Lean Analytics: Use Data to Build a Better Startup Faster, by co-authors Ben Yoskovitz and Alistair Croll, digs into how startups can use data and analysis to develop and grow their products in today's highly competitive markets. The book builds off Eric Ries' Lean Startup methodology, which incorporates Lean manufacturing, Agile principles and early market research to create a rapid cycle of build, measure, learn. Lean Analyticsshines a light on the "measure" stage of the cycle, which can heavily influence the other two stages.
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In this first installment of a two-part SearchCIO New Books interview, Yoskovitz talks about what it means to use Lean analytics, why it's important to be "data informed" rather than data driven, and how concepts originally developed for the startup community are being adopted by the enterprise.
Yoskovitz has been an entrepreneur for more than 15 years. In 2010, he and Croll helped found One Year Labs, a startup accelerator that uses the Lean Startup methodology to get fledgling businesses off the ground. He is also vice president of product for the venture-backed startup GoInstant, a technology provider that enables shared online browsing experiences and was acquired by Salesforce in 2012 for $76 million.
Why should CIOs be interested in Lean analytics?
Ben Yoskovitz: Lean analytics provides a framework for how to innovate successfully. We focus on startups a lot, but by extension, it absolutely applies to large companies as well.
Let's pull this apart: How can Lean analytics provide that framework?
Yoskowitz: Part of what Lean analytics does in startups, and I think it applies to larger enterprises and CIOs, is that it creates what we call "poking holes in your reality distortion field." Entrepreneurs surround themselves by this reality distortion field in order to fight the fight as entrepreneurs, in order to claim that something is going to be amazing -- but it's not amazing yet. Lean analytics pokes holes in that.
For CIOs, it's more so about transparency and intellectual honesty. Lean analytics can provide that common language or framework that they can judge everything by. So instead of judging things haphazardly, if you will, we say that for every project, we want to have a few key metrics. And we're going to measure all projects similarly by those key metrics; we're going to be transparent and share those numbers with everybody so that everybody sees the data that's coming out for these projects we're working on.
It's the worst feeling in the world when you invest a lot of your own time and money only to realize nobody cares.
You also mentioned innovation: What is it about the Lean approach that lends itself to innovation?
Yoskowitz: It's about doing smaller things faster; it's about experimentation; it's designed around learning quickly; it makes failing, if you will, acceptable as an outcome of this process. All of those things are what drive innovation -- doing a lot of small things quickly, ideally toward something that's larger and has a significant impact on a business. But it's also the whole concept of how to do things as opposed to how projects are more traditionally done where we say … we're going to do this [project], and it's going to take six months. It's going to have a big budget … and then we launch this thing, and it turns out we missed the mark. That happens a lot in large companies; it happens with startups as well. It's the worst feeling in the world when you invest a lot of your own time and money only to realize nobody cares or not enough people care.
What does an enterprise IT organization have to do to embrace the Lean culture?
Yoskowitz: I was just speaking to somebody [who works] inside of a large enterprise about this very topic, and his approach is to do small things without asking for permission. In the book even when we talk about Lean and "intrapreneurs" -- folks who are trying to innovate within large enterprises -- we say that step one is you have to get permission to do stuff. But, in fact, this person I was speaking to said that to do small things, you don't necessarily have to get permission from management or the executive level. It might be as simple as running an internal hackathon … or [talking to] customers beforehand. You may not use the Lean vernacular because that may not be understood or accepted, but you may start to change a few of the things you're doing internally. You can start to apply these things -- not slowly -- but to small things and sneak it in and over time, you can start to have an impact on the culture of your company.
And so CIOs should just get out of the way?
Yoskowitz: The top-down approach to this kind of change is not necessarily going to work. At some point, a CIO has to say, "I support this methodology and this approach, and we believe data is of value and is important." That's going to have to happen to create cultural shift within a large company.
But some of the people I've been speaking to have been able to effect change -- granted, slowly -- from the bottom-up, and I think that's encouraging. CIOs should encourage that as well. If someone comes to you and says, "Instead of driving a 12-month roadmap and assigning 50 resources and making these multi-million dollar budgets, what if I just took three guys and we spend a day hacking on something on the side." Being open to that kind of change without shifting the whole company or whole corporate culture is something I would encourage.
You write about being "data informed" in your book, which is a different term than the ubiquitous data driven. Is that a way of saying both data and intuition are needed to make good business decisions?
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Yoskowitz: Absolutely. I think you have to be careful when it comes to extremes. If you're just going with your own gut all of the time, you're going to be, in my opinion, wrong more often. If you're overly focused on the data, you can get lost in the weeds.
In my experience, the data tells you what's going on. And if you're looking at the right stuff, that's very important. But it doesn't tell you why things are going on. So you have to be careful about over-focusing on data and making decisions strictly based on what's happening without understanding the why. The why comes, in part, from constantly talking to customers and collecting what we call qualitative data or qualitative feedback.
So should data influence intuition or should intuition influence the data you decide to go after?
Yoskowitz: You use intuition to put a marker in a place and then you validate with data. That's the idea behind the process. You have to understand what problem you're focused on … what is it that you're trying to solve. You have to draw a line in the sand and say I believe this to be true. But instead of following me blindly down this path, we're going to validate or, and let's be completely frank, invalidate the possibility of what I believe. So the data is what validates whether your gut is right or not right.
In part two, Yoskovitz digs into the measure part of Lean analytics and explains what he means by the "One Metric That Matters" or OMTM.