The Lean Startup

Business model canvas

Screenshot from “How to build a startup” (udacity.com) showing one of the key tools, the business model canvas, a visual tool to represent the complete thinking for a startup.

That the lean philosophy can be applied much more widely than manufacturing, if done so intelligently, should perhaps come as no surprise to readers of this blog. Recently, I’ve been learning more about one particular re-invention: the lean startup. The ideas have a clear heritage through lean and agile and, of course, place the customer very much in focus. I took the Udacity course How to Build a startup by Steve Blank to get a good overview. There’s plenty in the media on this topic too, with an Economist video special report on Startup 2.0, and even a poignant mention of what can go wrong with the traditional approach to startups on a Listserve email.

The big idea behind Lean Startup is that you need to talk to your potential customers, suppliers and partners and stakeholders as you develop your product ideas, so that you iterate your way to the market rather than failing after a massive investment. The entrepreneur (maybe that’s you?) uses rapid learning cycles to progress thinking, and when you discover some aspect of the plan (product, customer group, revenue model) isn’t viable you pivot to something better. Some key waypoints along this road are:

  • Define your product or service in terms of the needs (physical and emotional jobs to be done) and problems of your potential  customer
  • Test the hypothesis by asking these people – not forgetting that different groups most likely have different needs
  • Develop a minimum viable product that contains the essence of your idea (but no more) and test the hypothesis that people really will use it (and that you can make money from it)

After some thought of course, it becomes clear that the lean startup is none other than a lightly disguised version of design for six sigma, maybe a little less quantitative and a little more iterative, and good to see it getting wider exposure.

The lean startup is, I think, a very logical approach, particularly for web and mobile applications but also applicable to other products, particularly when developing a new market. Maybe the framework can be stretched even wider, to selling any kind of service or idea, all the way through to selling oneself when job-hunting. The key when applying this thinking to new areas, of course, is to begin with the philosophy and develop appropriate tools for the new area rather than mis-translating old ones.

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Innovationskraft

innovationskraft2013Yesterday, I was one of around 120 attendees at a half-day innovation conference in Gothenburg termed Innovationskraft. A surprisingly wide range of people were represented, including leaders from manufacturing and automotive industry, academics, lawyers, consultants and at least one behavioural scientist. And the meeting was free!

The theme for the day was structured innovation. We got to hear case studies about mobile phone development, global sustainability and development of portable fuel cells. For me, one of the most striking stories came from Jean Bülow at Avalon Innovation. He explained that leadership teams at their client companies typically rank innovation as critically important and, wackily, score it as 11 out of 10. However, it’s also somewhat rare that these same companies have any structured process in place around innovation, hoping rather than creativity will be sufficient.

If I try to distill the important principles that came of the day, it comes down to a few things:

  • Leadership must be on board, demand innovation and set a goal that means something to everyone in the organization.
  • Truly understand what your customer is trying to do. This is, of course, a much deeper understanding than asking them what they want!
  • Use a structured process for innovation. There are a bunch available – maybe it doesn’t even matter which one you choose.

When I look at this from a Lean Sigma perspective, I see tremendous commonality at the level of these principles between Lean and Innovation, probably against the prejudices of many of the delegates yesterday.

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The Mastery of Innovation

The Mastery of Innovation book cover

The Mastery of Innovation book cover

Today’s post is a little different as it’s inspired by a book, and I have to give away before we start that I like The Mastery of Innovation – a Field Guide to Lean Product Development by Katherine Radeka. This is story about how innovation can be enhanced and enabled by using Lean principles, so long as it’s done in a thoughtful way. The book is based on the author’s personal exploration of how different companies (including Novo Nordisk, Ford and Scania) have attempted to use Lean in their product development in order to speed up innovation to generate new products faster.

For some readers, the biggest surprise here may well be that Lean is described here as one way of increasing innovation. Indeed the whole idea of minimizing variation and having standard ways of working doesn’t immediately sound as if it supports a culture that allows for break-through ideas. Some straightforward ideas do come through that help break down that mental barrier:

  • use Lean to minimize the time that scientists and engineers spend on non-productive work such as administration
  • watch out for interruptions to people’s time: short interruptions can have a disproportionate impact on people involved in product development

However, one of the messages that comes out most strongly is that there is no recipe for applying Lean to innovation: each company needs to try and evolve the process over time. The majority of the book covers case studies from different companies, and it’s clear from these that they take quite different approaches and that even if there are underlying Lean principles that recur, the actions each company took were different.

For me, the best insight I got from the book concerns the classic wastes from Lean production (sometimes we use the acronym TIMWOOD to help practitioners remember transport, inventory, motion, waiting, over-processing, overproduction, and defects). When, we have used these internally, we have often asked staff to try to translate these concepts into something that is relevant to them and their work. The author of this book takes a different approach and asks instead what really are the important wastes for product development, and comes with a rather different list which are more specific and include design loopbacks, reinvention and un-productive meetings. The whole book can be seen as a way to challenge us to re-think Lean for product development, rather than simply make adaptations to Lean production. And for that, I’m grateful.

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Make your calendar from Lego

For many global businesses, the benefits of a tactile visual planning often have to be eschewed in favour of sharing plans electronically. Electronic plans, of course, feel more modern and make it easier to share between geographically remote sites and with co-workers who travel, but you lose some of the realness of  physical boards.

Lego calendar

Tactile visual planning. Photo: Vitamins Design

Engadget reports on a what I think is really cool idea of building their calendar from Lego and solving the remote site problem with some software that allows a photo of the calendar to be synchronized with an online calendar. And because they use colour to represent different clients, confidentiality is still maintained even when visitors look at the chart.

I think this idea has a lot of potential for even wider use, and not just because I want an excuse to play with the Lego that still often covers our living room floor. Why not create a daily task chart or even a process map in Lego. It’s maybe not right for every situation, but for dealing with those people who have become allergic to PostIt notes or even brown paper, it’s something different. And we know the bricks won’t fall off when you put your visual plan on the wall!

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Improving healthcare with lean

Maybe because I have a background in pharmaceutical research, I’m always particularly interested to come across examples where Lean has been used outside of the more “traditional” production environments. There’s a short article on the Harvard Business Review Blog Network entitled How we revolutionized our Emergency Department; certainly an eye-catching title.

The article describes what is essentially a Lean transformation at the Emergency Department of the Brigham and Women’s hospital in Boston. It’s an impressive piece of work, both in terms of what they achieved (customer satisfaction went from the 6th to 99th percentile) but almost more so the amount of work everyone there put in. Within an 18-month period, they learned about Lean, got agreement across the management they that they really had a problem and tested out many improvements. About half the ideas tested survived, which makes sense as even the most efficient approach that happens to, for example, reduce patient safety must be blown straight out the water.

Given an aging population with ever-increasing demands on healthcare and today’s economic realities for healthcare funding, improved use of scare resources is a necessity. Perhaps, less obviously, making the whole healthcare and hospital environment more patient centric is also important. Not only does this make the experience better for the patient, it also can reduce complications and increase compliance. And that is good news for everyone.

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Inertia

Much of what we do as Lean and continuous improvement practitioners is related to change management: there must be some change in the way work is done or we have made no difference. With this in mind, I was struck by a piece on World Service a couple of weeks ago in the program Health Check (recording available until 12 October—listen to 19–27 min). They talked about a publication from Gaurav Suri and colleagues (thanks to Gaurav for sending me the paper) which purports that the reason many patients don’t take their medication is simply inertia. Patients know full well that they must take their medicine and understand the benefits but still don’t change their behaviour. And this goes beyond status quo bias, where people choose the default or existing option, so long as they consider it to be good enough—not taking life-saving medicine ought to be objectively much worse than taking it.

This phenomenon is of course recognizable from many aspects of life from: starting a new training regimen, maybe starting a new piece of work, learning a new computer program and of course making changes to processes and the way we operate at work. Very often, it turns out that it is easier just to keep doing things the old way, even though we understand fully, at least at an intellectual level, that the new way is better.

The researchers mimicked this situation in the lab by giving volunteers electric shocks in a series of trials and also gave them a button that reduced the probability of receiving that shock. You really would expect that everyone would press the button every time? The volunteers were split into two groups: in one, they were forced at the start of each trial to choose whether or not to press the button; the second group could choose freely whether and when to press the button. In the forced-choice group, volunteers pressed the button 85% of the time but in the free-choice group they did this only 52% of the time. Both researchers and participants were, perhaps not surprisingly, somewhat mystified as to why the volunteers had behaved this way. There was a clue in the data that showed that those who pressed the button in the first trials continued to do this later. In a follow-up experiment, one group was given two pre-trials and told they must press the button in one of them. In subsequent trials they pressed the button 78% of the time, almost as often as the forced-choice group.

fashion pills

Fashion pills: source Deanna Reesor

So, is this really new knowledge and how how does it inform how we work with change management? My take is that this highlights some difficult behavioural aspects, where understanding the benefits of change (as well as the consequences of not changing) is not enough. In the radio clip, the suggestions are essentially to make the change easier: take the first dose of the medicine at the doctor’s surgery, leave the drugs out rather than hidden away or put the running shoes in the hall rather than the cupboard. From my experience, this makes sense and fits in rather well with this adage:

It’s easier to act your way into a new way of thinking than think your way into a new way of acting

The conclusion from all of this seems to be that while we shouldn’t give up articulating the reasons for change, we also need to try to make the change as easy as possible, and make it easy to practice so that it becomes a habit. And that’s as true for changes in a key business process as when this author posts his first blog entry!

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