The entrepreneur as scientist
‘Lean’ practitioners strive to avoid this sort of failure by gathering constant customer feedback:
“every product, every feature, every marketing campaign is understood to be an experiment designed to achieve validated learning”
The entrepreneur is like a scientist whose theories give rise to predictions that can be tested and (more importantly) refuted in the light of solid evidence. Market leadership comes when you can test, adjust, and iterate quickly enough to get the right “product- market fit” before the competition.
The entrepreneur as sprinter
One alternative to ‘lean’ is what Ries terms the ‘Just Do It’ school of thought, which is primarily for startups that are trying to respond to a current, well-known market need.
The UK’s Carbon Reduction Commitment legislation required businesses of a certain size to declare their carbon footprint on an annual basis, so startups sprung up providing services and software to help them do it. ‘Just Do It’ entrepreneurs would argue that if the need is evident then you should get on and build your product as quickly as possible, because the winner will be the one who is first to market.
But I would agree with Ries that where there’s any uncertainty there’s still value in using lean principles to test your target sector, your business model, your price point, and so on.
The entrepreneur as pilgrim
However, there is another category of startups that are making a bet on an emerging, currently unperceived need. They are betting on creating a radical paradigm shift. They believe in a promised land.
Twitter was one of those startups. Color might be another. These were started by entrepreneurs who believed in a vision of how the market would act if their product became sufficiently developed.
Plenty of potential users looked at early versions of Twitter and professed to ‘not getting it’: “why would
I want to limit my blog posts to 140 characters?” Similarly, Howard Schultz of Starbucks used to say, “if I went to a group of consumers and asked them if I should sell a $4 cup of coffee, what would they have told me?” and Henry Ford allegedly once said, “if I had asked people what they wanted, they would have said faster horses.”
So if customers can’t be trusted to know what they want, what hope is there for building a company on ‘lean principles’ through experimentation and constant customer feedback?
The entrepreneur as psychic
Proponents of ‘lean’ would say that having a vision – as Ries calls it, a “true north” – doesn’t stop you testing user behaviour in small batches. Twitter’s use amongst friends and family in its early days was said to be wildly addictive. Supposedly if Schultz and Ford had found their ideal, early-adopter customers then they would have seen similarly positive behaviour.
But I’d argue that no user experience within a small, like-minded group of Twitter fans can prove much about the likelihood of it becoming a global communication and publishing standard.
The entrepreneur as gambler
It’s the entrepreneurs who make the long-term bets successfully that generate the greatest returns - not those responding to existing market needs. Conversely it’s the companies that make the wrong bets that fail the quickest.
I really like the ideas behind ‘lean’ but I don’t think it is the only viable set of principles for startups. If you’re trying to create a truly transformational, ‘visionary’ startup then you should allow yourself to press ahead in the early days, as long as you do so in the knowledge that this approach has a higher risk of failure as well as a higher potential return.
If your assumptions prove to be incorrect then you’ll fail spectacularly. If not then you’ll be on the front page of Forbes magazine.
Paul has been advising entrepreneurs on growth strategies since 2005 as part of Rapid Innovation Group. He previously worked in technology and marketing roles at eBay, UBS, Barclays, and IBM.
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