Thursday, April 25, 2013

My lean (ugh) startup guru

I had my introduction to management consulting in the 1990s—the peak of the management fad era that had begun the previous decade. One of the biggest fads was "reengineering"—so popular that it became the euphemism of choice for "layoffs" which, in practice, was already a euphemism for job cuts. There were a lot of those in the 90s, and you couldn't go long without hearing about some company's new "reengineering" strategy.

Veteran consultants told me there really wasn't much that was new about reengineering other than the label—which they would often roll their eyes at. But it was new to me (just about everything was), and became one of the many management philosophies and methodologies I immersed myself in through the decade.

Somehow, I've now become one of the experienced guys, and today I think back to those times whenever I hear "lean" around startups. Eye rolling is often involved.

I'm a big supporter of many of the core concepts that now fall under the "lean" banner—they've been fundamental to much of the work I've done with startups over the last 10 years—but the label itself always grates.

Much like those veteran consultants from 20 years ago, I think the problems I have are that too much credit goes to the person who came up with the label and that the newness of the label can lead people to believe that the concepts are much newer than they really are.

I'd probably be fine if the bulk of the credit went to Steve Blank. And much of it does. Though many of the concepts didn't start with him, he was the one who brought them together and synthesized them in a modern tech startup context. His "customer development" (never roll my eyes at that one) approach is not only the foundation of lean, but its four walls as well. Maybe the ceiling too. When tech people talk about "lean" not only should Blank's name come first, there shouldn't be anyone else mentioned in the same sentence or even paragraph. But he isn't the one who came up with the "lean" label, so that often isn't the case. In some circles, derivative and often dumbed-down versions of Blank get more recognition than the original.

But Blank wasn't my lean (ugh) guru. For years, from the time I started working with startups in the late 1990s, the voice I could often feel myself channelling belonged to Joe Cossman. If you're old enough to remember Cossman at all, it's likely from his 1980s infomercials. That's where I came across him, when I was either a high school student or undergrad. The big winners that he talked about from his career included the ant farm and the spud gun. He wasn't exactly launching or running Fortune 500 businesses with products that change the world, but then that's true for most startup entrepreneurs.

Cossman lived to see the web—he died in 2002—but his biggest business successes, and certainly his infomercials, were pre-web. If he'd been born later, I think he would have loved the Internet. He would say that all you need to start a business is a typewriter, stationery, postage and perseverance. The Internet has since replaced the first three, so today you could translate his requirements as the Internet and perseverance, which is the foundation for a lot of startups.

But Cossman wasn't encouraging blind perseverance. One of his key points—and one that stuck with me for years to come—was that entrepreneurs too often wasted money building products without putting them to the test of the marketplace first—and that this was something they could have done inexpensively, and should have done early on.

I don't have much from Cossman to pull quotes from, other than memories (possibly misty, water-coloured ones), but this brief excerpt from one of his infomercials—recorded with my first VCR—is definitely proto-customer-development:

"This is where most people go astray. Unfortunately, someone will design or create a product and they become emotionally involved over that product. It's almost like it's one of their children. And that traffic light is flashing red, red, red and all they see is green. And before you turn around, they've hocked the family jewels, they've made inventory, they've made tools and molds and then they're looking for a way of selling it.

Only a week ago, a man came to me and he had a good product, but he had put $300,000 into that product and ran out of money. Yet, when he came to me a week ago, truthfully, I could have showed him where to be at the same position he is today for less than $2,000. Because I won't allow a man or woman to make more than one of anything. Don't make 10,000, don't make 5,000. One sample—I call it a prototype—can give you the same answers as a large inventory. Because, when you have a good sample, you can photograph it, you can put out a publicity release, you can take it to department store buyers and get an opinion on it, you can show it to mail order houses, and that's all you need is one sample."

He's not talking about software and someone who doesn't easily see the view from 10,000 feet may not spot it at first, but the key concepts at the heart of "customer development" are in there and in many other things Cossman said. He was talking lean (blech) 30 years ago, and there were no doubt many others before him.

I'm not suggesting that anyone today needs to read Cossman or seek out his infomercials. The world has changed. I've had decades to let Cossman's ideas evolve in my head with the times and seeing them now for the first time would be jarring. There's more than enough resources available from a current perspective (Blank's Four Steps to the Epiphany is still the best place to start).

But Joe Cossman was the one who put these thoughts in my head all those years ago and someone whose ideas I've remembered every year since.

Yes, the ant farm guy from the infomercials. He was my lean (eyeroll) guru.

Saturday, April 20, 2013

Spinning the unemployment numbers

Statistics Canada releases its Labour Force Information report every month, and while each edition contains many new numbers, almost all of them play a barely-audible second-fiddle to the unemployment rate.

I live in part of Middlesex County that falls within the London census metropolitan area (CMA). This area had a panic attack when the March figures were released a couple of weeks ago. You'll quickly see why when you scan the unemployment rates of the 15 CMAs in Ontario covered in the report:

Thunder Bay6.3
Kitchener-Cambridge-Waterloo  7.2  
Greater Sudbury7.8
St. Catharines-Niagara7.9

You might think it would be hard to put out a positive spin when your number is second from the bottom (and as close to the bottom as it is to the one ahead of you). But when you look at the numbers—all of the numbers—it turns out that it's not so difficult to find a silver lining.

And that got me wondering how hard it would be to find something strongly positive to say about each of the 15 CMAs—based solely on their Labour Force Information stats—no matter how bad their unemployment rate is. I was particularly thinking of what municipal politicians might say to put the best spin on their local numbers.

Obviously, the ones with the lowest unemployment rates are a piece of cake:
  1. Guelph: We have the lowest uemployment rate of any CMA in Ontario.
  2. Ottawa: We're neck-and-neck with Guelph for the lowest unemployment rate in Ontario. The 22,400 net new jobs we created last year was second only to Toronto.
  3. Hamilton: We're neck-and-neck with Guelph for the lowest unemployment rate in Ontario.
  4. Thunder Bay: We have one of the lowest unemployment rates in Ontario.
  5. Kingston: We have one of the lowest unemployment rates in Ontario and are second among all CMAs in Ontario in net new jobs created per capita since the last municipal election.
Let's see what we can come up with for the 10 remaining CMAs that won't be able to brag about their current unemployment rates.
  1. Barrie: We've created more jobs per capita than any CMA in the province since the last election and have seen the largest drop in unemployment rate among all Ontario CMAs. (I like that one.)
  2. Kitchener-Cambridge-Waterloo: Among the CMAs with a population over 200,000, no one has created more jobs per capita than we have since the last election—nearly 15,000 net new jobs.
  3. London: Outside of the huge urban areas of Toronto and Ottawa, no CMA in the province created as many jobs as we did last year. (See! We got something.)
  4. Toronto: Since the last election, we've created more new jobs than all the other 14 CMAs in Ontario combined, and are in the top four even on a per capita basis.
  5. Windsor: Since the last election, we've had the second biggest drop in unemployment rate among the 15 CMAs in Ontario.
  6. Greater Sudbury: Since the last election, we've created the third most jobs per capita among the 15 CMAs in Ontario and have the third highest drop in unemployment rate.
  7. Brantford: Among the less urban CMAs in Ontario—the seven with a population under 200,000—only Barrie created more jobs than we did last year.
  8. St. Catharines-Niagara: Since the last election, we've created a net 12,300 new jobs— only two CMAs in Ontario have created more jobs per capita than we have. Our drop in unemployment rate makes us one of the top four performers in the province.
  9. Oshawa: Since the last election, our unemployment rate has dropped from 10.1% to 8.6%—a performance that puts us in the top third of all CMAs in the province. (Showing some stretch marks but still okay.)
  10. Peterborough: You know, these labour force numbers aren't the be-all and end-all.

Can Windsor use a non-snub to energize a focus on innovation?

OMG, did you hear? There's a new $100 million "Innovation SuperCorridor" initiative from the province introduced in the budget...