A secret sauce for running Lean?

By Thomas Klem Andersen, Published on January 20th 2014

Last week the Copenhagen Lean Startup Circle and Silicon Vikings co-hosted yet another interesting event on the Lean Startup concept. This time at Copenhagen School of Entrepreneurship (CSE) headlining Ash Maurya who has authored the Lean Startup methodology book Running Lean.

 Ash is a serial entrepreneur and a keen ambassador for the Lean Startup movement, which is sweeping the startup world at the moment. He is the creator of the Lean Canvas (start your own here), author of the books Running Lean and the Customer Factory (in process). Back in December 2013, he headlined the Lean Startup Conference in San Francisco and he is behind one of the most read startup blogs in the world: www.practicetrumpstheory.com.

In his own words his Lean journey started when confronted with the works on Customer Development and Lean Startup pioneered by Steve Blank and Eric Ries. He joined in on the conversation and started applying and testing the principles on his own ventures all the while sharing his learnings on his blog mentioned above. The blog eventually turned into the Running Lean book aimed at helping entrepreneurs raise their odds of success.

At CSE Ash shared some of the insights from his book. Here I will share what I took with me from the event:

The myth about the perfect idea and the visionary entrepreneur

Entrepreneurial success is not so much about starting with the perfect idea. Rather it is a question of arriving at a plan that works before you run out of resources. For this you need to be willing to learn and you need to be ready to do it fast. In contrast to the glamour picture of the entrepreneurial genius, most successes are based on a lot of failures and learnings along the way.

Some principles of Running Lean

-       Plan for systematic learning

To be a systematic learner you need to find ways to test your assumptions and visions. You also need to be aware of the fact that entrepreneurs often fail to see the entire business potential of initial and even mature ideas.

-       Listen to customers

A simple way to design for fast learning, which is key to the lean startup concept is talking and genuinely listening to customers. By doing so you can learn about their problems and start figuring out how to solve them. The most important entrepreneurial mantra in this context is: You don't need to build a solution to validate if you've found a problem worth solving! Simply ask your customers. This practice can save you a lot of time and a lot of wasted resources and thus get you running Lean.

-       Test to learn

Document your plan. Knowing what you are doing and how you are doing it, while measuring for progress will let you test the plan in order to change it for the better. This includes testing solution and product feasibility, testing customer demand and testing business model repeatability etc.

-       De-risk your business model

Identify the riskiest parts of your plan and work systematically on de-risking your product and business model

-       ‘Canvas’ your plan

An easy way to do this is to work with the Lean canvas which condenses a business plan to one sheet and brakes it down into workable elements.

There’s no secret sauce and no silver bullet

There's no guarantee for success but living by the Lean principles will raise the odds of it. However as Ash put it: You should never take the Lean principles on faith. You have to go test them out for yourself! Running Lean is not a theory, it is build on experience and requires hard work, strong intention and an attitude supportive of learning, focus and speed. Thus Ash supports Steve Blank’s urging mantra for entrepreneurs to get out of the building which is clearly emphasized by the title of his blog: Practice trumps theory!

5 Things that slow down your startup's growth

Excerpts from an insightful Six Revisions blog post by Sabelline Chicot, Sep 30 2013 

Creating a startup has never been easier. And once you get going — depending on your drive, vision and personal motivation — you will likely experience rapid growth and productivity at the start of your journey. Everything’s new and there’s seemingly endless potential to grow.

However, once the honeymoon period fades and reality sets in — and it will at some point — you will be faced with doubts, fear, and insecurity. This point in time is a crucial fork in the road; one path will move you forward and the other will lead you astray.

When that time comes, it’s important to deal with the following common issues experienced by most startup founders.

1. Waiting for Everything to Be Perfect

Sometimes it’s hard to get things moving because you want things to be flawless.

However, perfection never happens. Perfection is a pipe dream.

To succeed in business means focusing on the things that matter. Moving forward and growing means not letting inconsequential details derail you from launching your product or distracting you from your vision.

After all, a startup business is like a living organism, it will evolve over time. As long as you have the core features in a sufficient state, you will be fine.

It’s best to take your product to the market swiftly and improve it over time, rather than agonizing over non-essential features and ending up missing the mark. As LinkedIn co-founder Reid Hoffman once said:

"If you’re not embarrassed by your first launch, you’ve launched too late."

You have to start some time, and that time isn’t when everything is perfect.

Even Apple — now one of the most successful companies in the world — started with a humble and imperfect product: The Apple I computer.

Successful entrepreneur and developer Dave Winer says this about building software: "Software is a process, it’s never finished, it’s always evolving. That’s its nature. We know our software sucks. But it’s shipping! Next time we’ll do better, but even then it will be shitty. The only software that’s perfect is one you’re dreaming about."

Suggested Reading:

·         Progress Not Perfection (medium.com)

·         Taming Perfectionism (www.defmacro.org)

·         I Want to Punch Perfection in The Face (medium.com)

·         Just Ship It (www.neiland.net)

2. Trying to Live Up to Your Competitors

It can be all too easy to compare yourself to your competitors. This process can be intimidating and discouraging, too.

Keeping up with industry news and knowing about your competition is an essential task for all business founders. But when it becomes an obsession, it can be unhealthy for your company.

Don’t waste time thinking about your competitors’ every move. Only you can be the maker of your business’s success. Analyzing the competition can be a long, dark maze in which you can easily lose yourself in.

Paul Graham — a successful entrepreneur, startup advisor and investor behind companies like Dropbox, Airbnb, Stripe and Reddit — pointed out in a blog post that startups rarely fail because of its competitors.

A crowded market, according to Graham, is a signal that there’s an unfulfilled need in that market. The presence of competitors should be viewed as a healthy sign of market viability, rather than a threat.

Do your competitor analysis and keep abreast with what’s going on in your industry, but don’t let it discourage you from building your vision.

Suggested Reading

·         Stop stressing about startup competitors (startupnorth.ca)

·         Competing in a Startup World: Lessons From a CFO (insideindianabusiness.com)

3. Doing Everything Yourself

Don’t feel compelled to wear all the hats of HR, marketing, IT, finance, web development, and sales. Your energies are best channeled into a few specific and strategically crucial tasks, so make sure you get help from other people. Delegation is an important skill all entrepreneurs must master.

Tim O’Reilly, founder of O’Reilly Media, looked back at his career as an entrepreneur and what he wished he had done differently. O’Reilly notes that one of his biggest failures was trying to do everything himself: "I believe it was Harold Geneen who once said, ‘The skill of management is to achieve your objectives through the efforts of others.’ Yet, like so many entrepreneurs, my first instinct was not to hire the team to go after a new product or market, but to do it myself, or with the team I already had."

Empower the relevant people in your business and give them the best tools you can afford to let them do their job.

4. Taking Yourself Too Seriously

With the number of business-critical decisions you will have to take, it’s easy to become a little too serious.

Serial entrepreneur Sir Richard Branson is probably the ultimate embodiment of a good-humored startup founder. Behind his cheeky smile, however, lays a very solid business rationale: a sense of humor and positivity tends to create a culture of openness where employees are more likely to be creative. "Granted, smiling can’t solve every problem, but it can make almost any situation a little better," Branson says.

Maintaining positive morale is crucial in the close confines of a startup.

5. Fear of Failure

There’s nothing wrong with being wrong. Perhaps the most important thing to remember is that mistakes will happen. You will always wish you had done certain things differently.

The art of getting things right is also about getting things wrong. Nobody has ever had a perfect idea that didn’t need any work or changes — accepting this notion demonstrates a self-awareness and maturity that will be integral to the success of any young business.

Many successful entrepreneurs, from Rand Fishkin of Moz to Hiten Shah from KISSmetrics, have encountered hurdles along the way but have got up and kept going.

The key to their success was the ability to learn what had gone wrong, why it had gone wrong, and how they could stop it from happening again.

Suggested Reading

·         Why You Should Ignore Startup Failure Stats (venturebeat.com)

·         How My Start-Up Failed (alumni.stanford.edu)

And What if You Do Fail?

Try to make failure as low-cost as possible and learn from it as much as you can.

And have a plan Z. Having a backup plan if things go really wrong (which ensures you will have a roof on your head even if it means going back to Mom and Dad’s) will help you face difficult times with more objectivity and come out of it, if nothing else, at least a little wiser.

Start-Up or Stop: When Innovation Means Knowing How to Let Go

Excerpts from a conversation with Dan Levinthal professor of corporate management at Wharton, University of Pennsylvania and Phil Morle CEO of Pollenizer Global in Knowledge@AustralianSchool of Business July 23, 2013

To survive, companies need to innovate; they need to update their products, develop new ones and push their way into new markets. A strong research and development program is essential. But arguably equally important is the ability to cull those projects that aren’t working.

Letting projects go on for too long drains manpower and cash as well as management focus, and can erode a company’s profitability. Witness the Newton, a hand-held computer developed by Apple that was one of the factors that contributed to its loss of profitability in the 1990s. Despite strong indications it was not appealing to consumers, the company stuck with the project for more than a decade until founder Steve Jobs re-joined Apple and canned the project.

The Renewal Process
Levinthal argues that companies cannot rely on a sustained competitive advantage – the idea that a company will better its competition and continue to be profitable thanks to a single piece of technology it owns, or to its location, or to some other single factor. Rapid advances in technology and the dismantling of trade barriers mean that any competitive advantage a company has will likely last only five to 10 years.

“The world is changing, competitive contexts are changing, perhaps a different way to look at the question of competitive advantage is: how does the firm manage this renewal process?” Levinthal says.

“On the one hand you need the tough love of saying 'we’ll try these things and we’ll do the culling', but at the same time we can’t figuratively shoot the actors involved; failure has to become a little bit safe,” says Levinthal. “So it’s this difficult balance of being tough on resource allocation, but at the same time you can’t make it stigmatising and career-ending that you were ‘the guy who was in charge of that initiative in China that didn’t quite get any traction’.”

‘Failure’ as the way to success
Sillicon Valley does well with its mixture of high failure rate and occasional success and Levinthal says a challenge for strategic management is to try to replicate that renewal process within an individual organisation.

“There’s a high rate of failure, but the engineers and the money reassemble with the creation of a new entity,” he says. “So you’re getting a quite rapid cycle and occasionally you’re getting a dramatic Google or Facebook kind of success.”

Failure doesn’t attract the same sort of stigma in the tech sector as it does elsewhere in the corporate world. Indeed, when some investors in Silicon Valley assess the credentials of entrepreneurs they look for a couple of failures in the past, reasoning that they will have been informative experiences which better equip the entrepreneurs for future success.

Controlled Micro-Failures
The managers at Pollenizer have also tried to de-stigmatise failure, instead coining the word “flearning” – a combination of failure and learning.

“This term failure is just rubbish, because it does suggest something bad has happened,” says Morle, “and actually the learning that’s necessary to discover a sustainable business model comes through as many failures as possible. The process of creating a start-up is as many controlled micro-failures, or flearnings, as you can do in as short a period of time.”