SPEED AND URGENCY IN SILICON VALLEY
DEPLOYING THE LEAN STARTUP METHOD
The Lean Startup is a movement launched by Steve Blank, a serial entrepreneur in Silicon Valley. His Lean LaunchPad has changed how startups are built, how entrepreneurship is taught and how science is commercialized; and it’s changing how large corporations and the government innovate. Blank wrote “The Four Steps to the Epiphany” and co-authored
“The Startup Owner’s Manual” with Bob Dorf. He teaches at Stanford University; the University of California, Berkeley; Columbia University; and New York University. In 2011, he developed the National Science Foundation (NSF) Innovation Corps—known as I-Corps and considered the standard for sci- ence commercialization in the U.S.—and later he brought the I-Corps to the National Institutes of Health (NIH).
Along with Peter Newell and Joe Felter of BMNT, Blank has developed and taught a Hacking for Defense class at Stan- ford that will spread to more than a dozen other universities nationwide in 2017. He launched its sister class, Hacking for Diplomacy, at Stanford in fall 2016.
After a stint in the Vietnam-era Air Force repairing fighter jets in Thailand, Blank ended up in Silicon Valley, where he start- ed or worked on eight startups in 21 years. After retiring in 1999, “I had some time to think about it and realized—hereti- cally, at the time—that we were just missing something really big,” he said in an October interview with Army AL&T.
A typical Silicon Valley startup at the time, he said, was treat- ed pretty much as a small version of a large, established com- pany. You wrote a business plan, raised capital from investors, hired a team, introduced a product and then started selling it.
“And most of the time you’d fail, but that was the methodology, because large companies wrote plans and raised money and whatever, and they succeeded,” Blank said. “So, most of the time when you failed, you blamed it on the founder, the VP of sales or something else.”
What was missing, Blank realized, was the understanding that startups had almost nothing in common with large, success-
SELLING THE LEAN STARTUP Steve Blank speaks at Startup Istan- bul in October 2015. The event’s organizers describe it as “a gather- ing of the leading startups, internet companies, business angels and venture capitalists from Asia and Europe.” (Photo by Alison Elliott)
ful companies. Large companies know their customers, their competitors, their products and their pricing. Startups go into business knowing none of that. “We needed very different tools to manage chaos and uncertainty, versus what you have in a known organization, which is certainty.”
None of the conventional ideas of how to run a business dove- tailed with startups, Blank said.
“For 100 years, business schools have been teaching, not wrongly for existing companies, how to manage supply chains, how to write income statements, balance sheets and cash flow, what you use to manage profits and companies, how to hire, how to do everything … but they were all assuming you had an existing company,” he said. “There wasn’t even a class or a language to describe, well, what if you’re operating in a se- ries of unknowns rather than a series of knowns? There wasn’t even a word to describe that.”
It’s comparable, Blank said, to the Cold War as opposed to the current war against Islamist extremists.
“When we were facing off against the Soviet Union, that was a series of knowns. In Europe, you could most likely know where their tanks were going to come through, we knew their weapons. The equivalent is dealing with ISIS [the Islamic State group]. Here’s a threat that’s changing hourly. Because they learn rapidly, they train in cyberspace, they buy on eBay, they use Telegram and Messenger, they pay with PayPal, etc. That’s a very different threat. It’s a chaotic and agile threat versus the ones we were facing during the Cold War.”
As Blank started working on his theory of how startups should proceed, he developed three components. “One is under- standing that anything decided on Day One won’t survive first contact with customers. And therefore what you really have is a series of untested hypotheses. No facts. So how do we organize those hypotheses?”
Step One: Articulate your hypotheses. Blank borrowed the Busi- ness Model Canvas, a concept from Alexander Osterwalder, a Swiss business theorist, author and consultant. On a single sheet of paper, you develop your hypotheses: What’s the prob- lem? Who’s your customer? How will you deploy your team? What’s the distribution channel? What’s your solution? “Write down your hypotheses. And write them down in a framework that’s repeatable and sharable with other people,” Blank said. “Here’s what we think the problem and solution look like.”
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Army AL&T Magazine
January-March 2017
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