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Get Lean to Achieve Radical Success
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What is a “Lean Startup”?
“Lean is actually an old idea, taken from the Japanese concept of lean manufacturing. What we’ve done is apply it to entrepreneurship,” states Ries. He goes on to explain, “In general management, it’s the job of the executive to manage what we know. With entrepreneurship, however, the job changes to manage what we don’t know. Scientific experimentation becomes critical to reducing risk and to building a sustainable business.”
With traditional management, Ries says, you focus on building a great product. When it’s built, you deliver it to customers. Your entire focus is on doing an efficient job in getting the product ready. However, what if you spend a long time developing the product efficiently and according to plan, only to find out that your audience doesn’t like it and doesn’t need it? That’s an incredible waste, and a direct path to failure. This approach to product development is obviously riddled with risk.
“It’s like a car driving off a cliff,” explains Ries. You can fine tune the engine and get great gas mileage, but if you wind up driving your car off a cliff, it’s all for naught.
With the Lean Startup methodology, you instead focus on continuous innovation through vigorous testing and a Build-Measure-Learn feedback loop. You implement a Test-Learn-Pivot cycle as quickly as you can. You aim for a “minimum viable product” as a method for evaluating your business ideas and for assessing your progress. Instead of spending a long time on development and only then allowing customers to use the product, the Lean Startup approach provides customers with the minimum viable product as early as possible in the development process. From there you iterate continuously based on ongoing customer feedback.
Why It’s Difficult for So Many Entrepreneurs to Implement a Lean Startup
Ries explained that the reason why more companies are not naturally drawn to the Lean Startup style of management is that an existing path has already been paved.
He used the analogy of a train conductor. The train conductor may be good at driving the train, but he’s not thinking about where the train is actually going. If you place a train conductor in a car, he’s going to be in trouble, as major driving decisions need to be made. A train conductor is simply not accustomed nor equipped to make those types of decisions -- instead they are focused on keeping the train on the tracks. A typical manager is like a train conductor, managing output based on a predetermined direction. There’s a lack of rapid decision-making based on any kind of market feedback. This makes it difficult for many companies to pivot based on what’s truly needed by customers.
Lean is Better Than Cheap
Lean is streamlined. Lean is efficient. However, lean is not "cheap."
"Lean Startup isn’t about being cheap [but is about] being less wasteful and still doing things that are big." This is a quote from The Lean Startup website.
According to Ries, "Lean does not mean cheap. Yes, you save money through the Lean Startup, but that’s because you learn as much as possible from customers during continuous development of the product.
"Cheap, as opposed to lean, is something like cheap furniture. It’s nice that you save some money for your startup. But cheap furniture isn’t what customers are seeking. It doesn’t solve a customer need. It doesn’t bring you any closer to a successful, sustainable business.
"By focusing on cheap instead of lean, it’s the equivalent of focusing on the exhaust rather than the car itself. It’s ineffective, it doesn’t bring you closer to building a successful company, and it’s the wrong thing to focus on.
"Think of a lean athlete. They have a high metabolism, which enables them to take in many calories and put them to effective use. It’s your job as an entrepreneur to build high metabolism for your business."
Well-Known Example of a Lean Startup
Ries points to Zappos as a good example of a company that represents the lean way of building a business. “If you were to start an online shoe retailer, you’d start with manufacturing partnerships, warehouses, an ecommerce platform, hire a CFO, etc. This is the standard way of doing things. Yet it’s extremely expensive and you won’t know if it works until you’ve invested a ton of money into the venture.”
With Zappos, founder Nick Swinmurn took a very different approach. He started with a minimum viable product by walking into a small, local real-world shoe retailer, asked the owner if he could take photos of each shoe, and post them online. In return, for any orders received, he would walk into the store and purchase the shoes from them. What Swinmurn did, in fact, was produce the very minimum business infrastructure to test and prove an idea. Only then did he start to invest further money into the business. Everything about Zappos was designed to test, learn and pivot as quickly as possible. And then to rinse and repeat.
It’s this type of continuous learning engine that provides Zappos with a quick understanding of what customers want and are willing to pay for. It reduces the risk of the unknown, which any startup faces and needs to master if it hopes to be successful.
From Idea to International Movement
Lean Startup has gone from a blog and book, to a worldwide business movement. There are meeting groups, conferences and a wiki. The success of the book, Ries says, is credited to the success of the movement, not the other way around. It’s because there were people who were reading Ries’ writings on Learn Startup principles and asked for permission to host corresponding meetups – in itself a minimum viable product for an event. Ries was dubious, but hundreds of people were showing up to even the initial events, proving that the methodology truly resonated with an ever-growing number of individuals.
Ries states, “The movement is about these people. They are the ones who made it happen. It was due to the thousands of people who took it upon themselves to spread the word.” A promising aspect about the popularity of the movement is that it needn’t end with startups. Any organization, whether government department or large company, can apply the principles and achieve greater innovation and success.
http://www.startupnation.com
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