Helping new businesses to cut away useless fat

Philip Salter
Follow Philip

A. The word “lean” comes from lean manufacturing, the system of management that has its origins in Japan with the Toyota Production System. The Lean Startup applies these principles to the process of innovation. Unlike the traditional approach to new product development, The Lean Startup relies on validated learning, rapid scientific experimentation, as well as a number of counterintuitive practices that shorten product development cycles, measure actual progress without resorting to vanity metrics, and help us learn what customers really want.

So, are you attempting to set out a science of starting a business?
Yes, precisely. Science requires vision, just as startups require vision. Building the right product requires systematically and relentlessly testing that vision to discover which elements of it are brilliant, and which are crazy. Science also requires having a prediction, a hypothesis, about what will happen – based on assumptions, such as you might find in a traditional business plan. When we experiment, in order to learn, we need that prediction so that we can compare it to the actual results. That’s one of the reasons why vision is so critical to startups. We need to be able to predict what customers are supposed to do when they encounter our product.

Do you think your model could come as a wake-up call for the less rigorous?
The attributes for entrepreneurs cut both ways. You need the ability to ignore inconvenient facts and see the world as it should be and not as it is. This inspires people to take huge leaps of faith. But this blindness to facts can be a liability, too. The characteristics that help entrepreneurs succeed can also lead to their failure.

Entrepreneurs have been trying to fit the square peg of their unique problems into the round hole of general management for decades. As a result, many entrepreneurs take a “just do it” attitude, avoiding all forms of management, process and discipline. Unfortunately, this approach leads to chaos more often than it does to success.

Developing a scientific, rigorous approach to entrepreneurship will ultimately benefit all of us.

How does failure fit into your vision of the ultimately successful entrepreneur?
Entrepreneurs need to face their fears and be willing to fail. Failure is a prerequisite to learning. The problem with the notion of shipping a product and then seeing what happens is that you are guaranteed to succeed – at seeing what happens. But then what? As soon as you have a handful of customers, you’re likely to have five opinions about what to do next. Which should you listen to? Entrepreneurs periodically must ask themselves a seemingly simple question: Are we making sufficient progress to believe that our original strategic hypothesis is correct, or do we need to make a major change?

This major change is called a pivot, and the whole Lean Startup model is designed to get to those moments of pivoting sooner than we otherwise would – without having the whole company fail, just because one of our ideas has failed.

How do you define an entrepreneur?
My formal definition of a startup is: a human institution designed to create a new product or service under conditions of extreme uncertainty.

Therefore, entrepreneurship is the management discipline that deals with these kinds of organisations. People mistakenly think you have to work from your garage to run a startup. Entrepreneurs are everywhere, including inside large companies. Anyone who is creating a new product under conditions of extreme uncertainty is an entrepreneur whether he or she knows it or not.

Many of us become “involuntary entrepreneurs” when our previously stable and safe job in a stable and safe industry all of a sudden becomes highly uncertain.

The Lean Startup is out now, published by Portfolio Penguin at £14.99.