How The Lean Start-Up Can Save Your Business

Last year I heard Eric Ries speak to a room of most twenty-something internet-entrepreneur-hopefuls about his book, The Lean Start-Up.  The book explains how to significantly increase the likelihood of success of a start-up by taking a series of scientifically designed steps to reduce failure.

Perhaps the most well-known example of a lean startup was Groupon, who tested the concept by handing out coupons for the pizza restaurant in the building where they worked. The book has become a phenomenon and a part of the vocabulary of legions of young programmers with the dream to create the next billion dollar IPO.

But there are two reasons why every single business needs to understand the concepts and practice the lean start-up methods:

1.  If you don’t innovate in a business environment where everything changes at lightning speed you will become obsolete.

If you have a Facebook business page you know that Facebook isn’t  kidding when they say their motto is “move fast and break things.”  They will deliver changes and you will adapt. That’s life on the web and Facebook is throwing you into the deep end of the pool to learn to swim.  It’s true of all digital marketing.  You have to keep up with technological changes and with consumers who demand increasingly better experiences in mobile and social media.

But, it’s not just about incremental chance, it’s about revolutionary change.  Adapting to technological changes is the practice game.  The industries where most of the businesses did not revolutionize include music, printing, book and magazine publishing, travel—and if it hasn’t happened yet—bricks and mortar retail. The companies that survived and will continue to survive have generally not been the established ones.  Your industry could be next. But there is no reason why you can’t be a start-up if you establish the right mindset and a system that supports innovation.

 2.  If you attempt to make major shifts in the way you do business without a rigorous system for mitigating risk, you can lose your shirt.

The lean start-up model proposes a system that is foreign to many established businesses. You don’t perform expensive research. You don’t hire a team. You don’t rent office space. You don’t create a five year plan. You don’t start coding or buying for the perfect embodiment of your vision.  Because that’s high stakes gambling.

You create the MVP—the minimum viable product.  And you’d be surprised to discover how simple that product can be.  The point of this exercise is to get a model of your business in front of real potential customers and see what happens.  You create a prototype that could be little more than a PDF.  This is critical because it is the only way to test assumptions.  There is no point in asking people what they would do if . . . . because what people really do is quite another thing than either you, or they imagine.  Think small and think “test”.  There are so many aspects of your vision that you won’t know will work until you test, from the price to the experience.  The lean start-up model allows you to find the answers with a small, private group of people. Using the MVP approach, you find out if you are creating value for consumers before you build.  And that is the point of a business—to create value for consumers.

The largest startup in the world right now is Wal Mart Labs, a small, innovative group of people, operating outside the traditional structure of Wal Mart with the idea of finding a way to reinvent the online experience and integrate the online and offline experience of the world’s largest retailer.  Their “Get On The Shelf” program allows any vendor to upload a video of their product and the decision of whether it makes it into Wal Mart is based on crowdsourcing the decision through public voting.  It is an innovative idea for such a large retailer where the longstanding tradition is to put buying power in the hands of a few individuals. But, it seems, that they didn’t test the concept with real users before launching, because while the vision was admirable, as soon as it launched, it became apparent that finding a specific type of product would be nearly impossible, in spite of the availability of general categories.  The videos are not tagged and the site is not searchable.  At  least they tried something new.

Why not experience the promise of an internet-entrepreneur and take advantage of the opportunity that exists in times of massive change to innovate within your own business?  Just because you’re big or well established doesn’t mean that you can’t innovate if you create the right environment.

So, as an established business, what do you need to understand to participate?

• Do not get comfortable. Always be generating ideas.  Not ideas that improve on what you have, but ideas rethink the way things are done. Remember, that the ones that often pay off are usually the simplest, craziest, most counterintuitive ones.
• Create an atmosphere where ideas are treated gently.  It’s typical in established businesses that when an innovative idea is proposed, the first response is to give reasons why it won’t work.  That approach would have killed a lot of successful business models including Twitter, Ikea, Zappos, and Apple.
• Know that committees don’t innovate.  If even one, or a few individuals are willing to work on an idea because they believe in it, allow some time and a shoestring budget to see if they can prove the concept.  Become a VC investor within your own company.
• Be willing to compete with your own current products.  If you don’t, some imaginative, young group of people with The Lean Start-Up in hand, will and they’ll do it in a way you haven’t been thinking of.
• Get comfortable with failure. You may have heard that failure is part of the process of successful entrepreneurial ventures but established businesses tend not to accept failure.  The lean start-up model requires you actually embrace failure.  But don’t worry because a) it’s how you learn and b) it won’t be failure on a grand and public scale.  Just know that you have to put aside your ego and your attachment to your initial strategy.  If what you learn tells you that changes are needed, be willing to “pivot.”

Do you think innovation is risky? Today the riskiest strategy is not to innovate.