How to embrace entrepreneurs as employees

I had just finished placing the order of all the supplies that would fill the Proshop that summer. It was my first week on the job as Proshop manager. The golf course was more or less a dump but I loved golfing so I figured why not spend my summer hitting balls on the driving range and getting paid for it. My boss wanted me to fill up the shop with “the usual stuff” and an inordinate amount or head covers. No budget. No past records. No prior knowledge. Just whatever I thought was necessary.

I used my best judgement based on the demographics of the members but come middle of the season anyone could tell I was clearly off point. The give aways were untouched Prov1’s (expensive golf ball) and the obvious shortage of animal head covers. The owner would run comparison reports of last years sales to that current year and be furious every time. My coworker and I tried to explain that there weren’t even the same products in the shop not to mention there were multiple rainout weekends which clearly affected sales. He didn’t want to hear it and because of that I almost got fired.

At the time I knew he was a bad manager but I never took the time to think about what actions he could have taken to set me up for success. I ended up taking the blame and chalked up the shortage of sales to a learning experience that everyone in that position would of had to go through. This is exactly the excuse that Eric Ries tells you to avoid in his book “The Lean Startup”. This personal example doesn’t have anything to do with Startups but the principles can be used in existing businesses as well. His model for Startups is simply build, measure, learn where the amount of learning being done is what your growth is based on, not user statistics. The idea is to go through this process as fast as possible with small changes each time. In this type growth model everyone is affected by the progress of each new task because they each see it all the way through, no matter what their job title.

This idea of lean production has been taken straight from the Toyota manufacturing plant. Their employees don’t pass problems on down the production line to make it look like they’re making progress. If anyone see’s a defect on a car they have the ability to shut down the whole line. The problem is addressed then and there even if it means holding everyone else up. Their philosophy is “we’re ok with having every possible problem happen exactly one time, having a problem repeat itself is unacceptable.”

The real reason this book reminded me of my golf course experience was because of his major point of how important it is to always be testing and learning. When you input a change and you have no way of knowing how it has affected your customers decisions what good was it? Your product may look better but is it more functional? …In comes batch theory. The smaller the batches the more efficient the testing. In the chart below each letter represents a batch.  There is a limit of 3 open batches in each bucket at any given time. This format of implementing new changes forces you to build in metrics for validating hypothesis before starting new ones. Remember each change should come with a hypothesis of the positive effect it will have on the customer, basically whether or not this was a good idea to do in the first place. The metrics involved can be as easy as split testing (running the product with the new change to half your customers and leaving the old product to the other half, measuring the results)

Backlog In Progress Built Validated

In my example I was ordering products, from a Canadian supplier, to fill the entire Proshop. The demand for products was low and  the turnover rate was only twice a season. In retrospect this was an absurd process, it’s not like the products would take weeks to arrive or we were paying huge amounts for shipping. This one big order could have easily been cut down into smaller batches with the ability to measure and learn about the customer needs before placing the next order.

In a retail sense this process might seem obvious, however in web business it is an all too common mistake. People build products for an unknown customer all the time. They either don’t know who their customer is or the customer doesn’t know they need the product. Because these companies don’t practice this lean development process they haven’t done any testing to prove their hypothesis about whether their customers want the product or not, therefore the product usually fails. Eric encourages companies to build minimum viable products (MVP’s) which have the least features possible to accurately test the hypothesis. This product might not look good or function great but after testing your idea is either validated or it isn’t. People worry about tarnishing their brand by releasing a bad product but the reality is not that many people will see it anyway but if this still bothers you, you could launch under a different name. Based on the success of the MVP your team can then make an educated decision on whether to preservere with the original idea or pivot. There is no shame in pivoting your business in new business if it means it can be viable. There is shame however in keeping the company in limbo where your neither dying nor growing at the rate you had intended. If you are constantly testing ideas and seeing how customers respond you should never find yourself in this situation because you have the data to know when something isn’t working and to continue in that path would be a waste of time and energy.

The idea of testing an MVP  before developing a prototype or a ready to launch product is a mistake I’ve made myself. Even before reading this book I had realized that the easiest way to know if there was a market present was to get out on the street, talk to potential customers, make a basic product and charge from day one. This seems like such an easy concept but when you have ideas that you think are great in your head part of you doesn’t want to be realistic and even have the opportunity to hear that no one wants your product. This a huge mistake because you just keep your head down wasting time and money on something that is destined for failure. If you cannot fail you cannot learn. I encourage people to fail fast and fail often because if you aren’t learning you aren’t growing. The hardest part is taking my own advice.