A couple of weeks back, we attended the Leancamp unconference, an event with various sessions that covered Lean Startup, a term developed by Eric Ries in his book of the same title. The premise of Lean Startup is that entrepreneurs get their products to market quickly and cheaply, test it with their customers, get feedback and then iterate and develop it further.
The more we listened, the more we realised that Lean Startup is a philosophy as much as a process. It’s a discovery process used to adapt your business’ route as you learn more about what your customers want. Lean Startup is about ensuring that what you intend to sell is what people need. It is about finding the most effective way of achieving your overall mission, rather than working towards a pre-defined product. As Salim Virani, co-founder of Leancamp quoted: “find your customer where they are, not where you want them to be”.
The lean approach is great for a new company, but it can seem more difficult to incorporate it within an established business. Here are some tips we picked up from the event.
We started off our day with Rob Fitz’s no jargon introduction to Lean Startups. His main point was that you start by breaking down the big question “will this business work and make money?” into a series of smaller questions that can be tested. Rather than fully investing in and building the final product, is there something smaller, with less risk that you can do to test the business model?
John Mullins, author of “Getting to Plan B”, shared his thoughts on building breakthrough business models, and the importance of being flexible around the final outcome of the venture. Most successful businesses were not the entrepreneur’s initial idea, i.e. their plan A. But through engaging in ‘learning conversations’ with customers, they identified what really was in market demand, and adopted a plan B. Part of this process involves finding ‘analogs’ – business models that you would like to emulate (not necessarily from your industry) and ‘anti-logs’ – those that you wouldn’t. Then take ‘leaps of faith’ to test these hypotheses.
Whilst presenting the Business Model Canvas, Alex Osterwalder co-author of Business Model Generation described how large companies can adopt lean processes, which can be difficult as they don’t often have the structure to deal with experimentation. Existing business models usually rely on incremental innovation – small improvements executed within the parameters of a plan and budget. At the other end of the continuum, the aim of a new business model is to disrupt the entire business. The best way to deal with this, says Osterwalder, is to wait until the existing business model is successful, and then experiment with new business models separately.
Which brings us onto the next point of incubating ideas. Although on the surface this sounds a lot like a traditional R&D approach – a single department dedicated to exploring new products and services – it isn’t. With ideas incubation comes the understanding that everyone is responsible for innovation, and that ideas can come from anywhere in the company. Forward, a media technology company, have developed various techniques for this:
- 10% time (similar to Google’s 20% time initiative) – encouraging all employees to spend a dedicated amount of time on side projects
- Setting up Hack Days – interactive and collaborative events where employees work together over an intense time period (e.g. 1 day) to develop new products and prototypes
- Establishing an Innovation Leave programme – where employees get a dedicated number of days in addition to their annual leave that they can spend exploring and developing ideas
A vital ingredient in establishing a start-up culture at Forward is to form teams of people with different skills from across the organisation – mixtures of entrepreneurs, online specialists and marketing experts. The multidisciplinary team forms a mini-enterprise, which is separated from the rest of the company, giving them the freedom to experiment, explore new business ideas and importantly, to embrace failure.
In light of this, our final consideration is how companies will prepare individuals for a startup culture. It will be driven by people who have the entrepreneurial skills and mindset to initiate projects, take risks and persevere with new ideas. This will no longer be a capability reserved for a specific role or team within an organisation. As Eric Ries stated at the Leancamp unconference, “entrepreneurship is about to go from a ‘nice to have’ in society, to an absolutely essential way of getting things done”.