The Lean Startup - Eric Ries [24]
In accordance with traditional management practices, Barlerin is spending time planning, getting buy-in from various departments and other managers, and preparing a road map of initiatives for the first eighteen months of her project. She also has a strong accountability framework with metrics for the impact her project should have on the company over the next four years. Like many entrepreneurs, she has a business plan that lays out her intentions nicely. Yet despite all that work, she is—so far—creating one-off wins and no closer to knowing if her vision will be able to scale.
One assumption, for example, might be that the company’s long-standing values included a commitment to improving the community but that recent economic trouble had resulted in an increased companywide strategic focus on short-term profitability. Perhaps longtime employees would feel a desire to reaffirm their values of giving back to the community by volunteering. A second assumption could be that they would find it more satisfying and therefore more sustainable to use their actual workplace skills in a volunteer capacity, which would have a greater impact on behalf of the organizations to which they donated their time. Also lurking within Caroline’s plans are many practical assumptions about employees’ willingness to take the time to volunteer, their level of commitment and desire, and the way to best reach them with her message.
The Lean Startup model offers a way to test these hypotheses rigorously, immediately, and thoroughly. Strategic planning takes months to complete; these experiments could begin immediately. By starting small, Caroline could prevent a tremendous amount of waste down the road without compromising her overall vision. Here’s what it might look like if Caroline were to treat her project as an experiment.
Break It Down
The first step would be to break down the grand vision into its component parts. The two most important assumptions entrepreneurs make are what I call the value hypothesis and the growth hypothesis.
The value hypothesis tests whether a product or service really delivers value to customers once they are using it. What’s a good indicator that employees find donating their time valuable? We could survey them to get their opinion, but that would not be very accurate because most people have a hard time assessing their feelings objectively.
Experiments provide a more accurate gauge. What could we see in real time that would serve as a proxy for the value participants were gaining from volunteering? We could find opportunities for a small number of employees to volunteer and then look at the retention rate of those employees. How many of them sign up to volunteer again? When an employee voluntarily invests their time and attention in this program, that is a strong indicator that they find it valuable.
For the growth hypothesis, which tests how new customers will discover a product or service, we can do a similar analysis. Once the program is up and running, how will it spread among the employees, from initial early adopters to mass adoption throughout the company? A likely way this program could expand is through viral growth. If that is true, the most important thing to measure is behavior: would the early participants actively spread the word to other employees?
In this case, a simple experiment would involve taking a very small number—a dozen, perhaps—of existing long-term employees and providing an exceptional volunteer opportunity for them. Because Caroline’s hypothesis was that employees would be motivated by their desire to live up to HP’s historical