Lean Startup update with Eric Ries @Volta

I last saw Eric Ries speak about Lean Startup in 2011 -- so I was delighted the chance to hear him again crossed my path. VIP VoIP, Clarity, and Volta joined forces to bring a live video conversation with Eric.

The meeting was hosted in Volta’s funky Halifax event space - kinda perfect with its graffiti’d walls, electric motorcycle, and bustling hive of startup workspaces.

Lean Startup is about five years old now, and Eric says that while he has learned a lot, the principles remain solid. He is pleased that terms like pivot and MVP (minimum viable product) are now accepted and their definitions formalized.

We gotta fix bureaucracy!

Eric kicked things off by stating that today’s bureaucracy is holding us back. US GDP growth between 1914 and 2014 was an average of one.point.something -- half from population growth and half due to productivity gains. With flattening population growth, the US must find substantial productivity improvements just to match past GDP growth. A shift in how we achieve growth is required, and Eric believes that entrepreneurship is the key.

Before diving into how that can come about he noted that entrepreneurial vision is becoming more widely appreciated by finance people. This came as a welcome surprise as their support for Lean Startup ideas to become part of enterprise management, is critical for growth.

But surely Lean Startup is for startups?

Entrepreneurs are about uncertainty. But wait, most organizations have uncertainty. So maybe it is not about “eating ramen, living with your parents, and pulling all-nighters”? The reality is that Lean Startup fits almost any sized company at any stage. Eric said we’d be shocked how similar the conversations are that he has had with companies like GE and small crazy startups -- uncertainty places them in the same headspace.

Further, he has been blown away by how companies like GE and Intuit have embraced Lean Startup and done the huge amount of work just to
prepare their organizations for it. GE is training every division CEO and many many employees -- impressive commitment and a compelling evidence of their faith in Lean Startup’s role in their future.

What does that look like?

In the future Eric sees entrepreneurship as an atomic part of most companies, on par with Sales or Engineering. It would have its own accounting, reporting, rules, everything. Wow. However this function can only succeed if it is separate, otherwise the other areas such as sales will pillage resources every time it’s quarter end etc. and severely hamper it’s ability drive strategic change.

How we can make it happen

It begins with you -- today’s entrepreneurs -- include a Lean Startup unit in your mental image of how large organizations are run
while your company is still small. That way you will grow up to build a big company with Lean Startup in its DNA. Otherwise history will repeat itself with the same old style of companies that we have today.

What about “growth hacking” - isn’t that a good solution? Growth hackers succeed, but it’s not magic - they go back to first principles to determine what to change to make things better. Every company is different, so the growth hacker’s solution will be different every time. (I’ve done this a few times, and have been delighted how even just a day of facilitated digging can reveal amazing opportunities to improve). But it’s a one shot deal. On the other hand, infusing entrepreneurship into an organization as a permanent discipline brings ongoing that growth hacking cannot.

In his closing comments, Eric touched on the perceptions of failure. Think of a CEO faced with communicating to the “Failure is not an option” Sales team and the “We eat failure for breakfast” Lean Startup team. The difference lies between productive failure, which is great, and un-productive failure. Looking at how failure is treated at work, it’s natural not want to confess to failure, but in performance reviews we are asked about our failures -- the question is the problem. A constructive question would focus on productive failure, and then applauding it for the value it brings.

In summary:
  • Lean Startup is standing the test of time
  • Finance types are now getting it, which bodes well for enterprise adoption
  • Lean Startup benefits all kinds of companies, new and old, large and small
  • Lean Startup become a new construct within companies
  • Entrepreneurs need to visualize Lean Startup in the DNA of the large company they aspire to be, while still small
  • Productive failure is good - use it as healthy measure of doing the right things

Thanks to Eric, Volta, Clarity On, and VIP VoIP!
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