Lean Into It

 

Source: https://bryandavenport.me/category/leadership/

The Science of Lean Startups

     Traditional business models emphasize developing a range of products or services, conducting extensive testing and research in secrecy, then unveiling the finished product to consumers.  While this method does work, it has limitations.  By keeping developments a secret, businesses lose valuable feedback from prospective customers.  Often a product will be developed and produced without market testing, and once it is released there is no interest in the product.  A solution to this is the Lean Startup method, which focuses on limited products and frequent market testing for consumer feedback and opinions.  This method is useful for both new businesses and established organizations developing new products for their customers.  By identifying an “MVP” (Minimum Viable Product), which can be used for limited release to gain feedback, a business will already have an established customer base at the time of full release.  By adopting a mindset that the business’ primary goal is not to make things, make money or serve customers, but rather to figure out how to build a sustainable business, Lean practices can increase chances of success for startup businesses.  With a 75% failure rate among new startups, this is an encouraging development in business strategy.

     The idea of using a business model canvas, or single-page roadmap to sketch out nine areas affecting the business, is revolutionary in business planning.  Rather than spending a lot of time planning, researching and working through every detail of a startup, this canvas allows developers to chart out their hypotheses and see how they interact.  The point of the canvas sketch is to identify how to create value for customers as well as the business.  Once the canvas is developed, the various hypotheses are taken to the field for customer testing, then results and feedback are used to make modifications. 

     This week I was impressed by the TED talk by Llusi Pareras entitled “5 Keys to Success for Social Entrepreneurs.”  Pareras introduced himself by stating he is “the bad guy,” as a venture capitalist.  He went on to explain how frustrated he is by the poor quality of business proposals he receives for potential investment, and how bringing for-profit businesses into the social sector could change the way social problems are addressed.  His five keys for social entrepreneurs who are successful include:

• Knowing the value of an idea – The value of an idea is nothing.  Value is contingent on execution, not the idea itself.
• Hate.  Hate is a great motivator - To effectively solve a social problem, successful entrepreneurs hate the effects of the problem and are driven to find a solution.
• Shouting to the world – Pareras describes people who come to him with a secret idea, and are afraid someone will steal it.  A truly revolutionary idea will cause someone to want to tell the world about it.
• Being paranoid – People who are focused on their weaknesses and fears that might prevent their idea from being executed are more likely to work very hard to ensure success.
•  Looking at both social impact and money – Ideas cost money to develop and implement.  Hiring the most talented people to do the work costs money.  The best way to achieve success for social change is to invest in the best resources possible.

     Pareras’ talk is very short and succinct.  Both the content and format get the point across clearly; focus and keep it Lean.

     Developing sharp business skills is essential in social innovation.  It is impossible to develop a business plan or social intervention program without having strong, current skills and knowledge of the problem you are trying to solve.  You cannot make a viable plan to help others until you fully understand the problem, the people involved, and the most current innovations being used.  By following Lean principles, entrepreneurs and innovators can focus on the bare bones of a problem and solution and get products and services into the hands of customers quickly, then make adjustments based on results and feedback.  The most important business skills to have are in line with the list Pareras shared; know the value of your idea (nothing) and focus on execution strategies instead, work on a problem that you have strong feelings about, don’t keep your product a secret, identify your weaknesses and potential roadblocks, and invest enough money and resources to ensure your business has the best people and the best materials.