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.

No comments:

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...