Innovators have a new dilemma. While it is cheaper than ever to achieve problem/solution fit, the rate of change makes it expensive and difficult to maintain product/market fit.
Companies need to do more than just apply Lean Startup concepts, they need a holistic focus on three key areas:
1. Lean Startup
2. Business Model Innovation
3. Continuous Delivery
The Dangers of a Myopic Approach
Though leveraging all three at once may seem overwhelming, those who do so can thrive in extreme uncertainty. To see why, let’s start by breaking down the dangers of only focusing on one of these key ingredients.
Lean Startup Alone
Lean Startup has gone viral. I heard Marc Andressen say, “It’s like we discovered the theory of relativity,” while being interviewed by Eric Ries last winter. Unfortunately people are running with Lean Startup in ways that at best are local experiments and at worst destructive to an organization. Lean Startup is powerful stuff, but by itself it does not address how you retain product/market fit or deliver stable, scalable software to the customer.
Business Model Innovation Only
At the same time, the days of a static business model, with an organization structured like a factory to execute on the model, are long gone. Today, Business Model Innovation is crucial for any business to survive. CEO’s need to be constantly creating, testing and modifying business models. Unfortunately much of this work occurs in a vacuum that is completely decoupled from the delivery of the product. Worst yet, without Lean Startup to validate/invalidate the risky assumptions in your business model it becomes nothing but an interesting thought exercise.
Continuous Delivery By Itself
The emergence of Continuous Delivery is a game changer. We are standing on the shoulders of Extreme Programming and Open Source giants as we can now safely increase speed to customer with our software. Unfortunately these efforts often originate in IT Departments and do not address the inputs for creating customer value. By itself, Continuous Delivery has merely given you a way to deliver waste faster.
Lean Startup + Continuous Delivery
Lean Startup + Continuous Delivery is a powerful combination. Not only can you rapidly design tests to learn but you have the software capabilities to do it in a well designed, scalable manner. However with the absence of Business Model Innovation, you have little hope of taking advantage of the revenue generating opportunities. You’ll pivot in and out of product/market fit if you fail to leverage it with an innovative business model.
Lean Startup + Business Model Innovation
Lean Startup + Business Model Innovation is another powerful combination. Not only are you rapidly designing business models but you are systematically validating/invalidating them through Lean Startup experiments. Unfortunately without Continuous Delivery, you’re chances of scaling it and remaining responsive to customer’s changing needs are slim. Organizations that do not address their delivery streams end up experimenting outside of their release cycles. This is manageable for a time, but will not work well after you need to iterate product quickly.
Business Model Innovation + Continuous Delivery
Business Model Innovation + Continuous Delivery is an interesting combination, yet I wonder that it can really exist in practice without some element of Lean Startup. Essentially you’ve coupled your Business Model Innovation efforts directly to your customer without validating/invalidating risky assumptions. While you could rely on the customers to validate those for you at an aggregate level, that’s an amount of risk I doubt you’ll want to incur.
The Power of a Holistic Approach
This brings us back to Lean Startup + Business Model Innovation + Continuous Delivery. The combination of all three disciplines gives you an API for thriving in extreme uncertainty. You can create new business models, rapidly validate/invalidate the risky assumptions and deliver value to your customers in a quick and scalable manner. I would not go so far as stating you will be invincible with this combination, but you will be extremely hard to beat.
If you focus on all three of these key areas, you soon will discover that instead of being reactive to competitors, your competitors have become reactive to you.