THE lean startup. These three words have gone from a management concept to a global movement, favoured by startups that are big on bootstrapping their way to growth.
In a nutshell, the lean startup philosophy is about spending as little time as possible to come up with a minimal viable product and building on existing systems to eliminate redundant efforts.
The three central principles are the goal of minimising waste, the culture of continuous improvement and the importance of measuring the big picture.
The term “lean startup” was coined in 2008 by Eric Ries, who was inspired by Toyota Motor Corp’s Lean Thinking management approach famously applied by the Japanese carmaker in its production system.
Its popularity has grown beyond its Silicon Valley birthplace and spread to other parts of the world following the success of Ries’ bestselling book The Lean Startup published in 2011.
In 2012, “lean startup” was voted by Forbes as one of the top 10 overused buzzwords.
But what does it mean to be “lean” and can Malaysia’s entrepreneurs adopt this here?
How much can Malaysia use it?
Code Ar.my, a three-year-old local tech startup, seems to think so. They have been developing the principles into a platform for educating entrepreneurs on using the lean startup methodology.
Code Ar.my founder and CEO Zafrul Azhar Noordin says the method puts a “scientific framework in entrepreneurship”, specifically in product and customer development.
“Before this, it was all an art, a gut feeling, a hunch and all that. Now, we are changing it to a science and it makes [entrepreneurs] think more like a scientist, as opposed to an artist, or someone who goes by gut feelings,” he explains.
“It’s about customer feedback over intuition, and iterative design over ‘big design upfront development’.”
Although the model has brought success for many businesses, it may not work for startups outside the Silicon Valley. At a conference last year, American startup guru Steve Blank admitted that the methodology was developed in and for the Silicon Valley.
Blank, co-pioneer of the lean startup movement, said the process assumes that startup entrepreneurs have full access to eager and intelligent business customers, a host of industry angels and venture capitalists.
“Outside the Silicon Valley, the density and risk profile of investors are not the same. Without investors, you can’t have a cluster. It’s like one hand clapping,” he was quoted as saying.
Nevertheless, Zafrul notes that the lean startup is not a silver bullet or a magic crystal ball. It’s not for all types of businesses and situations.
“I don’t think it is healthy to have only one way of doing things — you should always have options, and many people have been successful with their own methods,” he says. And the lean startup philosophy represents another method of doing things.
Although he concedes that the lean startup is not for everyone, Zafrul remains confident that there is value in it that Malaysian entrepreneurs can adopt.
For example, he believes that the entrepreneurial skill of empirical evidence is missing in our ecosystem. Our entrepreneurs are great at observation, experience and forming awesome ideas, but they tend to skip experimentation, he says.
“This is where the lean startup method can fit into our ecosystem. The next time you hear about an awesome idea, it should be followed by [conversations] about the amount of experimentation or ‘validation’ the idea has gone through,” he adds.
The larger focus for Code Ar.my is on startups at the idea stage and the following 36 months. Zafrul strongly believes that the lean startup method is crucial in the first three years of a typical startup.
“Generally, they spend the first two years figuring out what their business is all about — the product, the customer, the price point, marketing channels and so on. This is where the lean startup fits in,” he says.
‘Start early, fail early’
Zafrul also says startups that have experienced failure before will appreciate this method.
“I hope it reaches as many of the 90% that have failed, or will fail, in their startup or business venture. Sometimes, personal ego and pride get in the way of building a successful business,” he says.
“It could be because you lie to yourself, even when deep down, you know you are building the wrong business. You don’t ‘pivot’ because your ego doesn’t allow you to be wrong, and [to your ego,]being wrong is the same with being a failure.”
When one embraces the lean startup mindset, he wants to know that he is wrong and wants to “fail” as quickly as possible.
“Today, I would be smiling from ear to ear if I found out that I was wrong and failed within a week. I would ‘pivot’ immediately and continue my journey with money in the bank and time on my side,” says Zafrul.
What’s also lacking in the local ecosystem is a large enough pool of leaders and experts. Malaysia needs more volume, and not just two or three of the same people shouting in the ecosystem.
“We need more buzz and we’re not there yet. I like this example when I landed in San Francisco — I was showing my passport at the Immigration and the woman asked me what do I do. I said I do a startup, and we ended up in a nice short conversation about startups. That’s San Francisco,” Zafrul says.
“The ecosystem needs different groups of people, different networks, and that’s why we’re trying to decentralise. I don’t just want Code Ar.my to solely lead lean startups — we want many more people in this. If something were to happen to us or one day we get tired of it, then we still have a sustainable community, and it carries on.”
Bringing lean startup to the region
Code Ar.my is looking to spread the word further afield. It has been appointed the regional partner for Lean Startup Machine, a global movement dedicated to educating and training entrepreneurs to use the lean startup method.
“The way we do Lean Startup Machine is very inclusive, and to make it sustainable, we work and develop local community leaders in several cities,” says Zafrul.
“Our role is to support these cities in terms of how they build Lean Startup Machine, like how they get mentors and speakers.”
In 2013, Code Ar.my participated in and sponsored the first Lean Startup Machine workshop in London, and last year, organised two in Kuala Lumpur.
Zafrul and his team have now taken up the challenge of being responsible for 14 countries — all 10 Asean countries, Hong Kong, Taiwan, Nepal and Maldives — covering 24 cities.
As the countries’ lead and regional director, Code Ar.my’s goal is to create sustainable and lasting communities, like those in Kuala Lumpur, Kota Kinabalu, Johor Baru and Penang.
“I really want to democratise and have different faces representing Lean Startup Machine in Malaysia. That way, it’ll be sustainable,” Zafrul says, acknowledging the value in having many perspectives and voices in the ecosystem.
Lean Startup Machine is organised based on demand from cities around the world. You can vote for an event to happen in your city on its website www.leanstartupmachine.com.
The first regional workshop kicks off in Kuala Lumpur from June 5 to 7. Lean Startup Machine plans to conclude the regional tour before December.
The 2½-day workshop provides a crash course on the important aspects of Ries’ methodology such as identifying customers, how to come up with assumptions and validating those assumptions with potential customers.
“This method can also be adopted by companies eager to climb on the innovation bandwagon. We are trying to push it out to schools and universities, not just to students but also to lecturers,” says Zafrul.
This article first appeared in #edGY, The Edge Malaysia Weekly, on May 25 - 31, 2015.