Mastering Innovation: A Deep Dive into ‘The Lean Startup’
Agile project management, has reshaped the software development landscape in the past decade.
In “The Lean Startup”, Eric Ries delves into agile methodologies, revealing their universal applicability. These strategies aren’t exclusive to startups either; they’re your secret weapon for growth in a team-based or customer-centric environment.
In this article we will discover how these methods are revolutionizing the way we work and lead, offering a fresh perspective on project management and self-improvement.
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| Photo by David Travis on Unsplash |
Vision: The Birth of the Lean Startup
At the core of every lean-principle lies customer value. So why not adapting and learning from customer feedback?
IMVU, a company co-founded by Eric Ries, struggled in its beginning. Initially the company focused on creating an add-on for existing instant messaging applications (creating 3D avatars). It was not successful. However, due to them analysing user feedback, they found out, that users did not want an add-on. They wanted a new app to connect with others online through 3D avatars. So IMVU did that: they ditched the idea of providing an add-on and developed a stand-alone messaging-service with the 3D avatars at its core. The users got what they wanted. IMVU found its success.
Even more businesses, including industry giants like Kodak, General Motors, and Hewlett-Packard, have demonstrated how they can defy adversity and achieve a remarkable turnaround by embracing lean principles.
Minimum Viable Product
When it comes to understanding the ever-elusive desires of your customers, there’s a fascinating twist to the story. Sure, you can always ask them, but more often than not, even they aren’t entirely sure what they crave until they witness it in action. It’s like a riddle: customers may know what they want, but the real revelation happens when they discover what they truly need.
The Minimum Viable Product (MVP) is your trusty method for uncovering a customer’s true needs.
An MVP is like a pocket-size edition of the final product, equipped with precisely enough features for customers to dive into its capabilities. Here’s the key takeaway: an MVP is remarkably cost-efficient, can be developed and launched rapidly, as well as allowing you to swiftly gather customer feedback and adapt the MVP accordingly.
In short: It is a method for fast learning.
And as the Lean Startup methodology suggests: learning leads to innovation and innovation leads to success.
Steer: Build-Measure-Learn
The Build-Measure-Learn cycle forms the core process of the Lean Startup methodology and stems from the lean-principle Plan-Do-Check-Act (PDCA).
The focus is on the learning: Working backward in the process helps defininig what you need to learn, how you’ll measure it, and then develop accordingly.
The Build-Measure-Learn cycle can be subdivided in four elements: Leap, Test, Measure, Pivot (or Persevere).
Leap
The concept of “Genchi Genbutsu” can be a game-changer here. It originates from the Japanease and means as much as going to the source and gaining a deep understanding of the customer and her needs. A success story of Genchi Genbutsu is the Sienna Minivan - before its introduction, the leading product manager from Toyota took a roadtrip through the USA to get an understanding of potential needs. It was not a short trip. It took him more than 53.000 miles across the USA. But it worked out: the Sienna Minivan was a total success.
Only once you have a deep understanding of what a customer actually needs, you can do a “leap-of-faith” assumption. This is the core definition of a startup’s business model. Or if you apply the methodology outside of entrepreneurship, e.g. in intrapreneurship: the fundament of your project or the backbone of your strategy.
Test
The “leap-of-faith” assumption needs to be rigorously tested, preferably through affordable MVPs that allow quick learning and the identification of true customer needs.
Measure
The impact of changes need to be measured. However, it is imporant to distinguish between vanity metrics and actionable metrics. Vanity metrics seem impressive on the surface, but provide little valuable insight into the actual performance or success of an initiative. Actionable metrics are different: they are specific, relevant, and directly tied to the initiative’s objectives. They quickly tell you, if your “leap-of-faith” assumption works or if it doesn’t.
So focus on creating actionable metrics!
Pivot (or Persevere)
With the “leap-of-faith” assumption defined and actionable metrics in place to measure them, the final step is to either persevere or pivot.
If your strategy does not prove to work (through measurable metrics), a pivot is needed. Agility also means beeing open to change and to change quickly. Therefore, the Lean Startup approach encourages change and outlines various pivot types such as: zoom-in pivot, zoom-out pivot, customer need pivot, value capture pivot, engine of growth pivot, …
Accelerate: How you can apply the Lean Startup methodology
As mentioned earlier, the Lean Startup methodology extends beyond startups. Nevertheless, it consistently places the customer at its core. This principle derives from the essence of lean thinking, where an action holds value only when it directly contributes to enhancing the customer’s experience.
A customer can be external and internal.
This perspective opens up the methodology to many different stages: entrepreneurship, intrapreneurship, team leadership, product development, software engineering and many more.
- Make use of small batches: At the heart of the Toyota Production System lies yet another game-changer: the One-Piece Flow. Eric Ries turned it into a high-speed lane for zipping through the Build-Measure-Learn cycle. The secret sauce? Embrace small batch sizes. In the software development realm, it’s the magic of Continuous Integration, where every step is a leap toward innovation.
- Grow in the right way: In the Lean Startup methodology there are various growth engines at your disposal, each with its unique dynamics. You’ve got the “sticky” engine, characterized by high retention rates. Then there’s the “viral” engine, where customers bring in new customers through word-of-mouth and sharing. And don’t forget the “paid” engine, where the cost of acquiring a customer is outweighed by the value they bring in.
- Adapt & Innovate: When it comes to adaptation, the 5 Why method shines as a brilliant tool for pinpointing the root causes of problems and making necessary adjustments - innovating existing solutions. And speaking of innovation, innovative teams require enough freedom in order to operate at their peak efficiency.
- Measure with actionable metrics: Your metrics should be specific, relevant, and directly tied to your objectives.
- Waste not: In the world of lean principles, waste, known as “muda” in Japanese, stands as the arch enemy. The core mission of the Build-Measure-Learn cycle is to combat and minimize this waste.
Conclusion
In this blog post, we’ve dived into “The Lean Startup.”
This methodology has redefined innovation, offering a structured approach to learning, adapting, and achieving business success. Whether you’re a startup entrepreneur or part of an established organization, embracing the Lean Startup principles can unlock new possibilities and drive meaningful change.
If you got interested in the Lean Startup, check out the full book “The Lean Startup” by Eric Ries.