Hi there -
Here is this week’s “1 principle, 2 strategies, and 3 actionable tactics” for running lean…
1 Universal Principle
“A pivot, not grounded in learning, is a disguised ‘see what sticks’ strategy.”
When researching for my book ten years ago, I came across this stat: More than two-thirds of all successful startups pivoted their idea.
Fast-forward a decade. Based on data from thousands of teams on LEANSTACK/LEANFoundry and hundreds of teams I’ve coached firsthand, I’d revise this number upwards to more than ninety percent!
This may sound like a bad thing, but it’s quite the opposite.
Here’s why:
2 Underlying Strategies at Play
I. Good ideas are rare.
Good ideas don’t come to us completely formed but as flashes of inspiration.
Vetting good ideas from bad ones and fanning these idea sparks into bonfires requires a search versus execution mindset.
The path is never a straight shot, and so pivots (or course corrections) are to be expected.
Next:
II. We’re stress-testing ideas a lot earlier now.
The build-first era: If you build it, they will come.Over a decade ago, most teams employed a build-first approach. They’d spend months in the metaphorical garage, first building a product before engaging customers. This deferred customer learning and pivots happened over months or years.
Startup success rates: 9 out of 10 startups fail.
Then, we learned about customer development:
The customer-first era: Why build something nobody wants?Many teams have started prioritizing testing customer risks over technical risks. This has accelerated customer learning, and pivots have occurred over weeks or months.
Fast-forward to today, there’s an even faster way:
The business model first era: Why build something that can’t possibly work?We now know how to design and stress-test business models before engaging with customers. If a business model is flawed, spending weeks and months on customer development will not fix it.
The true product of an entrepreneur is building a working business model.
This moves up learning even earlier, and now pivots happen over days or weeks.
This is a good thing because as pivot times go down, so does the sting of drastically changing your idea.
If you haven’t stress-tested your business model or don’t know what that entails, my business model design challenge provides step-by-step instructions. When you’re ready, you can check it out here. Knowing what constitutes a good business model will speed up your search for good ideas, even if you don't have an idea.
So, pivots are par for the course, but most founders misunderstand what pivoting truly means. So, in the last section, I’ll share a few actionable tactics:
3 Actionable Tactics
I. A pivot is NOT about changing direction at the first sign of failure.
Good ideas need steeping time.
We often don’t know what we don’t know, and getting discouraged is easy. But remember that
- for every idea, there are multiple business model variants and
- the hockey stick for even the most successful startups always starts flat.
II. Pivots aren't about trying random stuff.
Throwing enough spaghetti at the wall may eventually work, but most startups run out of resources before they find a breakthrough.
The key to good pivots is chasing explanations (or why).
- When a business model fails a design stress test, knowing why instantly helps you fix it.
- When an experiment fails a validation test, determining why helps you develop new approaches to fixing it.
- Even when an experiment passes, chasing why helps you double down on the right insight versus having a one-hit wonder on your hands.
III. Pivots require external accountability.
Holding yourself accountable for your idea is difficult because reasonable, smart people can post-rationalize anything, but founders are especially gifted at this.
Even I find myself making excuses when things don’t work as I predicted. The antidote is assembling a small team of "trusted" external stakeholders who can hold you accountable and call your B.S.
As an aside, I’m working on facilitating the creation of external accountability pods for LEANFoundry members. The startup journey can be lonely, so the idea here is to connect like-minded founders with each other.
“If you want to go fast, go alone. If you want to go far, go together.”
- African proverb.
So, what about overall startup rates? Are today's success rates higher or lower than those of a decade ago?
If you follow a process like the one I teach, which prioritizes testing the riskiest ideas first, short-term idea success rates are expected to decrease, not increase.
That’s also been my finding.
However, long-term success rates go way up after problem/solution fit—as high as 10X. For more on that, see this past newsletter issue.
The key to success is separating idea success from founder success:
Be ruthless with your ideas. Have faith in yourself.
That's all for today. See you next week.
Ash
Author of Running Lean and creator of Lean Canvas
.
.
P.S.
Knowing when to pivot is a classic Goldilocks problem: too early and you might miss a breakthrough insight; too late and you might run out of resources or miss the market entirely.
Here’s this week’s video on how to do this systematically:
.
.
P.P.S.
Whenever you're ready, there are 3 ways I can help you:
1 - Get my Just Start course: If you're new to this framework, you'll learn the key mindsets for building the next generation of products that matter.
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 - 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.
