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Agile and Lean Startup - Part 3

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Agile and Lean Startup - Part 3

Let's look at the ever-evolving space of lean and agile developments and provide you with a collective study that will help us understand the evolution.

· Agile Zone ·
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For those who missed the earlier parts here are the links. 

https://dzone.com/articles/agile-amp-lean-startup-part-1

https://dzone.com/articles/agile-and-lean-startup-part-2

Now we would be looking into Lean Startup Methodology in detail. “The Lean Startup Methodology” has gained immense popularity among the startups. Using the Lean Startup approach, companies can avoid chaos and conduct experiments to test a vision. 

The Lean Startup

Summary  

As per Eric Ries “Startup is a human institution designed to create a new product or service under conditions of extreme uncertainty" (Eric Ries 2012). Such an institution could exist in a typical startup, which is run in a garage or also within an enterprise dealing with extreme uncertainties. In such uncertain situations, by applying Lean thinking, the author identifies that a lot of waste happening in product development could be mapped to things that are built which are not wanted by Customers. Also, many startups assume that a concept of startup should be built using a just do it approach and should not have any processes or elaborate management. As against this conventional wisdom, the author proposes a principled methodology towards creating and managing startups, eliminating waste and redefining management principles as necessary for startups. I will be highlighting a few important concepts around the Lean Startup.

Validated Learning  

Many startups operate on a leap of faith approach, trusting the vision of the founders. Eric proposes that a startup should be built not based on instincts, but based on valid metrics, based on real customer engagement, around the assumptions, which are treated as hypotheses, which he calls as Validated Learnings. In manufacturing industries, progress is measured by the unit of products made and the satisfaction of customers. For a Startup, the whole question is to figure who exactly the Customer is and what exactly he wants, whether he is ready to pay for the product or the business model around revenue generation, A startup should focus its effort on finding answers for these questions which are collectively treated as validated learnings. Everything that a startup does should be treated as an experiment focused on building the right thing based on the startup’s vision. In a normal operation a product manager tells what he wants, and the engineering team builds whatever that is proposed by the product manager. As against this the Validated Learning approach attempts to find answers for the following questions. 

  • Does the stated problem really exist for Customers?
  • Are the Customers willing to buy or use a solution?
  • Are they ready to use the solution we provide?
  • Can we build the solution to solve the Customer Problem?

The goal isn’t just delivering features but rather identifying customers and learning whether we are solving real customer problems.

Build Measure Learn

Build measure Learn is one of the central principles of Lean Startup. The approach is used both for finding and continuously making the product or service effective in the most cost effective and timely manner. 


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Figure 3 Build Measure Learn Loop

(E. Ries 2012)

Though the idea sounds simple it is transformational as it constantly attempts to validate that what is being built is what customers want. Real Customers are exposed to the increments and their reactions are measured allowing us to perform validated learning,

Plan

  • Though the model may be called Build-Measure and Learn, the process starts with the planning stage where we attempt to define what we want to learn by developing a hypothesis which defines the idea that should be tested and the expected reaction. The riskiest elements  of a startup like value hypothesis and growth hypothesis are tested first.
  • Once a clear hypothesis is defined the next step is deciding around what to measure to test the  hypothesis and how we collect the needed data.

Minimum Viable Product  

The minimum viable product is an approach of doing experiments with minimal efforts and infer validated learnings about customers. The term product could be misleading as on occasions it’s not even building a product but minimal efforts that’s focused on testing the vision. The goal is to test fundamental business hypotheses.

Build  

The build face focuses on building an MVP that allows to test the hypothesis. The focus is on just enough efforts which result in a product, a presentation or a video or anything that could attract the interest of the early adopters and gather feedback.

Measure 

The measure phase focuses on launching the actual project to the hands of customers and gathering real feedback around the metrics just were defined to verify the hypothesis as a part of the planning phase. All of the data is objectively assessed to come up with facts.

Learn  

The learn phase is when the analyzed data is used to make strong business decisions. 

  •  Preserve  The data proves  that the originally defined hypothesis is valid, and we should continue improving the product by refining the original idea.
  •  Pivot .   The experiment has invalidated the idea and we have gained invaluable feedback around what is not working with minimal effort. We have the opportunity to correct course and repeat the experiments or even abandon the idea.

In very early cycles the Build Measure Learn provides enough feedback which allows to make preservation or pivot decisions allowing startups to have a longer runway to try out many different ideas before they run out of money as opposed to the old model of building an entire product and realizing that customers don’t want the product.

Innovation Accounting  

Innovative accounting is defined as an approach by Ries towards evaluating progress when the normal metrics used by established organizations like revenue, customers, ROI, market share are not available. 

  • Level 1 Customer focused dashboards: Focus only on items to validate the business opportunity by measuring customer input by creating business dashboards which are actionable and measurable.
  • Leap of Faith Assumptions Dashboards:  Focus on fundamental assumptions around business opportunity. Mainly 
    1. Value Hypothesis Behavior that validates that customer is excited to use the  Product 
    2. Growth Hypothesis Customer Behavior that would help acquire more customers.
  • Level 3: Net Present Value Dashboards: Focus on specific metrics that are long term business drivers.

Using the Lean Startup method, organizations when it comes to product development, could stop wasting time and effort and rather test their hypotheses in the real world with validated learning, ultimately helping them reap success.

Lean Startup Versus Agile

Lean Startup Methodology and Agile are not at odds with each other. In fact, Agile methods like Kanban or Scrum could be used in conjunction during product development. I would be comparing what the core Agile Principles are and how Lean Methodology maps against them. 

Table 3 Agile Versus Lean

Agile Principles

Lean Startup

Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.


 


Validated Learning by forming an experimentation mindset and building an MVP for verifying hypotheses would allow us to build with confidence.


Businesspeople and developers must work together daily throughout the project.


The Product, Marketing, Engineering should all work together in forming and interpreting the Build Measure learn Loop.


Build projects around motivated individuals. Give them the environment and support they need and trust them to get the job done.


Advocates teams even within enterprise to have high-level of autonomy and giving them a sandbox to conduct the experiments. 


 


The most efficient and effective method of conveying information to and within a development team is face-to-face conversation.


There isn’t any specific stress on face to face conversation as teams nowadays are geographically spread.


Working software is the primary measure of progress.


Working Software alone is not the measure of success. Learning what the Customer wants is important.


Agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a constant pace indefinitely.


The startups work on validating as many learnings as quickly as possible and the entire team attempts to work together. 


Continuous attention to technical excellence and good design enhances agility


Approach focuses on what is minimally needed to verify the hypothesis to build the MVP. It is important to have an experimental mindset to decide whether we want the feature that is being built and verifying it with minimal efforts and later based on preserving decisions, and then perfecting.


Simplicity--the art of maximizing the amount of work not done--is essential.


Learn Startup also advocates the same. The difference is not just from a technical standpoint but also from a business point of view to constantly inspect what is being built is what the Customer wants.


The best architectures, requirements, and designs emerge from self-organizing teams.


The focus isn’t just on the architecture or design alone. The entire team works together to identify and build what the customers want.


At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly.


The teams constantly validate the hypothesis and make a pivot or preserve decision. What is to be next build is adjusted based on the learnings. 



References:

Topics:
agiile, lean startup, software development

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