Hi there -
Here is this week’s “1 principle, 2 strategies, and 3 actionable tactics” for running lean…
1 Universal Principle
“Seek success by avoiding failure.”
One of Charlie Munger’s favorite techniques was using the inversion principle to view a problem from the opposite perspective.
“Invert, always invert."
- Carl Gustav Jacobi, German Mathematician
Rather than focusing on what would cause success, you focus on things that would cause you to fail and then identify ways to actively avoid those failures.
However, it’s important to emphasize that:Avoiding failure is NOT running away from failure.
In startups, for instance, one of the top reasons for failure is wasting resources and building something nobody wants.
One way to avoid startup failure is to avoid doing a startup.
That’s not who this post is for.
This post is for people who have already committed to a goal (such as building a successful startup) and want to increase their chances of success.
Here’s how to use inversion to avoid startup failure:
- Avoid wasting resources to first build a product.
- Avoid building what people don’t want.
Solution: Sell before you build.
Q.E.D.
2 Underlying Strategies at Play
I. Preemptively avoid foreseeable failures.
Inversion helps you flip the problem to expose obvious cracks and pitfalls in your thinking. Then, avoid those pitfalls.
“All I want to know is where I’m going to die, so I’ll never go there.”
- Charlie Munger
There are several foreseeable pitfalls to avoid when starting a startup, such as chasing a small market, falling in love with your solution, and over-indexing on stealth.
I created a suite of seven stress tests in my Business Model Design course. These tests don’t guarantee success, but they do guarantee avoiding these foreseeable failures—thereby raising your odds of success. You can check them out here.
In fact, all my playbooks do this.
The next playbook in the series (Demand Validation) outlines a step-by-step “sell before you build” process to avoid wasting months building a product no one wants. You can check it out here.
II. Systematically confront unforeseeable failures.
While inversion helps expose foreseeable failures through thought experiments, the startup journey is riddled with many unforeseeable failures.
The key to navigating these is avoiding big-bang wipe-out failures and replacing them with small, fast learning iterations or two-week sprints that roll into 90-day cycles.
When you work in 2-week sprints, you replace failing with learning and big pivots with small course corrections.
The law of compounding plus time takes care of the rest.
A 1% daily improvement results in a 37x improvement in a year.
Good startups chase 10x, which is a 0.633% daily improvement.
3 Actionable Tactics
I. Build/update your business model to expose your most fundamental assumptions.
Models help us tame complexity.
At the outset of any project, I use Lean Canvas to turn my big ideas into testable assumptions. If you haven’t already, you can create a free account at LeanCanvas.com.
A Lean Canvas, however, is only one of three models I use.
Once a project is underway,
- you need metrics to home-in on what’s not working and
- insights to home-in on why what’s working IS working.
Business Model = Key Assumptions + Key Metrics + Key Insights
II. Stress-test all the ways your model could fail to avoid obvious failures.
With my models created/updated, I then use inversion to
- prioritize my riskiest assumptions,
- identify my biggest bottlenecks or constraints and
- seek explanations or causality and formulate new theories.
III. Systematically avoid big bang failures.
Good theories, no matter how elegant, still need to be tested.
Avoid premature scaling and instead create and follow a traction roadmap in 90-day cycle increments.
That’s all for today. See you next week.
Ash
Author of Running Lean and creator of Lean Canvas
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P.S.
Whenever you're ready, there are 3 ways I can help you:
1 - Join LEANFoundry: Join 21k+ founders who use our tools, courses, and coaching resources to build and launch their products to paying customers. Works like a gym membership. Cancel anytime.
2 - Take the 30-day Business Model Design Challenge: If you're an aspiring or early-stage founder looking to launch a new idea in 2025, join my next Business Model Design Challenge, where you'll learn how to design and stress-test your idea without wasting resources.
3 - Get my Foundations Course: If you're new to this framework, you'll learn the key mindsets for building the next generation of products that matter.
