Steve Blank, Customer Discovery and Lean Methodology – InnovaBuzz 326

Steve Blank, Lean Startup Methodology

In this episode, I’m really excited to have as my guest, Entrepreneur-turned-educator Steve Blank, the Father of Modern Entrepreneurship. Credited with launching the Lean Startup movement, he’s changed how startups are built; how entrepreneurship is taught; how science is commercialized, and how companies and the government innovate.

Steve is the author of The Four Steps to the Epiphany, The Startup Owner’s Manual, and his May 2013 Harvard Business Review cover story defined the Lean Startup movement. He teaches at Stanford and at Columbia University where he is a Senior Fellow for Entrepreneurship; and created the National Science Foundation Innovation Corps — now the standard for science commercialization in the U.S. His Hacking for Defense class at Stanford is revolutionizing how the U.S. defense and intelligence community can deploy innovation with speed and urgency, and its sister classes, including Hacking for Diplomacy, Hacking for Oceans, Hacking for Local, are doing the same for other real-world challenges.

In our discussion, Steve and I talked about:

• Being a fact-based rather than a faith-based business
• Why customer discovery and Lean Methodology are more important than ever in these radically changed times
• What businesses can do to reinvent and reimagine themselves for the post-COVID world

Alexander Osterwalder in episode 293 introduced us to Steve.

Listen to the podcast to find out more.

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Show Notes from this episode with Steve Blank, Creator of the Lean Startup Movement

Key points and takeaways from this episode include:

• Startups are not smaller versions of larger companies. Large companies execute business models. Startups search for business models.
• No business plan survives the first contact with customers.
• Everything in a new venture and a big idea is a series of untested hypotheses. 
• The Three Components of the Lean Methodology:
  1. Customer Development
  2. Agile Engineering
  3. Business Model Canvass
• There are no facts inside your building. Get out of your building and use agile engineering to build a minimum viable product.
• To start a new venture either inside or outside of your company, you have to believe that you are a visionary.
• The whole purpose of customer development is to turn a faith-based enterprise into a fact-based enterprise.
• Don’t just talk to customers. Show them the incremental and iterative progress.
• You can constantly iterate a minimum viable product instead of waiting for a year or so until you ship the wrong thing that people don’t need.
• You are allowed to pivot. Pivoting is the best invention of the 21st century. Pivoting means you are allowed to be wrong without getting fired.
• Alex Osterwalder’s Business Model Canvas is a framework for about 80%-90% of the things you want to be checking when you’re doing something new. It gives you a way to track all your hypotheses.
• The Lean Startup Methodology allows companies to minimise the amount of time and money spent on innovating new things as they search for the right business model.
• Lean requires humility.
• You can be the smartest person in your company but unless you are going to be the purchaser of the products you create, you don’t really matter. All you have is a set of untested opinions.
• You cannot outsource customer delivery and Lean. It is the people who are leading the company and running the exercise of the new product that have to be the ones talking to people directly. The second most important thing is that people leading the company are the ones who have the authority to pivot. 
• You need to have both the knowledge and authority to test alternatives in front of the customer. That’s how founders and new projects in large corporations end up scaling.
• Innovation requires a culture change, education, and incentives to make it work. 
• There’s a difference between execution and innovation, and you need to run these two different cultures in parallel. You have to execute and innovate in parallel.
• The world has changed radically. As a leader, you need to understand that it requires new processes and procedures to formalise and embrace these changes.
• To survive these radically changing times, you need to come up with new innovative models or ways to serve your customers and test those ideas rapidly to stay in business. 
• Customer discovery for the first level of interaction with customers is more effective than in-person meetings.
• Every business, large or small, and startup, needs to be thinking about what the world is going to look like in 3 to 6 months.
• It is going be a mass extinction for series of industries which, unfortunately, will eliminate a lot of businesses, but more importantly, it will also create a whole new category of businesses that never existed before.
• This whole idea of having a hypothesis, testing it, getting out of the building, and building a minimum viable product, is now more urgent than ever. It is no longer a nice-to-have. To some businesses, it is survival.
• Trying to figure out a new market is different than an existing one. In a new market, you want to go outside to understand the day and the life of the customer and be able to articulate what’s going to happen when your new product changes the entire industry.
• Customer development outside of the building is not a giant focus group. Its goal is to inform the founders and help them extract some insights out of the data they are gathering and not make a master list of all the possible feature requests.

The Buzz – Our Innovation Round

Here are Steve’s answers to the questions of our innovation round. Listen to the conversation to get the full scoop.

1. #1 thing to be more innovative – Realise that no matter how smart you are, there are no facts inside your building. Part of getting out of the building is understanding the problem and then testing the solution. 
2. Best thing for new ideas – Learning from others and being humble.
3. Favourite tool for innovation – Reading books and blogs.
4. Keep project/client on track – Understand that the goal is not innovation. The goal in any company is revenue and profit.
5. Differentiate – Sometimes, it is something that you create, and other times, it comes from what customers tell you. Discover and understand a day in the life of a customer.

To Be a Leader

In the midst of all this current situation, it’s hard to remember that the sun will eventually come up. If you, your family, and your employees are healthy and safe, that is what matters. Businesses will recover and there will be opportunities for new businesses, new products and services, and hopefully, you’ll be the one that’s building them and delivering them. Out of crisis always comes opportunity. 

Reach Out

You can reach out and thank Steve through his website. 

Suggested Guest

Steve suggested we have a conversation with Peter Newell, CEO of the innovation company BMNT and Eric Ries, author of the book on the Lean Start up Movement and also of The Startup Way. So Peter and Eric, keep an eye on your inboxes for an invitation from us to the InnovaBuzz podcast, courtesy of Steve Blank.

Links

• Website – Steve Blank
• Website – Lean Startup
• Twitter – @SGBLank
• LinkedIn
• Facebook
• Instagram
• How the Lean Startup Changes Everything

Books

• The Four Steps to the Epiphany: Successful Strategies for Products that Win
• The Startup Owner’s Manual: The Step-By-Step Guide for Building a Great Company

Cool Things About Steve

• He came to Silicon Valley in 1978 after serving four years in the U.S. Air Force during the Vietnam war.
• He co-founded or worked in eight startups before he retired.
• He has received numerous awards and recognitions including, the Earl F. Cheit Outstanding Teaching Award at U.C. Berkeley Haas School of Business, Forbes 30 Most Influential People in Tech, and the 2013 Northern California Environmental Leadership Award, among many others.

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