This primer provides a brief introduction to the subject for anyone who needs to know but is afraid to ask!
The lean management concept was the brainchild of Toyota with their Kanban and Just In Time manufacturing processes.
But, for our purposes, we need to start with Eric Ries’ 2011 book, ‘The Lean Start-Up.’ Despite its title, it is not just for new businesses! It is of interest to any organisation dealing with conditions of ‘extreme uncertainty.’ Entrepreneurial start-ups clearly fall into this category but so, too, does any organisation developing a new product or moving into a new market. In fact, it applies to anybody faced with the question, “will people buy this?”
The core idea is very simple…
In a world of extreme uncertainty, the classic approaches to business planning or new product development don’t work. The usual linear ‘research, develop, launch’ approach is much too risky to be taken seriously and explains why the vast majority of new business ideas fail.
Instead, Ries advocates an iterative ‘build, measure, learn’ loop. He argues that an initial business idea can never be more than an untested hypothesis, no matter how much effort goes into research. The only effective way to validate such a hypothesis is to test it in a live setting.
This involves building a ‘minimum viable product’ (MVP) and getting it to market quickly so you can observe, measure and learn from the reaction. The hypothesis is then refined and the MVP is modified and re-tested.
The key point here is that the MVP is a prototype, not a fully developed product. It must work well enough to test your hypotheses and be sufficiently adaptable to respond quickly to what the market tells you. Sometimes the feedback will encourage you to ‘persevere’ by evolving your product. In others you will need to face up to a fundamental flaw in your thinking and make a radical ‘pivot.’
But, either way, you are reacting to how the market actually behaves, rather than how you think it should behave!
Put simply, ‘agile’ is the application of lean principles to the customer acquisition process.
It's no exaggeration to say that old school marketers were largely operating in the dark. Marketing communication was expensive, cumbersome and inefficient and, to make matters worse, nobody could be sure what worked or why! Sales managers faced the same problem. They relied for their information on their sales people in the field, who were notoriously economical with what they chose to reveal!
Faced with such an environment, it's hardly surprising that attitudes to marketing investment were characterised by suspicion, reluctance and conservatism. That has all changed. The overwhelming adoption of digital technologies has had a ground-breaking impact.
The response of the market can now be observed and measured with confidence for the first time. We can see what people access, how they access it and how they respond. Customer profiling is much more precise, enabling us to target effectively. And, content can be produced and modified quickly and economically, so we can respond rapidly to what the market tells us.
In a word, “yes!” And, this is coming from somebody with a life long aversion to the uncritical adoption of the next ‘silver bullet.’
Unlike the vast majority of past ‘bright ideas,’ the combination of lean and agile fundamentally improves our ability to assess investment effectiveness. The commercial potential of new business ideas (whether products or market approaches) can be evaluated rapidly and customer acquisition processes can be developed and optimised with confidence.
‘Agile customer acquisition’ has now become a fundamental element of the overall lean development process. After all, it's hard to see how you can test an MVP without it!
These approaches are, of course, relevant to any business engaged in new product or market development but they also apply to organisations needing to achieve rapid growth or are having to cope with a fast changing environment.
If you operate in mature, low volume, stable local markets and win business through personal relationships and word of mouth, this is, possibly, something you can do without. But, for everybody else, this stuff is very important indeed!