The Major Pitfalls of Lean Startups
Nov. 13, 2020
The best startups I work with have truly embraced the lean startup methodology. Generally speaking, it is a great practice that will increase your chances of success. I am following it myself in running my own business, even though it is not a tech company.
Working with dozens of startups, I do see, however, companies that are implementing it wrong. As with any methodology, the principle can be great but if your implementation of it is lacking, not only you won’t get the results you were hoping to get, you might even end up worse than if you haven’t implemented it at all.
You Must Deeply Understand the Methodology Before Using It
Think about the last time you implemented a new methodology. You most likely have read about it, maybe asked around seeking advice from people who already implemented it, and then went straight to doing. A quick search for “where to start”, and then perform clear, practical steps.
While this is generally the right process, there is an important part of reading about the methodology that you don’t want to miss (but most people do). You must understand the roots and principles of the methodology, which problem it is coming to solve, and why it is better than the alternatives. Spend an adequate amount of time researching the answers to the questions above. Treat everything you read with a grain of salt, and only stop when you are truly convinced — not because everyone is doing it, but because you understand the secret sauce and how it would get you the results you are looking for.
You need to research deep because what you see on the surface isn’t going to give you the answers. The surface is filled with quick start guides and action manuals — all are important but only after you get the essence of the methodology right.
For example, if you start implementing agile and Google it, you will get iterations, time boxes, retrospective, and incremental delivery. Even if you read the agile manifesto, it has very little reasoning in it to help you understand and be convinced that this is really the right thing to do. You can “do agile” without being agile at all. One of the most important principles of agile is that you don’t know everything there is to know, and you need to constantly improve. But people love clear instructions and stability, so many companies are implementing a very rigid agile process that never evolves, thus defeating the whole purpose of the agile methodology (and then wondering why it doesn’t work for them in getting results).
If you have a clear understanding of the roots and principles of the methodology, this is less likely to happen. Whenever something isn’t working as you expected, you can go back to the original reasoning as you understood it, and see what is missing in your implementation.
Oddly enough, many of the pitfalls of implementing new methodologies are occurring when you are trying too hard to implement it. Without the deep understanding mentioned above, abuse of the methodology is almost inevitable.
Lean Startup is no different in that sense. The two major pitfalls described below are occurring when the methodology is taken to the extreme, without staying true to its source.
Pitfall #1: No Long Term Thinking
The lean philosophy says you don’t really know what’s happening in the market until you meet the market. For example, even if potential customers tell you they are willing to pay for something, you can’t know for sure until they are actually paying for it.
While this is very true, the nuances here matter. Not knowing at all is very different from not knowing for sure. Unfortunately, many entrepreneurs are ignoring this difference, and in the name of being lean, are adopting a spray and pray approach: try as many directions as possible, and see what holds. There are very specific times in a business where you want to use this approach, and even then you want to plan it carefully in advance.
As a product leader, this creates chaos that is very hard to deal with — for you, for the product and development team, for management, and eventually for your customers and your business. For example, it is impossible to create any relevant marketing materials and core messaging when you don’t fully understand where you are going — which problem you are solving and for whom, at least.
If you feel this is your current situation, it is your responsibility as a product leader to change it. Create a product strategy, and use it to help everyone align and create their own strategies based on it (marketing, sales etc.). Don’t be afraid to take the lead, it is part of your role even if no one told you so.
One of the foundations of the lean startup methodology is that you need to test your hypotheses. In order to do so, you must, of course, have clear hypotheses. These are assumptions and core beliefs that you have about your customers, their needs, the value they see in your solution, and their willingness to take action.
Not only you need to have these hypotheses stated clearly, but they also need to make sense and connect to one another to create a grand theory of why people should buy and use your product. If you are unable to explain it on paper, it won’t work in reality. I can guarantee you that.
The lean startup says that even if you can explain it on paper, it’s not guaranteed that it will work in reality, but nowhere does it say that you shouldn’t understand how it should work in theory.
Outlining these assumptions, refining them until they make sense, and then using them to align with the entire company is one of the things we are working on in the CPO Bootcamp program (currently available only in Israel). To learn more about the upcoming Bootcamp click here.
Pitfall #2: No Progress
The lean methodology introduces the build-measure-learn loop as the means to move forward and validate the hypotheses you had one after the other. The idea is that you want to validate your assumptions as quickly as possible so that you can adjust if you are wrong sooner rather than later, and avoid sunk cost.
While this principle is super important, it is also a slippery slope if taken to the extreme. You might find yourself (or the company) being afraid to move without proper validation, tempted to test and research as much as you can before making actual progress. Analysis-paralysis was never a more relevant term.
I see this more often with B2B startups, where the validation is slower and doesn’t necessarily involve a lot of “build” and “measure”. Instead, the validation in these cases is focused more on customer interviews and feedback from a longer sales cycle. In these cases, the development team might be left hanging with no validated learning to implement.
It is a common misconception that the product leader’s job is to optimize the use of development resources. While true in some cases, but more often than not it is a complete blocker. Moving forward in an environment with a lot of uncertainty cannot be done by solving the uncertainty. Uncertainty is here to stay. Instead, you should shift your paradigm to risk management. Managing risks means acting despite the risk, after a proper analysis. It means that you are actually taking informed risks, not that you are waiting for the risk to go away — because in most cases it won’t.
Assess yourself: are you in any of these extremes? Do you feel one of these pitfalls? Living with uncertainty is not easy, but that’s the world we live in as product and business leaders. Make yourself comfortable with uncertainty, or you will have a very hard time succeeding — or even sustaining — as a product leader. If you are in Israel and think you need help with this, check out the upcoming CPO Bootcamp. Learning to live and thrive with uncertainty is a key part of truly becoming a product executive. Help yourself succeed — in the CPO Bootcamp or any other way.