Is the lean entrepreneurship methodology the golden rule of entrepreneurs? What is the correct posture for lean entrepreneurship?

Editor’s note: This article is from WeChat public account “China Europe International Business School” (ID: CEIBS6688)< /a>, author Gong Yu.

GONG: The front and back of Lean Startup

In the traditional economic era, the introduction model of products is basically a very linear process: through product research and user research, product concepts are formed, then human development is organized, internal testing and external testing are conducted, and finally put on the market.

Around this process, we built layers of tools and methodologies, such as milestones, funnel models, stage gates, and more, everything looks very linear. However, there is a very big flaw behind the whole process: lack of feedback mechanism. This can lead to a situation where the company does everything and finds that the product and market needs simply don’t match, and at this point they have exhausted all the time and resources. This long-cycle, slow feedback mechanism is very deadly for a startup.

Each stage has different methodologies depending on the power of the times. Beginning in 2012, a new entrepreneurial methodology began to emerge, namely lean entrepreneurship.

Lean startup has “three quicks”

The theoretical framework of lean entrepreneurship is divided into three parts: first, establish key assumptions; second, verify assumptions by interacting with users; and third, provide Minimum Viable Product (MVP). The core of this theory is fast hypothesis, fast verification, fast feedback and iteration, referred to as “three fast”. So, lean startup is a fast logic.

What is the most difficult thing in this “three fast”? Is a hypothesis. Assume that talent is needed, which is the dividing line between a great entrepreneur and a good entrepreneur. The assumption is not purely rational consideration, nor is it purely quantitative analysis. This requires the founder to have three senses: sensitivity, beauty and inspiration.

I agree with the point that Ren Zhengfei mentioned in the previous period that “there is no correct theory without correct assumptions; without the correct theory, there is no correct direction; without the right direction, there is no correctStrategy; without the right strategy, there is no correct action. So, the assumption is critical, it is the biggest challenge many entrepreneurs face.

After defining the basic assumptions, it is to verify the hypothesis. The verification hypothesis is to verify the pain point, whether the verification mode can be repeated, and whether it can be scaled. It also verifies that the product or service is able to find early supporters (angel users). If you can’t find an angel user, you need to go back to defining the basic assumptions and redefine your assumptions. The entire feedback mechanism must be fast and agile.

龚焱: the front and back of lean startup

How do you verify the hypothesis? We need MVP, the smallest viable product. The so-called “minimum” has two meanings: first, not for all users; second, not a large and comprehensive combination of functions. The core of MVP is to validate key assumptions, quickly gain cognition through MVP, and give up some features that are not helpful for cognition. Therefore, MVP is not just a simple product prototype, but also a cognitive tool.

The essence of lean entrepreneurship is an intensive learning, or trial-and-error learning. When an enterprise takes an action, the environment will give a feedback, which may be a punishment or an encouragement. The company then takes a step closer to the intended goal based on environmental feedback until it is approaching the original goal. The German philosopher Nietzsche once had a saying: “All good things are tortuously approaching their own goals. Everything is straightforward. All truths are curved, and time itself is repeated.” This statement is essentially the same as the thinking of lean entrepreneurship.

Defects in Lean Startup

In the past seven years, Lean entrepreneurial methodology has gradually moved from the edge to the mainstream. Many entrepreneurs regard it as the golden rule of entrepreneurship, but it also faces many criticisms.

For example, Peter Thiel, the godfather of Silicon Valley Venture Capital and author of 0 to 1, is a firm critics of lean entrepreneurship. He believes that lean entrepreneurship means lack of planning. Enterprises choose to “cross the river by feeling the stones” and continue to advance in trial and error, indicating that there is a lack of clear planning. Moreover, lean entrepreneurs can only make things that are slightly innovative.For example, limiting the number of words in a single blog post, and eventually making it to Twitter, but it is impossible to make a subversive innovation that brings people to Mars.

Hou Yi, founder and CEO of Box Ma Xiansheng, recently said in an interview: “All big business is not a small step run, iterate quickly. All big business needs on the first day of business. Do top-level design and understand the nature of the business.”

In addition to the above mentioned deficiencies, I think lean startups are facing other problems.

The first is the choice of the control group. If lean startup is a scientific experiment, there will be a so-called AB test, there is an experimental group, there is a control group. Through the comparison between the experimental group and the control group, the final conclusion is drawn.

Many times, people who do lean business will unconsciously fall into this logic and think that they are doing a scientific experiment, but in fact, entrepreneurship is never a scientific experiment. In the middle of the process of entrepreneurship, the data obtained and the experimental scene are always full of noise and grayscale. This grayscale can be controlled in the laboratory scene, but not in the entrepreneurial scene.

Second, the entrepreneur himself is a ruler of interpretation. Two people are equally entrepreneurial, get the same data, and finally have the opposite interpretation. Is it right or wrong to interpret? Should this matter persist? These problems alone cannot be quantified, and all of this ultimately ends up returning to the founders themselves.

As mentioned earlier, lean entrepreneurship is an intensive learning and a trial and error learning. Lean entrepreneurship has the advantages and disadvantages of all trial and error learning.

What are the disadvantages of trial-and-error learning? There are two kinds of errors in statistics: one type of error and two types of errors. These two types of errors are like a seesaw. On one side, the other side is high. One type of mistake is “it is better to let go of a thousand, not to kill one.” The second type of error is just the opposite. It is “it is better to kill one thousand and not let one go.” The thinking of lean entrepreneurship is to reduce the chance of wrong killing, which also means increasing the chance of missed.

Not only that, lean startup is a fast feedback mechanism, although this mechanism is co-produced with this era, but it will also bring some new problems, such as the lack of persistence and can not wait until the birth of the explosion products.

The correct posture of lean startup

The disadvantage of lean startup is short-term gain rather than long-term gain; partial optimization rather than global optimization; repetition of successful experience rather than absorption of failure lessons. So, how to overcome the inherent shortcomings while giving full play to the advantages of lean entrepreneurship?

The first is to return to strategic thinking. Lean startup is like GPS, it can help you find the optimal path,But can’t help you determine where the end point is. Therefore, entrepreneurs must not use lean entrepreneurship instead of strategic thinking. The relationship between the two is strategic thinking, lean business is behind. Moreover, your assumptions must be based on strategic thinking, not on lean entrepreneurship, and the relationship between the two cannot be reversed.

Secondly, the essence of trial-and-error learning is inductive, but inductive method must be combined with deductive method, and deductive method requires us to improve our abstract thinking ability. I suggest that you learn the macro mechanism design theory, learn how to set up the mechanism, and how to formulate the rules of the game, which can help us to make up for the shortcomings of the simple induction method.

More,Learn from the Jewish “parallel logic” (Proposed by Professor Zhang Ping of Tel Aviv University, Israel)Think about the problem and improve the difference The degree of tolerance of the opinions. Ancient Greek philosophers, such as Socrates, will strictly abide by three laws: the same law, the contradiction law, and the middle law. In the case of the Chinese law, it believes that “A and non-A can never be true at the same time.” But Under the “parallel logic”, “to complement each other immediately”, the two contradictory views may be the two sides of the same truth, which can be true at the same time. So, if you encounter ideas that are different from your own point of view, don’t rush to deny it, but be compatible and think differently.

Finally, “I don’t want to do anything, but I want to be myself.” The most important thing is to return to the founder itself and strengthen the cultivation of the three senses (sensitivity, beauty and inspiration). It must be acknowledged that perfect lean entrepreneurship is also inseparable from the traction of values. We rely on values ​​to lead lean entrepreneurship, rather than lean entrepreneurship to drive values.

I would like to use the words of the founder of BAE Systems as a summary: “A startup is not a technology company in nature, but a learning machine. The speed at which entrepreneurs learn and improve their self-awareness determines the ultimate ability of the company. How fast and how far.”

Edit | HanselWU