I’ve always been fascinated by the waste and throw away work being produced from well-executed failures. By well-executed I mean that the execution plan was well formulated and agreed on by a team. In the fast-moving world of innovation, companies and startups forget to validate their thinking with the clients that will ultimately use their products.
The Lean Startup by Eric Ries is my new obsession in driving quality products, following a proven recipe to reduce waste. Eric derived and developed this way of thinking from the Lean Manufacturing methodology created by Toyota to minimise waste, and increase productivity.
Lean manufacturing or lean production is a systematic method originating in the Japanese manufacturing industry for the minimization of waste (無駄 muda) within a manufacturing system without sacrificing productivity, which can cause problems. Lean also takes into account waste created through overburden (無理 muri) and unevenness in workloads (斑 mura). Working from the perspective of the client who consumes a product or service, “value” is any action or process that a customer would be willing to pay for. — Wikipedia
The theory is based on a powerful feedback loop that is broken down into 3 main areas namely Build, Test and Learn, Pivot/Retain. Now, this might sound straightforward, but to change a culture where you develop a single idea, to a culture of building multiple experiments, testing them, and selecting the ones that are successful goes against the normal status quo.
This method is relevant to both big and small companies, and all can achieve a level of success when combining these lean principles with existing business processes.
The biggest challenge we face when dealing with clients is that they follow a big batch, a single idea, a siloed approach to innovation. If a company is serious about innovation and creating sustainable economic growth, the starting point is the operating model and its approach to validating their ideas.
When gearing your business for innovation, the first step is to reduce your batch size. Out of experience, you will get great push back from teams stating that it’s reducing their ability to be productive. Smaller batch sizes give you the agility to run multiple experiments, measure their impact and decide to retain or pivot.
Let us assume you are a financial services provider. If you are a big player in this space, your biggest threat is disruption from smaller players with more agility to push innovative financial products to market quickly. Your ability to define, build and test new products are hindered by the company’s ability to decide on what to develop first, time to develop a single iteration, and then to see what the takeup will be.
The lean way would be to assemble a cross-functional team i.e. a salesperson, an operation person, a business analyst and a developer. Then go through an iterative experimentation cycle to test, not one, but multiple products. These iterations will have well-defined metrics to influence the pivot or retain decision. The metrics are collected from actual clients that will be buying these products, this is called validated learning. Validated learning is the process of making sure that the assumptions when creating the product is true, and that you are not all drinking the same tainted kool-aid.
Pivoting or retaining an idea. I like formulating frameworks to test ways of work, and ideas against. The lean principles allow me to construct a framework in which I can use empirical evidence to make decisions. I can decide to further develop an idea, pivot, retain the idea, or cease development altogether if my validation proofs it.
The lean movement isn’t just about how to create a more successful business…it’s about ‘How can we learn more quickly what works, and discard what doesn’t?