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Lean Startup Offers Project Managers a New Framework for Delivering Innovative Solutions

“I love my phone!” “This report is useless!” “It’s so easy to pay my checks online.” “The building is beautiful!”

These are stakeholders talking. To be specific, these are customers and end-users.  Here’s another stakeholder’s point of view. “There will never be enough traffic to generate the revenue we need.”

After all the effort that goes into a project, have we actually produced something that is desirable? Do the benefits of the outcome outweigh the cost of the development?

As we create products and services, hitting the value target is always a challenge. Project teams need to figure out exactly what needs to be built, and then build it correctly. That is true whether we are working on a residential remodel, bringing a new drug to market, or expanding online banking services.

From Agile to Lean Startup: Entrepreneurs Search for the Value Target

Software developers responded to the challenge by shifting to agile methods. Agile is a paradigm shift. Rather than investing heavily in up-front analysis and design, agile methods emphasize incremental delivery of a finished product to tighten the feedback loop with their customers. This dramatic shift has proven itself many times over and agile methods continue to be refined and improved.

Entrepreneurs have an even more daunting challenge, according to Eric Ries, the most visible face of a new movement called Lean Startup. They must discover what the customer wants and deliver it within a business model that is sustainable. Along with “what does the customer want?” there are a host of other questions about whether that product can be created, the right kind of business model to fulfill the need and the right organization to deliver it; essentially the entire business plan.

In his book, The Lean Startup, Ries shows that these questions can apply to any type of organization – from government agency to Fortune 500 Corporation to actual garage startup. “A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.”

Use Minimum Viable Products to Accelerate Learning

Innovation often springs from inspiration. Startups – whether at a government agency or a Silicon Valley incubator – envision a new way to solve a problem, maybe a problem most people aren’t even aware of. Remember that really new ideas aren’t a response to stated needs – iPods and Facebook were created by people who saw a problem or opportunity that others weren’t seeing.  But inspiration of this type is based upon a lot of assumptions, particularly assumptions about whether the potential customers will really embrace the solution.  Lean Startup advocates experimenting to confirm your assumptions.

We can experiment with any part of the business plan, but some of the most popular examples experiment with customer desire and rely on a minimum viable product, or MVP. The MVP concept is also found in agile software development. An MVP represents a feature that we are trying out on real customers to get the most authentic feedback possible. In The Lean Startup, Ries gives the example of Food on the Table, a successful company whose website technology helps families compose a shopping list every week based upon their favorite recipes and the best prices available at the local grocers where these people shop. You can imagine that this requires a pretty complex combination of systems and grocery store partners. Long before the technology was built the concept was tested with a no-tech minimum viable product: the founder and the VP of Products personally provided the service to the first customers, performing all the work themselves. The first customer and each additional customer provided feedback on the service, educating these entrepreneurs on what mattered to their target market. 

The journey from these early, hand-built shopping lists to a company with a national audience wasn’t built on a single MVP experiment, but on a chain of experiments that provided constant feedback and course correction.

Embrace the ‘Lean’ in Lean Startup for Your Projects

The lean in Lean Startup refers to the principles of Lean Manufacturing that emphasize reducing waste and focusing on activities that create value. Lean applies to startups because developing complicated products and marketing plans when facing extreme uncertainty is very high-risk and has the potential to waste a lot of time, effort, and money.

Project managers like clear goals and controlled scope.  But that’s seldom the way innovation works. Perhaps the most important lessons for project managers wading through the swamps of innovation are about risk and waste. Experimenting and pivoting from your original assumptions to a viable, desirable product may not be quick, but it is the lowest risk, most cost effective approach for navigating through the extreme uncertainty that can accompany our attempts to innovate.

Get the Rest of the Story

This post is excerpted from Chapter Three of The Fast Forward MBA in Project Management, 5th edition. Get the book to see how Lean Startup, Agile, Stage-Gate and traditional linear development lifecycles work for different kinds of projects. Get a free ebook here.

Source: Eric Ries, The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, New York, Crown Business, 2011