Lean Start Up
I often hear people say that Lean and Six Sigma can't be applied to innovation and entrepreneurship. Eric Ries new book, The Lean Startup, dispels that notion. What if the process for creating a successful startup can be learned? What if the lessons of Lean Six Sigma can dramatically increase the odds of startup success from one-in-ten to five-in-ten or greater?
"The grim reality is that most startups fail. Success can be engineered by following the right process." That's Eric Ries' thesis: there's too much waste in traditional startups who build products and services that customers do not want and refuse to use.
What's the right process? After building a product that no one wanted, Ries resorted to listening to customers. "Bit by bit, customers tore apart our seemingly brilliant initial strategy."
Then, he began to apply Lean production principles: "Which of our efforts were creating value and which were wasteful?" To do this, Ries says startups"need to focus on the boring stuff: how to measure progress, how to setup milestones, and how to prioritize work."
Minimum Viable Product
Ries changed his approach to begin with a minimum viable product (MVP). "Additional features or polish beyond what early adopters demand is a form of wasted resources and time." Unlike finished products, new products still have to find a customer and evolve. The MVP serves both as a test of design and as a learning tool to get feedback from real customers and test business hypotheses. (Sounds like Six Sigma doesn't it?)
"We need the scientific method. Everything a startup does--is understood to be an experiment designed to achieve validated learning." The MVP is also asmall batch. "The biggest advantage of working in small batches is that quality problems can be identified much sooner." The MVP serves as a starting point for what Ries calls the build-measure-learn loop.
- Build an MVP.
- Measure results of an A-B test of features and functionality.
- Learn from the results and tweak the product.
Ries says that this loop begins with the end in mind: What do we want to learn? What MVP would create the measurements to provide the learning needed?
One of the early experiments surprised his team. The online product used avatars. Since avatars should move around the space but animating movement was complex, they just used a point-and-click "teleportation" type of movement. Customers loved it. Ries learned that movement was cute, but teleportation was fast.
If a new feature or capability doesn't enhance the stickiness or desirability of the product, the team abandons it and moves on. If it increases the demand for the product or service, they keep it. Pretty simple, huh. But this is how a startup can hone in on what customers want and create a successful startup. When I created the QI Macros in 1997, this is how I did it.
Where Lean Manufacturing seeks to increase inventory "turns", the Lean Startup seeks to increase turns through the build-measure-learn loop. "We need to focus our energies on minimizing the total time through this loop. That way, we can avoid much of the waste that plagues startups today. Teams tend to converge on optimal solutions rapidly even if they start out with really bad ideas." At Ries startup company, IMVU, they make 50 changes to the product every day. That's a lot of turns and a lot of learning. How fast are you learning?
So, I hope this gives you some idea that Lean Six Sigma, with some minor tweaking, applies to innovation and startups just as it does to existing operations. Ries says: "Both successful startups and established companies alike must learn to juggle multiple kinds of work at the same time, pursing operational excellence and disruptive innovation."
Isn't it time to start using the tools of Lean Six Sigma to create more successful products and services? More successful startups? Or are you going to listen to anti-Lean Six Sigma rants of tradionalists? It's up to you.
Lean Startup Resources
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