In the technology startup world, lean is a way of life.
Being lean is not just a mantra, to many technology startups it’s how they operate day to day.
“Running lean is a systematic process for innovating from Plan A to one that works before you run out of money,” said Ash Maurya, founder of Spark59 and author of Running Lean.
Most startups fail just like most products fail, Maurya told about 50 people gathered Thursday afternoon for a Lean Startup meeting at Geekdom, a San Antonio collaborative workspace at the Weston Centre downtown. Many of the entrepreneurs in attendance belong to the TechStars Cloud, which kicked off on Jan. 9 and is based at the Geekdom.
“The odds of success are really stacked against new products,” Maurya said. “I would suggest not focusing on the failure rate but focusing on this statistic: 66 percent change their product along the way. What separates a successful company is not finding that perfect plan but perfecting that plan along the way.”
Eric Ries coined the term Lean Startup and trademarked it. His 2011 bestselling book has a similar theme of Running Lean. Ries teaches about how to use build, measure and learn cycles to identify what customers really want.
Lean comes from lean manufacturing or lean thinking, Maurya said. The key there is eliminating waste.
Companies fail because they fail to find markets for their products and they fail to find the right customers, he said.
First, entrepreneurs need to ask themselves if they have a problem worth solving. They can do this by interviewing potential customers. Next, they must create a demo to put in front of a customer as quickly as possible. It’s also important to stay focused.
“We have this myth of the visionary entrepreneur,” Maurya said. “The most visionary of our times is Steve Jobs who recently passed away.”
But Apple has a string of innovation behind its successful products like the iPod, iPhone and iPad that goes back to the first Newton, a tablet computer that Apple built that failed twice.
But Maurya said that product development actually gets in the way of learning. The best way to learn is from customers and markets in the earliest stage.
“We get some learning at that point, but the real learning occurs when we release the product into the market,” Maurya said. “Lots of companies build something hoping there will be a market for it. That’s where they go astray.”
The Running Lean process shortens the time from idea to product release. The key to success is building a product people want and knowing how to listen to customers to adjust the product.
For example, if Henry Ford asked people what they wanted for transportation they would have said faster horses, Maurya said. But Ford was able to identify the hidden problem embedded in there. People wanted faster transportation and he was able to create an alternative.
“All the customers can do is tell you what their problems are,” Maurya said. “Define what that ideal solution is for them. That’s what running lean can be boiled down to.”
One of the most important parts of Running Lean focuses on the activities entrepreneurs do to engage with customers.
“You need to get out of the building and engage with customers throughout that development process,” Maurya said. “The answers don’t lie on your computer or in the lab. You have to engage with customers and talk with them.”
Startups need to run small experiments and find ways to do 10 to 20 releases in six months to refine the product and path to one that works.
“Business plans fall short,” Maurya said. “It goes from critical thinking to fiction writing. You start making up stuff. The format for a business plan is a bad one. We call it a form of waste in the lean terminology.”
So Maurya created a shorter version to distill down the most important concepts behind a startup. He calls it the Lean Canvas format. It’s a one-page adaptation of the original business model plans. To date, more than 8,000 startups have filled out a Lean Canvas format on his site. He’s also sold 15,000 copies of his book in a combination of PDF formats and traditional publishing. The second edition will be released in March.
“Because it’s a single page it gets conversation going whether it’s good or bad,” Maurya said. “ If you put it in front of someone they can’t help but read it.”
Startups are about risk mitigation initially. If an entrepreneur is trying to raise funding, it’s not about solutions yet, Maurya said. Investors look at your business model from a completely different lens.
“What we are doing here is taking a very complex product like building a company and breaking it down to its components in manageable sizes,” Maurya said.