbers is to have made a bunch of allocations. The actual cost of delivering a letter is pretty close to $NADA. The cost of opening up all of those post office doors and firing up all those trucks, however, is astronomical. They get to the cost of each type of item by going through some undoubtedly very clever arithmetic that ends up telling them x.xxx% of funny truck expense is assigned to letters and y.yyy% is assigned to magazines.
Just because someone conjured up a slick equation, and has some pretzel logic to justify the math doesn't make it so, however. The cost of the truck does not in any way shape or form depend on what sort of stuff it is being used to deliver on any given day. It is simply the cost of the truck and trying to make it into the cost of anything else leads nowhere other than to bad decision making.
The Lean Startup
By Eric Ries
Most startups fail. But many of those failures are preventable. The Lean Startup is a new approach being adopted across the globe, changing the way companies are built and new products are launched. Inspired by lessons from lean manufacturing, it relies on “validated learning,” rapid scientific experimentation, as well as a number of counter-intuitive practices that shorten product development cycles, measure actual progress without resorting to vanity metrics, and learn what customers really want. It enables a company to shift directions with agility, altering plans inch by inch, minute by minute.
Rather than wasting time creating elaborate business plans, The Lean Startup offers entrepreneurs - in companies of all sizes - a way to test their vision continuously, to adapt and adjust before it’s too late. Ries provides a scientific approach to creating and managing successful startups in a age when companies need to innovate more than ever.
This course is part of Gemba Academy's Complete Lean Package, which now has over 206 video modules and is used by over 1,000 companies worldwide. More information.
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