This is Jill VanDewoestine back in for the Technology Marketing Center with a post on the wildly popular book by Eric Reis.
When Ries' The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses came out in 2006, it called for bringing management excellence to entrepreneurship. As Steve Blank wrote in Harvard Business Review, the lean startup "favors experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional “big design up front” development." A cottage industry has formed to promote these ideas, and the concepts are finding their way into business school curricula.
The question is: how do these ideas work in large companies that develop highly specialized technology products for BtoB markets? The idea of small project teams forming "start-ups" within large companies is nothing new. Such teams can leverage several lean startup concepts, but need to adapt them for their own circumstances. The book describes some of these adaptations in detail, but others are left to the reader to figure out.
- Using appropriate metrics that allow testing of the value & growth hypotheses
- Use a Build-Measure-Learn feedback loop to test the value hypothesis with customers
- Providing stable resource levels (not necessary a high level, but not subject to random cuts)
- Enabling a "sandbox" where new ideas can be focused on by dedicated teams
- Using regular "pivot or persevere" meetings to make the hard decisions with data rather than intuition
- Use of 5 Whys to get to the root cause of problems
- Continuous product tests with small sets of customers - companies developing early-stage, fundamentally new technologies rarely have more than a handful of collaborators, because the technology is only usable by specialized customers and must be kept secret to generate IP. In that case, different variations of a product can be tested by using Design of Experiments concepts in collaboration with a single customer.
- "Sticky, viral, or paid" growth engines - none of these models describes growth that results from a new technology becoming critical to compeititveness in a category, such as the use of touch technology in smartphones, or the replacement of CRT by LCD in PC monitors and TV. This adoption-based growth is best measured by penetration rate rather than units, because the firm will see the saturation rate coming and can adapt its business model more smoothly as the market matures.
The most critical concept in The Lean Startup, regardless o'f the specifics of the tools and methods, is that it requires a new mindset to be adopted by everyone in the team. Adopting these tools is an exercise in change management, and as such will encounter substantial resistance. The "immune response" of the firm will be to blame the tools as ineffective, the motive for adopting them political, and the whole thing as just another passing fad. Successful projects need high-level sponsorship, a long-term committment from the very top, and extensive training & support for team resources.
Bottom line: this book offers a glimpse into how Lean concepts can be used to increase the likeihood of entrepreneurial success. Project managers in large technology companies will need to marshall their resources to get buy-in for the concepts, and adapt some of the tools to be appropriate for smaller, more specialized markets.
For more on technology marketing and lean start-up principles, check out the Technology Marketing Center audio file on application of Minimum Viable Product in B2B businesses.