What is lean startup?

What is lean startup?  Here is  Lean startup

This Lean startup provides an interesting startup business model based on the 5 principles – Entrepreneurs are everywhere, entrepreneurship is management, validated learning, build-measure-learn, innovation accounting.

I would like to reflect with my views and experience.

1. Entrepreneurs are everywhere – Yes, they are. For entrepreneurship to be successful, do we need to look for a niche market, rather than a market “dominated” with “experts”?  Most successful entrepreneurs started with a small test or niche market, but developed it into a giant business with long term visions.  Consider those disruptive innovative and technology.

Startup = experiment.  Yes!

Stop wasting people’s time.  I have to think about the meaning of this time wasting.  Are we wasting people’s time if we don’t add value to our customers or clients?  May be.  But we don’t save people’s time either.  Time is money, and is valuable, so it can be equated to VALUE.  Value people, and that will be the key to success in building relationship with the customers, and they won’t see you as wasting their time.  In other words, focus on the customers’ needs and expectations, and that is VALUE & QUALITY.

Most startups fail – because of the principles of scientific management?  May be/may be not.  Scientific management is part of the evolution in “management and control”  Without scientific management, we don’t understand why system could be right, and why system could go wrong, due to its mis-application.  In science, scientific management allows for management based on facts and data, so there is nothing wrong if that is the case.  The problem often lies with the inappropriate twisting of the facts or the incorrect interpretation of the data and trends.  The recent financial crisis is one where all the facts and information were covered up, because they turned out to reveal problems with the companies concerned.

So it is the inappropriate application of scientific management principles in human that caused the failures, and if we are to apply scientific management on human, then we need to be aware of the complexity of human behavior, market dynamics and networks interaction, which all would cause a “chaotic” and unpredictable sets of human behavior in any organisation, or networks.

2. Entrepreneurship is management – Create an institution.  I would consider creating a network, better still, a self-organised network as a support to the institution.

Speed wins.  Yes. But I would add that speed loses, especially when there aren’t enough space because of a lack of reflection, a lack of critical thinking and creativity, and a disconnection with the customers.  Too much task-oriented, and too much emphasis on efficiency and effectiveness, neglecting that customers are PEOPLE, who are looking not for speed, but VALUE.

3. Validated Learning – Well laid out flow of the plan-implementation-control process, similar to the Plan-Do-Check-Act.  I think nothing is predictable and known in an open system, and all are based on Assumptions.

Achieving Failure = Successfully executing a bad plan.  So bad plan is unavoidable in an experiment, and based on historical researches, most “revolutions” failed, and failed badly.  So if failure is the mother of success, we need more failures, and more learning through those failures, to succeed.  The critical question is: What have we learnt through such bad plans, such poor implementations, and failures, and how could we improve its chances of success? So entrepreneurship is about management, is about validated learning, and about learning through experiments, and failures.  What did we learn from SARS? What did we learn from the financial crisis? What did we learn from the demise of Enron, Ansett Australia, and HIH?  Here in Insolvent Trading of Companies, where Ansett, HIH, One.Tel and Harris Scarfe were cited as examples, symptoms of failure include:

– Poor management

– Inadequate financial control

– Competition

– Cost structure

– Market demand

– Over expansion

– Over trading to the point of insolvent trading

It is also crucial to review the success and failure factors in Business Process Re-engineering (BPR) implementation process, and see what we could learn from the cases.

4. Build-Measure-Learn – Great metrics

5. Innovation Accounting – Establish the baseline, tune the engine, pivot or persevere

The logic of a business system for creating value in the Internet era as explained in this eBusiness Model Ontology for Modelling eBusiness includes:

1. Product Innovation

2. Infrastructure Management

3. Customer Relationship

4. Financial Aspects

So VALUE CREATION is the KEY to such LEAN STARTUP and BUSINESS.

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