Archive

Posts Tagged ‘lean startups’

Creating Mountains of Technical Debt in Lean Startups

March 21st, 2011 No comments
This post originally appeared in Launching Technology Ventures a Harvard Business School MBA elective course that examines lean startup management practices.

Lean methodology values employing minimal effort to get to the next milestone.  Lean principles have a short-term focus to test hypotheses, which is quite rational considering that once a hypothesis is disproven you haven’t wasted any time in further wasted effort.  Customer development methodologies also encourage similar principles, ensuring a deep understanding of the customer and the market before embarking on the development of an expensive product that nobody wants to buy.  These lean principles and culture will work great in optimizing the path to get initial traction, but could wreak havoc on further development of the product causing avoidable risks down the line.

Creating technical debt through minimizing waste
Specifically in software development, lean product development can result in significant technical debt.  To be sure, technical debt refers to the costs associated with hasty software development resulting in neglecting architecture, incomplete testing, and incomplete documentation.  Subsequently, once a product has accumulated technical debt, further development work contains interest payments on this debt in the form of building on code that still needs further work to truly be complete.  In the future, this debt can be paid off through rewriting the code in the right architecture as intended, completing all the testing necessary, and completing documentation.  Acquiring technical debt, in fact, is often a direct result from applying lean principles, since activities that do not add immediate value to achieving the next milestone in a product release should be considered waste.

Vicious cycles of technical debt
The issue of technical debt accumulation is further compounded by the fact that once technical debt has been accumulated, cost-benefit analysis will often show that paying off the debt creates value in the long term, but destroys value in the short term – thus a bad decision if you are choosing the most efficient lean path to the next milestone.  This vicious cycle of technical debt accumulation can result in large amounts of increasing debt overhang, causing significant amounts of interest payments that significantly hinder and potentially stall further development.  The vicious technical debt cycle is analogous to taking out increasingly higher rate credit cards to pay off previous debt accumulated; you keep buying yourself a short term lifeline at an increasingly higher long term penalty.

Symptoms of technical debt are hard to identify
While a great developer with intricate knowledge of the code can provide a decent estimate of technical debt, this debt is often hidden and unknown to higher management.  The symptoms of technical debt are very hard to identify.  A development cycle with large technical debt interest payments results in development delays that often can’t be attributed to anything in specific, typically unfairly blamed on the miscalculation of estimated development timelines.  Subsequent decisions made based on a misunderstanding of technical debt situations can lead a startup astray – resulting in anything from slight misallocation of resources to cutting off potentially profitable product lines.  In situations where technical debt is the root cause of development delays, misinterpretation by management can result in severely misguided decisions.

How to really stay lean
Using lean methodology as a guide, product development timelines and decisions should be made balancing the optimal short term solutions with an awareness of the long term consequences.  There is nothing wrong with accumulating technical debt, in fact similar to financial situations, acquiring some debt to attain certain milestones more quickly can certainly result in value creation.  But be mindful of the longer term risks involved and addicting qualities of debt, a vicious cycle of technical debt can create a house of cards that will sooner or later come crashing down.  Early investments in good software architecture, testing, and documentation create higher cost and minimal benefit in the short term, but can pay huge dividends in the long term.

Some tips on how to avoid acquiring mountains of technical debt in a lean startup:
  • Ensure management has a clear understanding of the level of technical debt
  • Balance the short term needs for technical debt creation, with the longer term benefits of paying it off
  • Understand the large shadow cast on software development by architecture, testing, and documentation

 

Lean Startups: The Most Efficient Path To Non-Differentiation

March 14th, 2011 No comments
This post originally appeared in Launching Technology Ventures a Harvard Business School MBA elective course that examines lean startup management practices.

In a hypothesis-driven lean start-up environment, lean theory recommends maximizing your learning from customers while minimizing effort.  While the theory sounds great, if lean startups follow lean principles blindly it could lead to unintentionally bland results.  More specifically, if the product vision is truly inspired, lean approaches can drive the development path away from a disruptive new solution and gravitate more toward incremental improvements upon existing products.

Lean methodologies can stifle innovation
Lean principles originated in the manufacturing environment to help reduce waste and focus on value-added activities.  In manufacturing environments however, lean principles are typically only implemented once both the production processes and product are very well defined.  In contrast, in the R&D lab lean principles can inhibit collaboration, creativity and innovation.  To be sure, there are certainly ways to improve the efficiency of the innovation process.  In fact, IDEO has developed their business around ways to achieve this in a repeated fashion.  In an uncertain innovative environment, the value that certain activities bring to the final solution can often only be identified as such in hindsight.  In a start-up, just like in an R&D lab, the product is still not yet fully defined and structured processes can limit the creativity of innovation and breadth of outcomes.  Additionally, iterative continuous improvement principles can severely limit the final product results from lean start-ups to incremental improvements.  If the lean startup methodology is implemented without careful thought, the original vision of the startup will likely be discarded pre-maturely.

Customer feedback can be misleading
A truly disruptive product solves a problem in a creative novel way, and often requires new customer behaviors.  If a customer needs to behave differently for your product to work, customer-centric development and feedback needs to be approached with care.  Customer feedback and behaviors may be skewed toward experiences with existing products.  Thus early adopter customers can give misleading feedback, and cause the product development path to stray away from the original vision – before this vision has even been appropriately tested.  An ideal visionary customer can perhaps piece together where you are trying to go with your product, but this can be very unreliable.  Real valuable customer feedback comes from a completed product, not half of a prototype and some hand waving.

Splitting interdependent hypotheses can lead to false results
Disruptive products often have a whole hypothesis composed of a group of sub-hypotheses that are interdependent on each other.  Testing these hypotheses independently can lead to both false-positives and false-negatives.  Just because you couldn’t sell the peanut butter or jelly sandwiches independently, doesn’t mean the peanut butter and jelly sandwich isn’t a great snack.  Customer feedback used to test a hypothesis only becomes valuable with a product that is able to test your whole hypothesis.  Thus if maximum learning really only occurs with all the pieces of a complex product pieced together, then your minimum viable product is really just your first whole product release, just like in traditional product development.

Lean startup methodology is a helpful guide, but not gospel
Lean startup methodology provides great advice on ways to iterate quickly and get customers involved in startup product development.  Ultimately I do believe Steve Blank’s book (Four Steps to the Epiphany) and Eric Ries’ lean startup methodology are extremely effective as a guide – but should be interpreted with care.

Some tips to help avoid these potential lean methodology pitfalls:
  • Don’t stifle early innovation by over-applying lean principles
  • Test interdependent hypotheses with whole products
  • Keep a strong vision and filter customer feedback

 

 

Categories: Lean Startups Tags: