Validated Learning

Running Lean by Ash Maurya

Validated learning is a cornerstone of the Customer Development and Lean Startup methods. Both approaches define a startup as an institution whose purpose it is to create viable business by learning within a chaotic environment. A startup iterates its way to success by tracking meaningful metrics and creating testable hypotheses about growth and value. The outcomes of each experiment guide decisions and streamline processes such as backlog management and product feature prioritization.

Running Lean covers three phases of a startup’s lifecycle: problem/solution fit, product/market fit, and achieving scale. The first phase answers the question “do I have a problem worth solving?” and corresponds to Steve Blank’s Customer Discovery phase. The outcome of problem/solution fit is a Minimum Viable Product (MVP) which is then used to determine whether the solution meets customer needs during the product/market fit phase. Ideally, a startup achieves sufficient market adoption and can move on to the scale phase. Prior to product/market fit the startup is focused on learning and validating its assumptions about value and growth. Afterwards, optimization becomes a key concern.

Every aspiring entrepreneur has a Plan A. Unfortunately most Plan As don’t work…What separates successful startups from those that are not isn’t that they have a better Plan A, but that they can get to Plan B before they run out of resources.

In the video below, Maurya describes the Lean Startup process and points out that effective learning is what differentiates successful startups from unsuccessful ones. The description he gives of moving from Plan A to Plan B is similar to the process Randy Komisar and John Mullins wrote about in their book Getting to Plan B. While Komisar and Mullins focus on using analogs, antilogs, and leaps of faith, Maurya relies on the Lean Startup’s learning focus. He describes the rigorous approach that Lean Startups take as they iterate “from Plan A to the plan that works”. Rather than using gut feel and intuition, Lean Startups use validated learning to discover successful products and business models. Lean Startups immediately start building and testing their business model instead of spending months writing a business plan.

Lean Startup is not about asking what customers want, it is about testing the original vision against what customers do.

The validated learning process in a Lean Startup begins with documenting your business model. Each part of the business model (what is the problem we’re solving?, who is the customer?, how will we reach our customers?, how will we capture revenue?)  is systematically tested through controlled experiments. Validating Product/Solution fit (do I have a problem work solving?) is validated by decoupling the problem from the solution and just testing the problem with customers through interviews. The startup’s business model is documented using the Lean Canvas, which is a business model documentation tool adapted from Alex Osterwalder’s book Business Model Generation.

Validated learning and pivots are key activities in the first two startup lifecycle phases (Problem/Solution Fit, Product/Market Fit). Scale, the third phase, is focused on growth and relies on optimization for success. Pivots are strategic experiments designed to find a plan that works.

In order to maximize learning, you have to pick bold outcomes versus change incremental improvements. So, rather than changing the color of your call to action button, change your entire landing page.

A basic Lean Startup technique is doing the smallest thing possible to learn from customers.

Lean Startups use a iterative Build-Measure-Learn loops to test each successive hypothesis from solution, to demo, to minimum viable product. Maurya recommends making bold changes, but warns against relying solely on speed and learning. He says focus (Right Action, Right Time) is needed to ensure there isn’t waste as the startup simply races to find its next iteration and optimizes too early.The feedback loop is applied to each component of the startup’s overall solution:

• understanding the customer problem (formulate testable hypothesis, articulate the problem, conduct problem interview),
• validating the product demo (formulate testable hypothesis, build the demo, conduct the solution interview with customers)
• validating the solution (formulate testable hypothesis, build the minimum viable product, conduct the minimum viable product interview with customers)

In a Lean Startup…a feature is only “Done” when it provides validated learning from customers.

One of the most interesting concepts in the book is adding a fourth step to your feature lifecycle. A typical Kanban board includes three phases: backlog, in-progress, and done. Adding a fourth phase called “Validated Learning” requires that you prove each feature has provided validated learning (“was this feature any good?”). Closing the feedback loop by determining whether the feature proved or disproved the initial hypothesis ensures that the startup learns with each release. This underscores the Lean Startup philosophy of deliberately formulating testable hypotheses in everything you do to maximize learning.

Maurya’s e-book contains a step-by-step illustration of the Lean Startup method in action. He uses the book itself as a case study and includes detailed flowcharts and scripts, templates, and techniques for customer interviews. He walks through his specific hypotheses for the book and business model canvas product to illustrate how he formulated his business model experiments. The book is focused on web-based products and contains a lot of advice tailored to that type of business (landing pages, SEO, blogs) but the principles can be applied to variety of products and services.

Maurya’s e-book is a great complement to The Lean Startup by Eric Ries. While Ries covers the entirety of Lean Startup strategy, including its roots in Lean manufacturing, and tells the story of his company, IMVU, Maurya provides a “get started today” tactical handbook that will get you up and running within pages.