Last week we had the opportunity to meet with Ash Maurya, author of Running Lean (affiliate link). In his book, Ash provides tactical guidance for the customer development and market validation processes popularized by Eric Ries in the Lean Startup.
The Lean Startup methods are fantastic, but we aren’t a startup, so we wanted to focus on intrapreneurship: driving value within a large corporation through risk-taking and innovation.
In recent years, product teams have adopted agile approaches and the “lean” mentality: start small, iterate, learn, tune, scale. However, the pace of adoption of these concepts on the business side – marketing, sales, services, support – typically lags that of product. It turns out that the business’s primary interest is in protecting the status quo; the curent revenue and profit streams, not driving risky new innovations into the market. A thorough, scientific accounting and full understanding of any perceived disruption to the steady state is required for the business to get behind new product innovation.
On the surface this seems like a reasonable expectation, but there is significant statistical evidence that knowing exactly where we’re going and having a detailed plan is much less important than our ability to embrace uncertainty by trying many small experiments. For more on that topic, check out the idea of convexity vs. understanding by Nassim Taleb, author of The Black Swan (affiliate link).
While the merits of planning vs. experimenting are worthy of further discussion, this article is about ideas we discussed with Ash for working more closely with the business units to embrace the lean mindset, iterative discovery, and in-market learning. We noted several practical strategies for “de-risking” the process of in-market validation in partnership with the business:
1) Validate your business model hypothesis within the smallest segment possible
Market risk exists when there’s uncertainty about building a viable business. We can address market risk in stages. When we talk about the “next generation” of that business or changing the business model behind it, we generate fear. And fear often manifests as political posturing and defensive, protectionist tactics.
We should search for a learning ground that is acceptable for both the business and the product team. For example, if we desire to replace the flagship product because of technical limitations and risk, we should choose a small corner of the existing installed base to test something new. We must achieve small successes to gain the trust and demonstrate the value necessary to take on successively larger amounts of risk.
2) Focus on one objective at a time, e.g. existing or new customers?
Using experiments and innovation accounting to “define, measure and communicate progress” is key (see How We Use Lean Stack for Innovation Accounting). To be effective these efforts must have focus. For example, we may be working on a replacement strategy for an existing product, but we also believe that new product will allow us to attract new customers. The experiments and resulting outcomes are discrete and we should test them independently.
Using Ash’s Lean Canvas approach, we can model the opportunities, assumptions, market segments and implications independently and design tests relative to each set of realities. Compartmentalizing these efforts allows us to focus and avoid muddling results of our discovery in each area.
3) Win early adopters within the business
Just like we find early adopter users, we have to find early adopters of the vision within the business. They will need to take a leap of faith with you, and as can act as champions within the business as we achieve incremental success. As successes grow, we can expand the circle of business early adopters until the product/innovation is ready to become mainstream.
4) Do all of this very quickly
The speed in which we execute matters. As a best practice, new ideas and market opportunities should be defined and validated within 3-6 months. This is not only a good, Lean practice, it’s the key to building trust within the business. When market validation activities 12-18 months or more, folks get impatient and concerns rise. Questioning investment levels and applying pressure for plans and checklists doesn’t help matters, because until there is in-market validation, any and all plans regarding the trajectory of a business are purely speculative.
In fact, best practice may be to launch a charter program in 3-6 months before asking for any formal business unit buy-in. It’s my opinion, however, that having someone from the business participate in the experimentation is absolutely critical to long-term success. But they must be versed in the lean mindset and approach the process in an entrepreneurial way.
It was a great opportunity to talk to a leader in the field of lean methodologies. The discussion further affirmed for me that the lean approach can work inside an established business if we do the things I mention above. The business craves knowledge and understanding and the best way to learn and achieve those assurances is in small, digestible chunks. We will never get around the fact that there is no crystal ball. The future is inherently uncertain. The business and product innovation teams must share this understanding and build plans together that encourage rapid learning through experimentation in market instead of inside-out plans that assume specific outcomes.