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Have a Lean Start-up, but Start Out Right

Posting by Stewart Christ, MBA, Principal at BMC Associates

I recently enjoyed reading The Lean Start-up by Eric Ries. Ries does a masterful job of describing an efficient method for starting an entrepreneurial technology company. He promotes the creation of a learning organization and managing the creation process by taking discrete steps that produce a meaningful and measurable outcome. The outcome is then evaluated and that information then drives the next step. Inherent in this approach is a lean, or agile, approach to product development.

Ries organizes his book around an evolutionary cycle in a start-up business. Fundamental to the Lean Start-up method is a continuous feedback loop comprised of three steps:  build, then measure, then learning (what he calls “validated learning”). The flow of the chapters follows his process, starting with the discipline of the product Vision, then following a method to Steer this process, and finally techniques to Accelerate the growth of the company.

Most successful companies are not the act of a single individual, but they are the consequence of the collaboration of the co-founders. A strong and thriving partnership is demanding and requires up-front thought and effort, as well as ongoing attention. Ries presumes that a team of individuals is already in-place and working together on the start-up. However, in reality, some process has already taken place that has brought this group of individuals together, as well as some amount of capital.

Often, the co-founders of a company are in a rush to get started so they ignore important details. It is important for them to communicate their shared vision for the company with each other and to have an open conversation about their personality styles, personal values, strengths, and weaknesses. It is crucial to discuss the expected contributions of each partner, the roles they expect to play, and the associated rewards, authority levels, and means of accountability. The partners need to negotiate their plans for ownership, compensation, and organizational governance.

To create a resilient partnership, co-founders should discuss their perceptions of fairness and their likely reactions to various upside and downside scenarios, including conflict. Often start-ups ignore or avoid these conversations. If they do occur, the discussions are not documented for future reference. At BMC we are often asked to help partners in an ongoing business negotiate these important issues–years after the fact. An investment of time up-front avoids considerable hardship down the road.

The Lean Start-up approach taught by Eric Ries is very powerful. However, in your rush to start your company, don’t scrimp on the up-front investment in your partnership. Make your partnership the first step in the Lean Start-up process.