Greg Satell reports in Digital Tonto:
No model is perfect and eventually anomalies show up. Initially, these are regarded as “special cases” and are worked around. As the number of special cases proliferate, the model becomes increasingly untenable and a crisis ensues. At this point, a change in assumptions has to take place if things are to move forward. That’s where the Lean Startup is heading now. Much of the value from innovation has come from iterating new applications. We’ve learned how to go fast, but in the years to come we will have to relearn how to go slow.
In 1997 Clayton Christensen published The Innovator’s Dilemma and it sparked a revolution. It seemed that all anyone could talk about was disruptive innovation. That was until Henry Chesbrough published Open Innovation in 2003 and that got hot. Then Stanford launched its d.school and design thinking was where it was at.
Yet go to an innovation conference these days and chances are that most people will be talking about “the Lean Startup.” That’s a sure sign that a good idea is about to go bad. When any process or practice descends into mindless conformity, especially an innovation practice, we should begin to be skeptical.
As I explain in my book, Mapping Innovation, there is no one “true” path to innovation. So a process that works great for some types of problems is bound to fail when applied to others. No tool or method is a panacea. That’s why although the Lean Startup model continues to offer tremendous value, we should be increasingly skeptical about it and keep our eyes open.
The Seeds Of The Lean Startup
In many ways, Steve Blank was the classic Silicon Valley success story. A veteran of eight startups, he cashed out in his mid-forties and retired to his ranch. Yet as he began to think about his career, he noticed a persistent pattern of failure. In each company, they would develop a product, launch it and then race to correct their mistakes before the money ran out.
In 2002 he began teaching an entrepreneurship course at UC Berkeley’s Haas School of Business and at Stanford. That led him to publish The Four Steps to the Epiphany, which became a cult hit. Eventually, he combined his efforts with Alex Osterwalder to create the Lean Launchpad, which changed how people thought about building businesses.
Blank’s core principle is that “no business plan survives first contact with customers.” So instead of starting with a business plan, you develop a set of business hypotheses and document them with Osterwalder’s Business Model Canvas. Instead of building a prototype, you build a set of minimum viable products to test those hypotheses. Based on what you learn, you iterate and pivot until you find a viable path to profitability.
In time, Blank began to realize that his methods could be applied beyond startup companies. In 2012, he launched I-Corps at the National Science Foundation and tripled the success rate of commercialization grants. Hacking 4 Defense applies the Lean Launchpad to the solve problems at large government agencies and he recently has turned his sights onto large organizations.
It’s easy to look at Blank’s track record of success and begin to think that there is nothing that lean startup methods cannot do. That’s where the trouble always starts.
Eric Ries, The Startup Way And The Downfall Of General Electric
One of the students in Blank’s class was a young entrepreneur named Eric Ries. A veteran of two failed startups, Ries was determined to make his new venture, IMVU, a success. Using Blank’s methods, he was able to transform the fledgling company into a going concern and left in 2008 to work on new projects.
It was then that Ries hit on his real talent — popularizing ideas. He started writing about what he learned as an entrepreneur in his blog and eventually published a book, The Lean Startup, in 2011. It was an immediate bestseller and Ries soon became an icon. Travelling and speaking widely he transformed the Lean Startup into a full-fledged movement.
In 2012, General Electric CEO Jeffrey Immelt came calling. He wanted to indoctrinate his organization with the kind of entrepreneurial energy that Ries wrote about in his book. That led to the FastWorks program at GE, which used Ries’s methods to dramatically reduce development time, while improving product quality and market fit.
Today, GE has fallen on hard times. There have been massive losses, layoffs and Immelt has been pushed out as CEO. The firm was recently removed as Dow component after more than 100 years. The problem was that while GE greatly accelerated getting its gas turbines to market, with the rise in renewable energy, its customers were no longer buying gas turbines.
The truth is that GE has become a square-peg business in a round-hole world. Eric Ries helped it get better and better at doing things its customers cared less and less about. The Lean Startup wasn’t the reason it failed, it was just completely beside the point.
Anatomy Of A Paradigm Shift
The term paradigm shift has become so common that we scarcely stop to think about where it came from. When Thomas Kuhn first introduced the concept in his classic The Structure of Scientific Revolutions, he described not just an event, but a process that he noticed had pervaded the history of science.
It starts with an established model, the kind we learn in school or during initial training for a career. Models become established because they are effective and the more proficient we become at applying a good model, the better we perform. We then rise through the ranks and become successful.
Yet no model is perfect and eventually anomalies show up. Initially, these are regarded as “special cases” and are worked around. However, as the number of special cases proliferate, the model becomes increasingly untenable and a crisis ensues. At this point, a fundamental change in assumptions has to take place if things are to move forward.
That’s where the Lean Startup is heading now. Anomalies are beginning to show up and they are easy to dismiss. Clearly there were a lot more things going on at GE than the FastWorks program. Management made some bad decisions. But the number of instances in which the Lean Startup model fails will accumulate until they cannot be ignored any longer.
We Need To Start Thinking About A New Era Of Innovation
Over the past few decades, innovation has become nearly synonymous with digital technology. We’ve come to understand the underlying technology so well that new generations of chips have doubled the power of our technology with almost metronomic regularity. Not surprisingly, much of the value from innovation has come from iterating new applications.
Yet just because that’s the world we’ve become used to doesn’t mean that’s how the world really works. The future will always surprise us. We will soon enter a new era of innovation in which we won’t understand the fundamental technologies that drive progress. New computing architectures will emerge and we will have to learn to apply them to new fields, like materials, genomics and robotics.
We’ve learned how to go fast, but in the years to come we will have to relearn how to go slow. You can’t rapidly iterate a quantum computer or a revolutionary new material or a fundamentally new cancer cure. These things take years — and sometimes decades — to perfect, but then they change the world far more rapidly than anyone expects.
As the great statistician George Box once put it, “All models are wrong, but some are useful,” and that’s true of Lean Startup methods as well. They are clearly useful, but no strategy fits every problem and the problems we need to solve in the future will be very unlike the problems of the past. We need to rethink how we innovate.
The best way to do that is to prepare. Start exploring now. Embark on a grand challenge that will fundamental change your field or industry. The only way to truly win the future is to shape it. You don’t do that by shortening development times (although that is useful), you do it through long, sustained effort.
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