Lean Startups

Indianapolis Lean Startup Circle

James Paden, VP at Compendium and Mentor at Indianapolis Startup Weekend, spoke at last night’s Indy Lean Meetup about the difference between bootstrapping and lean startups. While both conserve cash whenever possible, their goals are different. Lean startups aren’t opposed to accepting funding, they just shouldn’t take it until after some customer validation has occurred.

From Iteration to Execution

As you can see from this chart, in lean startups, the process starts with customer discovery, then goes to customer validation. The arrow back to customer discovery indicates revisions until a product/market fit is established and the process can move over to customer creation and eventually company building. While the goal of bootstrapping is to build without incurring debt, the goal of lean is to learn from short, iterative processes (the discover and validation phases) AND to build the company as fast as possible.

The Lean Startup

As Matthew pointed out on my book recommendations page, The Lean Startup by Eric Ries is a great book to help your startup get started right. But what I didn’t realize until attending last night’s Indy Lean Meetup was that lean was a part of the agile method.

The premise of The Lean Startup is to, “Apply lean thinking to the process of innovation.” After reading this book, the next time you go to make a new product or start a new company, you’ll be asking yourself, “Can we build a sustainable business around this set of products and services?” and you’ll start to look at customer requests/desires differently than you may view them today. Using innovation experiments explained in the book, you’ll be able to determine whether a new product or service is required or simply a tweak to any existing product, but Ries warns, “Stated customer feedback is not always an accurate reflection of actual need/desire.”

Agile Indy

Last night at the Agile Indy meeting I learned a little bit about what Agile is. At it’s core it’s a focus on people and teams power to get things done by communicating. Agile facilitates that movement from the individual to the team and from idea to implementation. It’s similar to lean principals when it comes to short, iterative product development cycles.

Retrospectives

We did what they call a “retrospective” which involves these steps:

  • Brainstorm
  • Cluster
  • Prioritize
  • Action
  • Commit

For the brainstorming session, we were looking for topics the group wanted to discuss or cared about. We used the default star-pattern of, “What do you want to…

  • = Stay the same
  • > Do more of
  • < Do less of
  • – Stop doing (it’s hurting us)
  • + Start doing

The brainstorming is done with a “one-in-hand” post-it note process where everyone writes one thing, then puts it on a wall or board. The “Cluster” process then uses the team to sort the post-it notes into categories using the same “one-in-hand” method. Seven random people are then asked to assign the clusters into seven different categories. The group then is allowed two dots each to assign importance to the categories. One dot on two categories or two dots on one is allowed. The two most popular categories then go into discussion and from that discussion, 5 action items are created. The last step is to commit these action items to being done and completed.

This is just one part of Agile. There are terms like SCRUM and SPRINT, neither of which I know what they mean (yet). I recently wrote about the Agile meetup as part of the broader category of what meetups mean to me, but I felt there was enough material from last night’s meeting that it deserved it’s own post.

The most popular book on Agile in Amazon doesn’t even mention Agile in the title. Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, is a book about achieving breakthrough results by, “methodically taking small, experimental steps in order to discover and develop new ideas.” The author, Peter Sims, researched what went on behind the scenes of some of the great achievements and innovations we witness in today’s world. He said, “Most of them weren’t the epiphanies of geniuses, but instead the result of masters of a specific type of experimentation. To find out the common elements of their experimental approach, I reviewed empirical and neuroscience research about creativity and innovation, and interviewed or observed dozens of people about their approach, including Army counterinsurgency strategists, architect Frank Gehry, agile software development teams, stand-up comedians, entrepreneurs who had self-financed billion dollar businesses, the rapidly growing field of design thinking, and musicians like John Legend, as well as executives inside a range of organizations such as Amazon, Pixar, Procter & Gamble, Google, 3M, General Motors, and Hewlett Packard.” As one reviewer wrote, “Constant experimentation (‘learn by doing’) is fundamental to this approach – and I would add, fundamental to Agile.