Crossing the Lean Startup Chasm
As an early believer in Lean Startup movement, I can perhaps be excused for my unbridled enthusiasm for the release of Eric Ries’ new book, The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Not however, for the reasons you might expect.
In fact, some early adopters of Lean Startups -- those who have already bought into the framework to the extent that they’ve applied its practices into their high tech startup -- might be a tad disappointed. They might have to look a little deeper; there's no vanity steps to success herein.
Why? In the end, this book is not written for them. But rather, like any good entrepreneur, Eric is aiming at the Mainstream market. According to Geoffrey Moore in Crossing the Chasm, you can’t address the Mainstream market the same way you learned to do in the early adopter market. (Hence the chasm.)
In my opinion, for example, early smartphone adopters diss’ the iphone, because Apple targeted the Mainstream, not them.
Eric’s intentions are easily discerned from his definition of Startup:
“A human institution designed to create new products and services under conditions of extreme uncertainty.”
This is clearly not intended to speak (only) to high technology startups, but rather to anywhere uncertainty exists. In my opinion, this is the strength of Ries’ book: it is a call to action to anyone inclined to take action to make things better despite facing severe uncertainty. There is no boundaries to where you can exercise your entrepreneurship. And though Eric doesn’t state so explicitly, true entrepreneurs are those willing to admit to the uncertainly within the institutions they inhabit AND to develop solutions that solve problems in the face of that uncertainty.
This definition applies to social entrepreneurship, non-profits, education, government, large successful businesses, and any business with technology risk or market risk, including yes, high tech startups.
Think about this for a second. If true, the problem with the failure to innovate facing many hugely successful businesses is not that they don’t “act like a startup,” but rather that they don’t understand their own uncertainty. Most people recognize that many governmental institutions face extreme inefficiencies and could benefit from new products and services designed and implemented in new ways. The roadblock is, perhaps, that in a society overly dependent upon the advice of “experts,” we are unable to admit to the uncertainties we confront and therefore fail to unleash the creativity necessary to build new systems to solve big problems.
Conversely, those who claim to know everything, in other words face no uncertainty, are either not part of a “startup” or simply not truly entrepreneurial. The arrogance of certainty leads to doing things the way they've always been done.
Make no mistake: there is much here for high tech startups. Entrepreneurs who are still figuring out how to apply the principles to their businesses have much to learn here, but Eric describes less how to do it and more how to think about doing it. (Teach a man to fish and all that.) Personally, I have found that there are multiple layers of understanding to be had in the Lean Startup world and most of us are just scratching the surface. While some will look for more specific action items, Ries’ approach is honest, since there is no such thing as a startup blueprint. While "Build, Measure, Learn" is easy to grok, the actual practices one has to put into place to create a learning environment that induces change, that produces products that people care about is hard. No, It's really hard. And it's one thing to do it in a high-tech startup of a couple of people and it's another thing entirely do to it in a startup environment of 10 people and it's another universe to do it in static, change-averse cultures that are in the most dire need of disruption.
Eric’s "stuffing the envelope" analogy, for example, is illuminating and one I hadn’t encountered before. It turns out that stuffing envelopes one at a time is faster than differentiating the tasks and doing them in batch mode.
“What if it turns out that the customer doesn't want the product we’re building? Working in small batches ensures that a startup can minimize the expenditure of time, money, and effort that ultimately turns out to be wasted.”
When in execution mode -- i.e., when uncertainty has been eliminated -- you can optimize processes for speed or cost. When in learning mode, however, crippling inefficiencies can occur if you've optimized execution on the wrong parameters and then learn your assumptions were wrong.
Eric offers stories that run against the grain, which lead you to think differently about how to solve problems, such as increasing efficiency through less specialization and the fastidious elimination of metrics that enforce false certainty (vanity metrics).
There's more to come. Eric briefly tackles the quest to bring disruptive innovation to the enterprise. At this point, I’m not sold on the methods prescribed. Ries says he aims to “protect the parent organization from the startup” thereby turning the conventional model “on its head.” The premise seems to be that senior management “springs innovation” onto existing managers.
I’m not sure this is the case. I think it more likely that senior managers are more distrustful of low margin, small market experiments run by kooky internal entrepreneurs then they are of managers who continue to execute on current products. Futhermore, there is no real head flipping here since these are really two sides of the same coin. Maybe big company departments need protection from fast moving startup people, but startups need “protection” from the problem of being measured by the same criteria (e.g. profit margin) as existing product. Big company R&D centers are rife with products that never see the light of day.
My take is that big companies are going to look more to startups to solve the problem of disruptive and even sustaining innovation. An economy bustling with 1000s of Lean Startups is conducive to enterprises waiting for small entrepreneurs to prove the market before the big guys move in. It will be interesting to see how this plays out.
The Dark Side The book is perhaps a bit heavy on the development side of the house, but for anyone envisioning innovation, this is the right place to start. Eric’s discussion of applying the "5 Why’s" is instrumental to understanding the implementation of fail-safe processes. It would be interesting to see these principles applied to the dark art of sales and marketing. Instead of traditional loss reports, what would a no-blame-game 5 Why's look like to dissect a failed sale? Poor Customer Support?
But this only means that new ideas of how to apply Lean Startup principles need to be tested, validated and shared. When discussing my book, the Enterpreneur’s Guide to Customer Development, with Steve Blank, he remarked how the school of thought he pioneered “is what it preaches.” Eric’s book demonstrates that. Not only because Customer Development is an important aspect of Lean Startups, but because Eric’s own vision and elucidation of Lean Startups has evolved tremendously from when I first heard him present his ideas in June of 2009 in China.
The Lean Startup movement is a framework entrepreneurs of all stripes can use to innovate in their industries. All those who adapt and practice it – who make it their own – will continue to advance the Lean Startup framework.