Driving digital era lean innovation
According to the Sri Lanka Association of Software Service Companies
(SLASSCOM) the vision for Sri Lanka's IT services sector is to
facilitate 1,000 start-ups by 2022, a reasonable goal in an industry as
the Sri Lankan IT/BPM Review 2014, has seen exponential growth in
workforce (123%) and revenue (238%) since 2007.
However, if we were to take into consideration the Allmand Law study
that concluded 90% of start-ups fail, then the industry will only
succeed in creating 100 viable start-ups. This need not be the case.
Years of studying start-ups have provided us with insights into the
pitfalls that engulf most start-ups, which, if avoided, can dramatically
improve the chances of success.
The primary reason start-ups fail is that they make a product no one
wants and they spend almost all their time and money perfecting this
product which no one wants. This is because they end up focusing on the
wrong question, "Can this product be built?" taking for granted the
assumed value and growth propositions as confirmed.
The idea and the product may seem innovative at first glance but if
nobody wants it then what use is it? Ideas are cheap but building a
sustainable business model is hard.
This is where the concept of lean start-up comes into play. It's an
innovative methodology championed by Eric Ries that minimizes risk and
increases the chance of success.
Ries is the Entrepreneur-in-Residence at Harvard Business School, an
IDEO Fellow and Business Week's 2007 Best Young Entrepreneur in Tech.
He developed lean start-up based on his previous experience in
start-ups and based it upon systems from the automotive sector. The main
goal of the methodology is creating a product that will fit the current
market, thereby increase the start-up's possibility of success.
This is done by implementing a feedback loop which allows you to
know, as quickly as possible and with minimum investment, the answers to
two key questions: "Can I create enough value my target users will
appreciate enough to pay for?", and "will I have enough of those
customers to make a viable business model?".
This mindset forces you to work with your target customers as early
as possible and open lines of communication between the developer and
the customer during the development period.
The feedback loop begins with launching a product. This will be the
minimum viable product (MVP) to validate the key hypotheses. And this
MVP may not even actually be a product. It could even be a video asking
people to sign up for a service, or a 'simulation' of the value
proposition you hope to provide to the customer, where the 'backend
work' will be done manually instead of by a system.
It really is the base minimum of what is needed to validate your
proposed value proposition.
And it is their interactions with this MVP that will feed into the
next step of the loop - Learn. At this stage the feedback from the
previous stage are measured and conclusions are drawn.
Finally, we must Adapt. This is the last stage of the loop and will
determine the future of your product. Depending on what you learnt from
customer interactions, you may choose to tweak your strategy or change
(or pivot) the product altogether. And then your newly adapted product
is launched to continue the loop until you've created a product that
fills a market need. The key is to do it fast with minimum investment.
While lean start-up holds many promises for the IT services sector it
is only one aspect of a set of methodologies currently percolating in
the industry. The other two are lean development and growth hacking. The
former derives from a development process that revolutionised the auto
industry in the '80s.
The process was based on optimizing flow, increasing efficiency,
decreasing waste, and using empirical data to determine needs and
The principles of the method were then translated to software
development by Tom and Mary Poppendieck in 2003. The pair had decades of
experience in the IT industry and used their experience in software and
product development to counter the prevailing opinions in their award
winning book. This resulted in seven principles of lean software
development; eliminate waste; amplify learning; decide as late as
possible; deliver as fast as possible; empower the team; build quality
in; and see the whole.
Apart from these principles, which are largely embedded in today's
agile development techniques, there are a few changes taking place that
create significant opportunities in disrupting the software development
First is the simplification of the development technology. The J2EE
era introduced significant complexities to the development process
compared to the simplistic client-server era: object-relational
impedance mismatch, and the need for lots of platform-centric
specialised knowledge around each of the different architecture layers.
Today, this complexity is being un-winded with new ways of thinking:
HTML5 and responsive design. These changes provide the opportunity to
significantly simplify software development.
In the future, software will not be built from scratch but on top of
platforms that provide reusable functionality and abilities out of the
Cloud based software development platforms similar to force.com will
take on the technology plumbing, deployment and even monetization
complexities and simplify software development to its simplest possible
form of creating a functional specification.
The final methodology is growth hacking which is based on the
principle that, after validating the value proposition early on, a
start-up only needs one thing: growth.
There is no need for elaborate marketing plans to achieve corporate
objectives or manage large marketing teams. Growth is a singular goal
that every decision, every strategy and tactic that a hacker makes is
towards achieving it.
The term was coined by Sean Ellis in 2010 and came to represent
people who focused on low cost, high impact and innovative alternatives
to traditional marketing that resulted in growth/exposure for the
start-up. Ellis is the founder of Qualaroo, a behavioural insight survey
software for the web and mobile, and was the first marketeer at Dropbox
Growth hacking is an intersection of three areas: programming and
product development, marketing and data analytics and these areas are
closely intertwined to move towards the growth objective.
The process is heavily data oriented where every decision or
experiment is validated against measurable goals and tweaked or changed
based on the outcome. A/B testing, landing page and user experience
optimization, email marketing, search engine and ad-word optimization
are common techniques used in this area.
Growth hackers look at every customer interaction as an opportunity
to achieve growth - for example referrals, integration with social
media, meet-ups and user group sessions with relevant subject matter
experts are all leveraged to build awareness and achieve growth.
What should be evident now is that start-ups today have a set of new
lean-inspired tools that cover the entire spectrum of 'what to build',
'how to build' and 'how to capture the market'.
This enablement comes at a time when the digital era has opened
significant opportunities across every industry due to changing customer
demographics and demands. These techniques, if applied correctly, can
have a dramatic impact of giving start-ups a David's advantage against
the Goliaths of the world.
While I have only touched the tip of the iceberg, there is a huge
opportunity for innovators to learn and adopt these techniques fully to
propel Sri Lanka into an era of innovation-led growth and prosperity.
The writer is Senior Vice President - technology at Virtusa. With
over 15 years of experience in IT, he leads Engineering Excellence and
Innovation for Virtusa and is responsible for global engineering
standards, metrics and tools and driving a technology innovation