Lean Startup vs. Agile

I recently dusted off my Lean Startup book and gave it another read as a refresher. While reading, I was reminded how some people still throw around terms like Lean, Lean Startup, Agile, and many other buzz words (Design Thinking, Sprint, Scrum, Kanban, DevOps, etc) almost interchangeably. When launching a new business, product, or feature set, it is important to understand the differences between these methodologies so that you can harness them to work together. My primary focus here will be on two of the most popular: Lean Startup and Agile.

Agile Software Development

Agile methodology is typically focused on software development. It builds on the lean principles of eliminating waste and optimizing for the whole. It favors an incremental, iterative approach over in-depth planning at the beginning of the project.

There are a number of popular agile practices that fall under the agile umbrella, such as Scrum, Kanban, and XP. Since agile is open to changing requirements (hence the name “agile”), it is ideal for developing products and features quickly and just-in-time.

Agile and Improving Adoption

At two past companies I worked at, I helped drive Agile adoption within the product development teams, serving in a range of roles, from scrum master and product owner to overall product manager.

Using concepts from Lean and Agile, we saw our organizations achieve many of the promised goals. We eliminated waste and drove value throughout the product teams. We increased overall value by breaking down organizational boundaries (particularly between stakeholders and development teams), deferring commitment and delivering the most important features quickly. We constantly talked with customers to deliver the features and functionality they wanted, and got glowing feedback.

We were doing everything right.

Agile adoption went well at both companies, driving major efficiencies and improving quality. But did it actually drive revenue or business growth? At one of the companies, it did not. So what happened?

There was one main difference. At Company A, we already had product-market fit prior to adopting Agile. At Company B, we were still searching.

The question that Agile methodologies don’t answer is this: What if you are building something no one wants?

To Persevere or Pivot

This is a question of product-market fit, and thus, a business one: Does the company persevere or pivot?

Agile teams will happily keep building features for a product that is dying or is no longer growing. Customers may praise the new features. However, without a way of testing and measuring your initial business hypothesis, teams will have have no way of knowing if the new features are adding any businessvalue. Vanity metrics such as number of features delivered and lower bug counts, or even total paying customers and gross revenue, aren’t enough to tell you if you have a sustainable business model.

Agile methodologies certainly allow your product teams to be nimble in cases where you do need to perform a pivot, such as a product or customer segment pivot. Pivots are fundamental changes in strategy, but usually don’t require a large technical change or redevelopment in the underlying product. Thus, the time it takes to pivot and test another value/growth hypothesis is much less than the time it took for the initial MVP.

To summarize, even the best agile product development organization will make no difference when it delivers a product that customers don’t want (or don’t know about or don’t want at the price being offered).

Lean Startup

The problem with the notion of shipping a product and then seeing what happens is that you are guaranteed to succeed — at seeing what happens. But then what? — Eric Ries

Lean Startup tries to solve these problems with a validated learning approach that helps us develop a solid business model. Lean Startup follows the principles of measuring results as you go and changing requirements as necessary using the Build, Measure, Learn loop.

Lean Startup: Build, Measure, Learn loop

Lean Startup: Build, Measure, Learn loop

While Agile is focused on optimizing product development — the “build” part of the Lean Startup, it does not adequately address the “Measure” and “Learn” parts of Lean Startup, which are critical factors to a new startup’s (or product’s) success.

It is important to note that even though “Learn” is listed last in the Build-Measure-Learn ordering, it is the first thing Lean Startup recommends you focus on. First, decide what it is you want to learn so that you can design and build a solution with clearly defined measurables. Without developing an initial value and growth hypothesis for your product, you might continue to build and iterate on vanity metrics or flawed business assumptions.

Combining Agile and Lean Startup (and Design Thinking)

Using a holistic Lean Startup + Agile approach, you can test your initial assumptions using actual customers. In doing so, you can quickly iterate toward product-market fit.

Though I won’t go into detail here, in situations where the entrepreneur (or intrepreneur) does not have a clear handle on the problem space or who the early adopters might be, a methodology called Design Thinking can be used (the other hot buzz word). Design Thinking is an excellent human-centered approach for ideating, and can be employed in conjunction with Lean Startup to help come up with solutions and hypothesis worth validating. See the diagram below.

gartnerimage.png

Startups (and established organizations) that want to innovate and introduce new products into market should use the Lean Startup approach. Ideally, it would follow the above diagram: Identify customer problems and run experiments (Design Thinking), define assumptions/hypothesis and clearly defined measurables to achieve validated learning from a customer segment (Lean Startup), and rapidly develop these solutions in an iterative and flexible manner (Agile).

Repeat until you achieve product-market fit… or pivot.

Giglabs