Complete drivel. He criticizes sound bites about Lean without even trying to understand what they mean.
E Sent from my iPad On Nov 24, 2012, at 14:15, [email protected] wrote: > > > > > Inc. > > > > BREAKTHROUGH ENTREPRENEURSHIP | Jon Burgstone May 10, 2012 > What's Wrong With the Lean Start-up > > It sounds like straightforward enough advice to build a better business, > > but the approach has serious flaws > > > Talk about launching a new venture these days, and chances are someone will > likely mention the principles of the lean start-up. A significant portion of > Silicon Valley and the start-up community in general have wholeheartedly > embraced them. The idea in a nutshell: The path to start-up success involves > launching a minimum viable product, testing it, learning from it, and > reworking it accordingly. > > It sounds straight forward enough. But there are some deep flaws in this > approach. As trendy and popular as "lean" is these days, launching lean can > be a really, really bad idea. > > The origins of lean > > The lean idea stems from the Toyota Production System (TPS), which was first > developed after WWII, and which continues to be refined. The goal of the > system is to reduce waste in the production process. Techniques such as > kanban and eventually ISO-9000 emerged to improve efficiency and > repeatability. > > Lean start-up fans emphasize the analogy to ISO-9000. They claim that the > lean start-up model can provide a roadmap to make the development of new > products and companies standardized, efficient, and predictable. > > As a former ISO-9000 auditor, and as a successful entrepreneur, I can tell > you these two activities–launching new ventures and producing uniform > products–have virtually nothing in common. I'm an engineer by training. I'm > all for developing processes with predictable outcomes, but emulating the > Toyota Production System is not the way to do it in the world of > entrepreneurship. > > TPS is designed to produce a system that can churn out millions of copies of > a product with consistently high quality. How is that like entrepreneurship? > Is the goal to churn out a million identical Instagrams? Obviously not. Each > start-up needs to be different, to fulfill an unmet customer need, to create > value. > > Two tenets of the lean start-up concept have generated especially high levels > of buzz. Both are deeply flawed: > > 1. Minimum Viable Product > > Lean start-up principles encourage entrepreneurs to introduce products > quickly to the market and learn from customer feedback. It sounds smart on > its face, because learning from customers is hugely important. But going to > market with a lackluster product can be insane. Think about the iPod, the > Google search engine, and Facebook. None of these products were the first > competitor in the marketplace. Instead their developers learned from other, > lackluster products. They improved upon the initial work of others, produced > a better solution, and grew to dominate their markets. > > Perhaps smart entrepreneurs should watch the efforts of lean entrepreneurs > and then pull an Apple, Google, or Facebook on them. > > 2. Innovation accounting > > Another key lean start-up principle is the idea that standard accounting > practices are not helpful measures of progress in the dynamic days of an > early-stage company. Instead, the thinking goes, start-ups should rely upon > "innovation accounting," or more creative metrics. So instead of, say, > measuring the number of customers a start-up has, you measure instead the > "engagement" of those customers. > > Innovation accounting sounds good–but accounting is accounting. Standard > accounting simply needs to be interpreted differently for early-stage > ventures, not ignored or deemed irrelevant. > > Think about Groupon, for example–a prominent lean start-up case study if > there ever was one. Groupon has managed to trip over profound accounting > issues in its short history. First, the SEC required the company to change > its accounting to conform to Generally Accepted Accounting Principles before > going public. Making that change required Groupon to report even greater > losses. > > Then came Groupon's first quarterly earnings announcement. Again, the company > had to restate earnings (actually losses) twice, due to more accounting > issues. And most recently Groupon took the highly unusual action of > disbanding their director's audit committee. If Groupon is the role model for > "innovation accounting," it's time to seriously reconsider this concept. > Entrepreneurs certainly can use standard accounting tools successfully; they > just need to understand how start-ups (and thus their GAAP accounting) differ > from established enterprises. > > The big picture > > I applaud the effort to bring a degree of predictability to launching new > ventures. It's a worthy goal. However, entrepreneurship and innovation are > not paint-by-numbers activities. Company founders need to think—and be > smarter—about their new ventures. And that does mean entrepreneurs must be > resourceful, adaptable, and learn from what doesn't work. But trying to > follow a system designed to produce a million identical, high-quality > Corollas, Camrys, and Siennas makes very little sense. > > -- > Centroids: The Center of the Radical Centrist Community > <[email protected]> > Google Group: http://groups.google.com/group/RadicalCentrism > Radical Centrism website and blog: http://RadicalCentrism.org -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org
