As companies grow in size, there is a tendency to lose the efficiency they had as lean, mean startups. Applying the fundamental principles of a startup to enterprises of all sizes keep them ahead of the competition in a demanding marketplace.
In 2011, Eric Ries developed the "lean startup" methodology, a way of launching and developing a business or product as efficiently as possible to reduce the risk of failure. It keeps enterprises focused on key processes to increase customer value, and reduces waste to a minimum.
1. Entrepreneurship is management
To react quickly in the product development lifecycle, it is imperative for an enterprise to empower everyone to communicate and collaborate, from the front-desk, to the top echelons. Senior management must be confident enough to be willing to cede control, and allow individual teams to feel empowered in the development process, therefore improving speed and efficiency.
2. Validated learning
Every step in the development process is measured to determine its efficiency or validity. Each subsequent step is adjusted based on the previous step, to refine and finetune for even more efficient subsequent steps. As a result, the agile backlog becomes prioritized by learning and risk, allowing management to determine if the product is feasible before committing to it.
Understanding the intersection of feasibility and effectiveness increases the likelihood of delivering a product that has maximum value and reduces risk of failure.
3. Innovation accounting
With individual teams having more autonomy and control (based on the first principle where entrepreneurship is management), a revamped process on reporting beneficial to both senior management and individual teams becomes critical.
The lean startup methodology encourages the use of metrics in the reporting progress, setting milestones, and establishing a process for how work should be prioritised.
The metrics used should help you make these decisions and give you guidance. A/B testing is one way to ensure the metrics being used are actionable as it confirms or disproves a specific hypothesis.
4. Build-Measure-Learn
The feedback loop is the primary way of execution in environments of uncertainty, turning assumptions, risks and unknowns into knowledge. Knowledge guides teams and companies to progress effectively through uncertain environments, and this leads to a more stable path to innovation. For this reason, the key measure of success is the cycle time of learning - how quickly a hunch is validated or invalidated, as detailed in the first principle.
The accelerating pace of business cycles and rapid changes in customer demands are inevitable. Implementing lean principles is the best way to embrace these changes and adapt continually to keep pace in today's complex and competitive environment.
Shen Yang is an Agile Coach at CA Technologies