Our Education colleague James considers how public sector policy makers can benefit from the theory behind lean tech start-ups:
I’m working on a really exciting project with the Greater London Authority and property developers Cathedral Group PLC, aiming to establish the world’s leading centre for digital manufacturing start-ups in West London. As a result, I’ve been spending a lot of time with London’s entrepreneurship community recently, from workspace providers to tech start-ups, social enterprises to investors. I love speaking to entrepreneurs and learning about how they develop innovative ideas, either within existing organisations or when developing new products. And what amazes me is their ability to generate these ideas, products and services with next to no financial or human resources.
So I’ve been thinking… what can London’s tech start-ups teach those of us working in the public sector about innovation?
More specifically, I’ve been thinking about a management approach that is particularly in vogue amongst tech entrepreneurs at the moment, called The Lean Start-up model. Developed by Eric Reis (founder of IMVU and entrepreneur in residence at Harvard Business School) and spoken about evangelistically by trainers and consultants the world over, the approach aims to make the process of developing innovative, customer-centric products faster, cheaper and more effective. In essence, it provides a set of tools that can help us all behave more like the ‘lean’ tech start-ups who have a huge impact with only a few staff and little in the way of financial backing.
What is The Lean Start-up approach?
In brief, the approach is structured around recurring phases, referred to as the Build-Measure-Learn feedback loop.
The approach suggests that rather than writing lengthy business plans and theorising about the best ways to relate to customers, the best way to figure out whether we’re on the right track is to create a product, take it to real customers (or service users) and gain feedback from their behaviour as soon as possible.
Reis suggests that often the worst thing we can do is attempt to create a fully functioning service offering before we put it in front of users. This risks undertaking a lot of work and spending a lot of money, simply to find out that our customers don’t value the perfectly crafted product we’re trying to offer them.
The mantra of the Lean Start-up is “get out of the building” and into the market.
In order to start the Build-Measure-Learn feedback loop, we need to create what Reis calls a Minimum Viable Product (MVP). The MVP provides customers with an opportunity to test the key features of a service in a real, live environment. This is what differentiates the approach from traditional market research. Instead of asking questions about customer preferences, it seeks the answers to these questions by observing actual behaviours.
Do you do this already?
I suspect for a lot of people in the public sector, the answer is yes. At least sometimes. Developments in patient centred care in the NHS and applications of Lean Start-up approaches to service redesign in central and local government show that there are pockets of Lean Start-up activity across public organisations. The question is therefore whether there is value to systematically changing the way we approach innovation in the public sector.
When is it the right approach to take?
Clearly there are some types organisations and services that would not benefit from this kind of approach, for example services working directly with vulnerable customers. It is therefore most valuable in certain circumstances, where ‘business as usual’ management is unlikely to produce the innovative results we seek.
The following are the key scenarios in which I think the approach can be most valuable:
- When operating in conditions of extreme uncertainly – i.e. when there aren’t clear, ‘off the shelf’ solutions to a problem that have been showcased elsewhere
- When establishing a novel, new service delivery model
- When customer insight is essential to the success of a product or service success
- When user behaviour is difficult to predict
In each of these circumstances, it can be hugely valuable to see customers interact with a service on their own terms, without the distortions that can be created in market research settings.
These are just some initial thoughts on the subject, but if any of the above sounds interesting I’d recommend reading Eric Reis’ The Lean Start-up. I’d also recommend having a look at McKinsey’s interview with the US Government’s Chief Technology Officer Todd Park, who speaks about his mission to “unleash governments innovation mojo”. He also specifically talks about he has successfully applied Lean Start-up thinking in one of the world’s largest, most sprawling bureaucracies.
James Nettleton is a BDO Consultant specialising in education, skills and entrepreneurship and works closely with our Local Gov team.