Origins of Small Batches

• In the book Lean Thinking, James Womack and Daniel Jones recount a story of stuffing newsletters into envelopes with the assistance of one of the author’s two young children.
• Every envelope had to be addressed, stamped, filled with a letter, and sealed. The daughters, age six and nine, knew how they should go about completing the project: “Daddy, first you should fold all of the newsletters. Then you should attach the seal. Then you should put on the stamps.”
• Their father wanted to do it the counterintuitive way: complete each envelope one at a time. They—like most of us—thought that was backward, explaining to him “that wouldn’t be efficient!” He and his daughters each took half the envelopes and competed to see who would finish first.
• The father won the race, and not just because he is an adult. It happened because the on evelope at a time approach is a faster way of getting the job done even though it seems inefficient.
• The one envelope at a time approach is called “single-piece flow” in lean manufacturing. It works because of the surprising power of small batches. When we do work that proceeds in stages, the “batch size” refers to how much work moves from one stage to the next at a time.
• Why does stuffing one envelope at a time get the job done faster even though it seems like it would be slower? Because our intuition doesn’t take into account the extra time required to sort, stack, and move around the large piles of half-complete envelopes when it’s done the other way.
• For example, imagine that the letters didn’t fit in the envelopes. With the large-batch approach, we wouldn’t find that out until nearly the end. With small batches, we’d know almost immediately.
• The small-batch approach produces a finished product every few seconds, whereas the large-batch approach must deliver all the products at once, at the end.
• Lean manufacturers discovered the benefits of small batches decades ago. In the post–World War II economy, Japanese carmakers such as Toyota could not compete with huge American factories that used the latest mass production techniques.
• Instead of buying large specialized machines that could produce thousands of parts at a time, Toyota used smaller general-purpose machines that could produce a wide variety of parts in small batches. This required figuring out ways to reconfigure each machine rapidly to make the right part at the right time. By focusing on this “changeover time,” Toyota was able to produce entire automobiles by using small batches throughout the process.
• Instead of buying large specialized machines that could produce thousands of parts at a time, Toyota used smaller general-purpose machines that could produce a wide variety of parts in small batches.
• The biggest advantage of working in small batches is that quality problems can be identified much sooner. This is the origin of Toyota’s famous andon cord, which allows any worker to ask for help as soon as they notice any problem, such as a defect in a physical part, stopping the entire production line if it cannot be corrected immediately.
• This process of continuously driving out defects has been a win-win for Toyota and its customers. It is the root cause of Toyota’s historic high quality ratings and low costs.

Small Batches in Entrepreneurship

• The theory that is the foundation of Toyota’s success can be used to dramatically improve the speed at which startups find validated learning.
• Toyota discovered that small batches made their factories more efficient. In contrast, in the Lean Startup the goal is not to produce more stuff efficiently. It is to as quickly as possible learn how to build a sustainable business.
• Think back to the example of envelope stuffing. What if it turns out that the customer doesn’t want the product we’re building? Although this is never good news for an entrepreneur, finding out sooner is much better than finding out later.
• Working in small batches ensures that a startup can minimize the expenditure of time, money, and effort that ultimately turns out to have been wasted.

Small Batches at IMVU