What the lean start-up method gets right and wrong

By Ethan Mollick

When someone learns I am an entrepreneurship professor, they tend to either ask me to listen to their start-up pitch, or look at me quizzically and say: “But I thought entrepreneurship was all about improvisation. How can you teach entrepreneurship?” What can we teach founders to make their start-ups more successful? The last decade has given me a lot of valuable lessons I can share, and these lessons come from two different sources.

The first was the rise of the lean start-up method, which proposed that the key to success was to be biased toward action. Founders turn the key questions they have about their business into testable hypotheses, then build fast and cheap “minimal viable products” to test these hypotheses. If the tests show they are correct, great. If not, they should change direction, modifying the product they are selling or the market they are approaching, based on the feedback.

Lean start-ups were not the only big change in start-up strategy in the past decade. Another, quieter revolution was taking place. Academics, with access to better data, more sophisticated analysis techniques and new approaches, have begun to crack the code of start-up success.

Evidence strongly suggests that start-ups should engage in experimentation along the lines pioneered by the lean start-up method. Rigorous experimentation is clearly important. But other work has shown there are aspects of the method that may actually be harmful.

Lean start-ups push you to talk to customers as quickly as possible. The focus on getting fast feedback on minimal viable products leads start-ups to aim for incremental improvements, focusing on what customers want today, rather than trying to see into their future. Additionally, a lot of research shows that novelty is often initially disliked by customers. Seeking external validation from early customers can, thus, be harder if you have a breakthrough idea rather than an incremental, but easily explained, product.

So, how do we keep the good aspects of the lean start-up approach without holding onto the bad? Recent research on corporate strategy suggests a new, more effective approach to experimentation that starts with a strategy—a theory about why your company is going to succeed—and, based on the choices founders themselves make, suggests the experiments to conduct.

By returning power to founders, rather than customers, to develop key breakthrough insights, this approach has the potential to be the next step in the evolution of lean.

Ethan Mollick is an associate professor of management at the Wharton School of the University of Pennsylvania.


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