“Everyone wants to know how to make his or her business leaner. Amazon has more than 9,000 books on lean. But once you’ve decided to ditch your master plan to promote streamlined flexibility, there’s another way to look at what it really means to be a lean organization. This approach goes far beyond paying lip service to the concept, because when approached strategically, the lean agenda has the potential to reduce the length of certain processes from months to hours.
It all boils down to one key distinction: Will you structure your business to maximize resource efficiency or flow efficiency?
These concepts are examined in detail by Niklas Modig in his groundbreaking book, This Is Lean: Resolving the Efficiency Paradox. Modig defines resource efficiency as a measure of the extent that a company’s resources are used in its processes. Flow efficiency, on the other hand, is seen as a measure of how quickly and seamlessly a company fulfills specific customer demands. In other words, one has a greater impact on your immediate bottom line, while the other focuses more on what your customers really care about: How quickly can we get value from the company?”
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