Early on I had a very confused idea of what Lean Startup was about and in retrospective that penalized me when I tried to apply it to my first venture.
Understanding some of the forces behind it greatly helped me making progress in the right direction and I hope it will help you too.
Design Thinking goes back as far as the '60s with the first few books on design methods appearing on the shelves and later popularized and championed by IDEO.
Design thinking generally refers to an approach that combines empathy for the context and the problem, creativity in the generation of solutions and scientific like testing in the validation of those solutions.
This already sounds very familiar, doesn't it?
Design thinking is actually in practical terms almost absent from Lean Startup literature and references, however it seems to me the overlapping is striking and undeniable.
With its roots as far back as 1930, Lean Manufacturing is at the core of the Lean Startup philosophy, even tho the term Lean was only coined in the early 90s.
Lean Manufacturing was largely developed as part of the Toyota Production System as a management philosophy and a set of principles that consider any work not generating value for the end customer to be wasteful, and thus up for elimination.
That said Lean Manufacturing brought us much more than a focus on eliminating waste and in fact is at the origin of two very powerful concepts we find in Lean Startup:
- kaizen, intended as an objective to continually improve the business/product
- Genchi Genbutsu, which in Japanese means "go and see" and translates to the omnipresent mantra get out of the building.
Being a management philosophy there was a lot as well developed around organizational aspects, but unfortunately most of that seems to have not been incorporated. As you build your startup however I believe you'd only benefit to take a closer look at some of the other driving principles:
- Respect for people
- Long-term philosophy
- The right process will produce the right results
- Add value by developing your people and partners
- Solve root problems and drive organizational learning
Customer development, pioneered by Steve Blank in the mid 90s, is a cornerstone of the Lean Startup movement and defines a scientific approach to better understand the customer and with that increase a product's odds of success.
Customer Development was popularized in 2003 by Blank's book The Four Steps to the Epiphany which details the custdev process and remains to date one of the goto books for aspiring entrepreneurs.
The 4 steps can be summarized as:
- Customer discovery, where hypothesis on the problem, target customer and solution are formalized and tested both qualitatively and quantitatively. The business model is also tested along with research on the target market.
- Customer Validation, which is all about verifying the solution through a money exchange and developing a sales strategy and positioning the product
- Customer creation, where marketing heavily enters the picture and customer service becomes king. This step is all about finding new customers and working on retention.
- Company Building, as the name suggests it's time to focus on the company itself as organization and scale out adding management and reinforcing a vision and mission while scaling customer acquisition further into the late majority and laggards.
Agile, commonly known as a strategy for lightweight incremental software development, gained popularity around 1995 culminating in the Agile Manifesto in 2001.
The Agile movement was born as a response to the process-heavy waterfall methodology, a sequential design process that predicated a steadily downwards flow (like a waterfall) through the phases of ideation, analysis, design, implementation, testing and release.
While this might have had merit in the past it became an unsustainable approach in the fast moving and always changing world of software where cleanly completing a phase before moving to the next is largely impossible.
Looking at the Agile Manifesto we find again principles very much in line with the rest of the other driving forces:
- Individuals and interactions over Processes and tools
- Working software over Comprehensive documentation
- Customer collaboration over Contract negotiation
- Responding to change over Following a plan
These four ideas can be easily remapped to the concepts of talking to customers and improving a product based on feedback rather than being hung up on our initial idea and a business plan.
Initially developed by Eric Ries in 2008 and then widely recognized in 2011 when the book came out, Lean Startup is a skillful collage of the above with a focus on technology startups.
It has the empathy elements from Design Thinking that were then at the center of Customer Development; the strong focus on validating problem and solutions by talking to customers as per Customer Development processes; a strong core in Lean Manufacturing when it comes to the management of the whole operation and eliminating waste while constantly improving.
As a movement that was born in the Silicon Valley it then incorporated Agile as the backbone for developing what at that time were primarily software products and then borrowed more from the User Experience and User Centered Design worlds.
The fact that it borrows so heavily by so many movements is the reason why it's easy for people used to other methodologies to read Lean Startup differently, which often is what leads to confusion for newcomers.
Bonus: the business model canvas
Since Lean Startup is about building businesses it had to address businesses modeling and that's where the Business Model Canvas (BMC) comes in.
Originally created by Alexander Osterwalder in 2008, the BMC reforms the Business Plan in a similar way to how Agile took the place of Waterfall.
It used to be, and still is in certain context, that if you wanted to start a business you prepared a Business Plan, generally to at least 10 years, where you projected all your costs, revenue and other variables, to prove the feasibility of the business.
This, often referred to as Excel Magic, had some merit in a world that moved slowly and had few variables and mostly large monopolies, but didn't work well in the extremely uncertain world of modern business.
As a result Osterwalder came up with a one page canvas that quickly captures all the key component of a business and is easy to consult, and more importantly update, as hypothesis about markets, revenue streams and so on are tested.
Since its creation several adaptations have been made, most notably the Lean Canvas by Ash Maurya which is optimized for web startups.
Conclusions and further readings
I hope you can now more clearly recognize and understand the elements of Lean Startup and with that better apply them to your business.
If you haven't already read these books I would invite you to check out:
- The Four Steps to the Epiphany
- Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation
- The Toyota Way to Lean Leadership: Achieving and Sustaining Excellence through Leadership Development
Ask if anything is unclear
I hope this was helpful, but if anything sounds wrong or unclear please propose corrections or ask questions in the comments. Thanks.