Category Archives: Current in Entrepreneurship

To Drive Innovation, We Need To Hire For Diversity And Empathy

One of the questions I get asked quite often, both at conferences and when coaching executives, is what type of personality is best suited for innovation so that they can optimize their hiring. Are technical people better than non-technical people? Introverts better than extroverts? Is it better to hire foxes or hedgehogs?

The first thing I tell them is that there has been no definitive research that has found that any specific personality type contributes to innovation. In fact, in my research I have found that there is not even a particular kind of company. If you look at IBM, Google and Amazon, for example, you’ll find that they innovate very differently.

The second thing I point out is that every business needs something different. For example, Steve Jobs once noted that since Apple had always built integrated products, it never learned how to partner as effectively as Microsoft and he wished it would have. So the best approach to hiring for innovation is to seek out those who can best add to the culture you already have.

Foxes vs. Hedgehogs

In Good to Great, author Jim Collins invokes Isaiah Berlin’s famous essay about foxes and hedgehogs to make a point about management. “The fox,” Berlin wrote, “knows many things, but the hedgehog knows one big thing.” Collins then devotes an entire chapter to explaining why hedgehogs perform better than foxes.

Yet as Phil Rosenzweig points out in The Halo Effect, this is a highly questionable conclusion. Even if it were true that the most successful companies focus on one core skill or one core business, that doesn’t mean that focusing on “one big thing” will make you more successful. What it probably means is that by betting on just one thing you increase your chances of both success and failure.

Think about what would have happened it Apple had said, “we’re going to focus just on computers” or if Amazon had focused on just books. There is also evidence, most notably from Philip Tetlock, that foxes outperform hedgehogs on certain tasks, like making judgments about future events.

So the best strategy would probably be to hire a fox if you’re a hedgehog and to hire a hedgehog if you’re a fox. In other words, If you like to drill down and focus on just one thing, make sure you have people around that can help you integrate with other skills and perspectives. If you like to dabble around, make sure you have people who can drill down.

Introverts vs Extroverts

We tend to see leaders as brash and outgoing, but my colleague at Inc, Jessica Stillman points out that introverts can also make great leaders. They tend to be better listeners, are often more focused and are better prepared than social butterflies are. Those are great qualities to look for when adding someone to add to your team.

Still, you wouldn’t want to have an entire company made up of introverts and, in SocialPhysics, MIT’s Sandy Pentland explains why. Perhaps more than anything else, innovation needs combination. So it’s important to have people who can help you connect to other teams, both internally and externally, bring in new ideas and help take you in new directions.

Consider Amazon, a company that is not only incredibly successful but also highly technically sophisticated. You might expect that it hires a lot of introverted engineers and I’m sure that’s true. Yet the skill it is most focused on is writing, because it understands that to create a successful product, you need to get a lot of diverse people to work together effectively.

So much like with foxes and hedgehogs, if you’re an introvert you should make sure that you have extroverts that can help you connect and if you are an extrovert, make sure you have people who can focus and listen.

Technical vs. Non-Technical People

By all accounts, Steve Jobs was never more than a mediocre engineer, but was clearly a legendary marketer. Nevertheless, he felt strongly that technical people should be in charge. As he once told his biographer, Walter Isaacson, in an interview:

 

“I have my own theory about why the decline happens at companies like IBM or Microsoft. The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The product starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company.”

 

Yet the story is not nearly as clear cut as Jobs makes it out to be. When IBM hit hard times it was Lou Gerstner, who spent his formative professional years as a management consultant, that turned it around. Steve Ballmer clearly made missteps as CEO of Microsoft, particularly in mobile, but also made the early investments in cloud technologyled to Microsoft’s comeback.

So much like with foxes vs. hedgehogs and introverts vs. extroverts, the choice between technical and non-technical people is a false one. Far more important is how you build a culture in which people of varied skills and perspective can work closely together with a shared sense of purpose.

Today, as we enter a new era of innovation, organizations will need a far more diverse set of skills than ever before and building a collaborative culture will be key to success.

Collaboration Is The New Competitive Advantage

Over the past few decades, the digital revolution has shaped much of our thinking about how we advance a business. Digital technology required a relatively narrow set of skills, so hiring people adept at those skills was a high priority. Yet now, the digital era is endingand we need to rethink old assumptions.

Over the next decade, new computing architectures like quantum and neuromorphiccomputing will rise to the fore. Other fields, such as genomics and materials science are entering transformative phases. Rather than living in a virtual world, we’ll be using bits to drive atoms in the physical world.

That will change how we need to innovate. As Angel Diaz of IBM told me a few years back, “…we need more than just clever code. We need computer scientists working with cancer scientists, with climate scientists and with experts in many other fields to tackle grand challenges and make large impacts on the world.”

That’s why today collaboration is becoming a real competitive advantage and we need to focus far less on specific skills and “types” and far more on getting people with diverse skills, backgrounds and perspectives to work together effectively.

2019 MARCH 20 by Greg Satell in Digital Tonto

Have a startup idea? Here are the first things you should do

People say that ideas are a dime a dozen, but many entrepreneurs–even experienced ones–struggle to come up with promising product ideas. The fact that you have an idea that excites you is a great milestone, and even though the startup journey is long and arduous, you at least have got a ticket to the show now. However, starting to build your product at the outset can be extremely risky (unless you are working on a breakthrough platform technology such as blockchain or quantum computing).

There is still a lot that you need to learn to refine your idea. The second most common reason for startups failing is that they run out of money, so one of the most critical things that you can do is be ruthlessly efficient. Turning your idea into a functional product is likely going to be the biggest resource drain in the very early stages of your company, so you absolutely can’t waste your resources building something that is not needed or wrong. Even if you are doing the engineering yourself, you don’t have infinite energy and time to sacrifice, and you too need to prevent wasting your efforts technical debt that you can easily avoid. So what exactly should you be doing?

Know thy competition

Learn everything there is to know about competing solutions. Far too often, aspiring entrepreneurs come to me thinking that they have an idea for a product that does not yet exist–an erroneous notion that is easily dispelled by a few minutes of Googling. Do not fool yourself into thinking that your idea is so unique that you don’t have competitors.

For your startup to succeed, your product needs to help customers accomplish their tasks much more effectively and easily than other solutions can. You need to know, in great detail, how other solutions succeed or fail because this knowledge will allow you to efficiently create something that is significantly better than status quo. It ought to be easy for most startups to come up with at least ten competing solutions and list ten things that they do well and another ten things that they do poorly.

Know thy customer

Your idea is going to help people do something better or more enjoyably than anything else that is available to them. However, success is in the details. Facebook certainly wasn’t the first social network, Slack wasn’t the first business communications app, and Apple didn’t create the first smartphone. It’s the little things that end up being decisive differentiators of your product, and the only way to get those right is to know your customers’ needs, preferences, and challenges in exacting detail.

The most effective way to gain superior customer insight is through dialog with individuals rather than via impersonal surveys. Ideally, you should sit down with those that are likely to be your customers and probe about their task, challenges, wants, and needs. Also, few things are as informative as watching your target customers use competing products and providing their feedback on the experience. Learning from your customers in person has the significant advantage that you can see their emotional response to questions and as they describe using available solutions.

It is sometimes exceedingly difficult to meet with your target customers in person, but rather than turning to a structured survey, you should still seek to talk with them to give yourself the flexibility to dive deeper into certain themes that might be of particular relevance to your innovation. Video conference and even a traditional phone call provide a channel for engaging discussion and incisive exploration. It may take a great deal of effort to overcome your aversion to a phone call, but I can almost guarantee that you’ll learn a lot more through a conversation than with the aid of a static survey.

It may seem backwards to start with learning about your competition rather than your customer, but I’m assuming that you already have basic knowledge about the people for whom you are developing your product. Plus, I have found it to be more efficient to research your customer after you have gained a deep understanding about competing products because it’s usually much easier to do some virtual intelligence gathering than get busy people to talk to you about their needs. However, it’s certainly possible to first do a deep-dive on the customer and then investigate your competition. Doing things in this order simply means that you might have to have a second dialog to ask specific questions about competing solutions.

Refine your idea

As you learn more about your customers and how competing solutions meet and fail to meet their needs, you should be continuously refining your idea and how you promote it. Pitch your idea to your customers and listen to their feedback, which you can use to improve your innovation even if it is theoretical at this point. Plus, you can get meaningful reactions to your idea without even presenting a prototype.

At the most basic level, you can describe how your product will be different from other options to get high-level feedback on the concept itself. Perhaps you’ll find that you are focusing on the wrong features. Delving deeper, you can present product designs, which articulate the specific implementation of your innovation. Designs will help folks more accurately visualize your product and will allow them to provide feedback on the user experience, form factor and anticipated implementation.

Each round of feedback that you get will allow you to fine-tune your product in the design stage, so you are not wasting valuable time and resources in the engineering phase. Remember that the second most likely reason why you will fail is that you’ll run out of money, so efficiency is paramount at the earliest stages of your startup journey.

Validate your product’s potential

After you have gone through a number of iterations and feel pretty good about both your solution design and how to pitch your product to others, it makes sense to ensure that customers will want to buy it or users will use it. There are a handful of clever tactics ensuring that you don’t necessarily need a functioning product to gauge market potential. Here are some of my favorite validation hacks:

  • List your product on an aggregator site such as Product Hunt;
  • Pitch your idea on a social network (preferably a topical group) such as Reddit, Hacker News, Facebook, or LinkedIn;
  • Make a pre-order page and drive customers to it;
  • Sell your product as a service.

Even better than getting a reading on your product’s market potential is getting multiple data points or input on variations of your product. Let me explain. First, you can implement all four tactics and assess the resulting data as a whole so you don’t get false negatives. Perhaps one channel will be much more effective at reaching your target customer than the others. Second, you can pitch different versions of your product and see which one generates the greatest interest. Perhaps you can vary which features you highlight or swap our product designs. The more you can figure out before spending a lot of engineering resources the better.

Key caveat

As I alluded to at the beginning of this article, the above advice is much more suited for a product that packages existing platform technologies in a novel product design rather than for fundamental platform technologies such as blockchain, machine learning, and 3D printing as well as performance-enhancing innovations such as edge computing. As one of my favorite innovation authors, Luis Perez-Breva, notes, the specific applications for such technologies may be both manifold and not immediately apparent requiring you to build a product with less competitor and customer research.

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Small Business Success Story.

While stationed in Bahrain with the Navy, married couple and business partners, Lisa and Justin Bey, often found themselves serving healthy and vegan food to their community. They turned to SBA’s resource partner network for guidance in turning their labor of love into a juice bar business.

While stationed in Bahrain with the Navy, married couple and business partners, Lisa and Justin Bey, often found themselves serving healthy and vegan food to their community. They turned to SBA’s resource partner network for guidance in turning their labor of love into a juice bar business. They received business counseling from the Veterans Business Outreach Center (VBOC) in Norfolk, Virginia and their local branch of @score_mentors. With the help of the VBOC, the couple completed extensive market research and identified a small vacant storefront in a plaza near both a nutritional supplements store and an exercise studio. The Beys were also able to secure an SBA Express loan and a 7(a) loan to purchase furniture, fixtures and equipment. @alkaliciousjuice opened its doors in 2016, supplying the Chesapeake area with healthy smoothies, bowls and alkaline water. Alkalicious has become a fixture in their community, now serving markets from young military moms and millennials to health conscious 45-65 year olds.

 

The Future of Work: The Impact of Disruptive Technologies on Jobs and Skills

Marla is a fifty-eight-year-old native of Oakland, California, with three children and two grandchildren. Marla started her career as a secretary on a typewriter, processing letters, notes, and invoices. As computers made their way into mainstream society, she progressed to a clunky desktop, eventually a laptop, and now works for an artificial intelligence startup and finds her tablet indispensable. With retirement in view and more time to spend with her grandchildren, Marla keeps puzzling the future of her grandchildren: what is the future of work for them?

In 2018, 10-15 disruptive technologies sit on the horizon to usher in “Industry 4.0” or the fourth industrial revolution. As with those in previous centuries, it’s hard to imagine the future in a concrete sense: cities and towns, jobs, school, transport. It’s hard to imagine because there are so many disruptive technologies that individually and collectively will change the economy, society, jobs, and the workplace.

Disruptive Technologies

Renowned Harvard Business School professor Clayton Christensen first wrote about disruptive technology and innovation in the 90s describing it as when one technology displaces an established technology and changes the nature or structure of an industry. Disruptive technologies tend to be new and aren’t incremental improvements on existing technologies. Fordham University professor, Milan Zeleny, went a step further to say that disruptive technologies must change the structure and organization, the architecture, of that which supports existing technology.

In short, disruptive technologies force companies to alter how they do business lest they become obsolete, sometimes quite quickly. Today, disruptive technologies include:

  • Autonomous vehicles — cars, drones, trucks
  • The Internet of Things
  • 3D printing
  • Renewable energy, energy storage
  • Advanced robotics with senses, dexterity, intelligence
  • Blockchain (and as of recently, hashgraph)
  • High-speed travel
  • Artificial intelligence and machine learning
  • Advanced materials
  • Gene editing
  • Spatial computing — augmented reality, virtual reality

What Does Tomorrow Look Like?

Most of us have heard of these technologies, but would struggle to have a discussion on what the implementation and implications of each technology looks like, let alone in combination. Partly the challenge is comprehending the impending changes and creating or analyzing the new relationships between humans, technology, society, business, and government.

Take for example 3D printing: imagine not going to a shop or ordering off Amazon. People will print most of their needs: houses, clothes, wood, utensils, cars, even Nutella. One city is printing a metal bridge. The future is so bright for 3D printing that printers could make organs, eyes, ears, or bones. As a result, humans could live healthier, longer, and the relationship of consumer to retail and producer may cut out most retail shops and change what cities and towns look like.

To go a step further with health, gene editing will help to eliminate diseases before birth or during early childhood. Gene editing will make crops heartier and more productive. Does this mean the end of cancer, epidemics, and world hunger? Will we even need robots to perform surgery? (Yes – humans are still human and accidents, falls, and emergencies will still happen.)

The agricultural industry has already experienced significant change, but imagine autonomous tractors, smart robots, and connected land and water surveillance: humans won’t need to pick fruits and vegetables, spray crops, or survey their fields by plane or helicopter.

Farmers and consumers will likely be less concerned about the potential pollution of their crops due to the increase in renewable energy use. Advances in renewable energy technology and changes in consumer preferences will eliminate fossil fuel use, gas-powered cars, and thus gas stations. Soon enough, electricity will be free.

If electricity is free, the internet is everywhere, and machines and devices have sensors, infrastructures and machines will be “smart,” the factory and city of the future will look quite different than what we know today. Warehouses and factories will be 99% machines with the occasional human. Machines will predict wear and tear and move to preventative maintenance: no more broken trains, buses, water pipes, etc. Groceries will be delivered and robots will have packed and shipped everything; the likes of Safeway and strip malls will be things of the past. Deliveries will be done by drones and USPS may not have the traditional mailman anymore. High-speed travel will make travelling from one city to another faster and easier: no more short-distance flights, airport hassle, or long road trips.

Impact on Jobs and Skills

Clearly, the world will be quite different. The city Marla grew up in won’t be the same city that her grandchildren grow up in, though they remain in Oakland. Hundreds have studied and tried to quantify disruptive technologies’ impact on jobs and the future of work: the breadth, depth, and scale of impact, which jobs will disappear and which will remain, how will the skillsets demanded change, etc. Overall, predictable physical work with repeated tasks, will be automated. Office support and administrative duties will be automated. Construction will likely need far fewer builders because machines will build. Jobs with customer interaction will shift, such as hotel and travel workers, food-service workers, retail workers, etc.

McKinsey predicts that in 60% of occupations, at least one-third of job duties could be automated. The World Economic Forum predicts an increase in freelance work to more than half the workforce. The OECD predicts that those in their teens will be the most at-risk for being put out of work by automation.

In 2018, we face a significant number of disruptive technologies that will, in accordance with their nature, disrupt life and the economy as we know it. Jobs will be automated out and will change in nature, but equally new jobs will be created that don’t yet exist today. Workers will need to be flexible, collaborate, be capable of digital navigation, handle high complexity, respond to a high number of requests or demands for attention and response, manage/filter signals and noise, and align themselves with work through skills-based not knowledge-based economies. Undoubtedly, there will be an increase in IT-related jobs, however they’re more likely to be in combination with other roles and industries as the lines blur, IoT pushes us to connect everything, thus technology and humans become ever closer.

UC Berkeley Innovation and Entrepreneurship newsletter from Dr. Christine Gulbranson.

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From rocky start to $6.5B acquisition — How MuleSoft’s CEO turned it around

MuleSoft is recognized as one the largest enterprise acquisitions in history — the integration platform was acquired by Salesforce in 2018 for $6.5 billion. It’s hard to believe, but this stellar company actually came from tough beginnings. According to CEO Greg Schott, when he joined in 2009, the company was a bit of a “fixer upper.” MuleSoft had just laid off nearly half of its staff, leaving just 20 people in the company. “We had about $1.5M in revenue and we were selling Mule as an open-source enterprise service bus (ESB) with an enterprise edition,” Greg describes. “It had the beginnings of a strong management team and a little bit of money in the bank that was going to last us about a year and a half.”

So how exactly did an open-source tool called Mule (which btw, took the “donkey work” out of integration) become the MuleSoft it is today — all 6.5B dollars of it? I chatted with my good friend Greg about the company’s unlikely comeback at our 1to100 conference. He was quick to point out that the integration space was one of those massive market opportunities available for the taking — “nobody had really figured out how to crack the nut on it.” He also identified three key drivers of MuleSoft’s rise: a product pivot, bigger enterprise deals, and forward-looking team construction.

Product pivot — Build towards an ambitious thesis

To give a sense for the magnitude of the challenge, Greg says that there was “$700 billion in [integration] pain that we could address… it was the biggest unsolved IT problem of all time.” MuleSoft’s original vision was to solve integration issues with a flexible platform approach that eliminated the need to build specific software for every connectivity problem.

MuleSoft’s starting principles were generally headed in the right direction, but they hadn’t successfully hit significant market traction. When Greg joined MuleSoft in 2009, it was still unclear how MuleSoft was going to address the challenge; the company was “pivoting around quite a bit at the beginning.” At that point it was all about survival — “keeping the lights on” with the original product, while MuleSoft identified a new direction to take.

MuleSoft’s bold product pivot was informed by some key factors. Greg and his team were able to successfully 1) identify an impending market shift (the massive move of software to the cloud) 2) construct a thesis in anticipation (APIs would become the dominant integration protocol) and 3) build a product ahead of the inflection point (the massive growth of SaaS tools)

MuleSoft presciently built out a paid cloud platform known as AnyPoint and continued to accrue connectors to more and more SaaS integrations. “We got religion around APIs” says Greg. “That’s when things started really clicking — as SaaS got massive and as APIs became kind of a protocol. We just skated to where the puck was going on all of that.”

Bigger enterprise deals — Move up-title, not up-market

To grow their revenue, MuleSoft didn’t actually change their target customer set. In contrast to the usual up-market ambitions of enterprise companies, MuleSoft’s primary challenge wasn’t chasing bigger customers. “We were always selling to the big enterprises,” says Greg. “J.P. Morgan was one of our first customers.” But the enterprise engagements MuleSoft had been getting were small, tactical sales.

In order to grow its ASP, MuleSoft needed to change what and how they sold. First, they made their new subscription platform “something that was bulletproof” that enterprise companies could bet mission-critical operations on. But getting increasingly bigger deals required up-leveling more than just platform functionality. MuleSoft had to fundamentally upgrade how it sold its value proposition — from selling solid integration capabilities to getting buy-in from senior execs on a transformative vision of connecting the enterprise. “To be able to actually sell to the CIO and talk about transforming the clock speed of their businesses,” says Greg, “that took years of us getting the motion and the muscle to be able to do that.” The hard work paid off. Says Greg, “When I first joined, we were selling $10 to $30,000 deals and now we have many customers that are north of $5 million annual subscription revenue.”

Team Construction — Hire for the future (at least six months out)

A big part of MuleSoft’s success was the company’s ability to recruit great talent. As a CEO, Greg naturally gravitates towards building a company around people and culture — this included a close handling of hiring at MuleSoft. “I dug in there and that was my thing,” he says looking back. Greg’s focus on culture and hiring paid off, although Greg admits he wished he’d hired a talent lead even sooner to keep himself more broadly focused.

The first important feature of Greg’s hiring strategy was finding new, hungry talent: “I’m a big fan of hiring the up and comers…top caliber candidates who are on their way to greatness” he says. “Because I found that a lot of times, you hire people that have already been there, maybe they don’t have the fire in the belly anymore. Maybe they’ve got a set way of doing things and they’re not willing to change.”

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Don’t Be So Quick to Go with Your Gut

Nobel Prize-winning psychologist Daniel Kahneman — along with Amos Tversky, his longtime collaborator who died in 1996 — changed the way the world thinks about economics, upending the notion that human beings are rational decision-makers. Along the way, his discipline-crossing influence has altered the way physicians make medical decisions, political scientists think through foreign policy and investors evaluate risk on Wall Street. It’s fair to say he’s changed the way many think about thinking itself.

Now, in a new article written with two co-authors, Kahneman could help influence the way senior executives approach decision-making. In a paper published Monday by the MIT Sloan Management Review, Kahneman and professors Dan Lovallo and Olivier Sibony outline a process for making big strategic decisions — things like whether to make an acquisition, launch a new category of products or invest in a start-up.

Their suggested approach, labeled with the wonky name “Mediating Assessments Protocol,” or MAP, has a simple goal: To put off gut-based decision-making until a choice can be informed by a number of separate factors.

“One of the essential purposes of MAP is basically to delay intuition,” Kahenman said in a recent interview with The Post and his co-author Sibony. The structured process calls for analyzing a decision based on six to seven previously chosen attributes, discussing each of them separately and assigning them a relative percentile score, and finally, using those scores to make a holistic judgment.

Kahneman said that while it may be common for teams of executives to make briefing books that are divided into topics or chapters for big decisions like an acquisition, it’s not as common to have a decision divided into subcomponents and each one evaluated independently.

“That, I think, is a departure from the way most important decisions are made, and that’s the unique element in MAP,” he said.

He compares it to thinking of big strategic decisions like job candidates.

“When you’re making an important decision, any option is like a candidate,” he said. “You should think of what are the essential dimensions that would make a difference between a good option and an option that should be rejected, and you should look at those dimensions one at a time.”

In addition to being a more disciplined approach to big strategic decisions, it may also help limit dreaded groupthink.

“By breaking up the process and making it fact-based, we’re doing as much as we can to inhibit groupthink,” Kahneman said. “Groupthink is as about the conclusion, [and with MAP] you’re trying not to get to the conclusion too early.”

Sibony, a former leader of McKinsey & Co.’s corporate strategy practice and now an affiliate professor at HEC Paris, said that while many companies have detailed processes in place for making lower-level decisions, ones made at the higher level can be subject to more gut-based instincts.

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Advantages Older Adults Bring to Entrepreneurship

Would-be entrepreneurs of all ages come to me for advice about whether they should start a business and what it takes to succeed. They range from the students in my entrepreneurship classes at Princeton, through men and women at midlife looking for a change, to soon-to-be retirees who aren’t yet ready for nonstop golf. They make for quite a study in contrasts: the young brimming with self-confidence, energy and sometimes naiveté; the older adults projecting experience, prudence, and sometimes self-doubt about their ability to keep up with the twenty-somethings they read about in the business press.

The young often need a strong dose of realism: The Silicon Valley model of explosive growth fueled by venture capital applies to less than 1% of entrepreneurs; brilliant ideas count for less than the ability to make customers happy enough to part with their money, and a willingness to take big risks often leads to disaster.

Older would-be first-timers need a dose of realism, too, but of a different kind. They are less likely to be mistaken about external factors like financing, customer expectations and risk-taking than they are about themselves—failing to see the many advantages they bring to entrepreneurship. If you’re an older adult contemplating entrepreneurship, take heart. You likely enjoy some or all of the following advantages:

You outnumber the young.First-time entrepreneurship is by no means largely a young person’s game. According to the most recent Kauffman Index of Entrepreneurship, a series of annual reports that measures U.S. entrepreneurship across national, state and metro levels, the proportion of new entrepreneurs over 45 is about 51% versus 48% for those under 45. Moreover, the share of entrepreneurs age 55 to 64 has increased from 15% of new entrepreneurs in 1996 to 26% in 2016 (the latest year for which figures are available). Meanwhile, the share of new entrepreneurs age 20 to 34 has decreased from 34% in 1996 to 24% in 2016.

You know your way around money. If you have been a business executive, as many of my older advisees are (including some former CEOs), you likely understand capital structure, financing and allocation of resources. But even if your financial experience extends no farther than taking out a mortgage or managing family finances, you are ahead of many younger people.

By Contributor to Former, 3/5/2019

Design Thinking, Lean Startup and Agile: Combination Betters Result

What is the difference between Design Thinking, Lean Startup and Agile?

I often get asked what the difference is between those terms. “Is lean startup opposite of design thinking? oh no, maybe it is the same?” and “Ah ok, so you mean agile?” or “I think Agile is a better word for it”. Those are some of the comments I get whenever I talk about one of terms above.

I will hereby try to clarify what these terms relate to, and how they can be integrated with each other.

Design thinking

Design thinking is an iterative process in which we thrive to understand the user’s pain, challenge assumptions, redefine problems, in order to create new strategies and solutions.

Opposed to “Brainstorming”, Design thinking promotes “Painstorming”, in order to fully understand the user’s pain.

The usual Design thinking phases are the following:

  • Empathize with your users
  • Define your users’ needs, their problem, and your insights
  • Ideate by challenging assumptions and creating ideas for innovative solutions
  • Prototype to start creating solutions
  • Test solutions

According to Tim Brown, CEO of IDEO: “Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.”

Lean Startup

“Lean startup is a methodology for developing businesses and products, which aims to shorten product development cycles and rapidly discover if a proposed business model is viable; this is achieved by adopting a combination of business-hypothesis-driven experimentation, iterative product releases, and validated learning.” — Wikipedia

Globally, 90% of startups fail (Forbes) and the number one reason is market failure: “They make products no one wants.” (Fortune).

The lean startup methodology was born in Silicon Valley in the 90s, but the use of the word “lean” has its roots to Toyota’s lean production system. Toyota’s lean manufacturing system was used to build things efficiently, yet it doesn’t tell what should be built.

Using Eric Ries words: “The Lean Startup provides a scientific approach to creating and managing startups and get a desired product to customers’ hands faster. The Lean Startup method teaches you how to drive a startup-how to steer, when to turn, and when to persevere-and grow a business with maximum acceleration. It is a principled approach to new product development.”

Agile

Agile is a way of working, based on an iterative development, incremental delivery and ongoing reassessment of a product.

As mostly used in software development, it is based on a clear idea of the product’s concept and its market. Contrary to the idea of focusing on a set of features to be developed, agile focuses on the high value features first.

Agile is all about producing tangible, working results after each iteration. According to the 12 principles of the Agile Manifesto, “Working software is the primary measure of progress.” Deliver a rough draft, then revise based on your editor’s suggestions. Never deliver the entire piece all at once!

Design Thinking, Lean Startup and Agile can be combined as shown in the picture below.

  • Empathize, Define and Ideate through Design Thinking
  • Turn ideas into Business models following the lean startup
  • Build and deliver the product incrementally and faster through Agile processes.
Source: Gartner

Why combining?

If 90% of startups fail because they produce products nobody wants, combining those methodology drastically reduce this risk of failing.

As you probably noticed, all the three methodologies take the final user into account, through direct feedback. This feedback loop makes sure that no product is created without a purpose to the final user. This is clearly against the old way of planning on paper and then starting building a real product based on a list of pre-decided features.

One Step Further

Using the new Lean Entrepreneurship Guide, recently published 6-page, laminated chart of all 14 lean, evidenced-based entrepreneurship planning methods, startups can be better designed for surer success.  Besides design thinking and agile, pieces of different lean methods can be used for stages in the planning process.  For example Marius Ursache of the DE Toolbox suggests a lean launch pad process can be enhanced by using the lean (Ash Maurya’s Running Lean) vs. business model canvas and the customer development more thorough using DE, disciplined entrepreneurship (Bill Aulet MIT).

Tailoring a lean startup plan through combination of techniques will make the final result more successful and certain to satisfy the customer need.  To buy the lean entrepreneurship guide on Amazon, see https://www.amazon.com/Lean-Entrepreneurship-Guide-Clinton-Day/dp/1423242017.

 

USASBE Annals of Entrepreneurship Education Now Available

 

USASBE (https://www.usasbe.org) Annals of Entrepreneurship Education and Pedagogy – Volume III

The third volume of the Annals of Entrepreneurship Education and Pedagogy critically examines past practices, current thinking, and future insights into the ever-expanding world of Entrepreneurship education. Prepared under the auspices of the United States Association for Small Business and Entrepreneurship (USASBE), this compendium covers a broad range of scholarly, practical, and thoughtful perspectives on a compelling range of entrepreneurship education issues.
If you are looking for the intersection of past practices, current thinking, and future insights into the ever-expanding world of entrepreneurship education, then you will want to read and explore the third volume of the Annals of Entrepreneurship Education and Pedagogy. Prepared under the auspices of the United States Association for Small Business and Entrepreneurship (USASBE), this compendium covers a broad range of scholarly, practical, and thoughtful perspectives on a compelling range of entrepreneurship education issues.

The third volume spans topics ranging from innovative practices in facilitating entrepreneurship teaching and learning inside and outside the classroom, learning innovation, model programs, to the latest research from top programs and thoughts leaders in Entrepreneurship. Moreover, the third volume builds on those previous as it continues to investigate critical issues in designing, implementing and assessing experiential learning techniques in the field of entrepreneurship.

Edited by Charles Matthews and Eric Liguori, this updated volume provides insights and challenges in the development of entrepreneurship education for students, educators, mentors, community leaders, and more. Annals of Entrepreneurship Education and Pedagogy – 2018 is a must-have book for any entrepreneurship professor, scholar or program director dedicated to advancing entrepreneurship education in the US and around the world.

Learn more here: https://www.e-elgar.com/shop/annals-of-entrepreneurship-education-and-pedagogy-2018