(Following is the gist of what I spoke at Hyderabad Startup Saturday on Sep 14, 2013)
Lets start with a seemingly unrelated question. Where would be household refrigerator manufacturers be investing now?
In 19th century it was ice-trade a huge global business that addressed this market. Then came the ice plant in 20th century followed by household refrigerator. Are we going to have these refrigerators after 100 years? If not, where will this market go?
I heard someone arguing that refrigerator manufacturers must be investing in bio-technology or GMO (Genetically Modified Organism). What if the next generation produces doesn’t need refrigeration to stay fresh for longer duration?
That kind of forward looking investment can happen only when the organization defines its business as “keeping food fresh” instead of any “ice-trade”, “ice plant” or “household refrigerator”.
Unfortunately, the software industry does not move at the rate of a century at a time. Betting on something like “ice-trade” that will give 100 year life does not happen in the high tech world. That compels the organizations to go the equivalent of “keeping food safe” of objectives in the industry. The only way organizations can survive the test of time is to have this vision and adaptability.
The Agile revolution gave enough tools and changed the mindset required for adaptive planning. But Agile’s adaptive planning is limited at the solution level “Problem known, solution unknwn”. Agile starts at the point the problem is fully defined. In our story, Agile is what that helps in finding the best way to build a ship and transport the ice to the destination. Agile suggests not to build a ship in isolation hoping that the end result is going to work as planned and desired. It lets you start with small, iterate and keep aligning your course towards the desired solution. That whole process is termed as Adaptive planning which is at the solution level.
The situation is entirely different if the problem is also not fully known at the start, which is the case with most startups. The lean-startup school is all about handling this situation “problem not known and solution not known”. Every idea comes up with set of “leap of faith” assumptions. Lean starup book gives the example and compares Sony’s Walkman and Apple’s iPod. When Sony first created Walkman it had to first validate the assumption that people want to listen to music on move and in public places. Where as Apple doesn’t have to deal with that assumption which is already validated by Sony. But Apple has its own set of assumptions like would people like downloading music from internet?
The more number of such “LOF” assumptions that are there in the business, the more probability of some of them getting validated negatively. The startup has to hear this from the market as quickly as possible and make the course correction. This is the adapt mindset that lean startups must possess.
The entire Customer development theory of Lean Startup is about identifying the right customers and quickly validating these LOF assumptions. The result is always a course correction (pivot). The minimum viable product (MVP) is all about how quickly we can validate these assumptions.
Here are couple of words of caution from my personal experience of two failed startups. Make sure the feedback you are getting on your MVP is from the right users of the system. If your end users are sales people, it must be a sales person on the ground giving you the feedback. Not the sales VP. If it is a solutions for HR department, get the feedback from the HR personnel on the ground who are going to use the system. Not the Head of HR. We must know the difference between a “smart-ass opinion” and “a critical feedback”
The other caution is about developing some level of indifferent to your idea when you had to make tweaks to it and pivot. Very quickly you will face the Elephant and rider in you. The feedback and rationale part tells you that you have to pivot. But the emotional side of you that has been parading passionately with the idea doesn’t let you pivot that easily. The worst thing that can happen is closing your eyes and pretending “all is well”.
Some of the books we discussed are
1. Lean Startup
3. Switch (A detailed description about Elephant and Rider)