Lean Startup – 9 concepts to get you started

So you’ve heard about the Lean Startup and are curious. If you don’t have a basic primer on it, go here. I’m serious! If you don’t understand the philosophy then review that before you jump into some techniques. I’ll wait.

Okay, now that you understand the basic principles let’s move forward with my pick of the top 9 concepts/techniques. I’ve tried to arrange it in decreasing order of ease of adoption, but your mileage may vary:

1. Small batches/Agile: A lot of software development outfits have already adopted Agile as their preferred approach. Awareness of Agile is pervasive at this point, but implementation of Agile still covers a wide spectrum of rigor. Agile in the Lean Startup context not only means the delivery of features but also thinking of feature set as an experiment, accompanied by analytics to validate whether the expected customer adoption/usage actually happened. Lean Startup also challenges Agile teams to deliver at unprecedented speeds of multiple releases per day.
2. 5 Whys: When you go fast, you also accelerate problems. But how do we choose between possible future problems to preempt? Lean Startup advises NOT to invest too much in preemptive solutions, rather be ready to move quickly when breakages DO happen. Then use the 5 Whys technique to dig 5 or more levels deep into the root cause of the issue, and fix it such that the problem does not recur. This involves asking Why there was a failure, and repeatedly asking Why to each answer that is presented. It is important to not punish the team for breakages caused by quick movement, rather to hold them accountable to prevent a recurrence.
3. Get out of the building: Strategic decisions must hinge on firsthand understanding of customers. Big investment decisions being predicated on assumed customer behavior without validation is the cause of much wasted capital. Heavy customer development/validation at every stage of product development is essential to stay on course to delivering end user value. This should not be viewed as an expensive, time consuming distraction but really used as a gate that approves further investment. This must be qualitative but also quantitative in generating usage metrics both before, during, and after launch.
4. MVP: You know we can’t talk about LeanStartup without its single biggest buzzword. 🙂 The term seems so… definite and succinct but everyone’s personal definition of Minimum and Viable varies. What narrows it down is how you define your hypotheses. Minimum Viable Product is what you build as you test out your core Growth and Value hypotheses. There are many creative ways to validate the hypotheses that minimize effort in building features such as Video MVP, Wizard of Oz MVP, Concierge MVP etc. Best designed MVPs are the result of Clarity (in terms of the hypotheses) and Creativity (to find the shortest path to validate).
5. Build-Measure-Learn: The 2nd most famous buzzword is the Build Measure Learn loop. Once we accept that we aren’t going to get it right the first time, we need to force decision makers to think in terms of hypotheses (ideas), experiments (product), analytics (data) and iteration (loop). Measure behavior not feedback. Do not think of startups as a one big launch with a single boolean outcome, but a series of experiments EACH with discrete boolean outcomes.
6. Pivot v Persevere: Again, this is an aspect that demands judgment and intuition. If you have constructed your hypotheses and set up your experiments right, your data should be clear on whether you need to Pivot or Persevere. There are many types of Pivot such as the zoom-in pivot, customer segment pivot, platform pivot, etc. It takes courage and mental preparation to let the data speak and prepare for a Pivot. Remember that a Pivot is not about giving up, but about continuing to strive for a better product-market fit. Also, remember that persevering should be considered if data indicates that experimental results were significantly skewed by data, lack of marketing, or other factors that could be influenced by just improving basic product and marketing quality.
7. Innovation accounting: Innovation accounting is about looking beyond traditional dollars/cents and volume metrics to really understand customer behavior. Once you establish a baseline of analytics with the MVP, each experiment/pivot should be associated with what the expected outcome/improvement in metrics is. This will talk to whether a current strategy is working or whether a pivot is needed. This means ignoring vanity metrics like number of downloads, hits etc. and focusing on conversion rates, retention rates, referral rates etc.
8. Innovation sandbox: Innovation sandbox is an area of the organization that is seeking to implement/understand Lean Startup techniques. This is NOT a skunkworks model of getting free passes or preferential treatment at the expense of the rest of the organization but more as an advance guard that educates and brings the rest of the team forward with it. The team should be cross-functional and with the intent to disseminate ideas and include feedback.
9. Adaptive organization: This is the term Eric Ries uses when describing an organization that has fully embodied Lean Startup principles. Progress is measured using Innovation Accounting, experiments translate into Validated Learning Milestones, etc. A comfort level is built for traditional “failures” as the focus is on learning. An “Immune System” is built for the organization where all team members deeply understand the new values of the organization and are empowered to ask questions/propose experiments and follow through. Management understands that innovation is no longer the purview of specific types of industry/business but given the rate of disruption is mandated upon all organizations.

That’s it in a nutshell. One thing to remember as you start getting deeper into LeanStartup is that there is a rapidly growing ecosystem out there. Many well-received books and workshops have sprung up such as:

1. Running Lean by Ash Maurya
2. Lean UX
3. Lean Analytics
4. The Startup Owner’s Manual
5. UX for Lean Startups
6. Lean Enterprise
7. Lean Startup Machine
8. Lean Launch lab
9. Lean Monitor
10. Many others upcoming 🙂 Given the huge interest in Lean Startup, things are going to get very busy.

Although, there is great value being created, you should know how to find and apply it. There are risks as you approach the broader ecosystem of Lean techniques. While The Lean Startup itself is generally applicable and pushes concepts and thinking, the derivations push finer grained tools and techniques such as the Lean Canvas, the Javelin board etc. This tightening of focus may start to exclude certain types of products/services that do not fit nicely into the tools. While I still think Lean StartUp as an approach applies to almost every organization you can think of, you have to use your judgment on which derived tool/technique applies to your business situation. But remember: you can’t pre-judge based on theory! You have to practice it to really understand it, so invest the time to get deeper. It is worth it.

At Informulate, the Lean Startup helps us address existential questions on finding/creating value for customers. Stay tuned for our upcoming posts as we dive deeper into Running Lean.