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Jeff Liker

Dan Jones: The Lean Startup

By Jeff Liker, - Last updated: Tuesday, June 11, 2013 - Save & Share - Leave a comment

There is a lot we can learn from the Lean Startup movement. I am grateful that this question provoked me to read the book again more carefully, and I urge others to do so too. First it tells a good story well – better than most lean books. Second it is written by an entrepreneur and business person, rather than an expert or consultant, who has struggled to use lean ideas to solve a very different set of business problems in his own businesses before sharing his results and reflections with others. The book stretches our experience and should help us reflect on the deeper purpose of the many lean practices we take for granted.

The lean movement has at least three key tasks – first deepening our knowledge of what our reference model Toyota actually does and how they do it and why, second bringing contemporary knowledge from diverse fields from neuroscience to decision theory to unlock the full potential of lean practices and learning, and third to conduct experiments to discover how to build functional equivalents in very different sectors with very different types of value streams and business problems. The Lean Startup movement takes this third strand to new territory.

As we took lean practices from discrete manufacturing to process industries, retail and distribution, service and repair, administration, healthcare, construction, financial services, IT systems and government we discovered that different tipping points unlocked the potential to transform different types of value streams. Yet understanding where and why today’s value streams are broken is just the first step to designing new ones back from customer or user needs rather than forward from existing assets and structures. At the same time the internet has opened up new possibilities of building a two way dialogue with key customers and users. The Lean Startup movement goes one step further – beyond lean product and software development and strategy to managing innovation and building whole new business models.

So how lean is it? Lean folk should quickly recognise the underlying premise which Eric Ries took from studying Toyota’s management system, namely seeing the whole activity of the organisation as a learning process. The Build-Measure-Learn cycle is of course a variant of the familiar PDCA cycle, with a strong emphasis on defining what the enterprise needs to learn next, how to validate this learning through quick testing cycles with customers and hence which innovations to develop for the next test cycle. Validated learning, minimum viable product, split testing, actionable innovation metrics and being prepared to pivot the strategy in response to feedback from customers all follow from this approach to learning. The big challenge for existing organisations is creating the space for entrepreneurial management to drive these actions.

So maybe the right question to ask is not how lean it is but whether it works and if so what the implications are for existing businesses. Maybe it is time to conduct more rigorous evaluations of the effectiveness of the different approaches to lean business transformation in different situations, something the lean movement has not yet embraced.

For me the Lean Startup movement could make a really positive contribution if it not only creates new business models but also helps existing organisations to move beyond the relics of the era of mass production, which are everywhere – functional silos, big focused factories, extended supply chains, big warehouses, big superstores, big hub airports, big district general hospitals and big IT systems to name but a few. The future is no longer “one best way” delivered to everyone through a single channel, but the ability to deliver exactly the right solutions to help business customers create more value in their work and help end users create more value in their lives. The Lean Startup movement offers a fresh approach for all kinds of organisations to come up with innovative new solutions and business models.

But for me there is still a missing piece to this puzzle, which, I am sure, will come into focus in the years ahead. That is developing the capabilities of every individual, household and community to manage their own lives through managing their own data. They are all mini businesses managing many complex processes to combine the right products, services and knowledge to create value in their lives. Mining “big data” to track what users do today and split testing to see their reactions to changes are well advanced but articulating the voices of expert users can take us a big step further. You might take a look at these three experiments to see what I mean – Ctrl-Shift, Ten Group and the City of Santander.

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