Ash Maurya is a serial entrepreneur, a published author, and someone who has become an inspiration for many through his inception and proliferation of the lean canvas tool.
Q: Can you talk a little bit about the lean canvas, its relationship to Eric Reis’s book “The lean startup” and how it came to be?
A: I have been an entrepreneur for many years and about five years into that experience I started questioning my methods as I launched several products that all looked great in the beginning but none of which were eventually successful. I started looking into common reasons for this recurring lack of success and, around 2009, I encountered a lecture by Steve Blanc at Berkeley. That time was the beginning of customer development principles which was later developed by Eric [Ries] into what became The Lean Startup. As I was able to witness these developments firsthand, I decided to develop tools for the purpose of serving as a means of implementation for those theories. I felt like what I was hearing from Eric and Steve consisted of principles but that it was difficult to put it into practice.
For example, the notion of documenting your hypotheses and running experiments was known at the time, but in terms of tools, the best you could do was an Excel spreadsheet which was far from ideal. I started experimenting with various kinds of alternatives and my blog was actually initially called “Practice Trumps Theory”. I was trying out different alternatives and sharing them on my blog as I went along.
At that point, I stumbled onto Alex Osterwalder’s business model canvas and it struck me as an interesting way of visualization. A couple of months later, I encountered an attempt to tweak that canvas format as a means of documenting one’s riskiest assumptions and that really grabbed my attention. My main observations about the business model canvas, as I tried to apply it to a startup idea, were that some of its elements were things that were too far off in the future like key resources and key partners. So I started tweaking the boxes based on my learnings. For example, it was clear to me that such a tool had to focus on customers and their problems and so I added the “Problem” box and whenever I added a box I removed something else. That’s essentially how the lean canvas came to be. As I was trying out things, I’d write blog posts about them and when I posted the lean canvas idea to my blog it rose very quickly and, even today, we still get traffic to that post. It appeared to align with what many other people were experiencing. That post turned into posters that I used in workshops which helped me tighten up some of the boxes. It was very important to us that anyone would be able to fill a lean canvas without having to study it in depth. My background is as an entrepreneur, not an academic, so that was very important to me. Eventually, the blog I was writing became the book “Running Lean.”
Q: From your experience, which of the boxes is the one that people struggle with most?
A: Over the years, I have been coaching and teaching Lean Canvas it seems that a box people tend to struggle within the beginning is the “unfair advantage” as it requires a thinking that isn’t natural to most people, at least not initially. Another one is “key metrics” which isn’t trivial and, in fact, I wrote an entire book called “Scaling Lean” to address that in particular. Another thing is the instruction to start with customers and problems. Unfortunately, entrepreneurs tend to approach their idea as a solution they’d like to implement and then start looking for the problem and customers that will justify the solution they have thought of. I now regard the canvas as a way for people to articulate their ideas and then use the canvas to help them see their biases reflected in the initial canvas they create.
Q: I know you also work with corporations and I’m curious about what happens when you apply the lean canvas in established organizations vs. when you do so with startups.
A: I start all conversations with corporations the same way. Corporations have to innovate faster than ever before. Startups most often fail because they run out of money before they can identify their customers and find a scalable way to sell to them. Corporations err on the side of stopping their conversations with customers altogether and failing to build things their customers actually need. My implementations are usually focused on teams seeking to implement the lean startup method internally and are starting to roll out internal processes. I have recently written about the idea funnel and the principle that, instead of betting on a small number of ideas, you should maintain a portfolio of ideas and have the ability to make a higher quality selection out of those you experimented with, thus being able to make a larger number of educated guesses vs. a small number of big bets. Something we are hearing from our customers is that the canvas offers them standardization, which is valuable when you run a funnel at scale. It introduces a language that executives can understand quickly.
Q: I’m curious about your opinion as to what it takes to create a shift in mindset in corporations. What can we do to create the changes that will allow lean startup principles to be adopted?
A: Every few years, there’s this new hot management trend that organizations “must” incorporate, like Agile or Continuous Integration, into their processes. So, naturally, when you introduce something new like a lean startup, there will be some eye-rolling. At the end of the day, in order to change the mindset, you have to generate results. If you are able to get opportunities explored and show results a lot faster than what they are used to, as we did in companies like Cisco and Newscorp, then you are setting the stage for that shift in mindset that you are seeking. Essentially, if people start saying “How were you able to do that?” then you know you are on the right path.
Another key to changing the mindset is breaking the normal patterns with relation to the projects in the funnel. For example, instead of offering annual funding to an idea that you like, you switch from time-based funding to merit-based investment, where you have to reach certain levels of validation to get the next round of internal funding. Even when you reach later stages of the project and you’re building an MVP, which could take 9-12 months, you are still basing your decisions on project progress, on its interim findings, and avoiding timeline-based lock-in.
Q: So what I’m hearing is that you are creating a “safe” environment where you control the rules. You ask for a little bit of time and money for a certain time period and tell management “We’ll do things our way, which will generate things that excite you and then you will want to invest in these things and you’ll want another wave of such exciting things.”
A: Exactly, and in addition, the cost is much lower than what organizations are used to spending on innovation. For example, a large bank wants to look into blockchain, which would usually entail investing millions of dollars with no real method behind it. In this case, we would come in and say: “Give us a much smaller budget, a small team of five of your employees and a few months and we can get you a lot further along in your quest compared to the original intent which would have been much more costly”. What’s interesting is that we find ourselves in situations where there are competing initiatives taking place inside the organization in parallel to us. This ability to present tangible outcomes through learning and findings allows organizations to compare you to such alternatives and realize your value, which accelerates the shift in mindset. This is differentiation based on speed, cost and the ability to make educated decisions.
Q: Once internal corporate ventures get the green light and business units start building them, they tend to undo a lot of the learnings that were accumulated in earlier stages. In addition, business units don’t have the skill of taking something from 0 to 1. In your book “Scaling Lean,” you tackle this issue of how to properly scale a startup in ways that can be very relevant to organizations so I’m interested in how that came to be.
A: As I was working with startups and internal corporate ventures, it became clear to me that there should be some notion of minimal success criteria. There’s this tendency to try and predict how big a product will be and that isn’t very productive because one will seldom perform an adequate estimation. It will usually just be a hockey stick fantasy. I find that it is much more productive to put a stake in the ground and say that if in three years time we don’t reach certain outcomes (revenues, customers, deployments) then we will scrap the product and work our way backward regarding what needs to happen now, in one and in two years in order to get to that final desired outcome. Three years is the timeline I prefer because it is a timeframe that isn’t too close, so teams have time to develop their customers and understanding of the market, while not being too far off in the distant future, or worse, with no horizon whatsoever. A technique I use is when facing an aspiring unicorn with a hockey stick Excel forecast, is that I ask about their most successful product and ask them to revisit historical data and look into their success rates three years into the project. That usually allows me to put the new project into perspective and reduce the three-year goals to more practical levels.
Q: If someone reading this article is starting an internal innovation activity in their organization, what would the lean canvas and the scaling lean methods do for them?
A: I could summarize years of my work with a single mantra that says “Love the problem – not your solution” and that’s what these tools will help you, as innovators, shift your mind towards. We can build things most of the time but what matters is whether we should do so and if anyone would care if we do.