Analytics as a Lean Startup

I ran across this post on Analyst First by , where he describes the world of Business Analytics as a prime area for the Lean Startup model.

I am a big fan of Eric Ries’ book The Lean Startup, where he advocates treating every new entrepreneurial venture, whether inside an existing company or as its own startup company, as a startup.  And further, since this is a startup venture, the uncertainty about whether this venture will succeed or fail is very high.

So, rather than put together detailed plans about building the product that the business will be based upon, a startup venture should be building the “minimum viable product” and getting feedback from customers quickly to see whether you’re on the right track.  The faster you get feedback, the better you’ll be able to build a business that is sustainable and meets the needs of your customers.

Effectively, Ries argues that you should treat the startup venture, every aspect of it, as a series of scientific experiments designed to inform you whether you are building a sustainable business consistent with your company’s vision.  It’s basically applying the scientific method to your business.

For one, I say, “Absolutely dead on!”  Most business activities, whether marketing or sales or even less-than-disciplined engineering, are performed via rules of thumb (“here’s what’s worked before…”) – there is no true “validated learning”, as Ries put it.   Generally, many businesses and engineering teams operate with the approach of “we made a number of changes last month, and our customers seem to like them, and our overall numbers are higher this month, so we must be on the right track”.  This might make a company feel good, but it gets them no closer to understanding why they might be succeeding, and what to do if things turn south.

And what is worse, the internal workings of the business may be driven by managers more motivated by preserving the current business enterprise than creating a new one.  This puts entrepreneurial ventures at risk from getting started in the first place, or at least started with the greatest possible chance for success.

And I like the way that Samild describes it in his post:

In the twenty-first century we can build almost anything that can be imagined. The challenge is not to build more stuff. It’s to build the right stuff. Most startups fail, says Ries, because they make the wrong things. The key activity of a startup should therefore be learning, not building. What creates value for a startup is it determining whether or not it’s on the path to a sustainable business.

If you’re interested in the Lean Startup approach to business (which, again, I highly recommend), you can find out more at Eric Ries’ website here, and you can buy his book The Lean Startup here…  Also, you can read more of Stephen Samild’s post here

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I currently serve as Vice President of Decision Science at CenturyLink. I've previously served as a leader in the Advanced Risk & Compliance Analytics (ARCA) practice at PwC and as Director of Data Science & Analytics Engineering at Areté Associates. I've served the public as Chair of the Thousand Oaks, CA Planning Commission. I have been married to my wife Stephanie since 1993, and we have a wonderful daughter Monroe. Learn more about me »

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