Thursday, September 26, 2013

Fostering Innovation in Established Companies

Guest post by Lisa Regan, writer for The Lean Startup Conference.

Does this sound familiar? You want to apply Lean Startup methods at your company, but your boss is used to being the decision-maker and is resistant to the concept of testing ideas. Or, you are the boss, and your team is afraid of or unwilling to try new methods. This kind of gap between leaders and teams is common at all sorts of companies. But it’s particularly prevalent at established companies, where hierarchy tends to inform more of the action.

On October 8 at 10a PT, join us for a webcast, Bringing Lean Startup to Established Companies. Eric will speak with Brant Cooper and Patrick Vlaskovits, both authors and entrepreneurs who have served as advisers to large companies, including many on the Fortune 100. This webcast is free with registration, and Eric, Patrick and Brant will open it up to Q&A with attendees, so come with questions ready. In addition, we’re offering a Lean Startup Conference discount for corporate teams; details below.

We explored Lean Startup in the enterprise through a number of talks at last year’s conference. One of our favorites was a panel led by Intuit co-founder Scott Cook, who spoke about the change in leadership required at his company when he decided to implement Lean Startup methods after meeting Eric in 2009. His challenge was, as he put it, “Converting Intuit to run on Lean Startup principles by converting Intuit to be a network of lean startups.” This transition required changing both how decisions were made in the company and how leaders behaved, moving away from what Scott vividly described as decision-making by “politics, PowerPoint and persuasion,” and “the conventional, the consensus, and the commonplace.”

In this discussion, Scott identified four things leaders have to do in an established company in order to “enable decision-making based on the best ideas that can be validated in the marketplace.” These were: setting the grand challenge; installing the systems and culture that enable people, even junior people, to be able to run fast experiments to achieve that challenge; pulling insights from those experiments, no matter whether they succeeded or failed; and living by the same rules and the same discipline as the rest of the team.

Each of these four elements of what we might term Lean Startup Leadership was addressed by a different Intuit team leader (the video here shows them all). To take just one example: Carol Howe, Intuit’s Senior Product Manager, spoke about the way her team created TurboTax SnapTax. A mobile app that lets people use their phones to prepare and file taxes, SnapTax lets users snap photos of their tax documents. As Carol described, the app was a huge success — but, “this was not where we started nor what we intended to build.” The original plan was for an app to allow photographing tax documents that users would then need to enter into their standard, web-based version of TurboTax. Customers disliked this two-step process in early testing, and so Carol’s team built a version of the app that ran entirely on mobile, and was a one-stop-shop for tax preparation. Even then, they were careful to test the new app in a limited context, launching it first only in California, and only on a limited category of tax filers.

Carol: “We heard from all those other customers — customers in other states, and customers with more complex returns. They complained to us and said that they too wanted to file their return on their phone. And that’s when we knew we were on to something special.” They had used methods characteristic of a Lean Startup to validate customer demand and create a truly innovative product — even though this product would compete with Intuit’s own flagship TurboTax software.

Obviously, any company, whether large or small, wants to create products that consumers nationwide clamor for. But creating and empowering teams to both identify and fill the needs of those customers via a process of rigorous testing and rapid iteration requires buy-in at all levels of the company. Corporate leadership, as well as team leaders, need to be on board. On October 8, Eric, Brant and Patrick will investigate the hurdles large corporations face in implementing Lean Startup and the unique opportunities there are for companies that are willing to do so. Register today to join them.

To help support teams applying Lean Startup methods, we’re offering a discount for any company that wants to send a group to the 2013 Lean Startup Conference. If you send eight or more employees, we’ll give you a substantial break. Simply email our executive producer Melissa Tinitigan for details, and use the subject header “group discount.” Here are few of the benefits to sending a team:

•    Get out of a rut. The Lean Startup Conference provides fresh ideas even for teams that have been working together, or hammering on a single intractable problem, seemingly forever. It’s not just the on-stage presentations that help get your team members thinking — it’s also the networking events and startup site visits that expose you to the sharpest entrepreneurial talent. And, professional development improves staff retention and satisfaction. Your team will come back energized.

•    Save time. Teams thinking about instituting more testing, or exploring the Customer Development model, will get direct information about how to implement these methods. You’ll gain understanding and confidence in the process, thus reducing your fear of making mistakes — a barrier that Scott Cook cites as a major hindrance to embracing Lean Startup, especially at the lower levels of a company.

•    Look into the future. The next best minds in corporate innovation are speaking at the Lean Startup Conference. They’ll give your team a sense of what’s ahead and can help you better perceive where to go next. Site visits to highly successful startups, including those successfully scaling, will provide inspiration and key insights to how those teams approach their work.

•    See results. Have your team present to a larger group — the division or the entire company— about what you learned at the conference. We’re preparing a kit of resources that you can take back to your organization and share ways you can immediately apply Lean methods to ongoing projects.   

Don’t forget to register for the October 8 webcast and prepare your questions for the live Q&A. Register separately to attend the conference, and email Melissa for group discount info.

Tuesday, September 17, 2013

Applying Lean Startup Beyond Silicon Valley

Guest post by Lisa Regan, writer for The Lean Startup Conference

Entrepreneurs beyond Silicon Valley, including those working abroad, often have to retool Lean Startup methods to apply them in places with very different business cultures. On September 24 in the U.S. (September 25 in Asia), international Lean Startup experts Kevin Dewalt, Takashi Tsutsumi and Justin Wilcox will meet for a webcast to compare notes and hash out solutions. This event is free, and their conversation will be followed by a live Q&A for webcast attendees; register today to join them.

To introduce you to some themes of this webcast, we spoke to Kevin, Takashi and Justin last week about the biggest challenges they see in implementing Lean Startup methods outside the U.S. Here’s what they had to say.

Kevin Dewalt—a speaker at this year's Lean Startup Conference—is an entrepreneur, investor and adviser who has served as an investor for a strategic U.S. government fund and as Entrepreneur-In-Residence for the National Science Foundation. Two years ago, he moved to Beijing, where he founded Lean Startup Meetup Beijing, as well as his current venture,, a platform for leveraging one-to-one relationships to build reputation and word of mouth.

“Two years ago I moved to Beijing, where, as the founder of, I take calls from all over the world, talking entrepreneurship and innovation with people in 30-minute intervals. Those conversations can often circle around the difficulties of entrepreneurship outside Silicon Valley. I think one challenge in trying to take Lean Startup ideas outside Silicon Valley, and especially to places that are highly culturally different from the U.S., like Asia, is that the methods most of us are familiar with are actually pretty culturally specific. If you ask people in Asia about Lean Startup methods, they’ll often say, ‘I’m not sure that would work here,’ and in a sense they’re right–many of the familiar methods won’t work if applied unmodified. That’s why I recommend that people focus on ideas rather than tactics. Lean Startup ideas will work even in places as different from Silicon Valley as Asia–the specific tactics will need modifying, though.

“Think, for example, about the way we talk about sales and customer development and the idea of ‘getting out of the building.’ In Silicon Valley, you can go to people and ask them what their problems are, and what solutions they would value, and they’ll be happy to answer you. People in Silicon Valley are accustomed to openly discussing change, and to talking about what’s wrong or needs fixin —it’s culturally accepted there and you get a lot of practice at it. In most of the world, that’s just not the case. If you walk into a manager’s office almost anywhere in Asia and say, ‘I want to talk to you about your problems,’ he’ll tell you that everything’s fine, that he has no problems. He’ll probably suspect that his boss sent you. Right away, by talking in terms of problems and change, you’ve lost that person; they’ll just shut down.

“This is not to say that you can’t get out of the building in Asia, too. But you’ll have to go about it differently. Relationships are very important, and introductions are valued, even expected. You’ll need to do the legwork to get introduced, and to become known to people before you ask them for help or information.

“Another resistance or challenge faced by people starting businesses in Asia comes from within the startup itself, around getting support from co-founders and investors. There’s often a practice in Asia of locking onto the first idea as ‘the idea.’ Impatient investors and team members give little support to a founder trying to do Customer Development to verify or modify that idea. They often look on this as a waste of time. And then, when customers are not buying the product, the blame will tend to focus inward — on the founder for perceived shortcomings in the product, rather than examining the question of whether the product itself is actually solving a problem.

“What can you do in the face of such challenges? As I mentioned above, think ideas. When you find yourself getting overwhelmed with tactics, remember that the big idea of Lean Startup is search – it’s about searching for opportunity. People search differently in different cultures. To find out how they search, you need local advisers, people who understand how to apply Lean Startup methods where you are, and to do customer development in ways that are relevant to that culture.

“The good news is that those people make themselves known. The Lean Startup community is very tight and well-organized. There are Facebook pages, and Meetups, both of which are good filters for smart, passionate people around the globe. (I’ve observed that people don’t organize Lean Startup Meetups unless they’re serious.) Those organizers will in turn value the Silicon Valley perspective that you bring – you just want to make sure you let them know that you’d like them to show you how they do it where you are now.” 

Many of the challenges Kevin describe resonate with Takashi Tsutsumi. Takashi has been a venture capitalist for fourteen years, investing in technology startups both in Japan and in the United States. Enthusiastic about the scientific approach for a startup, he personally translated both The Four Steps to The Epiphany and The Startup Owner's Manual into Japanese. On weekends, he evangelizes Customer Development and runs a Lean LaunchPad class nationwide in Japan. Takashi spoke to us specifically about what it’s like to try to bring Lean Startup methodologies to a business culture as conservative as Japan’s. He described two challenges, and two pieces of good news. [Ed note: Takashi emphasized to us that his ideas here are his own and not affiliated with any companies that he works for or is involved with.]

“Japan is known for its conservatism and the norm of lifetime employment, both of which result in a lack of entrepreneurship. In this environment, I have been practicing and evangelizing Customer Development/Lean Startup for the last seven years (with great help from my teachers Steve Blank and Bob Dorf and my friend Masato Iino), facing challenges and delighted by the unexpected good effects for entrepreneurship. The following are a few examples.

“Challenge #1:  Perfectionism and detail-oriented culture

“Japanese are known for their perfectionism and the Japanese culture is highly detail-oriented. This culture particularly contradicts with minimum viable products. Entrepreneurs worry that they will lose their trust and reputation with customers if their products compromise features, UI/UX, quality, etc. In addition, although entrepreneurs come up with good MVPs, they gradually add more features as customers say that A, B, and Z are missing, resulting in a ‘maximum’ viable product instead. Therefore, one of the keys for success to practicing Lean Startup methodology in Japan is to encourage entrepreneurs to be patient in minimizing their products. I sometimes refer the nice rule of thumb from Eric Ries, ‘Take what you think is right now and cut it in half and do that two more times and ship it back.’

“Challenge #2:  Pivot is failure?

“Pivoting is a key Lean Startup concept, but in Japan, pivot mostly means failure. The Japanese perfectionism affects this thinking in that people consider it right to complete a plan once it’s developed. First, this is true for entrepreneurs. They stick to the initial idea (i.e., the hypothesis) even if facts tell them it’s wrong. They just hate to admit being wrong, or they believe themselves too much to change their mind. Second, and more important, stakeholders, such as investors and management, think this, too. Even when entrepreneurs get used to the principle of Lean Startup, in which a pivot is not necessarily a failure but is progress, their stakeholders don’t share the sensibility. Investors and management use an original (therefore unproven) plan as a yardstick, so I often hear funny conversations that effectively go like this:

VP Sales: I talked to many customers to see whether they have the problem we hypothesized and whether our solution properly fixed their problem—but none of them said yes. We should pivot.

CEO: I know, but we can’t pivot as I got approval from the board by committing to our business plan. We have to stick to our original plan untapped and carry on, even if we know we are wrong.
“I see this as the largest challenge for Lean Startup practitioners, especially in Japan. Therefore, ‘Step Zero of the Four Steps,’ or buy-in, is more important in Japan than in the Valley.

“Good news #1: Perfectionism and detail-oriented culture

“Perfectionism and detail orientation inhibit adapting Lean Startup methodology in Japan, but they turn out to be strengths once people buy in. Once they buy in, entrepreneurs in Japan follow and execute Lean Startup exhaustively.

“I see exhaustive execution of Lean Startup methodology often in the mobile/internet space. One good example is Cookpad, Japan’s top recipe site. Cookpad develops new services and features on a strict Lean Startup method. They test selling an MVP first to their colleagues, and they have to pivot if their colleagues do not pay for it. In fact, Eric Ries’s Lean Startup is mandatory reading for new hires prior to their first day. Cookpad also has their homegrown tools for hypothesis building and cohort analysis for effective execution of Lean Startup methodology. Yes, as Lean Manufacturing was the heart of 20th century Japanese manufacturing, Lean Startup’s process-oriented quality nicely fits the Japanese mind. I hope more startups and corporations in Japan execute the Lean Startup methodology in the Japanese ‘relentless’ manner.

“Good news #2: Customer Discovery nurtures entrepreneurship

“Customer Discovery is never easy in Japan. Ordinary people do not talk to strangers, knowing they hate unsolicited inquiry. However, the more customers an entrepreneur talks to, the more they learn. What surprises me, however, is that talking to customers also turns non-entrepreneurs to entrepreneurs because they feel a sense of fun and confidence in their idea. As many of you saw in our final presentation for the 2020 Olympic game city, Japanese inherently love ‘O-MO-TE-NA-SHI,’ meaning total empathy. Here’s an instance. A group of graduate students at Tokyo Institute of Technology whose goal was to be researchers, found that prospects loved their product during a Lean Launchpad class. They decided to pursue their startup idea. Three out of seven teams in this Lean Launchpad class in Osaka decided to found a company to pursue the business idea they had tested by talking to a bunch of customers. This may be an effect from the perfectionism in Japan, in that that they execute exhaustively once they believe and feel confident after Customer Discovery. I find this phenomenon an unexpected effect of Lean Startup methodology, but very interesting, particularly given that Japan must increase entrepreneurship and new startups for the revitalization of its economy.”

Finally, we talked to Justin Wilcox, another Lean Startup Conference speaker this year. Justin has started several companies that have not succeeded. This process has led him to investigate the science of entrepreneurship, a topic he spoke about at last year’s Lean Startup Conference in a talk on crowdfunding MVPs. He leads Lean Startup workshops around the world, recently spending a lot of time in Singapore and Puerto Rico. He is a mentor for both Founder’s Institute and Startup Weekend and he blogs about Lean Startup matters at He spoke about a carrot-and-stick approach to encouraging Lean Startup methods in areas where they may run up against entrenched practices.

“My experience outside the mainland U.S. has largely been in Puerto Rico and Singapore, where I've noticed some real differences from Silicon Valley—some that are challenges, some advantageous. One major challenge in smaller countries is that an acute sense of market size has a negative influence on people's sense of how to talk to customers. Founders in these smaller countries sometimes think of their home country as their market, when their opportunity could be much larger. And so when we tell people that they have to get out of the building and interview X number of people in a large market (U.S., Europe, etc.), it’s naturally daunting. It’s uncomfortable enough interviewing customers—complicate that with different accents, time zones and cultural references and ‘getting out of the building’ gets harder.

“Market size plays into a broader under-confidence outside the U.S.—or perhaps it’s actually an over-confidence inside the U.S. In Singapore, for example, the first question I'm often asked is, ‘So what do you think of Singapore?’ And of course I say that it's great, it's extraordinary — because it is. But I notice that in the U.S we don't ask foreigners what they think of our country because there's a basic assumption that the U.S. is amazing. Puerto Rico and Singapore were both colonized, and I sense their histories of ceding power to some force outside and greater than themselves (foreign governments, large corporations, etc.) is reflected in their entrepreneurial culture. In that context, several Lean Startup leaders in these communities have to empower founders to take risks and embrace failure in front of friends and family—harrowing work at best, inconceivable at worst.

“My approach to confronting these issues outside Silicon Valley —really, outside the U.S.—is similar to the way I teach Lean Startup in general, which is to accept that everything about the methodology is hard, because people have to be willing and able to overcome their own basic psychological defenses. I try to encourage people to think about what they want out of life, and the ways this set of practices can help them get there, instead of only focusing on the barriers. If I can connect with an entrepreneur about what they want to accomplish, and what they are passionate about, I have an easier time persuading them to get outside themselves and beyond their usual limits and defenses.

“Of course this is difficult abroad—it is anywhere. And in my experience, people in Silicon Valley don't have it figured out any better than people elsewhere. This gets to the advantage that people outside the U.S. can have in implementing Lean Startup. I've been struck by instances where I've been to other countries and spoken with people who really get Lean Startup, and who are shocked that all people in the Valley aren't already doing these things. In fact, the culture of Silicon Valley, flush with success, can create its own kind of complacency, as though simply being in the right place at the right time will be enough. People working in environments that are not flooded with success will use anything they can find that will step up their game. So while the broader culture may resist entrepreneurship, individual entrepreneurs abroad can be open to trying anything, because they have to be. For instance—I would put more money on JFDI in Singapore, based on the way I see them pushing themselves, than almost any incubator in the U.S.”

Join Kevin, Takashi and Justin on September 24 (September 25 in Asia) for a free webcast to discuss these and many other issues around implementing Lean Startup ideas beyond Silicon Valley. Don’t forget to register to attend, and then prepare your questions for the live Q&A to follow the discussion!

PS. For The Lean Startup Conference, we sell tickets in blocks. When one block sells out, the price goes up. We have just a few tickets left in the current discounted block. Register today for the best prices. 

Thursday, September 12, 2013

Introducing New Lean Startup Practitioners

Guest post by Lisa Regan, writer for The Lean Startup Conference.

In building the program for this year’s Lean Startup Conference, we’ve tried to strike a balance. We’ve invited some deservedly well-known experts—people like Steve Blank, Laura Klein, Cindy Alvarez, Brant Cooper, Patrick Vlaskovits, Janice Fraser and Ash Maurya—to share their insights. But we’ve also sought out new voices. Indeed, the majority of our speakers this year are people who, though they’ve been doing compelling Lean Startup work and have great stories to share, are not on the conference circuit.

To give you a sense of these practitioners, we asked some our new speakers to talk about how they use Lean Startup methods. Below are three of their takes on  MVPs. To hear more from them, register for The Lean Startup Conference today. We’ve just  put a new batch of tickets on sale, and when this one sells out, the price goes up, so sign up now.

Steven Hodas will be speaking at the conference about  applying Lean Startup methods within extreme bureaucracy—in his case, the New York City Department of Education. Steven came to the NYCDOE via NASA, where he built the U.S. government’s first public website. After starting two companies of his own, he now heads the NYCDOE’s Markets initiative, which works on fostering smart demand for innovative solutions to the most urgent problems in New York’s public schools. Steven framed the value of MVP in terms of the enormous bureaucratic hurdles he has to cross:

“The NYCDOE is by far the largest school district in the country, with 1,800 schools, 1.1 million kids, and 135,000 employees. Our annual budget is $25 billion. As a life-long edtech entrepreneur I was excited and wary when I was asked to run Innovate NYC Schools, a program within the Office of Innovation that's intended to make the DOE more flexible, responsive, and better able to function. I knew that nearly everything I'd want to do would be anathema to standard operating procedure. After all, that is the point of the work.

For example, the basic notion of an MVP goes against the core tenets (whether spoken or unspoken) of large, bureaucratic organizations. Those tenets are:

1) We don't have customers, we have subjects. (Unspoken)

2) We are the experts in both the problem and the solution. (Spoken, loud and proud)

3) Iteration is a sign of failure, because (2). (Spoken, as if to a child)

4) The way to avoid (3) is to design by committee and then to ignore feedback, because anyway (1).

Still, because my job is to create bridges that don't yet exist between people inside the DOE (see 1-4) and those in the entrepreneur and maker communities, the MVP model provides the best template. In my case, the scarce resources, rather than time and money, are time and political capital. And the urgency stems not from an agile competitor, a first-mover market, or a power-law distribution of reward, but rather from the need to achieve enough velocity to overcome the tremendous gravitational pull of business-as-usual.

Further, my products are actually processes. My deliverable is not software per se (though sometimes there is that too), but alternative models for operating and engaging, a different way for DOE employees to view and go about their own work. An MVP strategy is the only way to generate the early wins that build credibility with both internal and external audiences, thus allowing me the space to learn, improve, deploy again, learn, improve, and so on. Each MVP is like a ratchet tooth or belay anchor that keeps the work from going backward, while enabling me to generate greater momentum for the next, more ambitious reach.”

Khalid Smith, co-founder of LessonCast, will be speaking at the conference about concrete things small startups can do to reach product-market fit with B2C customers. LessonCast builds tools that help teachers, schools, districts and teacher’s colleges improve the way that educators are prepared to teach. Khalid, who has a background in coaching, has talked about the challenge of really confronting your own decisions:

“When I speak at startup competitions, my talk usually starts with ‘I’m not as interested in how much of your business you can build this weekend as I am in seeing you execute the part of your business that creates value. So don’t build your business today. Today, do your business; then building it is just a function of time and money.’ But it’s really hard to take your own advice. This was true of our path to our current concierge model [Ed note: the concierge model is the practice of building a front end or offering a service that appears automated--and then behind the scenes, doing the work by hand]. My wife and co-founder Nicole pioneered the core idea behind LessonCast as she led the turnaround of a middle school struggling to raise its test scores. Using her experiences as a guide, we built a suite of tools that she wished she’d had during those tough two years. We thought we had our MVP and the next step was to scale our solution. But as we tried to sell it—crickets.

It took us a while to realize we’d committed the cardinal sin of using our own opinions and experiences in place of customer validation. I heard the words as I said them to teams in competitions: ‘You are not the customer!’ ‘What experiment did you run to invalidate your hypothesis?’ ‘How do you know what features are must-haves and should be part of your MVP?’ I realized we didn’t have answers to these questions ourselves. All we knew for certain was that the process a school leader would follow, and the software a school leader would use because he or she built it himself or herself, were both different from what other school leaders would actually pay for.   

What we had was an embarrassingly difficult-to-use, first-generation version of our software for school leaders, plus an accompanying process that had worked in an exceptionally skilled and passionate user, Nicole. Nowhere in there was anything that qualified as an MVP. So we sold our software the only way we knew how—by not telling the clients about it. We call our technique the concierge-coaching model. This is a hybrid model where we worked with clients as consultants, but gradually asked the clients to perform more and more tasks themselves using our software. Their ability to complete the ‘assignments,’ with us there or on their own, told us what new features we needed to develop, pinpointed where we needed to improve the user experience, and helped us develop better tutorials.

We focused on three customers: one K-12 school, one teacher’s college and one online course. It was slow and tedious, but the discipline of using the concierge model is paying off. We are on generation 3.0 of our minimum viable product. We are beginning to show the innovation economics of a healthy business and, for now, we can look ourselves in the mirror after a coaching session and be confident that we’re taking our own good advice.” 

Valerie Gofman will be speaking at the conference about how her company, Sharethrough, has scaled Lean Startup methods as it’s grown—a considerable challenge for any maturing organization. Valerie is a product manager, and she works with the business and development teams to guide strategy, testing and communication for both internal- and external-facing products. Her experience of Lean Startup methods has been shaped by the environment in which she works—as she says, “In the native advertising industry, which relies heavily on platforms that are mobile and provide scale, it is paramount that we are able to provide new product features quickly and efficiently.”

Here’s Valerie on how MVPs are woven into Sharethrough’s work:

“The nascent digital native advertising space, which Sharethrough created nearly two years ago, is rapidly evolving. In brief, native advertising is a form of paid media where the ad experience follows the natural form and function of the user experience in which it is placed. From the beginning, our product teams have been focused on iterating and learning as quickly as possible, with MVPs in common use.

MVP is a frequently-used acronym on the product and engineering teams and pervasive around Sharethrough as a whole. From early-stage efforts on new products to iterating on existing features, thinking in terms of the MVP allows us to focus on shipping-to-learn rather than shipping-to-ship. For example, with Vine's seemingly overnight success, brands began requesting it as a means to engage with their audiences. By limiting scope to a base set of functionality that we needed to get in front of those customers, we were able to turn around an MVP within two weeks.

Our MVPs commonly involve Wizard-of-Oz-style manual workarounds [Ed: this is akin to the concierge model Khalid mentioned] that provide efficiency and rapid learning for product and engineering teams and help us demonstrate early success with customers. For example, when thinking about bridging two applications that would eventually converge, rather than initially going through the multiple iterations necessary to  deliver a full-fledged integration, we shipped the most critical (and risky) components first, allowing us to have real users on the system give us a green light. Then, after some not-so-mild course correction, we were able to proceed with certainty.”

Steven, Khalid and Valerie will each focus on important Lean Startup lessons in their conference talks, and they are just three of dozens of new speakers this year. Sign up today for the conference to hear from them all.