• Colin Duff

The limitations of Lean Startup: when not to use it

Updated: Jun 2, 2020

A client I previously worked with to introduce and embed Lean Startup as their innovation methodology emailed me this morning. She asked:

Can the Lean Startup be used for operational fixes and improvements and what are the limitations of the methodology?

It’s an interesting question, so I’ve shared my response below.

"But first, as a quick reminder. Lean Startup is a methodology for innovating in a more entrepreneurial way using hypothesis-driven experimentation, iterative product releases, and validated learning. The core of the approach involves releasing rapid prototypes (known as minimum viable products or MVPs) to get real-world feedback from customers. Then use these insights to determine whether to: iteratively improve; pivot (course-correct by changing fundamental hypothesis); or kill the project." 

Yes – Lean Startup is ideally suited to fixing and improving operational activities! In most instances (90%+) this is possible and we have several examples of using the methodology for these type of challenges. However, there are three situations where applying the Lean Startup is less appropriate and/or requires extra care:

1. Optimising complex mature data-driven processes

Where the challenge is about fractional improvements (e.g. decimal percentages or handfuls of defects per million) other approaches, such as Six Sigma are better suited. Because it’s difficult both to generate and robustly test hypothesis.

2. Where developing MVPs and/or running experiments isn't possible

For example when implementing large backend IT systems such as SAP. While you can carry out user testing and some de-bugging in advance, you can't usually do a mini-migration or change your mind afterwards. Similarly, substantive iterations are costly and time-consuming.

3. Where errors have serious consequences 

In high-risk situations – where there is serious legal / compliance (especially health and safety), brand, political or financial risks – lean needs to be used with extra care. For example pharma companies running human drug trials or governments rolling out new benefits to vulnerable citizens. Even a handful of mistakes can be catastrophic in either scenario.

But, it’s worth noting that even in the above scenarios many of the principles and tools of Lean Startup are still applicable and useful. For example, to mitigate the risks of testing a radically new (peer-to-peer) service model, Telefonica set up a new brand (giffgaff) and localised the experiment to Ireland (a small market).       

In the spirit of the methodology, I recommend running some experiments on real operational improvement challenges.

[Originally posted here:]

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