Thoughts on Lean Startup and the limits of success

Eric Ries and his Lean Startup methodology are all the rage in entrepreneurial circles these days, regardless of whether one is talking about enterprises or startups in the more traditional sense. Some time ago, I got around to reading his book on the topic – The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses and wanted to write a semi-review of it.

Like I mentioned a few weeks ago, I do not believe in success formulas which “guarantee” success. Ries, unfortunately, almost falls into making the same impossible promise once more – why, I don’t know; maybe to sell the books; maybe because he really believes in the abilities of the Lean Startup method to solve everything; maybe it’s just exaggeration. Whatever the reason, I find it ironic that in the introduction, Ries can correctly point out that “The grim reality is that most startups fail.” – and then just a couple of paragraphs later offer the promise of a solution; “Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.” Some pages onwards he drives the point home again – “.. for every success there are far too many failures [..] The Lean Startup movement is dedicated to preventing these failures.”

To be fair, Ries does not outright claim that the Lean Startup method guarantees success, but as you can see, he certainly does imply something like that. Maybe such talk is necessary to arouse interest, to sell books or both, but I tend to put such universalities into the snake oil-category.

The book itself, as well as the Lean Startup methodology, do have a lot going for them. Much of the advise makes perfect sense and are not, as such, really new things but rather old concepts re-framed (note: nothing wrong with that, but it is rarely recognized that such “revolutionary” concepts can actually be quite old). Granted, however, that to many businesses the concepts are new. We, too, at my employer are busy doing MVPs now, something that would probably have been seen heretic in the telco space not many years ago – after all, MVPs can appear to conflict badly with the “carrier-grade” products that the industry is so proud of.

Without going into detail on what the Lean Startup is about – let’s take it as assumed knowledge; check out the Wikipedia entry for a mini-description – I want to say that I do like a lot of it: I am 100% for testing key assumptions, “scientific” learning, measuring progress and the rights things, pivoting – or as it used to be called, changing strategy – when it’s called for, choosing the right metrics and many of the other tactics described in the book. I particularly like the Five Why’s approach – borrowed from Toyota – for uncovering some of the true causes for failures and other events.

At the same time, I found some of Ries’ thoughts quite perplexing. He claims, for example, that “We are at the dawn of management’s second century” while management has of course, in one form or another, existed for millennia. He also criticizes small profitable business as being a “trap”, without giving justification as to why massive growth is always something to strive for. He also claims that “failure is a prerequisite to learning” which is patently untrue. Maybe he’s forgotten to test some of his assumptions there.

Finally, The Lean Startup misses one important aspect of success: luck, or chance. Business book authors understandably want to downplay the influence of the accidental in anything – it would, after all, seem to undermine not only some of their advise, but sometimes their world views. But the fact remains that while there are certainly things you can do to increase or decrease your chances of success (and significantly so), nothing in life or business is guaranteed or 100% predictable, the least of all “success”, however you define it. Bad luck can literally kill you, while good luck along with good execution can bring surprising successes.

This myth of being able to always fully control ones (or ones company’s) destiny is repeated in The Lean Startup; specifically, Ries lays out the causes for success as:

What differentiates the success stories from the failures is that the successful entrepreneurs had the foresight, the ability, and the tools to discover which parts of their plans were working brilliantly and which were misguided, and adapt their strategies accordingly.

The world of business books is chock-full of such lists. Reading just two is enough to get different ‘reasons’ for success. The vast majority fail to take chance into account. Is that important? I think it is; recognizing the role luck and chance play in everything does not and should not detract from seeking to do the right things at the right time – it’s not about taking a Laissez-faire approach to business, or failing to learn. It’s about not rationalizing failure by seeking to pin the blame on possibly innocent parties or circumstances; it’s about understanding that by definition, not every idea can work or grow into a huge business and accepting that sometimes it just doesn’t work out – without blaming anyone or anything.

Limits of success

It’s safe to say there are lots of people in the world today whose main goal is to come up with the next Google, or the next Facebook; not necessarily in the competitive sense but new things that are successful on the same scale. They are arguably the biggest mega-successes of recent years. Just to illustrate that every startup cannot, mathematically speaking, become a huge sustainable success, let’s do a thought experiment – quite often, people forget to do basic maths for so many things it’s amazing really.

Users of Facebook spend, on average, 15-20 minutes on Facebook every day. People have approximately 5 hours of leisure time per day, about half of which is spent watching TV. Let’s naively assume new services can take over the entire time spent on TV today; 2.5-3 hours per day on average. Do the math – that means we have room for nine services in which we engage with on a Facebook-level. Nine. Even if we devote 100% of our leisure time to new services and skip boring old stuff like socializing & showering, that’s still only 18 new services or so that we have time to engage with on the same level as Facebook.

I’m fairly confident there are more than 10 very capable people/teams/companies who are well-funded and execute well, looking to be the “next Facebook-level success”. I’m sure there are more, but let’s say there are only a hundred of such entities. It is mathematically impossible for all of them to succeed, regardless of the method they employ in going about it. If there are only a 100 of them, at least 90% are going to fail to become a huge success.

(Here we just looked at time spent on the service; we can of course do this reality check of service usage based on any of the available money-fronts as well, but will arrive at numbers in the same order of magnitude)

Getting back to the Lean Startup the book.. As far as business books go, it’s a good book. It should however be read as you would any business book – taking it in with a grain of salt, viewing it with a critical eye and adapting the approach to your circumstances.

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One Response to Thoughts on Lean Startup and the limits of success

  1. Andrew says:

    I plan to read this book, also, at some point, but I have been thinking along similar lines as your points about business books when it comes to “science” books recently. There are some books out there that at a superficial level, at least, sound like a scientifically-mind text. However, they’re actually a bit of a crock. In reading them, I feel a strong urge to just believe them, to accept their passionately argued-for conclusions.

    I’ve identified that if a book:
    1. Takes the view that others in their field are either idiots or charlatans.
    2. While quoting a range of experimental results and academic publications that support their conclusion, never explain why other experts reach a different conclusion other than referring to point #1.
    then that’s a BIG RED FLAG for me.

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