Friday, March 01, 2013

As Usual, Blues & Sushi

Notice: They're not Japanese
Right now there's a lot of energy circling around the entrepreneurial wagons. In LA, the too So-Cal coined "Silicon Beach," is propelling more networking, seminars, angels, vcs, Meetups, advisors, mentors, consultants, incubators, and crowd this and that than comfort permits. If the word "bubble" makes you shift in your seat, read on.

This is about one facet of this phenomena, the so-called "Lean" approach to startups, popularized by Eric Ries. First off, I'll say that I couldn't agree more with lean principles, but second, not because of Ries, because I've known about lean for a while. Years ago I got interested in how companies ran, and along the way, as millions did, read Peters' &  Waterman's In Search of Excellence. But it was the PBS doc based upon the book, if memory serves, that opened my eyes. In it, I first learned of Toyota's and Honda's different approaches to running a company versus the typical American pyramid.

For those who dig just a bit, it's easy to find that it was Toyota, decades ago, that originated lean principles, not Ries, who in fairness mentions Toyota. And while the "experts" fawn over lean this and that in its processes, they neglect the most important factor: people. 

While implementing lean approaches in process, the most important thing Toyota did was to recognize that you can say "we're gong to be lean," but how, exactly, do you do that? 

Back in the day, Toyota issued a company-wide offer: make a suggestion that helps the company run more efficiently and guess what? You get paid. Honda, meanwhile, took a different approach; while one diagram displayed the aforementioned typical American pyramidal top-down -- and therefore information flow -- approach to management, Honda's diagram was all over the place, with lines criss-crossing in a bird's nest. Their reasoning was simple: open up comm lines so that ideas -- people, not bureaucrats -- begin increasing the probability for synergy.

And here's the crux of the matter: you can have lean principles, mvps, pivoting... but if you give it to a bunch of "twenagers," what's going to happen?

Go back to the example of Toyota soliciting ideas from its crew, high and low. Management thinks they know about the assembly line, but the workers are doing the assembly line. Doing doesn't necessarily confer knowledge, much less insight, but how can it hurt to open up the comm lines to those on the front lines rather than constantly having a one-dimensional view from a bird's eye on high?

This simple thing -- grounded in people -- was the crux of Toyota's lean principles, not process re-imagining per se.

By handing over things such as lean principles and Business Model Generation (Osterwalder & Pigneur, another good read) to skinny jeans, I believe that's a good thing. But without the experience or training and skills that enable one to think so that you can pivot in a logical way, there's a false bubble of confidence bred. The joke goes that youth is wasted on the young, but we don't laugh when we say that a president can't be under the age of 35.

Think about one of my favorite things, basketball. The sport is rife with stories of young, high flying athleticism and enormous amounts of skills. But it's also true that no less than Michael Jordan himself points to the mental aspect of sports as being the toughest challenge. During a revealing interview, the living legend had this to say about his storied comeback to basketball after his brief baseball detour:

Q: When you came back, there was a new breed of players that had not tested themselves against you.
Jordan: Well, it was a challenge. One of the reasons I left was because I didn't have as many challenges as I [had] previously. Now I had all the challenges in the world. People were presenting different challenges to me and that's something that I was really thriving [on]. Young kids were talking trash to me. Some of them were physically, athletically a lot better than I was. But I think another championship -- to do what hadn't been done as far as I could remember. What separated me from them was I knew more. I knew how to win. I knew what it took. So that was a challenge to prove and see if you could teach these kids what it takes about winning. Not just physical skill but how to apply that in similar situations. The same thing that Magic Johnson and Larry Bird did to me in the 80's basically. It was my responsibility to teach these young whippersnappers how to do that, and in the midst of all that, it was a challenge to come back and win.
--NBA at 50 Interview: Michael Jordan, Part 2
What separated me from them was I knew more.

In essence, I think another bubble has been built, albeit anything that gives entrepreneurship  a leg up on the typical American favoritism toward huge conglomerates can't be all bad. What this bubble boils down to is that by emphasizing process without the skills to think logically through one's business model in all of its contingencies, that false sense of confidence builds. It's a step up from where we were, and in fairness, people such as Ries, Steve Blank and Osterwalder are steps in the right direction, but I'm pointing to something much more fundamental.

One of the things former Apple evangelist Guy Kawasaki says to startups is to hire better than yourself. What he points to is that startups are a far more complex landscape than a game of poker, and that people and thinking are the crux of the matter. There must be a sober way of mapping out one's business model in all of its permutations, not just acquiring a few skills, such as developing an mvp. To circle back to basketball, it's like having a hotshot shooter who can't handle the most fundamental aspects of the game such as switching on defense. Running a business is an ultra complicated affair, and if you're not sound fundamentally, no amount of mvp or testing would cause me to place a bet on you -- which is what an investment in a startup is -- a bet.

Look at the movie studios, one of the oldest institutions to employ the mvp principle in the form of pre-release screenings and focus groups to garner early feedback. Most movies languish and fall far short of expectations, prompting William Goldman's infamous dictum about Hollywood: no one knows anything. This is because of one thing: the studios not incorporating a ground up approach at the very beginning of the development process. By ignoring fundamentals, they automatically incorporate more risk into their formula.

Last, I find it amusing, but not surprising, that lean principles are having a hey day now. Ries has fashioned a career from it. But just as the blues only found its rightful place in American minds when foreigners such as Peter Green, John Mayall and Eric Clapton championed the art form, so too are these Japanese principles now wending their way into American startup circles. Just like sushi, Japanese finger food, now made an entire meal due to white people giving the "this is good" thumb's up.

Go figure.