Lean Startup Methodology and Product Development
There has been a lot of discussion about Lean Startup principles and whether they apply to hardware product development.
At Playbook, we have the opportunity and great fortune to see a lot of different types of manufacturing companies developing new products, and a lot of different types of projects within those organizations. (I call it great fortune, because I really love that part about working here.) Based on our experience, Lean Startup principles apply to product development.
This post is the first in a series about how Lean Startup Methodology applies to product development. The series will cover the relationship between Lean Startup Principles and Risk Management, and how the two can be combined to dramatically accelerate projects and profits.
The focus and examples will be on Research & Development projects where new products are being created and/or existing products are being improved.
5 Lean Startup Principles
- Entrepreneurs are everywhere
- Entrepreneurship is management
- Validated Learning
- Build-Measure-Learn
- Innovation accounting
Entrepreneurs are everywhere in R&D
Eric Reis states that “The concept of entrepreneurship includes anyone who works within … a startup”, and he defines a startup as “…a human institution designed to create new products and services under conditions of extreme uncertainty.” He includes both typical garage-based startups, as well as established companies with this definition.
Agreed. Entrepreneurs are everywhere in R&D. In fact, there isn’t a very clear line between conditions of extreme uncertainty and normal operating conditions in most R&D companies. While there is a wide range of uncertainty levels, and startups are toward the high end, most other R&D activities are somewhere in the middle, sometimes anyway. People creating new products and services in R&D companies regularly encounter very new and uncertain situations. They are entrepreneurs, and they are everywhere.
Eric also notes that “…the Lean Startup methodology applies to all companies that face uncertainty about what customers will want.” As described so well in Lean Startup, there are some risks (questions) which are common to almost every product development project. For example – Will the customer like it? Will they use it? How much will they pay for it? What unforeseen market issues and risks are there? Will it solve our customer’s problem well and be profitable?
Identifying Risk and Learning Early
While Lean Startup methods for getting early feedback about customers stand out as one of its biggest benefits, we think Lean Startup methods apply beyond the customer-acceptance risk.
For example, the methods identify--earlier--many of the unknown-unknowns which lie in the manufacturing and delivery of a product. I suspect Eric would agree. Wherever there are issues in the value stream that are difficult to identify early, Lean Startup methods help bring them to light so they can be addressed earlier, before they have a large cost.
In every project of every type there are many questions to answer. Whether we are developing a new-to-the-world product, a new-to-the-company product, or a new and improved replacement for an existing product, there are many uncertainties. Even a single feature enhancement often has similar questions.
There is something new, unfamiliar, unknown, and uncertain in every new product development project. If there isn't risk, we are not innovating, and our product is not likely to sell very well or be very profitable.
Lean Startup Methodology Applies Across R&D Project Types
Within most development organizations, there are research projects, technical development, and/or feasibility projects. These projects are very much like traditional start-ups in the sense that uncertainty is relatively extreme. The questions often start out at a very high-level. It is often difficult or impossible to see specific questions or a clear path to the end in any detail, and it is very difficult to estimate with any confidence when we’ll be done answering all of the questions.
But there are questions and uncertainties in most other types of projects, too. For example in a cost or scrap-reduction initiative in the manufacture of an existing product, or a Corrective Action / Preventative Action (CAPA), or an internal process improvement -- in each case, a problem needs to be solved. Will the improvement really work? Will it create other, unforeseen problems? Will it have the expected impact to our profits?
When applied correctly, Lean Startup methods can help answer these and many more questions, and mitigate risk earlier. It is not required that your uncertainty be extreme. In every case, Lean Startup Principles can be applied.
Continue with us as we dive deeper into the relationship between Lean Startup and Risk Management, and how the two can be combined to dramatically accelerate projects. Along the way, we will also discuss some of the critical differences between Lean Startup in hardware development and software development.
In the next post, we use an example from Lean Startup to demonstrate some similarities and differences between Lean Startup and Playbook Risk Management.
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