Anything those customers experience from their interaction with a company should be considered part of that company’s product.
This is an important rule: a good design is one that changes customer behavior for the better.
Failure is a prerequisite to learning.
It is insufficient to exhort workers to try harder. Our current problems are caused by trying too hard – at the wrong things.
In my Toyota interviews, when I asked what distinguishes the Toyota Way from other management approaches, the most common first response was genchi gembutsu – whether I was in manufacturing, product development, sales, distribution, or public affairs. You cannot be sure you really understand any part of any business problem unless you go and see for yourself firsthand. It is unacceptable to take anything for granted or to rely on the reports of others.
After more than ten years as an entrepreneur, I came to reject that line of thinking. I have learned from both my own successes and failures and those of many others that it’s the boring stuff that matters the most. Startup success is not a consequence of good genes or being in the right place at the right time. Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.
You can’t take learning to the bank; you can’t spend it or invest it.
Startups exist not just to make stuff, make money, or even serve customers. They exist to learn how to build a sustainable business. This.
Only 5 percent of entrepreneurship is the big idea, the business model, the whiteboard strategizing, and the splitting up of the spoils. The other 95 percent is the gritty work that is measured by innovation accounting: product prioritization decisions, deciding which customers to target or listen to, and having the courage to subject a grand vision to constant testing and feedback.
The CEO and VP of product, instead of building their business, are engaged in the drudgery of solving just one customer’s problem. Instead of marketing themselves to millions, they sold themselves to one.
Startup, I have always been a bit of a troublemaker at the companies at which I have worked, pushing for rapid iteration, data-driven decision making, and early customer involvement.
People are accustomed to thinking of accounting as dry and boring, a necessary evil used primarily to prepare financial reports and survive audits, but that is because accounting is something that has become taken for granted.
There is a reason all past management revolutions have been led by engineers: management is human systems engineering.
We do everything wrong: instead of spending years perfecting our technology, we build a minimum viable product, an early product that is terrible, full of bugs and crash-your-computer-yes-really stability problems. Then we ship it to customers way before it’s ready. And we charge money for it. After securing initial customers, we change the product constantly – much too fast by traditional standards – shipping new versions of our product dozens of times every single day.
Cycle after cycle, the team is working hard, but the business is not seeing results. Managers trained in a traditional model draw the logical conclusion: our team is not working hard, not working effectively, or not working efficiently.
I call this building an adaptive organization, one that automatically adjusts its process and performance to current conditions.
The critical first question for any lean transformation is: which activities create value and which are a form of waste? Once.
Part of the special challenge of being a startup is the near impossibility of having your idea, company, or product be noticed by anyone, let alone a competitor.
Product managers figure out what features are likely to please customers; product designers then figure out how those features should look and feel.
Just as scientific experimentation is informed by theory, startup experimentation is guided by the startup’s vision. The goal of every startup experiment is to discover how to build a sustainable business around that vision.