Lean-StartUp Hype (and Plateau)

I’ve just read a nice interview of Eric Ries on the current situation around the public awareness of the Lean-StartUp methodology. The author writes:

Eric Ries and his philosophies of rapid iteration, testing hypotheses and turning entrepreneurship into a science went from something that was considered crazy to something that was considered overhyped. There was almost no time in the middle where it was simply something that people considered and universally understood.

Lean StartUp on the Hype-Cycle

Gartner-Hype-Cycle-Graph

In fact, I believe this is the normal way how things evolve. We know the Gartner hype-cycle for technology, but this is the same here, I believe. It’s just not engineering technology but managing technology. And I thing we are now in the interesting part the technology becoming mature, being applied at different industries and by companies of different size – slope of enlightenment. In 5 years, I believe we will be entering the plateau.

Here you can find Anton’s german site for innovation management consulting.

Image-Attribution: Wikimedia Commons

A small round of people

Couple of days ago, I’ve given an introductory speech about the lean-startup methodology at a new startup event at Humboldt Innovation, organized by Benedikt. The room was half full with around 10 people. Not much, but I sometimes this is the exact right small round that everyone is comfortable with.

When a round is not too big, people open up much easier and speak about their projects in an honest and much more detailed way. There is enough time for everyone to ask question and give his perspective. This way I feel all the participants get a huge value out of it.

What is interesting is, that this dynamics is strongly dependent on the amount of people. When the round grows the interaction, especially in the startup world, tends to turn more into an exchange of cocktail pitches. A good atmosphere for networking, but not so much for exchanging valuable feedback.

Personal Networking, Corruption and How to Avoid the Latter

When I was a physicist, I thought networking was a kind of corruption (somewhat simplified). Today, I think it’s an important natural structure of human relationships and of a great value.

Figures of man in circles connected by lines
Danger: Personal networking can lead to corruption

 

My original thoughts were not completely off track. Especially, in the 90’s and early 00’s there has been a number of scandals in Germany, e.g. Mannesmann trial or the  CDU contributions scandal, where it became clear that there are strong personal bonds between people on the very top levels of the largest and most important institutions in Germany. And that this bonds make them much less vulnerable to the judicial system than common people.

 

Important decisions on behalf of organizations taken out of personal interest can be more or less destructive. Examples vary from politicians lobbying regulations for industries where they end up after their legislative periods to buying a car from a dealer you a friends with and spending more of your family money.

 

Benefit: Personal networking means in-depth information on people

 

When you know someone personally you get to know people in their entirety – with their skills, motivations, experiences, concerns, needs, etc. No online platform or other tool has ever been able (and may never be) to formalize all this parts.

 

Personal networks are limited. It’s a lot effort to build and sustain a personal network. And you can’t have a meaningful personal relationship with too many people at a time, some say the maximum is around 150.

 

Despite this limit, there are areas where personal networks are most efficient. The more subtle the decision criteria the more important is the holistic information about the person in question. The most obvious example is recruiting: Four out of five jobs are landed through personal networking. Business Development, Sales and Fundraising are all very much influenced by personal networking.

 

Caution needed when exercising authority 

 

When personal bonds create an additional incentive for a decision that you take on behalf of an organization you should be cautious. When ordering a service for your startup don’t limit yourself to your friends. This is when you should start making a difference between your interest and those of your company. And this is sometimes very hard. I know two ways how to approach this problem:

 

1. Pro-actively enlarge the number of options you have

2. Ask yourself: Would you decide in favor of your friend, even if you couldn’t expect anything personal in return?

 

What do you think?

Here you can find Anton’s german site for innovation management consulting.

Why I like Copycats and Where we Compete

I’ll say it straight out – I am happy there are Copycats in Germany, Russia and many other countries. I am thankful for their existence and to the incubators creating them.

 

Now before you kill me, please read what I have to say.

 

Logos of Zalando, Wimdu, eDarling, StudiVZ and 9flats

 

Copycats are good for customers

 

One example, Zappos was founded in 1999, they’ve got their large investment from Sequoia in 2004. Were we able to order anything on Zappos from Berlin in 2005, ’06, ’07? They had a market large enough in their home country. Zalando started only in fall of 2008! Would you like to wait for 5-10 years for a new business model from the US to come to Germany? From the customer point it’s clear that Copycats are good.

 

By the way, due to Copycats this attitude has already changed. AirBnB was founded in 2008 and they’ve already opened their first office in Germany in June 2011 to compete with Wimdu, 9flats and others.

 

And still, at almost every entrepreneur meeting in Berlin there is the “Copycat bashing” minute, sometimes longer. It’s very rare to hear someone defending them.

 

Copycats rarely innovate on technology but on culture adoption

 

As a physicist I look at it from a techie point of view. The more unique we’ve made our product and its features the more motivated we get. Let’s face it, the best thing for us is to come up with something cool that everyone needs but no-one has thought of before we did. But this is a risky business. Finding the product-market fit might end up in a total loss of invested capital and time. But this is what motivates us and that’s not at all about Copycats.

 

Copycats have to innovative at only one thing – adapting the business model from abroad to the culture at home. This has rarely anything to do with technology, so it doesn’t motivate us. Depending on the market in question, cultural adoption can be a huge or a very small risk. For example, general e-commerce is, I believe, quite culture-independent. At the same time, having worked in a health company, I don’t think you can just Copy & Paste any B2C health startup between most countries.

 

We are just competing, lets concentrate on our advantages

 

Our problems originate from both kinds of startups – Copycats and ones with substantial innovation – competing for attention of the press and angel/VC money.

 

It easy for us to get jealous of how simple it is for Copycats to validate their business model,  since it has already worked somewhere else. And to get jealous of resulting lower the risk for investors and hence of how much easier it is for them to raise money.

 

Instead of emotional disagreement and “Copycat bashing”, we should concentrate on emphasizing the advantages of investing in a startup with substantial innovation – i.e. without a fully tested business model. Here are some examples:

 

  • company culture – including necessary lack of hierarchy and amount of creative space
  • potentials of a first mover, which are huge in the internet (look at Facebook or Amazon),
  • higher agility in the beginning due to the smaller team

 

Comments and add-ons to the advantages list are very welcome.

Here you can find Anton’s german site for innovation management consulting.

Five most common regrets of dying people

This blog post – originally in Russian – made me think a lot. I’d love to share it with you and hear your opinion. For this, I translated it into English:

A woman, who is staying anonymous, worked for a long time in a hospice. Her duty was to comfort patients in the last days. Thus, she literally spent with them their last days and hours. From her observations she put together an own ranking of main regrets of people who approached the edge of life.

 

Here are the 5 most common regrets of dying people:

 

1. I regret, that I wasn’t brave enough to live the life, that I felt was right for me, not the one others expected me to live.

 

This was the most common regret of people. When people realize that their life is almost over, they can look back and easily access which dreams remained unfulfilled. Most of the people haven’t tried to follow even half of their dreams and had to die in the realizing that it was due to a choice that they might not have made themselves. It’s very important to try to act on at least some of the most important desires when you are young. Once start losing health, it’s too late. Health brings freedom that only few can appreciate, while they still have it.

 

2. I regret, that I worked so hard.

 

This feeling was present with every male patient that I cared for. They missed their youth and their relationships. Some women also expressed this regret. But as most of them were from the old generation, they generally did not engage in earning money for the family. All men I worked with, were deeply regretted to have spent most part of their lives conducting monotonous work to earn a living.

 

Simplifying your life you can lower your demand for income, that you think you need. By making more free space in life, you become happier and more open to new opportunities.

 

3. I regret, that I wasn’t brave enough to show my real feelings.

 

Many people have suppressed their feelings to keep relationships. As a result, they agreed to a mediocre existence and never became, what they wanted to be themselves. Many illnesses appeared as a result of suppressed feelings of sadness and resentment.

 

We cannot control the reactions of others. Although, their first reaction to the changes in relationship that you impose might be negative, in the end this you put the relationship at a new healthier level. In the end, it’s better to dissolve any unhealthy relationships in your life.

 

4. I regret, that I haven’t kept in touch with my friends.

 

Often this people didn’t realize how important their friendships were until the very last weeks of their lives. And then, it often to late to start looking for them. Many of them were so busy with their own lives, that they let their friendships pass by. Many regretted deeply, not having invested the amount of time and effort in friendships that deserved it. Everyone misses their friends, when he is dying.

 

Everyone living an active life tends to underestimate the importance of friendships. But when you are at the edge of life, material thing lose their meaning. Of course, everyone wants his financials in as good shape as possible. But money and status lose their value at the end of life. People with this regret, mostly are trying to do as much good as possible to the people they love. But once they are too ill and weak, they can’t really use their resources to accomplish their tasks.

 

5. I regret, that I didn’t allow myself to be happier.

 

This kind of regret was surprisingly common. Many didn’t understand until the end, that their happiness depended completely on their choice. They were slaves of their once established ideas and habits. Being afraid of changes, they pretended to themselves and to others that they are happy with their lives.

Here you can find Anton’s german site for innovation management consulting.

 

Image-Attribution: Thanks to Vlado

Overcoming negative motivation of a ToDo list

ToDo lists are still the most popular tool helping us to concentrate on tasks. In the Apple App Store alone there are more than 1000 ToDo list apps. I believe there is a problem with common ToDo apps and I can now put a finger on it (or at least close to it). I would call it a negative feedback loop or negative dynamics.

 

 

Round loop from a done task to a frowny

 

Negative feedback loop

 

ToDo apps I know, work in the way that you have a huge prioritized list of tasks to do. Every time you finish a task, it’s marked and put into background, i.e. it’s grayed out, it disappears completely or  is put into a different place. At the same time, you see the next task you have to complete.

 

I believe, this yields a motivational dynamics that is strongly negative. The app tells you that the task you’ve just put so much effort into completing is now not important or worse not existent anymore. And instead of the old, newly worthless, task you get a new one that you have to complete. I think, one needs to be a very self-hating kind of person to get motivated by this.

 

The whole purpose of  such an app is to make you more productive. Just organizing your tasks doesn’t deliver this result. Much more, we need to be motivated and satisfied to stay productive and not to become anxious of all the things we still have to do. In fact, for those who don’t have too many different things to do, organization of tasks is even less important.

 

My suggestion

 

I’ve realized this basic fault of ToDo apps and task organizers just a week ago. Since, I’ve been using the following approach. I’m using the app Wunderlist (from a hot Berlin startup 6Wunderkinder), but this app has the same fault as described above. Done tasks are grayed out, but at least they are still visible.

 

During the day, I note down all the tasks I am working on no matter how short (almost all). If something distracts me from a task, it’s a new task. By acting this way, I end up have many more tasks “done” in the end of the day, then I actually planned to. For example, I note any call longer than 5 minutes, or feedback I gave to a member of my team. In the end of the day, I have a look at the things I’ve done and appreciate my work. This last bit is the most important. It changes my attitude towards the whole list of tasks. Marking things “done” enlarges the appreciation and increases motivation.

 

Additional advantages

 

There are better systems out there, I am sure. But this one is giving me satisfaction for the work done and has some extra advantages:

 

First, every time I am being distracted, I decide consciously, whether I want to be distracted or not. Something that is worth my distraction is worth being noted down as a task. This way it’s easier to stay focused on the things you do.

 

And second, when assessing all tasks done through out the day, I have a pretty good account of what really took my time and effort. This way I have a clear picture and am able to draw conclusions and prioritize new tasks.

 

Feedback

 

What system do you use to keep yourself motivated? Any apps you can suggest? I’d love to hear about it and to try it out.

 

I hope guys from 6Wunderkinder read this and draw conclusions for themselves. Wunderlist is one of the best ToDo apps, I’ve seen so far. In fact, some days you get an e-mail from them, telling you what tasks are overdue and so on. Why not sending out an email telling people how much they’ve achieved last week?

 

And finally, special thanks goes my friend Timon, whose own self management system started my thinking process that eventually lead to this post.

 

Here you can find Anton’s german site for innovation management consulting.

How minimal should be your MVP?

Today, we had a discussion in our team, that I believe is very generic for many startups.

 

Should an MVP really be minimal or may be a little more?

 

To be more precise, we wondered how to test a certain feature:

 

  • Option A – to build it in a very basic way, hard coding most of the stuff, not thinking about adaptability or higher code standards and just test, whether it is already bringing the assumed value to our customers yielding certain metrics OR

 

  • Option B – to implement this feature fully functional and adaptable, as we right now would assume it will be helpful to our customers. We would then check the hypothesis measuring the same metrics.

 

The lean way would be to choose Option A, because it is already enough to measure the metrics and so to validate the value hypothesis. The main argument for this option is – You might create waste by putting additional effort into Option B, as the necessity of the feature itself is unclear.

 

The other side argued, that it seems pretty obvious that in one way or another we will need the feature in question at some point in future. And that completing Option B, after having validated the feature with Option A, we will have to start from scratch. So we would have created waste by implementing Option A first.

 

I believe in general both arguments are valid and sometimes even Option B might be right. But it’s a real example, I’ll try to prove it with real numbers.

 

We estimated that Option B would take us 4 days and Option A only one day to implement. The one factor which is key to the whole problem is – the probability that the feature in question will be successfully validated as bringing value as we designed it now. Let’s call this probability P. See the following table for the expectation for effort/time consumed for P = 20%.

 

Quantified effort linked with each option

The result is pretty obvious. Choosing Option A we have to expect to invest less effort/time. In fact, as long as P is less than 75% it’s better to choose Option A. For that you have to be pretty sure of your feature. Taking the startup definition by Eric Ries:

 

A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.

 

Well, under extreme uncertainty, you can hardly expect any feature to ever have a validation chance of 75%. In other words, it’s really important to keep the MVP minimal, as long as you are in a startup. We’ve come to a full circle.

 

Did my thoughts make sense to you? Have you have similar experiences? Let’s exchange!

 

Here you can find Anton’s german site for innovation management consulting.

Personal blog of a physicist turned entrepreneur