How To Make Your Organization More Agile By Using The Lean Startup Methodology

February 27, 2014 - 10 minute read - Posted by

If you had the choice of deploying your product to 1000 of your potential target customers right now or waiting 6 more months to perfect the product, what should you do? Some members of your team will push to wait for the perfect launch while others will want to get the product into the hands of customers to get critical feedback before it’s too late. What decision are you going to make, especially if you are tight on your budget and timeline?

Luckily, Eric Ries has formulated a strategy in his book the Lean Startup to enable you to innovate, get rapid customer feedback, and iterate without turning off your customers. The Lean Startup methodology is a series of principles for building and maintaining agile and innovative companies while reducing the risk of failure. Here are a selection of the most interesting points that Eric makes in his book, and why they’re so relevant to us at 7Geese.

It starts with a VISION

Yes, the prerequisite for being agile is a solid vision. Every company needs one to avoid running in circles like a chicken with its head cut off. If there is no vision, agility will kill you, as people will just move in different directions, burning all your resources without creating any unified products or services for your customers. At 7Geese, our vision is to help unleash human potential at work. It is something we all take ownership of and keep in mind every day, and helps us stay aligned and focused on what’s important. Even when we are operating at rapid speed, gathering loads of customer feedback, and making many snap decisions, we make sure to litmus test every decision to ensure it’s in alignment with our vision. Companies like Yammer have used alignment with the vision and what is important as a building block to build their super agile and adaptive workforce.

Creating Value and Eliminating Waste

Innovation and uncertainty go hand-in-hand. If your organization is operating with no uncertainty, it is not doing anything innovative. The biggest challenge in being innovative, agile, and uncertain is knowing what activities are creating value and what are time-wasters. Understanding the difference between value and waste can make or break your organization. The Lean Startup methodology employs the concepts of Lean Manufacturing (just-in-time manufacturing, efficiency in supply and production chains) to develop strategies to help organizations create value while eliminating waste in situations of extreme uncertainty.

Every activity that helps you learn factually about your products, markets, and customers is adding value to your organization and every activity that delays this learning is a time-waster. Using this principle, you can monitor all the activities your team is doing and see which ones create value and which ones are time-wasters. Validated learning, Eric defines, is measured by monitoring the positive improvements in a startup’s core metrics using facts to back up crucial data from your customers.

How to Measure Validated Learning and Make Progress

Where should we look for validated learning? What are the specific things we want to learn? The best practice is to test your hypotheses against your vision and to minimize the time to test each aspect of your vision.

At 7Geese, our core vision is to unleash human potential at the workplace by creating a platform to engage and align their employees to company values and objectives. We know that if employees don’t use our product, we have failed in executing our vision. Therefore, adoption of the product by users is one of the ways we measure how aligned we are with our vision. Every innovative and uncertain product and process initiatives (hypothesis) we take must improve our user adoption metric to succeed or it has failed. In either case of success and failure, since we have learned, we have made progress. But how can we make the learnings take place as fast as possible and achieve accumulated progress?

Validated learning is key to finding the bridge between a company’s vision and what a customer can accept, as opposed to what customers wanted or telling them what they should want. Not looking at the efforts of what is being built, but how much validated learning is coming out of those efforts is the measurement of productivity and progress in a startup.  This is where understanding your feedback loops and building a minimum viable product helps you learn (and grow) faster.

The Build, Measure, and Learn Feedback Loop

The Build-Measure-Learn feedback loop is a core component of the Lean Startup Method as shown below. In the Build stage you will work on an innovative and incremental product (or service) enhancement. The measure stage is where you test what you have built by collecting data. The Learn stage where you analyze the data to learn and use the new insights in your next iteration.

A key requirement is minimizing the total time through this loop to make faster progress. You can do that by building a Minimum Viable Product (MVP). A Minimum Viable Product is a version of a new product (or service) which allows a team to collect the maximum amount of validated learning about customers with the least amount of effort. Once an MVP is established, the feedback cycle can begin and you can keep fine-tuning.

Actionable/Vanity Metrics

Tracking progress in the feedback loop is dependent on good metrics. Startups will sometimes use the total number of customers or new users per week as their projected metrics for growth (hockey stick graph – what growth typically looks like). This is a vanity metric, which paints the rosiest possible picture without giving actual insights into what is working and what is not. Startups should be tracking progress based on actionable metrics, which look at specific aspects of how your users and customers are actively participating and using your product or service. One thing to note is that one organization’s vanity metric may be another organization’s actionable metric — you need to ask the right questions to discover what metrics are actionable.

Pivot: Small Turns to Get Back on Course

A pivot is a structured course correction designed to test a new fundamental hypothesis about the product, service, and strategy. A great example of this is Groupon, who started their company as an online activist webspace called The Point. After zero activity, one of the founders started a WordPress blog and made a promotional coupon for a local pizza shop. After a few users redeemed the coupons it started to grow, and now Groupon is a multi-billion dollar business. A pivot can be a large change like Groupon’s, or it could be as small as a change in your sales process. The important takeaway is that entrepreneurial spirit must live on — being open to making pivots is key for an organization to be innovative and agile.

Conclusion: Waste Not

103 years ago, Frederick Winslow Taylor wrote, “In the past, the man has been first; in the future, the system must be first.” Today, we live in that predicted world. We have many resources to build or enhance services and products, but should we invest in them? Many organizations are working hard on at the wrong things and wasting so much human potential and resources as result. Moreover, if we focus only on being efficient without a clear vision and following continuous processes of learning, we are destined to fail. We must continually test our assumptions and look at all setbacks as learning opportunities to grow as an organization and as individuals.

I’ve only touched a few topics in Eric Ries’ The Lean Startup. If you would like to learn more definitely purchase his book or read his blog. If you are interested in learning more about how 7Geese helps companies align their workforce, visit our website!

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