Does Lean Startup Have Limitations?

Let me, first of all, make clear that I am a big Lean Startup believer. I have internalized the principles, led long discussions with like-minded, and taught the principles to many entrepreneurs as part of my startup coaching/consulting work. For everyone, who hasn’t heard about it yet: the Lean Startup methodology is a scientific approach to experiment your way from a first product idea to a product that a certain number of customers want while minimizing waste (i.e. time) in the process. Its central element is the Build-Measure-Learn (BML) cycle, a basic visualization and iteration of the scientific method, which roughly consists of these steps: (1) do basic research, (2) derive hypothesis, (3) build experiments, and (4) collect & analyze data to validate/refute the hypotheses.

Lean Startup = Truth! But does it have limitations?

When I first read the Lean Startup book (something many Tech Founders probably haven’t done) I was immediately impressed by its logic, simplicity, and applicability. Over time I dove deeper into the topic (as part of my PhD research) and found more and more scientific work that had in parts covered different aspects of what is summarized in the Lean Startup methodology. I was surprised that none of these things had found their way into the heads of a broader base of practitioners. Eric Ries was really the first to digest the different aspects (agile dev, lean manufacturing, customer dev etc.) and appropriately apply them to the trending startup field. He also managed to present them in a way that is broadly accessible and easily marketable. While the Lean Startup methodology as a whole was a rather novel concept, its individual aspects weren’t all new. But how could they have been? The Lean Startup principles are the truth and truth doesn’t change over time! Although Lean Startup is the way to go in most cases, I am attempting to follow up on a popular blogpost by the well-known investor Marc Andreessen, who proposed that not every startup can be a Lean Startup. The next paragraphs present a humble discussion of three potential limitations of Lean Startup. Please feel free to comment and educate me, if I am mistaken.

1. Does it work for Big Ideas?

I argue that big ideas, the ones that are truly visionary and innovative, don’t always fit well with the Lean Startup approach, at least not entirely. Lean discovery and validation of customers (early part of Steve Blank’s customer development process) are tough tasks for highly innovative product/service ideas. Building an MVP simply isn’t easy in these situations. Customers may need an almost finalized product to get the intended experience, so balancing sufficient learning and the minimization of waste in the process becomes increasingly difficult. Along these lines Andreessen mentions that the methodology just doesn’t work well for startups “with the really audacious goals”. To illustrate the challenges of coming up with a lean MVP, he refers to Elon Musk‘s SpaceX, a project where you just have “to get the rocket into space”.

So, put frankly, may Lean Startup be too lean to support high-tech development? I believe this statement to be too harsh. Lean Startup does work wonders when validating smaller parts of a bigger startup vision (via divide & conquer) and, of course, for most ideas that aren’t extremely innovative (think “Airbnb for Boats”). It is tough to really draw the line here, because I think it’s blurry. Max Marmer of Startup Genome Project, for example, labels the big ideas as “transformational entrepreneurship” and defines them as having both high economic impact and high long-term societal impact. I would say they are mostly the ones that are tough to grab with the Lean Startup approach. Let me propose my own rule: If a technical solution for a problem exists or can be created fairly easily, Lean Startup is the way to go. In other cases, I’m not sure…

2. Risk of premature pivoting

Lean Startup teaches us to focus on experimenting and learning directly from customers. When our data refutes the hypotheses we have about our product, we are told to pivot. Of course, testing and tweaking a product can be done quickly, as long as you’re talking about a website or software. It’s not so easy when the solution isn’t limited to lines of code (and I’m not judging!). With a lot of software products nowadays pivoting is taken to the max. Andreessen even worries about the possibility of developing a “fetish for failure”. A ridiculous example that I have recently stumbled upon was the shut-down of a new social network within 45min after its launch (update: a sarcastic The Onion article making fun of the the pivot craziness).

I believe, it is a major challenge to design good experiments (with appropriate MVPs), measure the right things, and make quality decisions based on the data. Applied falsely, or in the wrong situations, Lean Startup may encourage us to give up too quickly. This is especially troublesome in cases where the goal is to bring a highly innovative product to market. Here, perseverance and a strong belief in the vision may be absolutely necessary for success.

3. Pivoting away from passion?

Another risk I want to address is the possibility to slowly but surely pivot away from your passion with every iteration through the BML cycle. Passion is the secret sauce that lets you go the extra step. If you don’t love what you’re doing, it’s highly unlikely that you’ll be very successful at it. An entrepreneur doesn’t usually wake up in the morning and think: ‘Today, I’m going to pivot my way to success, whatever it takes’. Much rather, most entrepreneurs that I’ve met start out with a vision to change the world for the better (and make a lot money in the process). In the HBR article “Too Many Pivots, Too Little Passion”, Daniel McGinn adresses this problem and proposes that “finding the right balance between passion, patience, and a practical respect for market feedback is probably a more realistic formula for start-up success.” In between frequent pivots I advise entrepreneurs to occasionally step back and contemplate whether the direction of their startup is still aligned with what they want to dedicate their limited life-time to.

What to do when Lean Startup isn’t enough?

Well, obviously I don’t have a quick and easy fix. Nevertheless, I propose that age-tested heuristics (versus the scientific method) may be the way to go when Lean Startup reaches its limits. Heuristics are proven rules-of-thumb that can be derived from decision-making patterns of practitioners. They usually develop over long periods of time and compact huge amounts of experience. An example showing the power of heuristics in finance is a pricing formula used by option traders. The formula was later expressed scientifically and came to be known as the Nobel prize awarded “Black–Scholes–Merton” formula. Our job is to be alert and identify the hidden heuristics applied by experienced entrepreneurs. They present powerful tools to navigate in uncertain environments, particularly if they have stood the test of time.

What are limitations that you have witnessed with regards to Lean Startup? What are your suggestions of how we can then operate? I would love for you to share your thoughts. Maybe we can find more answers?!

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4 comments

  1. avastmick

    I too am a fan.
    Stepping back I think a case can be made that the book does not have limitations per se. The concepts are universal enough to be applied in any instance.
    Simply, the devils is in the detail. If an entrepreneur follows the book rigidly (like a bible) and sticks to every word and phrase then it does have limitations and becomes no more than another (business) ideology, full of dogma that constrains thinking.
    The principles in the book are fine and, if taken generally, can scale. SpaceX is lean: compared to NASA. SpaceX created a MVP and iterates upon that as it builds its commercial proposition. The key word is “viable”; SpaceX had to build a viable space rocket, no less.
    Pivoting is merely tinkering with the outcome in another guise. You start with one thing, one idea; you end with another found along the way. Pivoting too soon is just panic: Lean Startup an excuse for your actions. Your example of the social media site is classic panic. Maybe they knew something; maybe they knew it was a dog and chose “pivot” than “pack up and go home” as their explanation.
    Finally, passion. If you have read my blog you know that I believe emotion is a killer of innovation. See http://avastmick.org/2013/03/26/successful-ideas-are-antifragile/ as an example of my thinking. Passion for your job and your ideas should not be confused with an emotional adherence to any idea. If the sensible path to alter course, to pivot, then do it – with passion! If the idea is great but people don’t get it, stick with it passionately.
    Hmmm, heuristics. In my heart I struggle with the concept. Your example is controversial! Heuristics smacks too much of “tradition” and “convention” for me to be happy with it. Praxis (http://en.wikipedia.org/wiki/Praxis_%28process%29) is better – the practical application of a theory; but that is what Lean Startup is all about anyway…

    • juliusparrisius

      Thank you for your in-depth comment. I love that you said “the devils is in the detail”, because that’s really what it comes down to. Too many entrepreneurs apply the principles although they haven’t internalized them, which is dangerous (panick-pivoting). Lean Startup has produced a lot of hype, so startups sometimes blindly run it them concepts and put a lot of trust in results. Even the great and practical step-by-step Running Lean by Ash Maurya has to be applied with care and brains for it to be really helpful, and I think most people underestimate that fact.
      To the SpaceX MVPs: Aren’t they mostly just able to test product risk at the moment as they are iterating to a technical solution that works? It’s tough to test a lot of other major hypotheses with regards to customers and the market, right?
      I get your points about having passion in the process and the pivot as your finding a product that customers want, but I would argue that it’s tough nonetheless. I think a lot of people underestimate Ries’ statements that Lean Startup principles aren’t always fun, but involve a lot of dry, analytical work. I will check out your article.
      The major problem in the acceptance of heuristics is exactly what you’re saying: they just feel “old” and “conventional” which doesn’t inuitively fit with innovation very well. But the test of time has often made them antifragile. They have evolved from praxis, which is why I love your comment about that. We all need a lot of practice to be able to fully benefit from Lean Startup.
      Thanks again for your thoughts. I really feel like I learned something from you!

  2. Max Völkel

    Hi, another lean fan here. I believe fundamentally, lean startup has no limits. Let’s look at the examples of your post.

    1) Does it work for Big Ideas? Sure. SpaceX could test hypothesis like “we can get the government interested at this and this price point” well before building rockets. Also, lean startup principles (run experiments to reduce the risk of an untested hypothesis) can very well be applied to technical aspects: Is this and this material combination light enough? Can this material made hotter than X degrees? And so on. Material scientists run experiments all the time.

    For me, lean startup is really: Looking at your risks. If there are big risks (i.e. those that financially can cost you X dollars, and the probability is rather high) then try to run a cheap experiment (usually much cheaper then X, otherwise don’t run experiments, just create the final product) to reduce the risk.

    The highest risks in *most* startups are (a) solving an irrelevant problem, (b) having no access to a customer segment, i.e. no working channel, (c) monetization. So also if a technical solution is hard to create, it would be smart to reduce risk systematically, where possible.

    2) Risk of premature pivoting
    The article you cite is from a parody-magazine called “The Onion”. They have many great and fun articles, but not the truth :-)

    However, in the battle gut feeling/passion vs. data, lean startup has no answers. If in doubt, respect the data, but follow your intuition, I would say.

    3) Pivoting away from passion?
    I agree. You should respect your inner drive (passion) as a major relevant force in the whole game. The other forces are maybe market, time, money, technology, channels.

    4) Limitations. Like the limits of science, the limit of lean startup is our creativity to come up with cheap experiments to reduce big risks. It’s something quite hard to come up with an experiment from which to learn. The other hard part is to be aware of all the hypothesis underlying a plan which in fact are risky. So lean startup has no real limits, but the application is hard.

    Maybe a bit like those courses “scientific writing” that teach you how to do proper citations and data handling. These courses help, but becoming a good scientist takes more. Mostly experience.

    Thanks for starting this discussion :-)

    • juliusparrisius

      Hi Max, love your detailed comments! And thanks for taking my post for what it was intended: to start a quality discussion about these questions. I have sensed more and more questions about Lean Startup’s limits lately, especially when it’s principles aren’t well understood.

      Your arguments really convince me:

      Big Idea projects can’t be tested easily, so maybe risks can’t be contained to the same level as in less high-tech projects. But the Lean Startup approach is still the most sensible way to go to balance effort and waste. When in doubt, it’s always good to follow your intuition but I want to add heuristics here (indirectly use the experience of others as a guide).

      I can live with your proposition that lean startup has no limits, except for the complexity of its application. This is what ultimately matters! If you do it well, great…if not, it can be a really messy. The danger is that most people underestimate the difficulty to put Lean Startup principles into practice, then follow a semi-strict approach and end up in chaos.

      Your sentence “THE LIMIT OF LEAN STARTUP IS OUR CREATIVITY TO COME UP WITH CHEAP EXPERIMENTS TO REDUCE BIG RISKS” should be printed and quoted all over the web. Love it!

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