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?!