Lean Startup

The Enterprise Software Sh*t Show

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Happy New Year.

I'm getting all the same "really excited it's 2011" tweets, blog posts and emails you are. I'm really pleased that so many people are looking forward to the new year. It's also cool to see others being zen and thankful as well for what 2010 brought them...we all have a lot to be thankful for.

I'm an optimist at heart...really...I don't think you can be a true entrepreneur if you're not an optimist. Sometimes, you have to smoke your own rope just to keep going. But after 20+ years of doing this, I have also developed a fair degree of "cautious optimism" and a healthy degree of paranoia (see Andy Grove). My personality definitely consists of large doses of both Grumpy Old Men and the Dude (minus the drug abuse, "man").

So, it strikes me as somewhat lighthearted, and perhaps a bit foolish that I see signs of bubble-like frothiness in the software business again. I'm no Noriel Roubini, but things feel a little wonky to me.

Here's why my knickers are bunching-up:

The Consumerization of Enterprise Software
It used to be that the software we employed for work was dictated by our organization, and the procurement process was somewhat orderly (read slow and cumbersome) and predictable. Selling into these organizations required skill, patience and experience (and the resulting bag-carrying, highly-commissioned salesperson).

Just like other industries that are being upended (music, publishing, television, advertising, etc.), enterprise software is changing due to software now being pulled into the organization by end-users and adopted at work because of the ease of acquisition/adoption/use and the low (if any) cost.

This represents a complete 180 from the "olden days" (as my 9 year-old likes to say). Or, as I've heard a little too much in the past year a "total 360." [Never quite understood how people miss the fact that a doing a 360 represents landing where you started...oh well, another blog post perhaps.]

Generational Differences within the Enterprise
The web has been around long enough now that you can see clear differences between people in their 40's and 50's and the next youngest cohorts. Growing up with the personal computer (Jesus, does anyone call it that anymore?), the web, mobile phones, Skype, and the like have created different expectations of autonomy, privacy, engagement, leadership...you name it. And settling for the previous era's enterprise software tools doesn't sit very well.

Minimum Viable Products for the Enterprise
While there is a huge opportunity to revisit mature enterprise software segments to gut them of their feature-fat and value-lacking complexities, there still needs to be enough thought and base-level of feature functionality so as to actually deliver meaningful value for the organization. I love the simplicity of many of the mobile and web apps I'm seeing out there today, but if I have to cobble 10 of them together to actually get something useful done at work, then I think we might be trending a little too far toward the Minimum part of Minimum Viable Products.

Importance and Influence of Mobile and Tablet Software
I think I read somewhere that 50% of Fortune 500 companies had purchased iPads for piloting enterprise implementations in 2010. Not sure of the source, or even if that's true. But if it is remotely correct...holy flying pails of cow dung.

Regardless of the veracity of those figures, there's no doubt the take-up of mobile applications has been huge, and the influence and importance of that movement has huge implications for enterprise developers like us.

The Insignificant (and continuously falling) Barriers to Market Entry
Given the global level of connectivity and the (seemingly) zero cost of the tools of production it doesn't take much for someone to launch themselves into the software business. Any barrier to entry that used to exist 10 years ago (other than market knowledge/subject matter expertise) should probably be seen as zero.

The Instability of the Global Economic Recovery
Okay, I'll admit it. Sheepishly. I have some post secondary education in Economics. Fairly useless mind you, but some theoretical understanding (hence useless) of how economic systems are supposed to work. And this makes me very nervous about our current global situation. I just don't see how societies around the world can amass such huge levels of personal and government debt without long-term implications. I guess I skipped that part of my undergrad classes.

Despite the above, there are many reasons to be optimistic about opportunities in the Enterprise Software market. But I think you'd be equally daft to ignore the signs that it isn't all rosy and there are significant challenges to succeeding in these turbulent times.

So, a cautiously optimistic Happy New Year to my Enterprise Software brethren.

(Wow, that was a crazy stream of consciousness post....I'll have to elaborate on each of these items in future posts as I've just skimmed the surface).

 

 

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Does Lean/CD = Incremental Innovation?

Before I begin, in the very slim chance that anyone of the Lean or Customer Development (CD) gods find their way to this remote corner of the web, I am a big advocate of the Lean movement in it's larger sense (Present capacity = work + waste, in particular), and the ideas espoused by Steve Blank in Four Steps to the Epiphany (product/market fit to be precise). We've been building mercanix in the early days using these ideas as guiding lights; just not as a road map. Why? I wasn't sure in the beginning...just a gut feeling...and I kept hearing the phrase "the map is not the territory," rattling around in the back of my head.

As we've been progressing through the milestones toward launching our public beta (and eventual production release), I couldn't help struggling with this nagging feeling that following the Lean/CD ideals too closely leads to incremental innovation rather than truly disruptive innovation. Innovation that captures the imagination and markets with audacious gestures.

Lean/OODA/CD advocates will likely say I'm totally overlooking [insert pertinent method, idea, theory, practice here] as espoused by [insert Lean/CD god here]. And that's probably accurate -  up to a point. But I'm getting the itchy-scratchy's with where this whole Lean/CD thing is going and how blindly many are following and extending the initial theories/work.

I've got no beef with Eric Ries or Steve Blank or anyone else riding the Lean/CD bandwagon. In fact, most of them seem like pretty cool guys. But the hype is getting a little nauseating (not their fault I don't imagine) to me, and stopping people from using critical thinking.

The ideas of low burn, fast iteration, product/market fit, etc...prior to scaling is all good...but it seems be crowding out some other perspectives. And god forbid that your opinion should differ from one of the gods or apostles...there's no room for dissension or debate among some of these people. It all feels rather religious to me know, where 18 months ago these were just touted as "interesting ideas," even by their creators.

Apologies for the slight digression. I am coming back on point now. But with an alternate opinion.

The Lean/CD approach seems to lend itself better to Incremental Innovations rather than Disruptive Innovations (see Christensen, et al); as it appears to focus on User Centered Design/Design Thinking (see Tim Brown and IDEO, etc) processes versus Design-Driven Innovations (see Roberto Verganti as one example).

What does that mean? It means that you are primarily using the customer perspective to drive your product development rather than creating something entirely new (dare I say radical). Products that defy categories and introduce new propositions to customers. Let's look at a couple examples.

A marketing manager for Apple described its market research as consisting of "Steve looking in the mirror every morning and asking himself what he wanted."

Or,

"Market? What Market! We do not look at market needs. We make proposals to people." Ernesto Gismondi, chairman of Artemide.

These two companies in particular have been responsible for some very disruptive and successful products. And not just once. They didn't look to their customers to come up with product ideas. They created "proposals" for their clients. Higher risk to be sure. It would appear higher reward as well. Perhaps there is a way to do Lean/CD AND Design-Driven Innovation? We think so.

The Lean/CD revolution is like any other revolution; they rarely deliver on their promises. That's not the fault of their main proponents, but their devout followers may want to broaden their perspective a little and mix in some other ideas. I know we are, and we're feeling good about it as we travel the path to scalability. 

 

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I Suck at MVP

[WARNING: Stream of consciousness blog post. Reader discretion is advised.]

I'm pretty sure I understand the concepts and frameworks; both Customer Development and Lean Startup. And we try to incorporate their ideas (in our own way - for our business/market/product). But I'm left feeling like we're completely missing the boat. Feeling guilty because we're not following the "canonical" examples.

It would be nice if I could pass it off as my innate Catholic (or insert other more suitable religious reference) guilt. But I'm not Catholic. Just can't seem to shake the feeling that we're not doing it "right" way.

I've read the books and keep up with the blogs:

Four Steps to the Epiphany
Steve Blank
Startup Lessons Learned
Certain to Win
The Toyota Production System
Agile Development
500 Hats

I'm part of the right group (Lean Startup Circle) and I try to post something of value so I don't end up just being a lurker and leeching ideas from everyone else. I've watched all of Steve Blank's, Eric Ries' and Dave McClure's presentations on the web. I've watched them so many times, I could probably tell you what version of the presentation they are presenting and in roughly what time period they've made adjustments and refinements.

I try to follow the right people on Twitter:

Sean Ellis @seanellis
Dave McClure @davemcclure
Hiten Shah @hnshah
Andrew Chen @andrew_chen
Sean Murphy @skmurphy
Venture Hacks @venturehacks

And I know there are exceptions to when you need an MVP and when you don't. I think I understand that an MVP isn't a minimal product. I get that people use the MVP idea to help build a great product, increase the chances of success or launch, and maximize the information about customers per dollar spent...but I still feel like I'm building too much when I hear countless stories about "we just put up a web page with some prototype screen shots and then ran AdWords campaigns...split test this and that...built three features, yada yada...success!

Seriously? And people paid you for that?

Crap. It all just feels cheap to me. In a good way.

Believe me, I want to be cheap. I don't like spending more than 12 months on a beta and leveraging my family's financial well-being to build too much of a product when less would do...but I just can't do it. Damn.

I get that it's potentially misguided of me to assume I know what customers want. But we did "get out of the building" to test our hypotheses. We did over 100 interviews, presentations, demos...and the ideas that underpin the feature set aren't even ours! We've co-opted them from what we feel is the best research available on high performance enterprises.

Doesn't help. I still feel like we're building too much.

But I can't stop.

It's definitely more difficult because we are utilizing a foundation of code we have built in the past and invested more than 5M in. But maybe that's wrong too? Maybe we should have just built a few screens and forgotten about the industrial-strength code base we'd built. Maybe we got stuck in the Sunk Cost decision trap?

Minimum feature set...that's the goal...so you can iterate once the
minimum feature set is released...problem is I can't seem to cut any
further and we have a pretty huge feature set...am I weak, deluded, or
just obsessed about delivering exactly what I think is required?

But we haven't heard anything that tells us we're way off the map...but maybe
we're not really hearing what people are saying?...are they just being
polite because they are in my network or friends of friends....?

Perhaps it's because we're building it to scratch our own itch, and as
we use it we think "oh man, you know what we HAVE to include..."

Maybe it's because we're getting responses that range from "it's really cool, but I don't think we'd use it at our size" right up to "It's fantastic, when can I have it?"

Some people definitely already want this...the question is how many others will
feel the same? Is it tens, hundreds, or maybe even thousands? Mother...it's a leap of faith. A sphincter-puckering sized leap of
faith, actually.

Then I hear myself (in my head only fortunately) say, "stick to your vision, don't compromise, don't dilute what you think is right...did I have lunch?...jeez, that's a nice car outside my office...oh crap, where was I?"

Is it an MVP if we still have a list of 50 things we can think of that we'd like to add, but haven't?

Yeah, didn't think so.

Perhaps it's because we are good at building things and it makes us feel good...so we  just keep building instead of launching...maybe we're afraid of launching? Maybe, but we've got little choice now as we need to see if we're going to get any return on our sizable investment...there just isn't any more strap left on this boot.

My stomach is in knots...maybe I didn't have lunch.

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Mission: Unreasonable










"A reasonable man adapts himself to his environment. An
unreasonable man persists in attempting to adapt his environment to suit
himself. Therefore, all progress depends on the unreasonable man."
George
Bernard Shaw

 

You might take exception with the term unreasonable, or with
the gender-bias, but if the idea in general does not resonate at some level
with you, then we're coming from a different place. You are either the
kind of person that is happy to challenge the status quo, or you are not.  We are decidedly anti-status quo.

 

We think the status quo is getting in the way of a lot of
people and the organization's that they work for. Keeping them from performing
up to their potential. Making their lives unbalanced. Creating murky lines
between work and living in the name of being busy rather than being effective.

 

We're on a mission to change that.

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Forgive Me Father, It's Been 10 Years...

..since my last startup. 

Well, if you want to be precise, mercanix (mur-can-iks) is over a year old, so in truth it was 9 years between startups (and no, I haven't been lazing about - my 3rd startup is still active - so I've got a day job too). 

But now that we're almost ready to emerge from stealth mode, I must admit to some level of trepidation. Will all that Customer Development stuff we've worked through in the past year really pay off? Have we really learned the lessons from Lessons Learned? Will the "throng" of people who said they'd buy our application really plunk-down their hard-earned money (however nominal the price may be)? Can a killer dev team lead by a 40-something guy with heavy-duty enterprise experience adapt to the web 2.0 world, and all these crazy new channels?

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We're going to find out very soon. We're down to the short-strokes...December 15th is fast approaching.

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