Lean Start-up and Lean Impact principles
We’re operating as a “lean start-up.”
Here’s what that means in the context of our non-profit organization
Lean Start-up
Lean Start-up is a uniform set of management practices which can be followed by any entrepreneur. Although originally aimed at for-profit start-ups, mostly in technology businesses, they have been adapted for “social” (non-profit/ social /philanthropic) start-ups under the banner “Lean Impact” (see below).
Applying scientific principles and validated learning to identify and eliminate sources of waste;
Adapting company vision to reflect customer insight;
Emphasizing fast iterations to stay ahead of uncertainty;
Effectively evaluating progress using a new set of benchmarks designed for startups.
By adopting the Build-Measure-Learn feedback loop, entrepreneurs are able to make constant changes that reflect the wants and needs of customers.
Traditional management would dictate making complex plans based on assumptions and future predictions, but the Lean Startup method remains flexible by throwing out these principles in favor of a lightweight approach that adapts to an ever-changing marketplace quickly and efficiently.
Key concepts:
Leaders should attempt to foster an environment in which team members are encouraged to innovate as fast as possible.
You must constantly assess which of your efforts are wasteful and which are value-building.
Every action should be treated as an experiment to find out what works and what doesn’t work. The goal is to generate tangible data that can be used to properly assess issues and to create a company vision that matches customer needs without waste.
Regardless of whether an experiment is a success or failure, the act of experimentation provides invaluable customer information, which reflects what customers actually want and need.
This type of research is accomplished in-house instead of by relying on existing market data which can be filled with false assumptions.
In Lean Start-Up incubator programs, participants are often charged with conducting as many as 100 interviews with prospective customers, suppliers, partners, and even competitors, in order to adequately understand the nature of the problem to be addressed and solutions available to the relevant market.
You cannot look to other startups for answers when solving the challenges faced by your own startup. No major business decisions can be made without deep firsthand knowledge of the problem.
The first product -- known as a “minimum viable product”, or MVP -- is never going to be perfect. It is impossible to account for all the features that potential customers may want, or even who your best customers are going to be. By launching a product as soon as possible, you can assess the real-world value of the product (if there is any value at all).
By conducting experiments, the data and feedback that you will receive is often more valuable than the revenue the product incurs.
First, a startup must spend time measuring where it actually stands in the market, even if the truth is less than ideal.
Second, a startup needs to devise experiments that can teach the business how to get its actual numbers and goals closer to those reflected in the business plan.
One of the key concepts covered in this chapter is the idea of innovative accounting. At the center of innovative accounting is cohort analytics. This involves independently looking at the performance of each group of customers that comes into contact with the product.
Another essential idea to innovative accounting is the idea of pivot or persevere.
Pivoting is the act of moving the company in a different direction based on the results of thorough experimentation and learning.
Persevering is when a product holds promise, hold onto it, talk to customers, and make changes as necessary to maintain the company’s vision behind the product or service.
The modern startup should rely on a small batch production model. Large batches only result in more waste, including the waste of funds that could have been used in more effective ways to steer toward the company vision. Smaller batches are nearly as time-efficient but allow for less waste in the event that something changes.
The implication for us is to learn key lessons in one state (a small batch) only before scaling the organization to address multiple states (a large batch).
Whenever a problem occurs, ask yourself five “Why?” questions in order to get to the root of the issue and correct it.
Excerpts adapted from The Lean Startup: A Complete Summary For Busy People (Vocreo 2015-02-09)
Lean Impact ( Lean Startup adapted for non-profit / social / philanthropic organizations):
“Lean Impact” is a book written by Ann Mei Chang and a program championed by The Lean Start-up Company to adapt the concepts of The Lean Start-up to non-profit organizations (https://leanstartup.co/social-good/).
The following summarizes these adaptations:
Think Big when considering the social challenges we face and that organizations should propose solutions that if successful, would address a sizable number of people affected by the issue.
Start Small: the pathway forward is unclear, and by starting small with testable hypothesis, an organization can test each hypothesis using the build, measure, learn feedback loop. It must discover if its intervention is (1) valuable to people, (2) has a strategy for growth, and (3) actually works and has the impact desired.
Relentlessly Seek Impact: a social impact organization doesn't have profits to prove it is successful at finding the right product-market-fit. Instead a social impact project it must demonstrate through metrics how its activities and interventions are the most cost effective option, with the greatest impact.
To conclude, The author of Lean Impact poses some questions to consider when applying the principles of Lean Impact to your organization include:
“Does it work?
What experiments have been run to further expand the social impact?
Do the beneficiaries love and demand what is being offered?
How will you reach the size of the population with this need?
What is in the research pipelines?
How has cost-effectiveness improved from last year?”
Excerpts from Gregory Schmidt, MD, found here:
https://www.gregoryschmidt.ca/writing/lean-impact-detailed-summary
Some of these ideas draw on the “Discovery Driven Planning” technique described here:
https://en.wikipedia.org/wiki/Discovery-driven_planning
Its main thesis is that when one is operating in arenas with significant amounts of uncertainty, that a different approach applies than is normally used in conventional planning….In discovery-driven planning, it is assumed that plan parameters may change as new information is revealed...In discovery-driven planning, funds are released based on the accomplishment of key milestones or checkpoints, at which point additional funding can be made available predicated on reasonable expectations for future success.
More recently, retired Stanford and Berkeley entrepreneurship Professor Steve Blank, who created the Lean Startup concept has adapted his Business Model Canvas into a “Mission Model Canvas” for use by non-profits.
See his post on this here: