strategy+business Winter 2013 : Page 94

maybe one customer, and try to get them to use the product. We sell it ourselves. There’s no sales team. We are personally in the store persuad-ing customers. S+B: It’s like something out of a 1935 county fair. RIES: Right, it’s extremely low-tech. 94 The goal, remember, is to start the learning process. I don’t care if you’re a new company or P&G—chances are, you won’t succeed the first time you try. For example, if no one’s ever seen a Swiffer mop, how do you know what aisle it should be in? All sorts of questions come up with a truly new product. People walk up and say, “What is this thing, and why are you trying to sell it?” Most people won’t be interested. But guess what? That would be true if you launched on a larger scale anyway. The technology life-cycle adoption curve is New Products 101. Every product requires you to go through an early-adopter phase before it gets to the mainstream. One counterintuitive lesson from this is the need to hold back your marketing. If you know that you’ll have to sell to early adopters before you sell to the mainstream, then every bit of work that you do beyond appealing to early adopters is waste, even if you do it in the name of quality. A lot of people won’t buy a product they’ve never heard of from a guy in a booth at a store, but they’re not your market yet. People with a real need for the benefit this product provides are willing to overlook things that other people might not. They accept defects in packaging, design, and usability because they want the benefits so badly. In this experiment, we learn which customers value the product and hopefully why. We also learn what the customer is willing to pay. We start to learn how to distribute it. Our assumptions no longer re-quire a leap of faith; we now know something about them. S+B: And if the experiments are successful and customers take to the product? RIES: You can then proceed along your normal business plan: Increase product runs, go from 10 to 100 to 1,000, eventually do the big launch. But my prediction, based on every startup I know, is that in that early sequence somewhere you will dis-cover that certain leap-of-faith as-sumptions in your business plan are wrong. You’ll have to do what we call a pivot: a change in strategy without a change in vision. You may pivot several times before you get it right—if you get it right at all. S+B: What you’re espousing is more than a change to current product development approaches. There are more deep-seated issues here. RIES: Woe to any manager who It requires thoughtful executive management and leadership. When I first started writing about lean startup ideas, if you had told me big companies were going to make this kind of transformation, I would have said, “Impossible. They’re too hard, too set in their ways, too bureaucratic.” It’s only be-cause some visionary leaders came to me and said, “I want to try this out, can we do this together?” that I’ve seen it happen. You have to change how people hold the startup accountable inside the established organization. In fact, the same goes for a startup with ven-ture capitalists [VCs]. You have to be able to prove to somebody else that you’re making progress, and that the progress is not just academi-cally interesting but economically viable. VCs are every bit as demand-ing about their investments as cor-porate VPs. S+B: How do you measure that progress? RIES: This is where accounting en-comes in one day and says, “Guys, we’re doing MVP, starting today. Let’s just do it.” This approach is a radical change to the systems that companies use to govern themselves. strategy+business issue 73 thought leader ters the picture. But first, we need to look more closely at the problem with current forms of measurement. At the outset of launching a new venture, the business plan is al-ways based on this sentiment: “Lis-ten, VC, spouse, or CFO—if you give me $1 million, or our whole life savings, or a year and this team of five people, I promise you astronom-ical results. We’re going to have mil-lions of customers and we’re going to be on the cover of magazines. It’s

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