For Startups, How Much Process Is Too Much?
Eric Ries, author of the StartupLessonsLearned.com blog, has been speaking and writing about lean startups. His particular focus is on software startups, and perhaps even more focused on those that are web-based and broadly distributed products. However, his thoughts on how to use lean principles such as experimentation, structure, and rapid learning in a startup are right on the money and drawing lots of interest from the startup community. I’m very glad to see this.
Recently he posted on the Harvard Business Review blog the post For Startups, How Much Process is Too Much? Here is an excerpt:
Startups develop some kind of process — whether it’s disciplined, haphazard, bureaucratic or empowering — because building a great product depends on it….
Finding the right balance requires an understanding of the fundamental feedback loop that powers all startups. It begins with an idea, which is translated into a product via the “build stage.” When customers interact with that product, they create data, which startups harvest in the “measure stage.” And, with any luck, that data will inform the company in the “learn stage,” and that learning will influence the next set of ideas. This three-stage feedback loop sounds simple, but it’s powerful nonetheless. It gives rise to this heuristic for evaluating any process or infrastructure change in the context of a startup:
Always choose the option that minimizes the total time through the feedback loop.
In other words, any change that accelerates learning is a win, and everything else is waste. This is very different from the trade-offs that need to be made in situations where the goal is to optimize for profit, margin, or growth….
The lean movement has been preaching waste reduction for many years, and anyone familiar with those ideas will understand how it applies here. The only difference here is that instead of measuring the creation of value by our ability to produce tangible high-quality artifacts, startups measure value by validated learning about customers.
I think this highlights a few key points.
- Lean is about learning first. A startup certainly should be clear about that. And clear about what it’s trying to learn about.
- Once a company has a track record, they turn more of their focus towards cost management and waste elimination. They try to optimize what they created, instead of continuing to create. I believe this is the difference between a stagnating company and one that continues it’s entrepreneurial spirit. Learning should still predominate our thoughts and focus, not eliminating waste.
- Define what areas you need to focus your learning on. Build a feedback loop around that. Feedback loops require process. Yes, even startups have process.
Eric’s got some great stuff, and I hope you’ll check out his blog and absorb some of what he’s been sharing.
I have been an avid follower of Eric Ries for sometime. His ideas about the Minimum Viable Product and learning from customers are incredibly powerful and transformative. These ideas apply not only to startups (Eric’s niche), but also to existing organizations as they seek to improve and innovate.
The challenge of the Minimum Viable Product approach for physical product manufacturers is how to achieve real learning from customers. Surveys are artificial and useless in this regard. Ideally you would be able to “look over the customer’s shoulder” as a web based software business can. That’s tough when your product is installed in a customer’s home or business.
Web based technologies, when used honestly and transparently, have the potential to allow for this type of visibility, but few product manufacturers have yet embraced this type of communication. I have to believe that there is an incredible advantage for companies that figure out how to do this.
I have been an avid follower of Eric Ries for sometime. His ideas about the Minimum Viable Product and learning from customers are incredibly powerful and transformative. These ideas apply not only to startups (Eric’s niche), but also to existing organizations as they seek to improve and innovate.
The challenge of the Minimum Viable Product approach for physical product manufacturers is how to achieve real learning from customers. Surveys are artificial and useless in this regard. Ideally you would be able to “look over the customer’s shoulder” as a web based software business can. That’s tough when your product is installed in a customer’s home or business.
Web based technologies, when used honestly and transparently, have the potential to allow for this type of visibility, but few product manufacturers have yet embraced this type of communication. I have to believe that there is an incredible advantage for companies that figure out how to do this.
I have been an avid follower of Eric Ries for sometime. His ideas about the Minimum Viable Product and learning from customers are incredibly powerful and transformative. These ideas apply not only to startups (Eric’s niche), but also to existing organizations as they seek to improve and innovate.
The challenge of the Minimum Viable Product approach for physical product manufacturers is how to achieve real learning from customers. Surveys are artificial and useless in this regard. Ideally you would be able to “look over the customer’s shoulder” as a web based software business can. That’s tough when your product is installed in a customer’s home or business.
Web based technologies, when used honestly and transparently, have the potential to allow for this type of visibility, but few product manufacturers have yet embraced this type of communication. I have to believe that there is an incredible advantage for companies that figure out how to do this.
I’ve also been a fan of Eric’s and wrote this blog post (which has a link to video) after seeing him give a talk at MIT:
http://www.leanblog.org/2010/01/notes-on-a-talk-by-eric-ries-on-lean-startups/
I’ll break a little lean news here — Eric is going to be giving a free webinar through the Lean Enterprise Institute on Wednesday April 28 at 2 pm. It hasn’t been announced yet (until now). I’ve been helping arrange that and I’m really excited to see how the broader, more traditional lean manufacturing and healthcare folks react to his message. Lots of good stuff from Eric – really makes you think although it’s not all transferable beyond web-based startups perhaps.
I’ve also been a fan of Eric’s and wrote this blog post (which has a link to video) after seeing him give a talk at MIT:
http://www.leanblog.org/2010/01/notes-on-a-talk-by-eric-ries-on-lean-startups/
I’ll break a little lean news here — Eric is going to be giving a free webinar through the Lean Enterprise Institute on Wednesday April 28 at 2 pm. It hasn’t been announced yet (until now). I’ve been helping arrange that and I’m really excited to see how the broader, more traditional lean manufacturing and healthcare folks react to his message. Lots of good stuff from Eric – really makes you think although it’s not all transferable beyond web-based startups perhaps.
I’ve also been a fan of Eric’s and wrote this blog post (which has a link to video) after seeing him give a talk at MIT:
http://www.leanblog.org/2010/01/notes-on-a-talk-by-eric-ries-on-lean-startups/
I’ll break a little lean news here — Eric is going to be giving a free webinar through the Lean Enterprise Institute on Wednesday April 28 at 2 pm. It hasn’t been announced yet (until now). I’ve been helping arrange that and I’m really excited to see how the broader, more traditional lean manufacturing and healthcare folks react to his message. Lots of good stuff from Eric – really makes you think although it’s not all transferable beyond web-based startups perhaps.
Hi Jamie,
Thanks for your post on Lean Startups. That is the way new companies will grow sustainably. I am also a big fan of the concept.
BTW, are there more resources, blogs and research on the topic?
All big things start pretty small 😉
Cheers, Ralf
Hi Jamie,
Thanks for your post on Lean Startups. That is the way new companies will grow sustainably. I am also a big fan of the concept.
BTW, are there more resources, blogs and research on the topic?
All big things start pretty small 😉
Cheers, Ralf
Hi Jamie,
Thanks for your post on Lean Startups. That is the way new companies will grow sustainably. I am also a big fan of the concept.
BTW, are there more resources, blogs and research on the topic?
All big things start pretty small 😉
Cheers, Ralf
I think Eric has great material and a real thought leader, long time fan.
His thought process based on Boyd’s iterations has made me re-think the marketing process and really has moved away from many traditional marketing concepts. The diagram Eric Reiss where he believes that you need both a programming and customer development team in Lean software development coincides with my thoughts of the need for Sales and Marketing to assume similar positions. This diagram may even have merit for Change Leaders and Kaizen Teams in Lean. It is very thought provoking.
http://www.business901.com/blog1/receiving-better-response-rates-thru-agile/
Eric ideas are based on very sound principles: Voice of the Customer. My hat goes off to him!
I think Eric has great material and a real thought leader, long time fan.
His thought process based on Boyd’s iterations has made me re-think the marketing process and really has moved away from many traditional marketing concepts. The diagram Eric Reiss where he believes that you need both a programming and customer development team in Lean software development coincides with my thoughts of the need for Sales and Marketing to assume similar positions. This diagram may even have merit for Change Leaders and Kaizen Teams in Lean. It is very thought provoking.
http://www.business901.com/blog1/receiving-better-response-rates-thru-agile/
Eric ideas are based on very sound principles: Voice of the Customer. My hat goes off to him!
I think Eric has great material and a real thought leader, long time fan.
His thought process based on Boyd’s iterations has made me re-think the marketing process and really has moved away from many traditional marketing concepts. The diagram Eric Reiss where he believes that you need both a programming and customer development team in Lean software development coincides with my thoughts of the need for Sales and Marketing to assume similar positions. This diagram may even have merit for Change Leaders and Kaizen Teams in Lean. It is very thought provoking.
http://www.business901.com/blog1/receiving-better-response-rates-thru-agile/
Eric ideas are based on very sound principles: Voice of the Customer. My hat goes off to him!