Just as is shown in movies, most of us imagine starting a business in three phases: the eureka moment, the photo montage, the workaholic frames and the final magazine cover recognition. The time allotted to phase II, the workaholic frames is the longest. The entrepreneur is scouting for potential team members, pitching to investors, going back on his ideation to incorporate their feedback, pilot testing his product and operating in stealth mode to maintain secrecy of the product. For years this has been the ‘Traditional’ approach of starting a business.
What is a Lean Start-Up?
With the advent of the time-poor-millennials, an important countervailing force called ‘The Lean StartUp’ has emerged. It is a flexible approach that aids the product development cycle. As stated in the Harvard Business Review, “It is a methodology that favors experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional ‘big design up front’ development.” This is to say that to assess our businesses we simply go ahead with a Google form survey, instead of using complex business evaluation techniques like SWOT or STP analysis.
What is Enterprise Architecture (EA)?
But all this may seem too dreamy without a conceptual blueprint. EA is an ongoing management process that determines how an organization can most effectively achieve and transition from its current to its future objectives. EA logically prioritizes resources available and presents a framework of the organization that enables entrepreneurs to think about different aspects of their business. It empowers them to link their existing strengths to see where they fit in the business canvas and can connect with the external environment. For instance let us say there are three departments HR, Finance, IT and Marketing within an organization. Enterprise architecture presents details about how every department can be strategically made to function in synthesis to maximize the potential of the organization.
Integration of both our concepts: Lean Start-Up & EA
Both Lean Start-Up and EA are dynamic concepts involving continuous evolution but at the same time they are starkly different. While Lean Start-Up is about constantly revamping business models and making new strategies as per the needs of the customer, enterprise architecture improvises existing strategic plans to align business demands with IT. Both concepts when applied individually are conducive to business growth, but when used together they can move mountains.
The synchronization of the two equips entrepreneurs with a mindset to continuously renovate the enterprise architecture instead of building one that will take years to develop into a perfect ideal. So what happens when Lean Start-Up & EA are applied together?
Let’s take an example to better understand how this synchronization of the two concepts can benefit businesses:
Indian Context
Most of the startups in the e-commerce segment, especially fashion retail, have revised their strategy from B2C (business to customer) to C2M (customer to market). For instance, Stalk Buy Love is a fast-fashion company that runs an online shopping site focusses on 7 days mind-to-market for new designs. This is to say that the production of clothes is based on the demand generated online by virtue of display of leading fashion trends on the website/app. Unlike conventional online apparel brands such as Myntra and Jabong which ‘produce first and sell later’, SBL pursues an unprecedented customer-driven strategy. A highly converting design catalogue allows them to run just-in-time fulfillment which ensures that inventory accumulation and wastage doesn’t happen. It gives them an edge over its competitors in terms of highest GMROI (gross market return on investment) in the Indian fashion market.
Global overview
Internationally too, the driving force behind world’s most successful businesses such as Amazon has been its obsession with its customers. This fixation has led to intimate customer bonding which encourages them to not only stay loyal to the company but also give back to the company in the form of constant feedback about their expectations from it. Bezos believes that, “Everyone has to be able to work in a call center” so that they have insight into the customer’s perspective. As such, each year he and thousands of Amazon managers attend two days of call center training and field calls periodically. Taking customer opinion at the right time prevents wastage of time and resources.
Dropbox is another multi-billion dollar business that minimized the time of its product development cycle by a virtual display of the product seeking opinion polls! To estimate if the demand for their product was sufficient to go ahead with the actual product development they asked for e-mail addresses of potential beta users.
But how do we integrate the two?
Following are a few ways by which entrepreneurial teams can look at incorporating the two:
The melting point of an Enterprise Architecture and a Lean startup comes in when the synchronization of the two equips entrepreneurs with a mindset to continuously renovate the enterprise instead of building towards an virtual ideal to be in the next few years.
- Create an outline of IT assets and business processes with an objective to understand the strengths and weaknesses of the business
- Set in place governance principles that drive an ongoing discussion about business strategy and how it can be expressed through IT
- The Lean Startup approach aka ‘Build-Measure-Learn’, aims to increase the value to customers while using fewer resources:
a. Phase 1: Build
Includes launching a minimum viable product (MVP), which could be just a virtual representation of the product to gauge potential users’ interest. MVP revolves around the dominant question of our time: whether the product should be built and not can it be built?
b. Phase 2: Measure
After evaluating the level of interest, it is essential to determine if the demand is sustainable to:
>To continue product development?
>If it is continued, what attributes should be added or refined?
c. Phase 3: Learn
Finally, after compiling potential users’ feedback, the last decision making point is whether to persevere or pivot. It encompasses the critical factor of changing product strategy or shutting down development entirely. Eric Ries who coined the term ‘Lean Startup’, believes that the future of a startup must not be analyzed by the burn per month but by number of pivot opportunities left undiscovered.
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