If they come, then build it

Our typical way of thinking is “if you build it, they will come.” The whispering ghosts from Field of Dreams continue to tell Ray Kinsella (played by Kevin Costner) this “truth.” For those of you who haven’t experienced Costner at his best (relative term!), here’s the IMDB summary:

Iowa farmer Ray Kinsella hears a voice in his corn field tell him, “If you build it, he will come.” He interprets this message as an instruction to build a baseball field on his farm, upon which appear the ghosts of Shoeless Joe Jackson and the other seven Chicago White Sox players banned from the game for throwing the 1919 World Series. When the voices continue, Ray seeks out a reclusive author to help him understand the meaning of the messages and the purpose for his field.

While Kinsella’s bold action provided him the chance to see the ghosts of the White Sox (including the ghost of his father), I have a feeling that Eric Ries would not approve! In The Lean Startup, Ries advocates an approach of testing a hypothesis to see if “they will come”, then start building. Or said another way, “build as little as possible, then see if they will come.”

Before we divine into the lean mentality, think about how this might look in the context of your life…say you want to start cycling. Do you

  1. Go to the bike store, purchase a $2000 road bike, get all the gear, watches, etc. or,
  2. Buy a $50 bike on craigslist. Purchase used gear. Wait to see if you actually enjoy riding then buy a nicer bike.

Sadly, my approach is typically to jump right in and buy the “nice bike” (NOTE: I don’t ride, I run). This approach is also taken by many in business.

Here’s a headline from Business Insider… “21-Year-Old Raises Largest Seed Round In Silicon Valley History — $25 Million — For Mysterious Payments App

To summarize, a 21 yr old Stanford grad just raised an enormous amount of funding with little more than an idea and a well paid team of advisers. There are no customers, no revenues and he’s entering a crowded space. That said, he has signed up some of the smartest VCs in the valley, and the people who run these firms are extremely smart, so I am not doubting the potential of Clinkle, just the approach.

Continuing on the Lean Startup theme, I wanted to share a different approach than the one taken by Kevin Costner and the start-up Clinkle. As mentioned above this approach is all about building as little as possible, and then testing and learning to see if “they will come.” One of the key terms in the lean lexicon is “minimum viable product” (MVP). In fact just using the term “MVP” will make seem a lot smarter and hip than you really are!

The MVP

The diagram above should help to explain what a minimum viable product is. Below is the definition from Ries:

the minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.

The thinking from the lean startup is that any effort put in above what is minimally viable is waste. Remember from “Getting credit for learning“, the goal of a startup is to learn. Additional features that don’t help us test a hypothesis are not necessary.

So what if you’re not in a startup, but rather an established company, the government, a not-for-profit? You too can also apply the concept of MVP.

Here’s an example of how we used the concept of MVP to test the impact of new space. I wanted to try and answer the question, can we effectively use space to facilitate collaboration? I know this sounds like a silly question (isn’t the answer yes!), but in a 107 year old insurance company with lots of cubicles, I wanted to test before a large build out.

So our MVP was created by moving a few cubicle walls and having a portion of my team sit together. We decided to eliminate our staff meeting as a test to see if information flowed more freely in the open space. After several months of testing, it’s clear that our configuration is highly effective. New hires learn at a quicker rate. Relationships are deeper on the team. Moral is high. Productivity has increased. Communication is better…I could keep going. What’s even better, is our MVP has shown other groups what is possible by reconfiguring space. When thinking about MVP don’t constrain yourself to true “product”.

The Zappos MVP

The story of the Zappos MVP is so amazing, I wasn’t sure how I had not heard it before. Nick Swinmurn, the founder of Zappos, wanted to start an online shoe company. He believed the most important hypothesis to test was “is there already sufficient demand for a superior online shopping experience for shoes?”

Rather than building out a slick website, buying warehouses, creating an integrated distribution model, Swinmurn went to a local shoe seller and asked if he could take pictures of the shoes and post them on his website. If customers decided to buy the shoes, Swinmurn agreed to go back to the shoe store and buy the shoes at full price.

This kind of MVP is often called a “Wizard of Oz” prototype because you don’t have to set up all the infrastructure. The man behind the curtain can create the effects.

Through Swinmurn’s MVP he was able to learn to take payments, answer customers questions, accept returns, all without setting up a warehouse and buying inventory. He was also able to test his hypothesis and learn that there was demand for an online shoe buying experience.

Hopefully these examples show how you can create MVPs no matter what industry you are in. Apply some creativity and think through what hypothesis you need to test and what MVP you can create to run the test. The process is iterative, so getting to your MVP quickly and beginning to learn is crucial.

Begin pushing yourself to MVP anything and everything. And please share your successes and failures!

Getting credit for learning

I sat in a colleague’s office several months ago and we actually googled “getting credit for learning.” We were in the middle of a difficult period in which we were making many changes. The two of us knew that the last six months had taught us many lessons that would prove beneficial going forward, but learning doesn’t lift ROIs, increase sales or improve margins. The CFO can’t spend what we had learned. So how do we get credit for learning?

Sadly, google failed me and I didn’t walk away with a good answer. It wasn’t until I read The Lean Startup that I found my answer.

…if the fundamental goal of entrepreneurship is to engage in organization building under conditions of extreme uncertainty, it’s most vital function is learning

 

In the Lean Startup model, we are rehabilitating learning with a concept I call validated learning. Validated learning is not after-the-fact rationalization or a good story designed to hide failure. It is a rigorous method for demonstrating progress when on is embedded in the soil of extreme uncertainty…

 

We were deep in the soil of uncertainty, so using validated learning would have aided us in showing progress. The key to Ries’s methodology is in it’s rigor. The Lean Startup method relies on a Build, Measure, and Learn cycle.

photo credit: http://e7systems.com/

My main take away from build, measure, learn is that you start work in reverse. Here’s how to use the framework:

  • What is it you want to learn? ex Do our customers prefer a new product feature?
  • How can you measure this? ex We will measure sales on a A/B basis. Group A gets the new feature, group B doesn’t
  • What do you need to build? ex We build the systems capable of issuing products with both features.

But the process can also work with process or something personal. Here’s an example of building a new process:

  • What is it you want to learn? Is the new product development process viable?
  • How can you measure this? How long in months does it take to develop a product in the new process?
  • What do you need to build? We take two similar products down two alternative tracks.

On of the reasons I am so attracted to the Lean Startup is that it borrows many of the principals of design thinking.

In other words, we need the scientific method. In the Lean Startup model, every product, every feature, every marketing campaign – everything a startup does – is understood to be an experiment designed to achieve validated learning. This experimental approach works across industries and sectors…

 

Source: static.ddmcdn.com

These decisions are experiments set up by design, for a specific purpose. An work done that doesn’t result in us learning something about a customer (or process) is waste. Also, it should be clear that iteration is an important part of the process.

In design thinking, the process is moving us towards prototyping and testing. It’s a given that your first idea will not be our best idea and we use prototyping as a way to gain empathy – so it would be wasteful to spend an extra 2 months on the prototype because what we’re really after are the empathy and insights.

In the Lean Startup method, we are trying to get to “learn” as quickly as possible and then the cycle starts again.

Do you (like me) want to get credit for learning? If so, please check out Ries’s book and become a student of the scientific method. Be clear ahead of time which hypothesis you are trying to test (what are you trying to learn?) and how you are going to measure success. Think of yourself as a scientist running a lab of experiments.

Please share if you have experience with lean methods. I’ve love how this book has helped me to re-frame work issues. Read the Lean Startup if you want to be stretched and waste less time on features, process, steps and don’t help create learning.

The 5 Whys

I know that I have read a good book when every chapter inspires a new blog post. That is exactly what The Lean Startup has done for me. While I do not plan on writing 14 posts (for 14 chapters!), I want to share as much as I can.

There’s a small tinge of irony that today’s post is all about a tool to find root causes. As I write, I am 30,000 feet above the ground on my way to SFO. Yesterday’s crash is a tragedy and much time will be spent trying to determine what caused the plane to crash – the root cause. The investigators will probably use the 5 Whys.
Why is root cause important?
This may seem obvious with the plane crash, but let’s play this out a little. What if I told you the plane crashed because the back of the tail hit the rock jetty. All we need to do is replace the rock jetty with runway and the problem is solved, right?
This sounds so absurd, but we use this logic all the time in business and in our lives. A junior level employee makes a mistake on an important project. Leadership blames the employee without asking “why did she/he make the mistake?” Leadership tries to fix the first cause rather than making an investment to fix the root cause.
Or look at a personal example…you’re in a store with your 2 year old and she starts to throw a tantrum because you tell her she can’t have an icee (I’d probably throw one myself if denied the coolest drink in town). Your initial reaction might be to try and pacify her as quick as possible (who could blame you? Everyone in the store is looking at you!), but it’s important to think about “why did she throw the tantrum?” What was the root cause of the bad behavior? Can I make an investment (not $, BTW!) that would fix the root cause and reduce the chances that she throws a tantrum in the future?
5 Whys
As mentioned above, the 5 Whys is a tool for determining the root cause. At this point, I want to let you in on a little secret – come close – to use it you ask why 5 times. Shocking, I know. My 2 year old (NOTE: not the one that threw a tantrum for not getting an icee!) is a master at 5 whys. That’s how kids learn, by asking “why?” repeatedly.
The 5 Whys comes from the Japanese automotive industry (Taiichi Ohno, Toyoto)…here’s a link to the wiki if you want to know all the ins and outs.
Even though it sounds simple, it is a powerful tool. But don’t let the simplicity fool you…proceed with caution! Eric Ries recounts in the book that the 5 Whys can quickly turn into the 5 blames. At a former company, he appointed a “5 whys black belt” (tangent: all I can think of is “sweep the leg Johnny”) because the proper use of the 5 whys require experience and skill.
5 Whys example
Here’s the example from the book (and Ries got this from Taiichi Ohno)
When confronted with a problem, have you ever stopped and asked “Why?” five times? it is difficult to do, even though it sounds easy. For example, suppose a machine stopped functioning:
1. Why did the machine stop? There was an overload and the fuse blew.
2. Why was there an overload? The barring was not sufficiently lubricated.
3. Why was it not lubricated sufficiently? The lubrication pump was not pumping sufficiently.
4. Why was it not pumping sufficiently? The shaft of the pump was worn and rattling.
5. Why was the shaft worn out? Because there was no strainer attached and metal scrap got in.
If we didn’t ask why 5 times as in this example, it would have been easy to conclude, “let’s fix this by fixing the fuse or by lubricating the barring.” The 5 whys allows us to see that the root cause is the strainer. Adding a strainer to the machine’s shaft will help keep this issue from happening again.
We could even take this a step further. Assume that all of the machines are supposed to have strainers attached. The next why could lead us to determine that more training is needed, or that we need to make other policy/process changes.
5 Whys for beginners
 
Here are some things Ries asks us to keep in mind, when we conduct a 5 Whys session
-Make sure that everyone effected by the problem is in the room during the analysis of the root cause
–if the problem was escalated to senior management, then those managers (up to the CEO) should also be in the room
-The most senior people in the room should repeat this mantra “if a mistake happens, shame on us for making it possible for someone to make that mistake”
If you don’t have a black belt in the 5 Whys, Ries has a simplified system to help develop the muscles:
1. Be tolerant of all mistakes the first time.
2. Never allow the same mistake to be made twice.
Proportional investment in root causes
The core idea is to tie investments to the problem. The investment should be larger the larger the problem or symptom. In the example above, if the machine going down is a minor problem, it would not be necessary to invest $100k in a training program to prevent this problem. But if the machine stopping costs the plant $10MM, then it’s worth the investment in prevention.
You read this in The Lean Startup?
 
Correct. So what does any of this have to do with a startup or being an entrepreneur? Here’s a quote from Ries:
“The 5 Whys approach acts as a natural speed regulator. The more problems you have, the more you invest in solutions to those problems. As the investments in infrastructure and process payoff, the number and severity of crises are reduced, and the team speeds up again.
With startups there is a danger that teams will work too fast, trading quality for time in a way that causes sloppy mistakes. 5 Whys prevents that, allowing teams to find their optimal pace.
The 5 Whys turns progress to learning, not just execution. Startup teams should go through the 5 whys whenever they encounter any kind of failure…
5 Whys is a powerful organizational technique. Some of the engineers I have trained to use it believe that you can derive all the other lean startup techniques from the 5 Whys. Coupled with working in small batches, it provides the foundation a company needs to respond quickly to problems as they appear without over-investing or over-engineering”
“The 5 Whys is important for teams – problems can have the tendency to pull people apart, the 5 Whys reverses this and actually brings teams together.”
I’m grateful that Ries has introduced me to this concept in his book. I am looking forward to working my way towards mastery. Have you ever used this technique before? Do you have success or horror stories? If so, please share.

The power of small batches

Please allow me to start this post with a recommendation…everyone* should read The Lean Startup, by Eric Ries (*NOTE: by “everyone” I am only referring to those who want to become smarter, more creative, be inspired and have your mind blown).

With the recommendation out of the way, I can now post the blog equivalent of a retweet from chapter 9 of Eric’s fabulous book.

Think of the simple exercise of stuffing envelopes. I do this every Christmas. I have 100 1) envelopes, 2) cards, 3) labels, 4) stamps.

So what’s the fastest way to complete the task of stuffing the 100 envelopes? Two choices

  1. label 100, stamp 100, stuff 100….or
  2. label 1, stamp 1, stuff 1 x 100

I’ve always pursued method #1, but after reading The Lean Startup, I now see the power of small batches (method #2).

“…in process-oriented work like this, individual performance is not nearly as important as the overall performance of the system.”

When working with large batches, we consistently underestimate the time required to switch tasks. We don’t consider the time required to sort and stack the piles of incomplete envelopes.

Another huge benefit of small batches is the ability to spot problems and course correct (pivot). Thinking about the envelope example, what if the envelopes had been the wrong size? We would have wasted the time of labeling and stamping. If we worked in small batches, we would have spotted the issue almost immediately and been able to save time.

The efficiency of scale disappears with large batches because, as Ries explains, it is more difficult to deal with the size and complexity associated with  large batches. (seems simple when put that way)

You have made it this far into the post and you’re thinking, “what does letter stuffing have to do with me?” Let’s translate the letter task into a more generic job function…

You create marketing pieces for someone (let’s call him Jay) to review. You need to create pieces for five different products. You have two choices in front of you.

  1. Create all five pieces —> send to Jay —> begin next task
  2. Create 1 pieces —> have Jay review (repeat 5 times) —> begin next task

Most workplaces tend to be set up in silos, reinforcing path 1 as the “best practice.” Path 1  “promotes skill building, makes it easier to hold individual contributors accountable, and most important, allows experts to work without interruption. Unfortunately, reality seldom works out that way.”

Why is this? Think about the time involved in switching tasks while dealing with the batch – this takes time. Think about the potential that all five pieces have a common defect – this would drain time. Think about the likelihood for Jay to interrupt you after you have “completed” the task. Jay will have questions – this takes time. It may be counter-intuitive, but path 2 (small batches) will be faster.

Small batches and startups

What do small batches have to do with startups? The better question is what do small batches have to do with “lean”?

The lean startup borrows ideas from the lean manufacturing movement, where the objective is to eliminated wasted production. Working with small batches allow a startup to test a hypothesis more quickly. (note: I almost typed, “small batches allow a startup to ‘go to market’ more quickly, but as Ries shows us, the goal of a product launch in the eyes of a startup is to test a hypothesis – another post is coming on “gettting credit for learning.”)

Including unnecessary features, testing more than one hypothesis, developing a detailed business plan are all examples of large batch waste.

Small batch bourbon

Anyone who has had great Kentucky bourbon will not be surprised by the title of the blog post. Small batch bourbon is superior to large batches. In fact, single barrel is the best of “small batch.”

Are you struggling with issues associated with large batches? Can you make a change to process that would allow you to work with smaller batches? The next time a colleague proposes a “divide and conquer” approach, tell him or her about envelope example and try your hand working with a small batch.