Is the “lean startup” the right approach for your industry?
The Lean Startup method is everywhere these days. Huge corporations are now preaching the value of failing fast, iterating, validation, etcetera.
But are you sure that your industry is the right environment for a lean startup?
For instance, the lean startup approach is terrible for mobile gaming, as Guillaume Lautour (VC at IDinvest) explained here recently. Mobile gaming behaves more like blockbuster movies, he said: you need a polished product, a fixed launch date and a huge marketing. Then, you pray. (It’s not for the faint of heart, and some developers like Drimmi are even leaving the gaming industry).
At the recent Lean Startup conference, it became clearer which industries benefit from a lean startup approach, writes strategic consultant Sean Murphy on his blog. Basically, there are three industries where lean startup methods are most helpful to develop and guide innovations processes:
1. Emerging markets
In emerging markets it’s important to get out in the field and see and feel the needs constraints that consumers are faced with.
In emerging markets, you can’t just import business models and products that work in more mature markets. You have to take the time to validate the ideas behind these models and products, or you might fail without even understanding why.
An example of good use of lean startup methods is the experience of IDEO.org while designing sanitation for poor rural areas in developing countries. As Jocelyn Wyatt from IDEO.org explains, in the design phase the team assumed that people would like the most ‘aspirational’ prototypes with a water flush.
In the field, the models didn’t perform well. The flushing mechanisms were prone to failure, and some users even forbade their children to use the toilets for fear that they might mess them up.
It was clear that the most simple model worked best. Next, they tested about a 100 of the prototypes. Then, a thousand. Now, they’re building 10 000. You can watch the video here:
2. Disrupted industries
A bit of a vague category – which industry isn’t being disrupted today? But anyway, what Murphy takes away is that industries with “proven but obsolete offerings” should start to experiment sooner rather than later with innovative, lean startup ideas. These are some of the most “disrupted” industries of the moment that Murphy sees:
- Product development / Outsourcing
- Health care
What they have in common is that new technologies and business models enable new competitors to rapidly gain on the incumbents – you could be blindsided tomorrow, either by a well funded startup, or by a big player that never before expressed an interest in your industry.
For an illustration of how fast you can be disrupted, look no further than the iTunes store. Perhaps the most innovative business model of the last decade, owned by an innovative company with extremely deep pockets, it’s now becoming obsolete as a music shop because of streaming services like Deezer and Spotify.
An interesting talk Murphy singles out is the presentation about ‘lean hospitals’ by Mark Graban. It’s interesting to see his slides on how traditional ‘top down’ design forces doctors and nurses to walk around endlessly in search for medication, files and patients. It’s pure waste, says Mark Graban.
Validated hospital design that follows the build-measure-learn approach works better and produces less waste. Because prototyping with concrete and steel is kind of hard, they used cardboard to prototype entire treatment rooms and care units:
3. Companies that have fallen behind
Some companies may not actively face disruption, but they do realize that they have fallen behind the innovation curve.
It’s the kind of companies where the comfortable day to day business is stifling innovation. Profits are still good and nobody in management sees a real incentive to drastically shake up things, or invent new ways of doing things that might cannibalize the existing revenue streams.
Here, the lean startup approach can help produce “small wins” that show management that there is potential in innovation.
Murphy cites Intuit as an example where teams were given the freedom to experiment, validate (and fail), in order to come up with new applications. Here’s the conference video of Intuit:
What do you think? Let us know!
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