‘Lean Startup’ Revolution Sweeps Through Business Schools

Ellen Rudnick, executive director, Polsky Center for Entrepreneurship at Booth

Ellen Rudnick, executive director, Polsky Center for Entrepreneurship at Booth

Other skepticism about whole-hog adoption of lean startup has focused on biotech and pharmaceutical products, and Booth’s Rudnick points out that a company selling a new drug can’t very well take its prototype pills out on the streets to test customer response. And improved versions of existing products may not require extensive feedback from prospective customers, Harvard’s Eisenmann says. “Where the method is really most powerful is where there’s uncertainty about either the problem or the solution or both,” Eisenmann says. “You don’t need to do a lot of hypothesis testing if you’ve got a widget you think is 10% faster, 20% cheaper.”

Lean startup’s focus on pivoting in response to the “out of the building” work raises a risk of “premature capitulation” – innovators not diligent enough in their research may divert from what otherwise may have been a successful path, says Rimalovski at Stern. “You don’t want someone to just bail on something because two or three people said no. You need to really understand the why, as to why they said no,” Rimalovski says. “When we teach this, we push people really hard to get volume, so they are getting a hypothesis validated, that they’re hearing it multiple times and that they’re understanding.”

Central elements of lean methodology also have a place in development of complex products such as industrial automation, says Chen of MIT. “The fully integrated system might be impractical to iterate in the classic lean startup manner from a cost and elapsed-time standpoint, but the spirit of hypothesis testing, learning, and pivoting based on new data should still be applied,” Chen says.

DON’T DISMISS THE BUSINESS PLAN: BOOTH

It’s not time for entrepreneurship educators to throw away the business plan, Rudnick says. Students in Booth’s Polsky Center still learn how to write business plans, “but each part of the business plan comes from the business model canvas,” Rudnick says.

“The business plan to us is still important but it has to be dynamic. We look at what is contained or should be contained in a business plan and have them test each of those elements.” 

Elaine Chen, MIT Sloan entrepreneurship instructor

Elaine Chen, MIT Sloan entrepreneurship instructor

Blank believes the lean startup skill set is a crucial asset for businesspeople at any level of any industry. “Our society in the 21st Century is moving with a speed, urgency, and agility that we just didn’t see in the 20th Century,” Blank says. “Large companies need to move at the speed of startups. Small businesses need to move at the speed of a startup. Unless you understand how to be resource efficient . . . you’re going to be kind of left out.”

BUBBLES FOR BOWSER

Back at Haas, team Woofyy is onto version 3.0, after testing of the second prototype revealed it couldn’t keep dogs engaged. “After eating the treat, he’s gone,” says team member Sharon Liu, who has a master’s in electrical engineering from the University of Florida. The problem’s solution? Bubbles. The device now allows the owner to use a smartphone to operate a bubble-making feature. And it turns out that although many dogs have little interest in chasing a robot, they love to chase bubbles. And dog owners love to watch their dogs chase bubbles. Also the owners can use a smartphone to dispense treats, watch and talk to the dog, and listen to anything their dog might have to say.

For Sharon Liu, with her engineering background, Lean LaunchPad has immersed her in an entirely new way of thinking about product development. “If you don’t know exactly who your customer is, you don’t know how to design your device,” she says. “I’m so used to having the mentality that if you have an idea, you build it, you ship it, and then you figure out how the customers will receive it. Engineers, we’re not so used to talking to the customer.”

Following Blank’s direction about lifetime value, team Woofyy has decided on branded treats for the device, possibly to be sold by monthly subscription. And the frog doll has given way to a broader selection of offerings for covering the surface of the device and holding the owner’s scent.

After Blank’s three-hour Lean LaunchPad class sessions at Haas, each of the teams joins another for a debrief of their latest presentations. The students ask each other questions, make suggestions, sometimes offer up contacts.

The first three iterations of Woofyy

The first three iterations of Woofyy

“We’ve had a lot of help from our peers,” Sharon Liu says. “It’s a very close-knit community.”

As for TrueCare24 and their near-failure experience, they had no idea that Blank’s stinging criticism of their effort had been a planned ambush. “The teaching team had pre-calculated we were going to make an example out of them,” Blank says. “There was no malice involved. These guys were adrift, not asking for help, and all over the place.”

In the days following their debacle, the TrueCare24 team met with every instructor, talked to some 25 potential customers, and then in the next class knocked their presentation out of the park, Blank says. “They were spectacular.”

DON’T MISS: Q&A WITH THE FATHER OF LEAN STARTUP; HOW STANFORD CULTIVATES ITS STARTUP CULTURE

  • There can’t be much arguing done about the requirement to have a lean startup mind set in today’s digital age. It’s imperative if one wants to get product to market fast enough to sync with the market in a type of synergy. The time lag involved in a traditional plan means you simply don’t catch the markets move, akin to buying stocks at the top of the market, only to ride the crash down. Lean start up is agile and a bottom up approach to strategy which allows for adaptability and seamless evolution with market tides.

  • Stuart

    I actually agree with Andreesen’s statement that Steve Blank’s methodology isn’t necessarily an approach that should be taken with some of the bigger ideas. Elon Musk’s efforts in clean energy, given as an example, are a great example.

    That said, Steve Blank is amazing and Berkeley’s school of business should be given massive amounts of credit for giving him the platform to develop his thinking — and teaching. It’s a lucky set of students that have gone through or that are going through his program there — and now at the other schools where Blank has expanded his efforts. I’ve heard him speak a few times and his ideas are really compelling.