Can you truly predict a customers’ reaction to a new innovative product and then scale the success of the product? Lean practitioners say you can, if you measure the right metrics, interpret them correctly, and focus on the problem and the uncertainties that arise.
To find out, I discussed the topic with Ash Maurya. He wrote the step-by-step guide for implementing Lean startup practices, titled Running Lean, created the Lean Canvas tool, and blogs regularly about these topics at www.leanstack.com.
Now Ash has a new book about applying Lean Startup principles to go from new product concept to a product that is achieving predictable success with customers. The book is titled Scaling Lean: Mastering the Key Metrics for Startup Growth. And while it is written in the context of startup growth, the concepts apply to any product innovation effort that involves creating a new product or improving an existing one – from startups to large enterprises.
In the interview (see below), you will learn three aspects of scaling lean:
- Using metrics
- Prioritizing waste
- Practices to achieve success
Below is a summary of topics discussed with Ash in the interview.
The need for scaling lean
The last book came out of me struggling with the starting stages of a product: how do you go and deal with the market uncertainties that arise. A lot of it is based in firsthand experiential learning. Since it came out, I continued writing, I continued speaking, and then went into teaching workshops. In doing so, there were a number of questions that repeatedly surfaced. Many of them were about what comes next. We know how to start with Lean canvases, how to describe a business model, how to build the minimum viable product, but as the team begins to grow, how do we practice Lean both as a methodology and as a process? As we start adding customers, we actually start getting pulled in many different directions. The questions I began to hear, and my own process of looking for answers, is how the Scaling Lean book came about.
Examples of scaling lean
The examples in the book draw from case studies, retrospectively at times, looking at companies like Facebook, Tesla, AirBnB, Dropbox, and HubSpot. I use them to illustrate a lot of the concepts. However, I always feel that it is a lot more tangible and practical for me to speak from firsthand experience, and in the book I address a product that I built using the techniques of Scaling Lean, called “User Cycle.” The domain is irrelevant. The point is I had built a home-grown system, I began socializing with a handful of potential customers, and then I went through the Scaling Lean process very rigorously.
Scaling lean metrics
In the business plan [using the Lean Canvas] there’s both the business model story and the forecasting section where we do some Excel magic wizardry. I kind of joke because we go too far there like we do with the business plan and we start working with thousands of numbers when we don’t really need to. I was looking for a better way to estimate whether a business model is worth pursuing in the first place, beyond the story. Any useful metric must measure customer behavior. The metrics that I dive into in the book is what I call the Customer Factory Blueprint, heavily influenced by Dave McClure’s Pirate Metrics [AARRR]. These are the acquisition, activation, referral, revenue and retention. Those are the five anchors of macrometrics that make sense. The more important thing is that with these five basic metrics, and sometimes even fewer, you can estimate a business model.
Waste is any human activity that consumes resources but doesn’t add value, and value is in the context of customer value. If we use that as a backdrop, we have to be looking at everything we’re building, our product, our marketing, our sales, and trying to be efficient, trying to remove inefficiencies, and not doing needless busy work.
Achieving breakthrough success
Creating breakthrough success is aided by asking “why” when the unexpected occurs. We see this in scientific discoveries, in entrepreneurial discoveries, where people go down a certain path and something unexpected happens and with further questioning a breakthrough occurs. Weird stuff growing in a Petri dish could have been written off as a mistake but instead penicillin was discovered. In Lean Startup terms, pivot towards something that actually does work, even if what is working is unexpected. Also, Lean Startup methodology is very good in taking big ideas and turning them into small, fast experiments. If you create fast experiments, you begin to get incremental feedback to judge whether to continue down a path or change to a new path. When we see problems, the most important thing is to ask why. If we can get to the why’s, we sometimes have to devise these incremental experiments to allow us to test our hypotheses for why these things are happening and only double down on the ones where we see those leading signals of things now moving in the right direction.
“Love the problem, not the solution,” Ash often says. It all comes down to studying the lock, not building the key. Because if you focus too much on the solution, you might miss something about the problem. That is, after all, how penicillin was discovered.
Listen to the interview with Ash Maurya on The Everyday Innovator Podcast.
image credit: recreation.ku.edu
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Chad McAllister, PhD is a product innovation guide, innovation management educator, and recovering engineer. He leads Product Innovation Educators, which trains product managers to create products customers love. He also hosts The Everyday Innovator weekly podcast, sharing knowledge from innovation thought leaders and practitioners. Follow @ChadMcAllister