What Is the Problem?
The “Lean Startup” approach is based on a book by Eric Ries of the same name. The fundamental problem that the book addresses is that many companies:
- Think that they know what the market and their customers want,
- Make a lot of assumptions based on that thinking
- Launch a long and expensive product development effort to meet what they think are those needs, and
- Then find out that those assumptions were wrong
That approach is typical for a company with a traditional plan-driven approach to project management. (That is what many people loosely call “Waterfall”). The problem isn’t really unique to startups; this problem can take place with any company of any size – it may happen more frequently with startups just because there is normally a higher level of uncertainty associated with a startup.
What’s the Solution?
The solution to this problem is to use an incremental and iterative approach to product development. That approach should have lots of customer input and feedback along the way. That approach is exactly what is used in an Agile product development effort. The approach would look something like this:
It’s easy to see how this approach can significantly reduce the market risk associated with new product development. And, it is appropriate for any company (not just startups).
- Instead of committing to a long and expensive development process on the basis of some limited number of assumptions that may later to be wrong;
- It treats those assumptions as only a “hypothesis” and seeks to validate those assumptions (hypotheses) as the project is in progress.
How Does This Fit With Agile?
The product development approach recommended by the Lean Startup method is essentially the same as an Agile/Scrum product development approach. It is based on an incremental and iterative development process with lots of direct customer input and feedback.
- The Lean Startup approach goes somewhat beyond an Agile/Scrum approach.
- The approach focuses on how the business strategy behind the product is developed and validated, which an Agile/Scrum process does not directly address.
In practice, this concept can be applied at many different levels. It is not limited to a single product development effort and it is not limited to startups. There are potentially multiple levels in any enterprise-level Agile implementation as shown in the diagram below:
The implementation of this is really at a higher level than the development process. It is at a business strategy level and a product strategy level. At each level in an enterprise:
- There may be different levels of uncertainty and
- Each level may call for a different planning approach based on the level of uncertainty at that level
Planning in an uncertain environment can be very difficult. Here’s an article that goes into that in more detail:
Overall Conclusions
The “Lean Startup” approach is a good, common-sense approach to planning that is very appropriate for an uncertain environment. It acknowledges the level of uncertainty in the environment:
- Rather than glossing over the uncertainty and making assumptions about it to try to make it go away
- It uses an incremental and iterative development effort to validate those assumptions as the project is in progress
This approach is not unique to startups; it can apply to a company of any size and level of maturity. It can also be applied at any organizational level and any level of planning and management in a company based on the level of uncertainty in the company at that organizational level or level of planning and management.
Additional Resources
You will find much more detail on this in my Online Agile Project Management Training.