how to introduce lean startup process into a medium-sized ... · 6.2 a multilayered strategy made...

How to introduce Lean Startup process into a medium-sized IT vendor, namely Futurice?

IDBM Master’s Thesis

Maria KulseHelsinki, 2012

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AALTO UNIVERSITYSCHOOL OF ARTS, DESIGN AND ARCHITECTUREIDBM MASTER’S PROGRAMMEDEPARTMENT OF INDUSTRIAL & STRATEGIC DESIGN

Author Maria KulseType Master’s ThesisTitle HowtointroduceLeanStartupprocessintoamedium-sizedITvendor, namely Futurice?Date 24th September, 2012Language English Number of pages: 153Supervisor Prof.PeterMcGroryInstructor DozentDr.RistoSarvas

Master’s ThesisMaria Kulse

AaltoUniversitySchool of Arts, Design and ArchitectureIDBM Master’s Programme24th September, 2012

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Abstract

FollowingAndersonandTushman(1990),companiesarefacingexceptionalcompetitionintoday’seraofferment.Pressuredbyaninnovationimpetus,companiesseeknewmeansofdoingandproducing.Start-upsareseenasamodelofinnovationduetotheirpotentialdisruptivepowerandareincreasinglyturnedtoasidentifyingpromisingmeansandprocesses,aspresentedbytheLeanStartup.

Thoughahighlypopulartopicinresearch,thereislittleempiricalevidencethatholdswaterinamorecriticalscrutinyoftheapplicabilityofLeanStartupprinciples,theirbenefitsandcompatibilitywithother,effectivemeanstodealwiththecontextofcomplexity,howeverfallshortwhenfacingextremeuncertainty,wherehighlevelsofdesignneedtobeincorporated.

InthisthesisIexplorewaystointroduceLeanStartupintoanagilemedium-sizedITvendor,namelyFuturiceactingasanempiricalenvironment.Utilisingco-creativemethodsImaptheculture,definecustomerrelationshipsandpresentprojectcases,inordertoidentifyopportunitiesandlimitationsofadoptingLeanStartupthinkingwithinthespecificsettingofFuturice.AsasolutionIpresentthreeactionablesteps,thataretheLeanStartupPoster,anartefact to educate and enable communication, the Lean Startup Roadmap, a set of actionable steps,andtheLeanStartupTestbedProposal,anartefact-baseddesignheuristictoverticallyandhorizontallyintegrateLeanStartupasaprocessintoFuturice.

Keywords: Lean Startup, agile, lean, software development, Futurice

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CI Corporate identityDD Dominant design DTC Discontinuous technological changeEBIT Earnings before taxes and interestHCD Human-centereddesignHCI Human-computerinteractionICT Information and communication technologyiOS Mobile operating system developed and distributed by Apple Inc. IT Information technologyIxD Interaction designLCM Lifecycle ManagementMDP Minimum desirable productMVP Minimum viable productPM Project managerPO Project / Product ownerR&D Research and developmentROI Return on investmentSD Service designUCD User-centreddesignUI User interfaceUX User experienceWP7 Windows Phone 7

Abbreviations

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Lean Startup is a company in its early stages of operation, that adheres to principles of ‘Entrepreneurs are everywhere’, ‘Entrepreneurship is management’, ‘Validated Learning’, ‘Innovation Accounting’ and ‘Build-Measure-Learn’(workingdefinition).

Entrepreneurship istheactofbeinganentrepreneuror“onewhoundertakesinnovations,financeandbusinessacumeninanefforttotransforminnovationsintoeconomicgoods”.Thismayresultinneworganizationsormaybepartofrevitalizingmatureorganizationsinresponsetoaperceivedopportunity.Themostobviousformofentrepreneurshipisthatofstartingnewbusinesses(referredasStartupCompany);however,inrecentyears, the term has been extended to include social and political forms of entrepreneurial activity. When entrepreneurshipisdescribingactivitieswithinafirmorlargeorganizationitisreferredtoasintra-preneurshipandmayincludecorporateventuring,whenlargeentitiesspin-offorganizations(Wikipedia,2012).

GOOB=gettingoutofthebuilding.AconceptcoinedbySteveGaryBlank,aspartofthecustomerdevelopmentprocess, as outlined in his 2009 publication 4 steps to epiphany.

Startup company or startup a human institution designed to create new products and services under conditions of extreme uncertainty (Ries,2011).

MVP=minimumviableproduct.Astrategyusedforfastandquantitativemarkettestingofaproductorproductfeature,popularizedbyEricRiesforwebapplications.Theminimumviableproductisthatversionofanew product which allows a team to collect the maximum amount of validated learning about customers withtheleasteffort(Ries,2011).

Glossary

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Validated Learning islearning,thatcanbevalidatedscientifically,byrunningexperimentsthatallowsonetotesteachelementoftheirvision(Ries,2011).

Innovation Accountingisastrategytomeasureprogress,howtosetupmilestones,howtoprioritisework:anewkindofaccounting,specifictostartups(Ries,2011).

Build-Measure-Learn Loopis the fundamental activity of a startup is to turn ideas into products, measure how customers respond, and thenlearnwhethertopivotorpersevere.Anystartupshouldbegearedtoacceleratethatloop(Ries,2009).

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1. Introduction 14 1.1Background–Answeringchallengesinaneraofferment 16

1.2Seekinganswersbyturningtostart-ups’–newmodelsof‘doing’areneeded 17

1.3 The Lean Startup and its applicability as a possible solution 18

1.4Empiricalcasestudy:Futurice 19

2. Research question 20 2.1 Research phenomenon & problems:

Deconstructing Lean Startup to assess its adaptability and scalability 22

2.2 Why does this matter? 22

2.3Definingtheknowledgegap 23

2.4 Research questions 24

3. Methods 28 3.1Generalapproachforinterviewsandworkshops 32

3.2Formatoftheinterviewsandworkshops 32

3.3 Possible shortcomings 34

4. Literature review 38

Part 1: Innovation - a complex, multifaceted phenomenon 40

4.1.1 Innovationstudiesandtheimportanceofacross-disciplinaryapproach 40

4.1.2Whatinnovationis-andwhatitisnot 41

4.1.3Innovationinthemakingandhowitoccurs 42

4.1.4Innovation-ahistorictechnologicalperspective 43

4.1.4.1 Technology Life Cycles:

DiscontinuousTechnologicalChange(DTC)andDominantDesigns(DD) 44

4.1.4.2 Technological discontinuities and the subsequent era of ferment 45

4.1.4.3Dominantdesignandthesubsequenteraofincrementalchange 47

Table of contents

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4.1.4.4 Strategic literature and Technology Management Research:

Howtofosterinnovation? 48

4.1.4.5Sustaininganddisruptingtechnologies-workingsimultaneously 48

Part 2: Innovation impetus in an era of ferment - they way we learn:

organisationally and strategically 51

4.2.1Simple-Complicated-Complex-Chaos:

Anorganisationalmanagementperspectiveonuncertainty 51

4.2.2Discovery-drivenplanningandemergentstrategies:

Causeandeffectand‘craftsmanship’ 54

4.2.3Effectualreasoning-

beyonddecision-makingheuristicsrootedinpredictionandcausation 56

4.2.4Innovationimpetus-therightstrategy,capabilitiesandvalues 58

4.2.5Summary 59

PART 3: Lean - Agile - Lean Startup: Learning rapidly, iteratively, constantly 60

4.3.2AgileSoftwareDevelopmentanditsorigins 60

4.3.2.1LEAN:Historyanddevelopment 60

4.3.2.2Leanbeyondmanufacturing 61

4.3.2.3 Agile Manifesto:

Principlesforbettermakingsoftwareandmakingbettersoftware 64

4.3.2.4ChallengesofAgileinintegratingdesignandbusinessaspects-

Clashofthetitans 66

4.3.2.5Discussionandrelevance 70

4.3.3TheLeanStartup 71

4.3.3.1Background&originsoftheLeanStartup 72

4.3.3.2PrinciplesoftheLeanStartup 73

4.3.3.3ShortcomingsandcriticismtowardstheLeanStartup 75

4.3.3.4Keypoints 78

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4.3.3.5Summary 79

5. Futurice 80 5.1Background 82 5.2History-past&present 83 5.2.1 Early years as a startup 83 5.2.2PresentsituationasafastgrowingmediumsizedITvendor 83 5.3Organizationalstructure 84 5.4 Direct and indirect competition 84 5.5 Value proposition and strategy 85 5.6Culture 89 5.7Projectcasestudies 92 5.8Salesandcustomerrelations 94 5.9Summary 95

6. Findings 98 6.1 Findings answering the set out research questions: Main RQ 1 100 6.1.1Findingsansweringthesetoutresearchquestions:Sub-RQ1 102 6.1.2Findingsansweringthesetoutresearchquestions:Sub-RQ2 104 6.1.3Findingsansweringthesetoutresearchquestions:Sub-RQ3 105 6.2 A multilayered strategy made up of the Lean Startup Poster, LeanStartupRoadmapandTestbedProposal 106 6.2.1 Lean Startup Poster 110 6.2.2 Lean Startup Roadmap 111 6.2.2.1Lean-Leaner-Leanest 114 6.2.3 Lean Startup Testbed Proposal 114

7. Discussion 118 7.1 Possible, general shortcomings 120

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7.2.1Outcome-specificpossibleshortcomings:LeanStartupPoster 122 7.2.2Outcome-specificpossibleshortcomings:LeanStartupRoadmap 1227.2.3Outcome-specificpossibleshortcomings:LeanStartupTestbedProposal 124

8. Conclusion 126 8.1 Conclusions concerning set out research targets 128 8.2 Contribution 131 8.3 Further research 132

9. List of Figures 136

10. Bibliography 138

APPENDIX 146

11. Meetings & interviews 144

12. Cases & Proposals 148 12.1Case1:internalsystemdevelopmentproject 148 12.1.1 About 148 12.1.2Challenges/OpportunitiesforLeanStartup 149 12.2CASE2:FlowFestival2012mobileapplication 150 12.2.1 About 150 12.2.2 Challenges / Opportunities for Lean Startup 151 12.3 Case 3: Windows 8 application 152 12.3.1 About 152 12.3.2 Challenges / Opportunities for Lean Startup 152 12.4 Summary 153

Big companies are not the same as startups, and never will be. But that doesn’t mean that they can’t be innovative and fast-moving like startups. They just have to do it differently.

Ron Ashkenas, 2011

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1. Introduction

1.1 Background – Answering challenges in an era of ferment

Overthelastfewdecades,informationtechnologyhassignificantlygrowninpowerfroma high entrance barrier domain to a “highly accessible and scalable force”1,reachingalevelof maturity that has started fuelling and transforming global economy by empowering new businessesandchallengingexistingmodelsandwaysofdoingbusiness.Hence,asarguedbyvariousscholarswearelivinginaneraofferment(Anderson&Tushman,1990)inwhichintensetechnicalvariationandselectionarepredominantandinwhichdisruptionandtechnological discontinuities appear through inertial communities of practitioners and organizationsascompetence-destroyingorcompetence-enhancingactivities(Anderson&Tushman,1991).Thishasbroughtaboutaninnovationimpetusfornotonlylargeandmedium-sizedcompaniesbutalsosmallones:potentiallyposingathreatandanopportunity,respectively.AsforanydisruptioninICT,itsdeepembedmentintovariousotherindustriesand sectors2isinturnaffectingthoseincreasingly,settingcompetitivechallengesforawiderangeofactors,resultinginfiercecompetitionamongthem.

Scholarsandpractitionersalikehaveconcludedthattheoldmodelsofproductionsforcompaniesarelapsed(Ries,2011;Christensen,1997),seekingfornewmodelsofproductionwhenincrementalinnovationisnotsufficientanymore(Christensen,1997)whenfacinghighdegreesofuncertainty,withconstantturbulenceanddisruption.ManysoftwarecorporationshavebeenembracingAgile,agroupofsoftwaredevelopmentmethodsbasedoniterativeandincrementaldevelopment,thathavebeenacknowledgedtoshowalackofprovidingsufficientuser-orientedvalue(Ries,2011).Whilstagilemethodsprovideexcellenttoolsandframeworkforconstantlearning(Poppendieck&Poppendieck,2003;Schwaber&Beedle,2001)andsomeiterativedesignonlowerlevelsofthesystem,asdefinedbyHyysalowhodistinguishesbetweenfivedifferentlevelsofdesignrangingfromdetailtosocial(Hyysalo,2010),theylacktheabilitytosuccessfullyintegratehigherlevelsofthesystem,themoreradicallevelsofthedesign

1 Startupgenome,www.startupgenome.com2 Forinstancemobiletechnologyisfundamentallydisruptingarangeofsectorsasdiverseaselections, healthcareandeducation.TimesMagazine,Vol.180,No.9,2012

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ability,tochallengeanditeratebeyondtheproductorservicescopeassuch,byincorporatingunderstandingstrategicandeconomicadjustments(forinstancebusinessplan,pricing,etc.)asconsequencesofdesigndecisionsandefforts(Ries,2011).

1.2 Seeking answers by turning to start-ups’ – new models of ‘doing’ are

needed

Inordertofindwaystodealwithuncertainty,scholarsandpractitionersincreasinglyturnattentiontowardsstartups,whosedefinitionhasbeenbroadenedtoincorporateanyhumaninstitutioncreatingvalue(Ries,2011).Theecosystemsofentrepreneurs,startupsandnewwaysofdoingpromisesfruitfulinsights,asmanypractitionersseemconvinced,inorderforestablishedcompaniestostaycompetitiveandtokeepupwithever-fasterincomingwavesofdisruptionistothinkandbehavelikeastartup,likeSteveJobssaidinhisinterviewatthe2010D8ConferencewithMossberg:“weareorganizedlikeastartup”(Jobbs,2010).

Thebasicpremisetoquicklylearnfromwhatwedo(withlesswaste)anddiscardwhatdoesn’tworkfasterandmorecheaplyhasmadeentrepreneurship,agileandleanbuzzwordsoftoday’sworld:ahighlydynamicera,inwhichtechnologicaladvanceisinthereachofglobalmajorityasitrequireslowinitialinvestment,varioustoolshavingbeencreatedandpublishedasfreewaretohelplearncodingandsetupownventures,andthuspresentinghighlyaccessibleandscalablesolutions.Thebenefitsoffourcenturiesoftechnologicalandorganisationalchangeareatlastreachingapreviouslyexcludedglobalmajority(Auerswald,2012),thatwilleventuallyleadtoaglobalprosperity(KauffmannFoundation,2010)andincreasedglobalcompetition,challengingandtransformingthenotionofeconomy.Withtheeffectofdrivinginnovationworldwideandtransforminghowpeopleworkandbuildproductsandservices,challengingestablishedcompaniestoactandthinkdifferent.Theseparadigmshiftshighlighttheroleofdesignandmultidisciplinaryeffortstofacefierceglobalcompetitionandfocusonessentialquestions,whilstprovidingmeanstoanswerthoseinthecontextofhighuncertainty,followingthelevelsofcomplexityoutlinedbySnowdenandBoone(2007).

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However,asRonAshkenasnotedinHBRjan2011publication:“bigcompaniesarenotthesameasstartups,andneverwillbe.Butthatdoesn’tmeanthattheycan’tbeinnovativeandfast-movinglikestartups.Theyjusthavetodoitdifferently.”(Ashkenas,2011).Itbecomesevident,thatthequestionathandis:how?

1.3 The Lean Startup and its applicability as a possible solution

Againstcounter-intuitivebelief,scholarsandpractitionersarguethatentrepreneurship,despiteitschaotic,disruptiveandinnovativenature(duetohighuncertaintycontext),requiresamanagerialdisciplinetoharnesspotentialopportunities(Blank,2009;Ries,2011).TheLeanStartupisaninternationalmovementandincreasinglypopularmethodology,promisingtotransformhownewproductsarebuiltandlaunched.Itisbasedonarangeofprinciplesandisfirstandforemostaimedatentrepreneursandstart-ups.However,thefivemainguidingprinciplesoftheLeanStartupalsoclaimsbeingapplicabletomuchwidercontexts,ultimatelyaimstoprovideananswertothequestionofhowwecanlearnmorequicklywhatworks,andatthesametimediscardmorequicklywhatdoesn’t(Ries,2011).Severalprominentsmallandbighigh-techcompanieshavebeguntopubliclyemploytheLeanStartupphilosophy,includingIntuit,DropBox,Wealthfront,Votizen,Aardvark,GrockitandGE(GeneralElectric).TheLeanStartupprinciplesarealsotaughtinclassesatHarvardBusinessSchoolasithasincorporatedRies’ideasintoitsentrepreneurshipcurriculum(Greenwald,2012)andaremovingintothepublicsectorasimplementedinmunicipalgovernmentsthroughCodeforAmerica,anon-profitorganisationbuildinganetworkofcities,citizens,communitygroupsandstartupstore-imaginegovernmentsforthe21stcentury.

AttheheartoftheLeanStartupmethodologyisasetofprinciplesfacilitatingtherealizationoftheneedtocreateexperiencesanddesirableproductsthatpeopleactuallywant,which–duetoisfastpacechangingnatureaspresentinaneraofferment–isthesubjecttoconstanttestinganditeration.ThebasicpromiseoftheLeanStartupisachieveatgreatspeed,

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desirableoutcomes,minimisewasteandemergentstrategydespitehighdegreesofuncertainty.Duetotheinvividdiscussionsamongstvarioustangentcommunities,amongstscholarsand practitioners, it thus is necessary to deconstruct the Lean Startup concept, identify its underlyingprinciplesandbenefitsandinvestigateitsmethodologiesandtools.Thisconceptualdeconstruction will enable a thorough analysis of the Lean Startup concept and allow for an investigationassessingitsadaptabilityintoanon-startupsetting,asprovidedbytheempiricalcasecompanyofFuturice.

1.4 Empirical case study: Futurice

Forthisthesis,IchoosethespecificcontextofFuturiceOyasanempiricalcasestudy.FuturiceisaFinnishmedium-sizedsoftwarecompanythatworkswithagilemethods.Thecompanyhasspearheadedthe“philosophy”ofhavingbusiness,designanddevelopmentcompetenciesunderoneroof,acknowledgingthepotentialofdeepprofessionalintegrationtocreatebetterproducts(Futurice,2012).Asafastgrowing,agileITvendor,theLeanStartupholdshighlyattractivepromisesduetoitsnaturalculturalfit,andthepotentialtodeliverhighlydesirableproductsandservicesatrapidspeed(Ries,2011).

TheLeanStartupholdsthepromisetoprovideprinciples,structure,methods,tools,andideasforanacceleratedandholisticproductdevelopmentprocess,thatyieldshighlydesirableproductandserviceoutcomeswithlesswaste.InorderforFuturicetotakeleadershipandposition itself as a credible company in selling and teaching processes and new models of working,LeanStartupisanewprocessthatneedstobeseriouslyinvestigated.ThoughtheoutcomewillbeFuturice-specific,gaininganunderstandingisnotonlyhighlyrelevantworkforthiscompanybutalsoothers,whoaimtobeatopofhowsoftwaredevelopmentandseektoapplytheLeanStartupprocessintotheirowncontexts.Furthermore,theyareconstantlyseekingnewproductsandserviceinnovationsforITvendoringandconsulting.Thisisespeciallytrueforcompaniesthatdon'trelyonoffshoringbutneedtoarguewhyhavinglocalhighlyskilledprofessionalsismorebeneficial.

There is some negativity in deconstruction. I wouldn’t deny this. You have to criticise, to ask questions, to challenge and sometimes to oppose. What I have said is that in the final instance, deconstruction is not negative although negativity is no doubt at work. Now, in order to criticise, to negate, to deny, you have first to say “yes”.

Jacques Derrida, 1997

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2.1 Research phenomenon & problems:

Deconstructing Lean Startup to assess its adaptability and scalability

Thisthesisissituatedwithinthequalitativeresearchthroughdesigninordertodevelopinsightsexceedingthecurrentstateofartconcerningliterature,theoriesandframeworksontheconversionofentrepreneurialpractice,agile,leananddesignpractices.ThoughlittleempiricalworkhasbeendoneontheLeanStartupmethodologyaspioneeredbyEricRies,variouscompaniesacrossindustriesandpublicinstitutionsandgovernmentsareeagertointroduceLeanStartupmethodsintotheirprocesses.Thisthesisaimstoprovideinsightsbyempiricallyinvestigatingitsbenefitsandshortcomings.InordertoaccessthevalueforthespecificsettingofFuturice,theconceptoftheLeanStartupneedstobedeconstructedtounderstand how its underlying principles can facilitate the creation of functional, desirable productsandservicesthatsupportaviablebusinessaroundthem.Drivenbytheneedforconstantinnovation,theriseofstartupsispressuringestablishedindustry.Softwareitselfpresentsafast-movingfield,drivenbyrapidandconstanttechnologicaladvancements,resultinginanimperativetolearnfast,worksmarterandbuildmoremeaningfulcustomerrelationships,whichisthereasonforchoosingtheempiricalcasestudyofFuturice.

2.2 Why does this matter?

Notwithstandingthegrowingacknowledgementinresearchandpracticethatstartupsrelatetocomplexsystemsandtransformativeinterventions,fewreflectonhowtheserelatetoactualtoolsandframework,orlinkandadapttoexistingorganisationalsettings.WiththisthesisIamtocoverthisgapbydiscussingsomeofthetheoriesIhaveidentifiedasrelevantinthiscontext,beforemappingaspecificcompany’scultureandsetting,reportingonthreecase studies presented as design inquiries into this organisation, laying the foundation for an informeddiscourseonitsdeconstructionandapplicabilitytoFuturice.

Inthisthesis,adesigndrivenfocusispursued,asinthewakeoftheLeanStartupmethodology,

2. Research question

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thepromiseforUXpeopletoprovidethenecessarytoolstoadheretotheoutlinedprinciplesisgiven.Thiswillresultinahighlyrelevantstudy,duetoitspotentiallybroadapplicability,thoughspecifictothestudiedcasecompany.However,duetothecommonsearchandacceptance of best practices within the industry, such as illustrated by the adoption of agile methodsinsoftwaredevelopment,thisstudyyieldsthepotentialtoapplytoanindustrywideaudience.

Especially in regards to Futurice, a former tech startup and highly successful organically growingITvendor,theLeanStartupmethodologylooksextremelyattractive.Thisisnotonlyduetocommonlyfoundrootsandphilosophies,butisalsoinevitableduetoitshighlyculturalfit,commonlyfoundprinciplesandvaluessuchaslearninganditerationaswellasacentralfocusonimprovingcustomerrelationshipandcreatingmeaningful,pleasurableanddesirableoutcomes.Furthermore,LeanStartupthinkingpotentiallyprovidesFuturice–asarapidlygrowingITvendor–awaytonotonlydifferentiatethemselvesfromtheirdirectandindirectcompetitors1butalsotobuildbetterproductstoprevailandbebetterequippedinthecurrenteraofferment(Anderson&Tushman,1990),bytacklingtheinherentuncertaintyandthushelpingtodesignsuitable,tailored-to-the-marketproductsandservice.

2.3 Defining the knowledge gap

Astheliteraturereviewpointsout,littleempiricalresearchhasbeendoneonthetopicofLeanStartupmethodology,thisresearchworkaimsatclosingthatchasm.TheLeanStartupprinciples,originatinginthestartupworldoftheUSwestcoast,developedinthecontextofweb-basedstartupsandproposingtomanagehighdegreesofuncertainty,havenotbeenempiricallyinvestigatedconcerningtheirscalabilityandapplicabilityinadifferentcontext,specificallythatofaFinnishmedium-sizedITvendor.

1 Servicesareintangibleactivitiescustomizedtotheindividualrequestofknownclients.(..)Clients generallyvaluethebenefitsofservicesmorehighlythanthegoodsrequiredtoprovidethem(Gilmore &Pine||,1999).CustomerSatisfactionisoneofFuturice’scorevaluesaswillbeexploredinlater chapters.

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Furthermore, little empirical research has been done around the topics of Lean Startup principlesandhowitfitsinwithothercommonpracticesandprinciplesthataremoremanagerial,suchasagileandleanordesign-driven,suchasUXandServiceDesign.Hence,thisresearchworkaimsatinvestigatingenablersandinhibitorswhenintroducingLeanStartupprinciples,identifyingthosespecifictotheempiricalcasestudy.ByinvestigatingandassessingtheapplicabilityoftheunderlyingprinciplesoftheLeanStartup,potentialbenefitsofadoptionfortheempiricalcasestudyareilluminated.InanattempttostrategicallyintroduceLeanStartupprinciplesintotheempiricalcasestudy,managerialimplicationsareexplicitlylisted,generatingahighlycontext-specificoutcome.

2.4 Research Questions

Followingtheidentifiedresearchphenomenonandproblemsarisingfromidentifiedknowledgegapsincurrentliteratureandtheoreticalapproaches,onemainresearchandthreesub-researchquestions,thatthisthesisaimsatinvestigating,arise:

Main RQ 1: What is Lean Startup and what are its underlying principles?

In order to answer this question, I need to deconstruct the concept of Lean Startup, investigateitsoriginsandcontextfromwhichitarose.Furthermore,thiswillbeaccomplishedbyidentifyingthevariouscommunitiesitresonatesorconflictswith,gatheringinterpretationsof scholars and practitioner of its practical application and broader applicability it may provide.Furthermore,exploringhowithasbeenabletogainthepopularityasaworld-widemovement#andtranslatingtheoutlinedprinciplesintopractice,iskeytoansweringthisquestion.

However,arisingfromthismainresearchquestion,sub-questionscanbededuced,asFuturice,asaspecificempiricalsetting,needstobecontextualised.Hence,threesub-questionsneedtobe answered alongside with it:

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Sub-RQ 1: What are possible enablers and inhibitors for adopting Lean Startup principles,specificallyinregardstoFuturice?

Possibleenablersandinhibitorsneedtobeidentifiedingeneralterms,beforespecificonescanbeidentified,specifictotheempiricalcasestudyofFuturice.Indoingso,strategicmeasurescanbediscussedinhowtoovercomeinhibitorstofacilitateasuccessfuladoption.

Sub-RQ2:WhatpotentialbenefitsdoestheLeanStartupmethodologyoffera mediumsizedITvendor,asshownwithFuturice?

AstheLeanStartupmethodologyisdescribedwithinthecontextofstartupsandentrepreneurs,additionallytoinvestigatinganddeconstructingtheconceptoftheLeanStartupitself,Futuriceasanorganisationanditsindustrysettingneedstobeinvestigatedinordertomaptheirculture,strategyandvaluesagainstthepotentialbenefitstheLeanStartupprincipledapproachoffers.ThisalsorequiressomeanalysisofwhichoftheprinciplesarethemostrelevanttoFuturice.Onlybydoingso,potentialbenefitsforthisspecificempiricalenvironmentcanbeidentifiedandformulated,astheyspecificallymatchstrategicneedsandgoalsorposeasolutiontoidentifiedshortcomingsorproblems.

OncethebenefitsoftheLeanStartupapproachconcerningFuturicespecificallyhavebeenidentified,thethirdsub-researchquestionsdealswithsummarisingfindingsinawaythatwillguide the strategic formulation of actionable steps of introducing Lean Startup methodology to Futuricesuccessfully.Hencethefollowingsub-questionarisesasfollows:

Sub-RQ3:HowcanLeanStartupprinciplesbeintroducedtoFuturiceandwhat actionable steps need to be taken?

InordertosuccessfullyintroducetheproposedbenefitsofferedbytheLeanStartup,thiswill

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beaccomplishedbyinvestigatingcasestudiesandmappinganddefiningcurrentcustomer-relationshipsandthecontexts,inwhichFuturiceoperatesin,asavendor.AsFuturiceitselfessentiallyisaserviceprovider,sellingprocessesandexpertise,aLeanStartuptypeofprocess hence would be a new producttosell.Answeringtheseissuesisvital,asonlythroughunderstandingthenatureanddynamicsofcurrentcustomerrelationships,improvementcanbeachieved.

Basedonfurtherdiscussionsandworkshops,astrategicandactionableapproachhastobeformulated in order to successfully introduce Lean Startup methodology as a process into Futurice,theoverarchingaimofthethesis.Iwillgiveinformedexplicitandactionablesuggestionsforhowthiscanbedone.

The secret to discovery is to never believe existing facts.

Bryant H. McGill, 1998

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3. Methods

Asguidedbytheidentifiedresearchobjectives,Iwillconductvariouswaysofinvestigatingandfindinganswerstotheposedmainresearchquestionaswellitsderivedsub-questions.

Firstly,inordertodescribeandunderstandtheresearchphenomenaandtheknowledgegap,a contextualreviewisbeingcarriedout,identifyingcoreliteraturefromthedifferentfieldstangent to the Lean Startup and the contexts of complexity and chaos, that will facilitate a deconstruction of the concept.

Conductingaliteraturereview,Iwillgiveinsightsintoinnovationstudies,organisationalmanagerial literature and strategic research that help frame technological change as a cyclic phenomenon(Anderson&Tushman,1990)andgiveinsightstogroundsonwhichinnovationhappens and current competition occurs, that in turn elicit the challenges companies are facing currently.Furthermore,Iwillidentifyprocessesandtoolsthathelptackleandthatpresentanswerstotheoutlinedchallenges.Identifyingandutilisingasuitableframework,asfoundinthe Cynefinframework(Snowden,Boone,1999),Iwillmaptheseprocessesandtools,includingproposingapositioningofLeanStartupwithin,inordertocontextualiseandcomparethemagainstoneanother,outliningbenefitsandshortcomingsofeach.

Secondly, in order to map Futurice as an organisation and to map and explain their customer relationships,offeringandservicedelivery,arangeofinterviewsandworkshopsarebeing conducted with Futurice employees.

Furthermore,inordertoassessthemeanstointroducethe,asrelevantidentified,LeanStartupprinciplesintoFuturice,athoroughunderstandingofitscompanycultureisindispensable.Hence,inordertoenrichknowledgeandnourishadeep,insightfulandholisticunderstanding,avarietyofuser-centredandprimarilydiscursivemethodsareemployedandutilisedinordertocaptureandmapthecomplexity.Furthermore,ethnographicinsightsthroughhavingworkedinthecompanyforoverayear,goingthroughtheinitialtrainingandintroductoryprocess,includingtrainingsessions,workshopsandinterviewsononehandaswellasparticipationina

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widerangeofprojects,cases,workgroupsandseminarsontheother,yieldingbothanexplicitaswellastacitknowledgebaseareincorporated.Inanefforttoadvancetacitknowledgeintoexplicitknowledge,arangeofadditionalartefacts,suchassalesmaterial,thewebsite,Futurice’sbrandbookandothers,aresubjecttoanalysis.

Aninitialroundofinterviewswasusedinordertoportraythecompany,itscustomers,thetypesoftheirrelationshipandtheserviceofferinginvolved.Theinitialframeworkofanalysiswasintroducedasitwillbeusedforthesecondroundofinterviewsinordertostructurethefindingsandtomakeexplicitsuggestionsconcerningtheadaptabilityofthediscussedprinciplesandtheoriesandmakethemsubjectofdiscourse.Inaddition,previouscompanycasesarebeinganalysedtoinvestigatethevariouscustomerrelationshipsFuturiceengagesin,howprojectsarebeingchosenandmanaged,facilitatingthedefinitionofexistingcustomerrelationships.

Thirdly, in order to explore how and if the principles of the Lean Startup can be applied in ordertoimprovetheserviceofferingandcustomerrelationshipsatFuturice,asecondroundof interviewsiscarriedout,introducingtheinitialframeworkofanalysisandrefiningthedeveloped artefacts,investigatingpossibleactionablesteps,throughco-creativemeasures,discursiveand proactive iteration.

Asstatedabove,basedontheinitialinterviews,severalvisualisationswereproduced,thatthentookthecentralaspectofsecondroundofinterviews,engaginginadiscursiveandpro-activeiterationandrefinementround,involvingvariousperspectives,experiences,backgroundandopinionsingroundingcomprehensiveactionablesuggestionsonformulatingthestrategicintroductionofLeanStartupmethodologies.

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3.1 General approach for interviews and workshops

Theoverarchinggoalwastoevaluatethiscompanyfromaholisticpointofview,tomapopinions,facts,artefactsandperspectivesintoacoherentstrategy.Hence,thechosenapproachofconductinginterviewsrequiredacross-sectionofopinions,facts,andperspectivesinordertogenerateamultilayered,comprehensiveandencompassingunderstanding.Henceitwasidentifiedasanecessitytocoverallorganisationallevelsofthecompany1.Additionallytothat,workshopsandfocusgroupdiscussionswerecarriedout.

Onekeychallengewastoidentifyanddesigntherightsettingandchoosingsuitableparticipants.Thechoosingoftheparticipantswasbasedonacrosssectionofskillsandknowledge,professionalbackgroundsandpositionswithinthecompany.Questionsaroseconcerningtheformatoftheinterviewsandworkshopsthemselves,theappropriatewayofdocumentation,embracingacomponentofiterativecyclesandasuitablesynthesisofvariousresultsandartefactsobtained.

3.2 Format of the interviews and workshops

AccordingtoHyysalo,therecanbestructured,themedoropeninterviews(Hyysalo,2009).Whilststructuredinterviewspresentarigidsetofpreselectedquestions,openinterviewsarearguedtobemoreakintodiscussionsabouttheselectedtopic.Themedinterviewspositionthemselvesinbetween,withpreselectedquestionsguidingtheinterview,thoughatthesametimegivingtheinterviewertheopportunitytoaskfurtherquestionsbasedonpreviousanswersorcomments.Asextractingandcomparingdatafromunstructuredquestionsisalothardertoaccomplish,openinterviewsposethechallengeofbeingmoredifficulttobeanalysed.Thatisalsoduetothefactthatgivenanswersfromvariouspeopledonotstemfromtheexactsamequestions.Hence,fortheinterviewsathemedapproachwaschosen.

1 Relevantdataoninterviewees,theirpositionsandjobtitlescanbefoundintheAppendix.

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Theinterviewsandworkshopswerecarriedoutthroughouttheentirethesisprocess.Asapreparationandadirectresultfromtheconductedliteraturestudy,Iidentifiedandformulatedasetofkeyquestions2tobothguideandsteertheinterviewsanddiscussions,howeverallowingspaceandtimefordiscursivesidetrackstobeexploredandfollowedduring.Theformatoftheinterviewsforboththeinitialroundaswellthesecondroundwasannouncedtotheintervieweeandcomposedofthreemaintopicsinordertoallowfocusandtoensuretimeboxing.Theinterviewsweresettolastforanhourwithapproximately50minutesreservedtocoverthemainareasandfurther10minutestoexplorethoughtsthathadrisenandfeedbacktobegathered.

Utilisingthe–thematicallyinthreemainparts–structuredkeyquestions,enabledtosystematicallycoverthroughliteraturereviewidentifiedsurfacingissuesinregardstoinnovation,technologicalchange,competitionchallenges,entrepreneurship,companyorganisationandcultureandnatureofprojects,amongstmanyothers.Furthermore,allconductedinterviewswererecorded,drawingsandnotesmadefromeachandbroughtintothenext.Followingthisiterativeapproach,enabledtheuseofvisualisationandnotesasadditionalwaysfordocumentation,alongsideaccuratelyobtainedtranscriptsthroughrecordings.Followingthethemedinterviewapproachmadeitinturnsubjecttomodifications,keepingtheinterviewsthemselvesleanandagilethroughout.

Additionally,shortworkshopsofnomorethantwohours,helpedtosummarisethefindingsobtainedandtoengageinco-creativemethodstofurtherdiscussideasaswellastoextractactionablestepsandactionpoints.Similarly,workshopswerearrangedthroughouttheprocess,andfollowedathemedapproach,leaningonthethemedinterviewapproach.

2 Key questions such as: “How would you describe the company culture within Futurice?”, “What are thecompany’scurrentgoalsandstrategies?”,“Whatpotentialbenefitdoyouseefromadoptingthe LeanStartupprocess?”.

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3.3 Possible shortcomings

AsaresultofhavingworkedatFuturicemyselfforaboutayear#andahalf,myperspectiveasaresearcheristintedthroughmyownselfasanemployeeofFuturice.Furthermore,thoughmypersonalbackgroundandeducationincludesasolidbusinessaswellastechnicalunderstanding,inFuturiceIammostlyperceivedasprimarilyaUXdesigner,duetothepositionIamholdinginsidetheteam,projectgroupandprofessionaltitleIamholding.Additionally to that, there are sociocultural factors, such as my nationality and me being a female,thatmighthavehadaninfluenceontheoutcomesofthisresearch.

Throughthechosenapproachhowever,Iamoptingforaqualitativeresearchapproach,thatinturnaimsatgeneratinginsightsthroughdiscourseandco-creativemeans.Hence,ratherthanfocusingonscientificrigour,Ichoseamoreleanandagileapproachtoconductthisresearch.Criticismmayariseduetoanotherapproachbeingarguedassuperior,however,giventhescopeofthisthesisandthespecificsettingofanempiricalresearchcase,morehigh-fidelityoutcomeswereoptedfor.

It needs to be emphasised, that his thesis presents a practitioner’s thesis, not the thesis of anacademicscholar.Theresearchquestionsaddressedarehighlyrelevantinpractice.Mychosen practitioner’s approach will hopefully contribute also to the academic discussions and perspectivesonthesematters.Withthedomainofthisstudybeingamixtureoftheoryandpractice–thoughclearlyandfirmlyanchoredinthepracticalcontext–itaimsatbuildingabridgetomoretheoreticalapproaches.

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Fig. 1: Transcribing interviews from recordings

Fig. 2: Mapping comments to matrix to compare and analyse results (right), which can be found from Appen-dix.

2

1

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Alex Kluwe

Teemu Turunen

Matti Jylhä

Sebi Taucic, UX & Service Design

Anni Tölli, Marketing Leader

Alexander Kluwe, Project Manager

Suvi Numminen, UI & Concept Design

Anni Tölli

Sebi Taucic

Tuomas Syrjänen, CEO

Teemu Turunen, Services Director, Lifecycle Man-agement

Petri Heiramo, Organizational Scrum Master

Suvi Numminen

Janne Toivola

Mathias Calonius

Tuomas Syrjänen

Interviews

Petri Heiramo

Workshop

Workshop

Informaltalks

Visuali-sation

Visuali-sation

Workshop

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Futurice culture, values

& strategy

CasesFuturice strategy

& Lean Startup

Proposal &

Actionpoints

Applicability Lean Startupmethodology

Visuali-sation

Matthias Calonius, Head of Consultancy

Janne Toivola, Senior Service Designer

Matti Jylhä, Business Director

As organizations struggle to stay nimble in the face of an ever-changing marketplace that is disrupted constantly by incumbents as well as start-ups, getting to market fast becomes top priority. [...] In other words, by the time the company decides internally how the product should be designed, the needs of the marketplace have changed.

Jeff Gothelf, 2011

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4. Literature review

Thefollowingliteraturereviewistargetedatbringingtogetherandsynthesizingexistingliteratureandresearchconcerninginnovation,managerial,organisationalandstrategyliterature in order to lay the foundation for understanding the fundamental forces of innovation,thevariousschoolsthathaveemergedinstudyingthiscomplextopic,aswellasgiveinsightsonpractitioner’saccountstoensurehighrelevancyandup-to-dateinsights.

Asthestudiedtopicisahighlycross-disciplinaryone,theaimofpartoneistotakeamultangularwayofstudyingit,howeverduetothespecificsettingofthethesisanditsecosystem from which it arose, this thesis deliberately chooses a technical and software specificangleofanalysis,bytakingatechno-historiclookatinnovation.Parttwoinvestigatesstrategicattemptsofdealingandmanaginguncertainty,introducingarangeofvariouswaysofdecision-makingprinciples.PartthreeoftheliteraturestudyhighlightsthefundamentalsfromwhichtheconceptofLeanStartuparose,andtomaketheoutcomesrelevantandapplicabletothefieldsthestudiedcasecompanyFuturice,operatesin,touchingupontangenttopicssuchasleanmanufacturing,agilepracticesaswellastheriseofLeanStartupandleanUX.

Part 1: Innovation - a complex, multifaceted phenomenon

4.1.1 Innovation studies and the importance of a cross-disciplinary

approach

Despiteinnovationarguablybeingasoldashumankinditself,innovationstudiesarearguablyarelativelyyoungfieldthatstartedtoemergeasaseparatefieldofresearchinthe1960’s.Theaccordingliteraturehadbeenvariedfordecades,withastrongfocusonapproachestiedtoindividualdisciplinesthemselvesthatyieldedtheunderstandingofinnovationasacomplexand multifaceted discipline that alone through science or a single discipline was not to be understood in its entirety, resulting in a focal shift of research in this area and the notions that characterizeit(Fagerberg,2006)withseveraljournalsandprofessionalassociationsfoundedtocontributetoastrongercross-disciplinaryapproach,synthesizinginsightsfromvariousfields

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anddisciplines,thatcharacterisesmostofthescholarlyworkdoneinthisarea.

Undoubtedly,thereissomethinginherentlyhumanaboutthetendencyofimprovinglife,inthinkingaboutanddoingnewandbetterways,thestrongdesiretolearn,acentraltopicincognitivesciences.AsoutlinedbyStephenKlineandNathanRosenberg(Kline&Rosenberg,1986),thelinearmodelcharacterizingthewidespreadviewoninnovationinthemid80’sgeneralizedachainofcausationholdingtrueonlyforaminorityofinnovations,namelytheassumedstemmingfromscientificbreakthroughsasinitiatorsforimportantinnovationsaswellastheignoranceoffeedbackandfailuresoccurringatvariousstagesofthelinearmodel,thatcanleadtolearningandeventuallytotallynewinnovations.Hence,acentraltopicofinnovationstudiesisthatoflearning,acentraltopicincognitivesciences,asoccursinorganisationalsettingssuchasgroups,firms,teamsandnetworksandthatisstudiedwithinsociology,organisationalscience,managementandbusinessstudies.(Fagerberg,2006)

4.1.2 What innovation is - and what it is not

Wheninvestigatingtheconceptofinnovation,ithastobeunderstoodagainstinvention,whereasbothcanbesocloselylinked,thatmakingacleardistinctionisimpossible(Fagerberg,2006).Inventionisthefirstoccurrenceofanideafornewproductandprocess,whereasinnovationisthefirstcommercializationofanidea,combiningseveraldifferenttypesofknowledge,capabilities,skillsandresources.Henceitfollowstheimportanceoftheroleoftheinnovator,whetheranindividualoranorganisationalunit,combiningthefactorsnecessary,asexemplifiedbytheworkofinnovationtheoristSchumpeteronentrepreneurialbehaviour.Ithighlightstheindividualperspective,layingmuchgroundforentrepreneurialstudiesingeneral.Schumpeterdistinguishedbetweenfivedifferenttypesofinnovations(newproducts,newmethodsofproduction,newsourcesofsupply,exploitationofnewmarketsandnewwaystoorganizebusiness,whereasthefocushasbeenonthetwofirst(Schumpeter,1934).

However,Schmookler(1966)arguedforthecriticaldistinctionbetween‘producttechnology’

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and‘productiontechnology’(similarlyto‘productinnovation’and‘processinnovation’),tocharacterizetheoccurrenceofnewimprovedgoodsandservices,andimprovementsinthewaystoproducethem,respectively.Hence,innovationfromabusinessororganizationperspective,canbeunderstoodmorebroadlyas“Innovation...isgenerallyunderstoodasthesuccessfulintroductionofanewthingormethod...Innovationistheembodiment,combination,orsynthesisofknowledgeinoriginal,relevant,valuednewproducts,processes,orservices”(LueckeandKatz,2003).

4.1.3 Innovation in the making and how it occurs

Innovationassuch,wasforthelongesttimeabsentfrommainstreamsocialscience,duetoaninabilityofscholarsinansweringthefundamentalquestionofhowitoccurs,leavingscholarstocommonlyassumearandomphenomenon(or“mannafromheaven”).InnovationtheoristSchumpeter,objectingtothispractice,highlightedthreemainaspectsinhiswork,knownasMarkI.Itincludedaspectssuchasthefundamentaluncertaintyinherentinallinnovationprojectsandtheneedformovingquickly,insteadofweighingallinformationavailabletofindthe‘optimal’solution-involvingleadershipandvision-andaprevalenceof‘resistancetonewways’,orinertia-qualitiesassociatedwithentrepreneurship(Schumpeter,1934).However,inhisaccounts,theorganisationaldimensionwasoverlooked,asmostinnovationsinvolveteamworkandtakeplacewithinlargerorganizations,whichhecorrectedlater,inhisworkknownasMarkII,emphasisingtheimportanceofco-operativeentrepreneurshipinbigfirms,withoutanalysingthephenomenonindetail(Schumpeter,1942).Centralfindingininnovationliteratureisthat,nofirminnovatesinisolationbutdependsonextensiveinteractionwithitsenvironment.

Hence,oneneedstoturntothesystemicnatureofinnovationsasthe‘innovationjourneyisacollectiveachievementthatrequireskeyrolesfromnumerousentrepreneursinboththepublicandprivatesectors’(VandeVenetal.1999,p.149).Hence,inthelastdecades,scholarlyworkhasconcentratedonhowsystem-conceptsareappliedtotheanalysisoftherelationship

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betweeninnovationactivitiesinfirmsandthewidercontext,inwhichtheseactivitiesareembedded.

4.1.4 Innovation - a historic technological perspective

One main approach has been to delineate systems on the basis of technological, industrial orsectoralcharacteristics(Hughes1983,Carlsson&Stankiewicz1991)andtoexplorethetechnologicaldynamics,itsvariousphasesandhowitinfluencesandisinfluencedbythewidersocial,institutionalandeconomicframework.Systematictheoreticalandempiricalworkoninnovationprojectworkanditsmanagementhasrisen,fundamentallyagreeingwithSchumpeter’suncertaintyaspect(NelsonandWinter1982,NonakaandTakeuchiandVandeVenetal.1999).BasedonPavitt’sanalysis(1984),thefactorsleadingtoinnovationsacrossdifferentindustriesandsectorscanvaryhugely,henceapopularapproachin(recent)mainstreaminnovationliteraturehasbeenacase-basedone.Popularinnovationliteraturehasalsocurrentlybeenexperiencingarapidexpand,accompaniedbyamuchstrongerresearchontheroleofinnovationeconomicandsocialchangethathasproliferatedinrecentyears,particularlywithinthesocialsciences.Buttheoverarchingquestionremains,howtofosterinnovation?

Theproblemsofinnovationareextremelyvariedandcomplexthatmultiplebodiesofknowledgearerequiredtounderstandhowtomanagetheevolutionofinnovation,hencenosingleparadigm(Kuhn,1970)hasemergedinthestudyofpatternsofinnovationbutseveral(Christensen1997).AccordingtheschoolofChristensen(etal.),fourbodiesoftheorycanbelabelled, one of which is the dominant design theory that studies one particular dimension oraspectoftechnologicalevolution,whichis–astechnologicalhistorianshavepointedout–criticaltothewayinnovationisorganized,aswellasitseconomicandsocialeffects,dependingheavilyonthespecificnatureofthetechnologyinquestion.

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4.1.4.1 Technology Life Cycles: Discontinuous Technological Change (DTC)

and Dominant Designs (DD)

Asstatedabove,afterthepioneeringworkofSchumpeter(1934,1942)andMarx(1906)concentratedmainlyontheactualeffectsoftechnologicalchangeoncertainindustries,organizations,individualsandroles.However,whenattemptingtounderstandtechnologicalchange,thenatureanddynamicsofit,Ihavechosentotakeahistoricalviewontechnologicalevolution,basedonthemodelonthecyclicalevolutiondeterminedbytechnologicaldiscontinuitiesanddominantdesigns,asformulatedbyPhilipAndersonandMichaelTushman.Their proposed model is used in order to position this thesis and to understand fundamentals oftechnicalvariation,selection,retentionandprogress(Anderson&Tushman,1990).

Accordingtothemodeloftechnologicalchange,atechnologicalbreakthrough,ordiscontinuity,initiatesaneraofintensetechnicalvariationandselection(eraofferment),culminating and ending in a single, dominant design, a new and stable and established technology.Hence,theeraoffermentisfollowedbyaperiodofincrementaltechnicalprogress,whichinturnmaybebrokenagainbyasubsequenttechnologicaldiscontinuity,asshownbelow.

Overall,theproposedmodelisacyclicalone,meaningthereareconsecutivephasesoftechnologydevelopment,thatfolloweachotherincyclicalmanner.Ithasalsobeendescribedasnon-linear,referringtoKuhn’swork(1962).Hearguesthatmajorchangeshappeningin‘paradigmshifts’thataffecttheveryfoundationoftechnologicalknowledge,businessmodels,andentireindustrythatpressurespeopletoanextendinwhichtheygoasfarasreconfiguringtheirknownpracticesandinventnewones.SimilarapproachesandmodelscanbefoundfromliteraturestemmingfromtechnologymanagementresearchsuchasClaytonM.Christensen(1997)andJamesUtterback(1994).

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Fig. 3: Underlying concepts of the DTC-life cycle, as adapted from Lambe and Spekman (1997), Foster (1986), Anderson and Tushman (1990) and Utterback (1994)

4.1.4.2 Technological discontinuities and the subsequent era of ferment

Thestartingpointforthepresentedmodelisaradicalinnovationatanunforeseenmoment,thatAndersonandTushmancoinedatechnologicaldiscontinuity.Itsradicalnessderivesfromthetechnologynotbeingbasedupontraditional,knownandtestedcompetenciesandbusinessmodels,disruptingtheexistingandestablishedindustry.Itisarguedtobedramaticallychallengingnormsofexistinginnovationsinanindustry,notonlyadvancingthestateofartbutalsointroducinganewwayofmakingsomethingoranewfundamentalproductarchitectureandhencedeeplydisruptingtheestablishedandexistingindustry.Thediscontinuityisaradical

3

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innovation,asopposedtoevolutionary,incrementalorconservative.

Thisdiscontinuitycaneitherbecompetence-destroyingorcompetence-enhancing,renderingtheexpertiserequiredtomasterthetechnologythatitreplacesobsolete,andbuildingonknow-howembodiedinthetechnologythatitreplaces,respectively.Inanycase,eachdiscontinuityinauguratesthetechnologycycle,thatstartswiththeeraofferment(Anderson&Tushman,1990).

Theradicaladvanceintroducedbyatechnologicaldiscontinuityleadstoanincreasedvariationinaproductclass,makingerasoffermentaccountforthemajorityofobservedtechnicalprogressacrossindustries(Anderson&Tushman,1990)asittriggersexperimentation,duetotheintroducedradicalinnovationornewtechnologybeingcrudeandexperimentalitself.Frequently,theydonotworkwellandarebasedonunprovenassumptionsandinconsistentcompetencies.Hence,inaneraofferment,anoldtechnologicalregimecompetesagainstthenewtechnologicalregimeandevendifferentvariationsofthenewtechnologicalregimecancompeteagainsteachotherwithin.Typifyingfortheeraoffermentistheabsenceofaclearcombination of actors that is stable and dominant, meaning that there is a high potential benefitinbecomingthenewdominantdesign.Furthermore,thismaketheeraoffermentexceptionallycompetitiveandindeterminateduetopreviousstructuresandmodels,powerrelationsandorganisationspotentiallychangingdrastically.

One critical aspect to highlight, is the fact that design plays an important role in an era of ferment.Often,severalversionsofthebreakthroughtechnologyappearduetothetechnologyitselfnotbeingunderstoodwellandbecausepioneeringcompanieshavinganincentivetodifferentiatetheirproductvariantfromthoseoftheircompetitors.Duringaneraofferment,potentialcustomersareoftenconfrontedwithseveralversionsofanewtechnology,thatoftenearlyadopterswillrespondto,howevermostwillwaitforastandard,resultinginfiercecompetition,inwhichmarketdominancemightpassbackandforthamongrivaldesignsovertime.Hence,duringaneraofferment,variationandselectionpressuresaresubstantialbecause

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ofsubstitutionanddesigncompetition.Acurrentexamplecanbeseeninthemobilephonecontext,wherepowerrelationsarechangingconstantly,themarketishighlycompetitiveandstartupsquiteeasilypenetratethespaceofmobileecosystem(TimeMagazine,2012),astheycanmoveandrespondquickly.Duetotheunpredictabilityoftheeraofferment,oneofthecorecompetencyconsideredvitalforanyactorwithinislearning,alongwithahighlightedroleofdesign.OneprimeexamplecanbeseeninApple’sinnovativeapproachtobusinessanditsproducts,re-organisingthecompanytostayleanandnimble,despiteitsenormoussize(FortuneMagazine,2012).

4.1.4.3 Dominant design and the subsequent era of incremental change

UtterbackandAbernathy(1975)suggested,thattheemergenceofadominantdesignisthekeyeventintheevolutionofanindustry,markingthetransitionfromafluidtoaspecificstate(Anderson&Tushman,1990),proposinganinitialperiodofproductdesignfermentbeforetheemergence of a dominant design, denoting a general acceptance of how principal components wouldinterfacewithothers-abasicarchitectureofproductorprocessthatbecomestheacceptedmarketstandard(Abernathy&Utterback1978,citedbyAnderson&Tushman,1991)-thatmaynotnecessarilybetheoptimaldesign.AndersonandTushmanargue,whileonlyknowninretrospective-thatthedominantdesignreducesvariationand,inturn,uncertaintyintheproductclass(Anderson&Tushman,1990)andhenceassertsthatthenatureofinnovationshiftsmarkedlyafteradominantdesignhasemerged.

Astheoutcomeofaneraoffermentisnon-obviousandcomplex,BijkerandLawexplainthatintechnologicalchangetheheterogeneousactors-forinstancebusinesses,organisations,regulators,usersandexistingtechnologies-eachhavetheirownstrategiesforwinningintheconflictandbeatinganyopposition(Bijker&Law,1992).Ontheotherhand,strategiesandactionsareshapedininfluencedbyotheractorsandtheirpursuedstrategies-makingchosenstrategiesandtheirconsequencesanemergentphenomenon.Buildingupondominantdesignparadigm,scholarshavearticulatedimpactsonpatternsofinnovationcanbe,including

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dominantdesignsrestrictingdifferentiationofproductsthroughinnovativedesign,resultinginfeweropportunitiesforsmallorentrantfirmstopenetrateamarketorfindrefugeinnichemarketsinpost-dominantdesignera(Christensen,1997).Definingforthisistheadoptionofthedominantelementsofarchitecturaldesign.Whileonlyknowninretrospect,dominantdesignsreducevariationand,inturn,uncertaintyintheproductclass.Dominantdesignsmaynotbebetterthanalternativesnorinnovative.Theyhavethebenchmarkfeaturestowhichsubsequentdesignsarecompared.ExamplesincludetheIBM360computerseriesandFord’sModelTautomobile,andtheIBMPC.

4.1.4.4 Strategic literature and Technology Management Research:

How to foster innovation?

Morerecentaccountscanbeobservedtohaveshiftedfocusfromexplainingwhatinnovationistohowitoccursandhowfirmscandeliberatelyaimedfor,facilitatedandsteerinvariousecosystemsandthroughvariousorganisationalsettings.Furthermore,theargumenthasbeenmade(Morone,1993;Tushmanetal.,1997)thatonlythroughabalancedportfolioapproachtoinnovation(withfirmspursuingbothincrementalanddiscontinuousprojects)canafirmcontinuetoprosperinthelongterm.However,therearenotablymuchfeweraccountsonhowtoactuallydoit.Despiteavastamountofpopularmanagerialliteratureoninnovationmanuals,thereisverylittleempiricalworkdoneinthisfield.

4.1.4.5 Sustaining and disrupting technologies - working simultaneously

As stated before, building upon the theories of cyclic technological change, similar approaches and model can be found from literature from technology management research, such as HarvardBusinessSchoolprofessorandbusinessmanClaytonM.Christensen’swork.Heisbestknownforhisstudyofinnovationincommercialenterprises,focusingondisruptiveinnovations,astraditionally,academicresearchandpractitioner’seffortsinmanagingtechnicalinnovationshasbeenfocusedonincrementalchangeandprojects,thatnaturallyamajorityof

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projectsongoingatanypointintimeinafirmindeedareandthatputthedominantshorttermreturninvestment(ROI)mindsetatrest:“Alsorecentfocusonleanandre-engineeringabsorbsmanyoftheperquisitesforconsideringsuchprojects”(Christensen,1997).

InChristensen’sfirstbookentitledTheInnovator’sDilemma(1997),hearticulateshistheoryofdisruptiveinnovation,thatdescribeshowlargefirmscanfailalthoughdoingeverythingright, as their successes and capabilities actually become obstacles in the face of changing marketsandtechnologies.Hegroundshistheoryinthekindoftechnologiesthefirmsispursuing,makingthedistinctionbetweenso-calledsustainingtechnologiesanddisruptivetechnologies:Technologiesthatimproveproductperformanceandtechnologiesthatareinnovationsthatresultinworseproductperformance,atleastinthenearterm,respectively(Christensen,1997).Companiesaretraditionallymorefamiliarwiththefirstone,thesustainingtechnologies,astheyinvolveimprovingaproductthathasanestablishedroleinthemarket,makingthemadeptatturningsustainingtechnologychallengesintoachievements.However,Christensenclaimsthatthesecondkind,thedisruptivetechnologies,largecompanieshavetroublesfacing,astheyarecheaper,simpler,smaller,and,frequently,moreconvenienttouse,occurring less frequently and causing the failure of highly successful companies that are only preparedforsustainingtechnologies,whentheydo.Sothequestionbecomes,ifthosefirmsdoeverythingright,whatleadsthemtofaildespite

Fig. 4: Image depicting Christensen’s theory on disruptive versus sustaining technologies.

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ofthat?ChristensenexpandsonthatinhissecondbookTheInnovator’sSolution(1999),byarguingthatfirmsneedtobeabletoidentify,developandsuccessfullymarketemergingpotentiallydisruptivetechnologies,beforetheycanovertaketraditionalsustainingtechnologies.However,theidentificationofthosedisruptivetechnologiesiscanprovechallengingas“marketsthatdonotexistcannotbeanalysed.”Furthermore,involvedvaluenetworksandtheorganisationalstructureitselfarearguedtobewithholdingtheprocessofsuccessfullydevelopingandmarketinganyemergingtechnologies.Hence,Christensenargues,managersneedtoadoptadiscovery-drivenplanning,fightingthepredominantstigmaoffailureinmostfirmsbyacknowledgingintheiroperationsthatnewmarketscannotbeanalysedandinsteadengageinanlearning-by-doingapproach,thatallowsforreal-timeadjustmentofthestrategyandplanning.Thishastohappenonapersonalaswellasorganisationallevel,asinvestinginpotentiallyemergingtechnologiesmayleadtofailurewhichistobetakenasanopportunityforlearningandcoaching.Onceafirmhassuccessfullyidentifiedanemergingtechnologytopursue,theymustcircumventtheirhierarchyandbureaucracythatcanstiflethefreepursuitofcreativeideas,throughexperimentalgroupswithinthecompanyatfreereignforinstance,thatcanchooseitsowncustomers,howtoanswertothem,howmuchprofitisneededandhowtorunitsbusiness.Furthermore,whilstmaintainingthecorebusiness,theemergingtechnologyneedstobedevelopedquicklyinordertocompetewithsmaller,morenimblefirms.Eventually,oncethecompanyhassuccessfullydevelopedaproduct,theymustfindanappropriatemarkettotarget,thatmightturnouttobeofhighlyunpredictablenature(Christensen,1997).

“Discoveringmarketsforemergingtechnologiesinherentlyinvolvesfailure,andmostindividualdecisionmakersfinditverydifficulttoriskbackingaprojectthatmightfailbecausethemarketisnotthere.”

–ClaytonM.Christensen,TheInnovator’sDilemma,1997

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Part 2: Innovation impetus in an era of ferment - they way we learn:

organisationally and strategically

Fundamentalinnovationssuchasagriculture,thewheelorthealphabet(Fagerberg,2006)havehadamajorimpactonsocietyatlarge.However,followingmediaEcologistRobertK.Logan,theSixthlanguageisdrasticallychangingtheoperationalcontext.Loganarguesthatspeech(naturallanguage:speakandlisten),writing(literacy:readandwrite),mathematics,science,computing(andcomputerprogramming),informationtechnology(andinternet),formanevolutionarychainoflanguages(Logan,1986).Unlikeprint,televisionorradio,usersoftheInternetandcomputerscaninstantaneouslyinteractwithinformation,recognizeit,reshapeitandrespondtoit(Logan,1995),whereasspeedinthishighlydynamiceraofuncertainty,isofimmenseimportance,alsoduetothewidespreadreachofITandit’sempoweringtools.FollowingSchumpeter’snotionofanentrepreneur’sabilitytoachievesynergy(Schumpeter,1934),thissecondpartoftheliteraturereviewdealswithvariouscontextsofdifferentlevelsofuncertaintyanddecision-makingprinciplesandframeworksidentifiedbyscholarsandpractitionersinoperationalcontextsofhighuncertainty.

4.2.1 Simple - Complicated - Complex - Chaos: An organisational

management perspective on uncertainty

The Cynefin1model,usedtodescribeproblems,situationsandsystemsprovidesatypologyofcontexts,guidingexplanationsandsolutionsthatmayapply.Theframeworkdrawsonresearchintocomplexadaptivesystemstheory,cognitivescienceandanthropologyandnarrativepatterns,aswellasevolutionarypsychology,exploringtherelationshipbetweenman,experienceandcontextproposingnewapproachestodecision-makingandknowledgemanagementincomplexsocialsystems,amongstothers.

1 Cynefinisawelshword,thatcommonlytranslatestohabitatorplace,thoughfallingshortofapre ciseconveyanceofmeaning.ItwaschosentobyD.Snowdentoillustratetheevolutionarynatureof complexsystems,includingtheirinherentuncertainty.

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OrganisationalmanagementscholarsSnowdenandBoone(2007)haveidentifiedfivedifferentcontextsdefinedbynatureoftherelationshipbetweencauseandeffect.Fourofthese-simple,complicated,complexandchaotic-requireleaderstodiagnosesituationsandtoactincontextuallyappropriateways,whereasthefifth-disorder-onlyapplieswhenitisunclearwhichofthefourcontextsispredominant,asseenbelow.

Fig. 5: The Cynefin framework as presented by David J. Snowden and Mary E. Boone (2007), that helps leaders determine the prevailing operative context to make appropriate choices.

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Outofthefourcontexts,simpleandcomplicatedrequireleaderstoadheretofact-basedmanagementastheyareordered.Simplecontextsarearguedtobethedomainofbestpractice(sense-categorise-respond)andarecharacterizedbystabilityandaclearcause-and-effectrelationshipinwhichtherightansweroftenisself-evidentandundisputed.Thisistherealmofthe“knownunknowns”andallpartiesshareanunderstandingresultinginunquestioneddecisions2.Complicatedcontextsontheotherhand,arearguedtobethedomainofgoodpractices(sense-analyse-respond)thatmaycontainmultiplerightanswersandthoughaclearrelationshipbetweencauseandeffectcanbedrawn,noteveryonenecessarilycanspotit.Thisistherealmof“knownunknowns”andrequiresexpertise,investigatingseveraloptions,forinstanceacustomaryapproachtoengineering.Aleadermustlistennotonlytotheexpertsbutalsoembracenovelthoughtsandsolutionsfromothers;requiringawillingnesstoexperimentandofteninvolvingmorecreativeapproachessuchasbrainstormingortoolslikegamestotriggernovelthinking(Snowden,Boone,2007).

Complexandchaoticcontextshowever,requireleaderstoutilisepattern-basedleadershipastheyareunordered.Complexcontextsarearguedtobethedomainofemergence(probe-sense-respond)astheyintroduceunpredictabilityandflux.Thisistherealmofthe“unknownunknowns”anditisthedomaintowhichmuchofthecontemporarybusinesshasshifted(Snowden,Boone,2007).Leadersarerequiredtopatientlyallowforapathtoemerge,aswhythingshappencanonlybeunderstoodinretrospect.Chaoticcontextsontheotherhandarethedomainofrapidresponse(act-sense-respond)asthisistherealmofthe“unknowables”.Therelationshipbetweencauseandeffectareimpossibletodetermineastheyshiftconstantlyandnomanageablepatternexists.Howeverthechaoticcontextletsinnovationthriveasopennesstonoveltyanddirectiveleadershipareacceptedinthesesituationsmorethaninothers.Intimesofhighuncertaintyaleaderisrequiredtomanagebothchaosandinnovationinparallelthroughadeepunderstandingofcontext,anabilitytoembracecomplexityand

2 Astheauthorsexplain,intheCynefinFramework,simpleandchaoticareadjacenttooneanother, asthemostfrequentcollapseintochaosoccurduetosuccesshavingbredcomplacency.Thisshift canresultincatastrophicfailureasshownbythemanypreviouslydominanttechnologiesthatwere suddenlydisruptedbymoredynamicalternatives.

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paradoxandawillingnesstoflexiblychangeleadershipstyle.

4.2.2 Discovery-driven planning and emergent strategies: Cause and effect and ‘craftsmanship’

Onetheoperationalcontexthasbeenidentified,howdosuccessfulstrategiesemerge?Following an HBR article in 2008, the high failure rate of smart companies in a new space shouldn’tbeasurprise:anoverwhelmingamountofevidencesuggeststhatcompaniesenteringnewmarketstendtostartwiththewrongstrategy(Anthony,Johnson,Sinfield,Altman,2008).Hence,inorganisationalmanagementandstrategicliteraturetheso-calledemergentstrategy,hasbecomeapopularconcept,as–insteadofrelentlesslyfollowingonepossible‘deliberate’strategy,thatturnsouttobeflawedorjustsimplywrong–astrategyinsteadcanemergefromthemarketitself.

FollowingmanagementtheoristClaytonM.Christensen,“outofthiscomplexityemergeafewstunninglysimpleandconsistentfactorsthathaverepeatedlydeterminedthesuccessandfailureoftheindustry’sbestfirms.Simplyput,whenthebestfirmssucceeded,theydidsobecausetheylistenedresponsivelytotheircustomersandinvestedaggressivelyinthetechnology,productsandmanufacturingcapabilitiesthatsatisfiedtheircustomers’next-generationneeds”(Christensen,1997,page4).Heacknowledgesthough,thatparadoxicallytheyalsotendtofailforthesamereasons,henceknowingwhenkeepingclosetocustomersisbeneficial,iskey.Accordingtohim,anelementofexperimentationandtakinglearningseriously,iskeyasillustratedinHonda’scaseofJapaneseSupercubbikesinnorthAmerica(Christensen,1997,page172),thathadtotesttheirbusinessmodelandpivotbeforesuccessstartedtoshow.Consequently,onekeyaspectisplanningtolearnversusplanningtoexecuteas“failureisintrinsictothesearchforinitialmarketapplication”(Christensen,1997,page180).Instrategicliterature,so-calledDiscovery-drivenplanning,whichrequiresmanagerstoidentifytheassumptionsuponwhichtheirbusinessplansoraspirationsarebasedon,“workswellin

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addressingdisruptivetechnologies”(MacMillan&McGrath,1995,page4).IntheexampleofplanningforDisneylandParisin1986,extrapolatingexperiencesfromvariousprevioussitesdidnotworkasthosewerebasedonuntestedassumptionsabouttheworkingbusinessmodel(MacMillan&McGrath,1995)thatisstillnotpayingofftoday(Timemagazine,2012).

Instrategicliterature,so-calledemergentstrategyisarelatedconceptthathasbroadlybeeninvestigatedbyscholars.Asalreadydiscussedasanphenomenonduringaneraofferment,strategiesandactionsofactorswithinareco-influencedbyeachother,renderingchosenstrategiesemergentatthesametime(BijkerandLaw,1992).Fromastrategicliteratureperspective,scholarsandpractitionershavecloselybeeninvestigatinghowtobestmanagethoseemergentstrategies,draftingmanualsandguidelines(Altman,Anthony,Johnson,Sinfield,2008).Scholarsarguethatinnovatorsinhighlyuncertaincircumstancesfollowanemergentstrategyinwhichadeliberateacknowledgementof‘unknows’andassumptions(Christensen,1997)isusedasanapproachtofacilitatetherightstrategytoemergebypickinganearlypointoflearningandadjustment,adjustingtheirstrategyaccordinglyandrepeatingthatbehaviour.Thisisdonethroughidentifyingcriticalareasofuncertainty,executingsmartexperimentsandadjustingandredirectingbasedontheobtainedresults(Altman,Anthony,Johnson,Sinfield,2008).However,anobviousshortcomingthoughremains,inhowtodotheactualproductdevelopmentandhowdesigningthosesmartexperimentsisdoneinpracticalterms.

People and companies need strategies to deal with the rapid pace and uncertainty and followingClaytonM.Christensen:“Marketsthatdonotexistcannotbeanalysed:suppliersandcustomersmustdiscoverthemtogether”(Christensen,1997,page165).Notonlyarethemarketapplicationsfordisruptivetechnologiesunknownatthetimeoftheirdevelopment,theyareunknowable.

BuildingontheworksofscholarslikeHenryMintzberg,effectivestrategiesarecrafted,ratherthanpurelyrationallycontrolledandsystematicallyanalysedfactsofmarkets,competitors,companystrengthsandweaknessesthatfollowsorderlythinking,butratheraction-driving

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thinking(Mintzberg,1987).Aswhencraftinganobject,shortages,limitationsanderrorsbecomeopportunitiesandstimulatecreativity.Hence,“largecompaniesoftensurrenderemerginggrowthmarketsbecausesmaller,disruptivecompaniesareactuallymorecapableofpursuingthem”,(Christensen,1997,page192)Thoughstart-upslackresources,itdoesn’tmatter,theirvaluescanembracesmallmarkets,andtheircost-structurescanaccommodatelowermargins.Theirmarketresearchandresourceallocationprocessesallowmanagerstoproceedintuitivelyandmoreeasilyembraceanemergentstrategyinordertosucceed.

4.2.3 Effectual reasoning - beyond decision-making heuristics rooted in prediction and causation

Hence,whatisperceivedbyestablishedandlargercompaniesasathreatcanbeperceivedbysmallerfirmsandentrepreneursasanopportunity.Withseveraldecadesofresearchonentrepreneurship,scholarshaveformulatednumerousdefinitionsonwhatanentrepreneuris.ArthurSullivanandStevenM.Sheffrin(2003)arguethatanentrepreneurisanenterprisingindividualwhobuildscapitalthroughriskand/orinitiative.Entrepreneursemergefromthepopulationondemand,andbecomeleadersbecausetheyperceiveopportunitiesavailableandarewell-positionedtotakeadvantageofthem.Anentrepreneurmayperceivethattheyareamongthefewtorecognizeorbeabletosolveaproblem.JosephSchumpetersawtheentrepreneurasinnovatorsandpopularizedtheusesofthephrasecreativedestructiontodescribehisviewoftheroleofentrepreneursinchangingbusinessnorms(Schumpeter,1934).Creativedestructionencompasseschangesentrepreneurialactivitymakeseverytimeanewprocess,productorcompanyentersthemarkets.

In order to deal with the amount of uncertainty companies are facing these days, Saravathy’swork(2008)aimstogiveinsightstohowentrepreneursdealwiththecentralaspectsofinnovation,usingeffectuationalreasoning.Saravathy’sworkoneffectuation,asetofdecision-makingprinciplesexpertentrepreneurshavebeenobservedtoemployinsituationsofuncertainty(Wikipedia,2012)giveinsightsintoanentrepreneur’swayofthinkingthat

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contrastswiththedecision-makingheuristicsrootedinpredictionandcausationthatfocusesonachievingaspecificgoalthroughaspecificsetofgivenmeans.Effectuationisessentiallyanideawithasenseofpurpose–adesiretoimprovethestateoftheworldandindividuallives.Effectualreasoningisbasedonarangeofprinciples,thatareasfollows:

1.Affordablelossprinciple Startwithyourmeans.Don’twaitfortheperfectopportunity.Starttakingaction,basedonwhat youhavereadilyavailable:whoyouare,whatyouknow,andwhoyouknow.

2. Bird in hand principle SetaffordablelossEvaluateopportunitiesbasedonwhetherthedownsideisacceptable,rather than on the attractiveness of the predicted upside.

3. Lemonade principle LeveragecontingenciesEmbracesurprisesthatarisefromuncertainsituations,remainingflexible rather than tethered to existing goals.

4. Crazy-quilt principle Formpartnershipswithpeopleandorganizationswillingtomakearealcommitmenttojointly creatingthefuture–product,firm,market–withyou.Don’tworrysomuchaboutcompetitive analyses and strategic planning.

Thoseprinciplescometogetherinaneffectualcycle,meaningthattheprinciplesarenotstatic,notone-timebutratheralogicprocess.ThisworkhasbeentakenevenfurtherbythelaterworksofSaravathyandVenkataraman(2011),thatevengoesfurtherbysuggestingthattheentrepreneurialmethodisakintonaturalmethod,thathasevolvedaspatternrecognitionatfirst,developingintoameasurable,teachablemethod.SaravathyandVenkataramanarguethatentrepreneurshipcanbethesame,ascertainpatternsarestartingtoevolve.Ithassofarbeenhandledasacategorymistake,sameasnaturalmethodbackthen,andalotmoreempirical

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researchisneeded.(Sarasvathy,Venkataraman,2011).Bygivinginsightsintofurtherresearchandposingarangeofopenquestions,theyoutlinecertaintrendsandpatterns,whichisakintohownaturalmethodcameaboutandthatinreturnhaveledtotwomainassumptions:

Theentrepreneurasthemagicalbeingthatspotstheopportunitiesversustheopportunitiesratheraresultofco-creation.Throughtheintersubjectivityoftheentrepreneur,theopportunitycanemerge.

However,itisnotedthattheargumentsmadeareratheranalyticalandlackactualprinciplesandexamples.However,theirhypothesesdoopenquestionsaboutthepossibilityrecreateanentrepreneur’sspiritanddrive,theirincentivesandopportunisticthinking.ThoughSarasvathyoffersvaluableinsightsintohowentrepreneursdealwithuncertaintyandoutliningguidingprinciplesofhowtheythinkandact,itisdifficultforcompaniestoreplicate.Hence,thechallengesoftoday’seconomyhavegivenrisetophilosophiesandmethodologiessuchasleanandagile,thatenablecompaniestoinnovate,despitetheobviouschallengeofreproducingeffectualthinkingwithin.

4.2.4 Innovation impetus - the right strategy, capabilities and values

Thoughthestart-upsettingmaybringaboutaparadoxicallyadvantageoussettingofrestrictionsandattractpeoplecapabletothinkdifferentlyaboutopportunitiesandbusiness,largecompaniessuchasApplehaveshowntobehighlyinnovative(Lashinsky,2012),reinforcingthatlargecompaniescancreatedisruptiveinnovations,justhavetodoitdifferently(Ashkenas,2011).

Thisalsohighlightsthefactthatforinstancedesignisahugelyimportantdriver(Anderson&Tushman,1999;Christensen,1997;Lashinksky,2012)asthegroundsonwhichwecompetehavechanged(Cooper,2001).Intoday’sexperienceeconomy(Pine&Gilmore,1999),productscompetebeyondtheirpurelytechnicalfunctions.Furthermore,wheninvestigatingessentially

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aserviceprovider,sellingpracticesandprocesses,amorescientificmethod,thatcanactasa tool to learn at rapid speed, as shown by Lean Startup methodology is highly promising set ofprinciples.AttheheartliesthecentralassumptionsthatITandtheinternethavehadademocratizingeffectandhencehaschangedthegamedramatically,asanyonecanbuild,testanditerateatmuchgreaterspeedandsignificantlylowercost,inordertoformulatetherightstrategyandbuildahighlydesirableproductorservicethatuserswillpayfor(Blank,2009;Ries,2011).Hence,somescholarandpractitionersarguethatthescientificmethodcanactasa tool to learn at rapid speed, as shown by Lean Startup methodology, arguing for much more mechanicprinciplesunderlyingtheinnovationprocess.

4.2.5 Summary

Tosumitup,arguablyalotofliteratureonstrategicandorganisational,howevernotthatmanyauthorshaveactualprinciplesandtoolsofhowtoinnovateinacertainoperationalcontext.However,duetodiscontinuousinnovationsarebeingcharacterizedbytheirhighdegreeofuncertaintyandrisk,ofteninvolvingtechnologiesthatareoftenunproven,makesinnovationprojectsusuallylastsignificantlylongeratagreatermanagerial,organisationalandfinancialcommitmentthantheirincrementalcounterparts(Christensen,1997).Theoutcomeofdiscontinuousprojectsareproductsandservicesoftentargetnonexistentmarkets,orthathavethepotentialtosignificantlyshakeupmarkets,renderingtraditionalmarketresearchinsufficientorevenredundant,requiringanewwaytoassessandtesttheirmarketvalue.Inordertounderstandbetterriskanduncertaintyasvitalcomponentsofdisruptiveinnovations,larger companies need and want to learn from small businesses and entrepreneurs, who are responsibleformostofthedisruptiveinnovationsfacingthosebusinesses.Furthermore,competitionisbasedonmorethanjusttechnologicalsuperiority(Anderson&Tushman,1990)butalsoontheexperiencesthatproductsandservicesprovidefortheuser(PineII&Gilmore,1999),makingdesignanimportantdriver.

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PART 3: Lean - Agile - Lean Startup: Learning rapidly, iteratively,

constantly

4.3.2 Agile Software Development and its origins

Inthesearchofbeingnimbleandkeepingchangeasaninnovativeforceinsideamediumorlarge-sizedcompany,scholarsandpractitionershavebeingarticulatingbestpractices,thathavebecomestandardmodelsofworkingalsostilltoday.OneapproachchosenatthestudiedcasecompanyFuturice,isagile,thathasitsrootsintheconceptofleanmanufacturing.Thefollowingchapterswillexploretheiroriginsandmainprinciples,oftheconceptsofleanandagile,theirsimilaritiesanddifferences,outliningtheiroriginsandsomeoftheirmethodology.Furthermoreitwillbeinvestigatedhowagilesoftwaredevelopmentanddesigncometogether,wheretheirtouchpointslieandwhatconflictsthosebringabout.IntroducingLeanStartupthinkingwillexploreaprincipledinnovationapproachrootedinthoseconcepts,observedtobeutilisedbystartupsandarguedtobeapplicabletobiggerfirmsalike.

4.3.2.1 LEAN: History and development

“Organizationsthataretrulyleanhaveastrongcompetitiveadvantagebecausetheyrespondquiterapidlyandinahighlydisciplinedmannertomarketdemand,ratherthantrypredictthefuture.“

–MaryPoppendieck

Essentially the concept of Lean can be understood manifold: as a management philosophy, a specificapproach,aproductionpracticeortoolsettoenableacertainwayoforganisationalthinking.Underlyingtoalltheseperspectivesistheoutcomeofvaluethatcanbemeasuredandbebroughtaboutbyacertainsequenceofvaluecreationanditsparticularconduction.OriginatingfromthemanufacturingrevolutionthatTaiichiOhnoandShigeoShingoarecreditedwithdevelopingatToyota,leanthinkingisradicallyalteringthewaysupplychainsandproductionsystemsarerun(Wikipedia,2012).Amongitstenetsaredrawingontheknowledge

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andcreativityofindividualworkers,theshrinkingofbatchsizes,justintimeproductionandinventorycontrol,andanaccelerationofcycletimes.Centraltotheleanthinkingisthenotionofvalue,definedasanyactionorprocessthatacustomer’swillingnessofpayingforisgiven,anditsultimatedriveshencelieswithintheconceptofwaste,whichisherebymeaninganythingthatisnotavalueaddingactivityofanysort.Inordertodriveoutwasteofanykindandeliminatinginefficientwaysofworkingputsastrongemphasisontheoverallsystem,operatingasawholeina(optimised)‘flow’–ortheseamlessproduction(sequencing)ofvalue.Additionally,itintroducestheconceptsofkaizenandkaikaku,theincrementalpursuitofperfectionandthenotionofradicalimprovement,respectively.Bothaimatpreservingvaluewithless(aslittle)workpossible.Itassumesvaluetobemeasurable,utilizingempiricalmethodstoprioritiseandcriticallyassessprogressandefficiency.Someofthetoolspresentedintheleanapproachtoidentityandsteadilyeliminatewaste(muda)toimprovequalitywhilstproductiontimeandcostarereducedare‘tools’suchasValueStreamMapping,FiveS,Kanban(pullsystems)andpoka-yoke(errorproofing)(Poppendieck&Poppendieck,2003).

Theseaimtoinvestigateshortcomingsandexposeproblemssystematically,incorporatingconceptsoftrustingtheindividualdoingtheirworkaswellaslearninganddeferringdecisions.The underlying principles that inform Lean production are eliminating waste, building in quality,creatingknowledge,deferringcommitment,deliveringfast,respectingpeopleandoptimisingholisticallyandisdrivenfromtheproductionfloorup(AgileManifesto,2001).

4.3.2.2 Lean beyond manufacturing

FortunesenioreditorAdamLashinsky(2012)investigatedhowAppleremaineditsabilitytomovenimbly.ItistheresultofApplethinkingdifferentlyaboutbusiness,stayingleanthrougharuthlesscorporateculturethatdisregardsmoderncorporateconventionsinwaysthatletitbehavemorelikeacutting-edgestartup(Lashinsky,2011).Apple’scultureofresponsibilitysworntosecrecy,attentiontodetail,constantfeedback,isreinforcedthroughastrictaccountabilitymindsetisatitsheart.Additionally,secrecyhasbeenfoundtobekeytoApple’s

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organisational structure, in which decisions are swift, communication is articulated from the topthroughJobb’sTop100managerialtoolthatsupportsacommand-and-controlculture.Therearefunctionaldivision(notsynergythatmakesitworkbutunifiedteam)thatarehighlyfocused.Apple’sdo-more-with-lessmentality,inwhichsayingnoasimportantassayingyesandprotosanddemosalwaysbeforespreadsheets,alwaysputssmallteamsoncrucialprojects.Artificialresourcerestrictionsandbest-in-classapproachthatcutsoutgeneralmanagerstructure,arefurtherwaystoreducewaste.Generally,Apple’scultureandapproachisnottobecopied,butratheraspectsofitcanbeadoptedwhenseenfit.

Resonatingwiththeideaofleanandreducingwaste,arenotjustorganisationalandmanagerialimplications,butalsoprocess-oriented,suchasRossLovegrove’s(2005)philosophyoffatfreedesign.Hearguesthattechnologyenablesandfacilitatesleanandefficientwaysofworking,ina-bynature’sabilityinspired-wayofdesigningbytakingoutanythingextraneous.Hencetechnologyallowstobringthenaturalprocessinto(industrial)designprocesses,linkingtoideasofcuttingoutthesuperfluous,beingmodular,embracingfractalwaysofworkingandre-using.

Software is ideal for the notion of lean, as it easily incorporates ideas of cutting out waste, workingmodularlyandefficiently,ascodecaneasilybechanged,testedquicklyandre-usedimmediately,makingitanaturalfitfortheincorporationofleanprinciplesasshownbytheagilemanifesto,acommonprocessbywhichsoftwareismade(Wikipedia,2012).

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Fig. 6: Illustration by ILOVEDUST, depicting Apple’s culture of secrecy.

Fig. 7: Schematic illustration, depicting Apple’s organisational structure.

Fig. 8: Ross Lovegrove’s GO Chair, designed in 1998-2001 and produced by Bernhardt.

6 7

8

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4.3.2.3 Agile Manifesto: Principles for better making software and making better software

AgilereferstoasetofvaluesandprinciplesasstatedintheAgileManifestodevelopedin2001(Becketal.,2001),thatwasareactiontoheavyweightmethodologiespopularinsoftwaredevelopmentatthetime.It’saimwastobreakawayfromthemainstreamwaterfallprocessdeployed widely, in the search of a more human and process and outcome focused approach, discouragingfromaccurateplans,fixedcontractsandmeticulousdocumentation,embracingchangeandvaryingrequirementsthatwerecommonrealityinsoftwaredevelopmentprojects(Wikipedia,2012).

ThetermagiledescribesMaryandTomPoppendieck’s(2003)effortstoadapttheprinciplesofLeanManufacturingtofitintosoftwaredevelopment,withrecurringbutrefinedandtargetedthemesandvaluesinherentintheAgileManifesto:

• Individuals and interactions over processes and tools• Workingsoftwareovercomprehensivedocumentation• Customer collaboration over contract negotiation• Responding to change over following a plan

Furthermore,inthepursuitofapplyingtheleanthinkingtothepracticesofsoftwaredevelopment,MaryandTomPoppendieck(2003)haveformulatedaframeworkintroducingasetofprinciplestoimplementtheabovethemesthrougheliminatingwasteandamplifyinglearningbydecidingaslateaspossibleintheprocessanddeliveringconstantlyandassoonaspossible,empoweringtheteamandbuildingintegrityintotheprocessandoutcome.

Valueandhighestpriorityisthesatisfactionofthecustomerthatisachievedthroughearlyandcontinuousdeliveryofvaluable(working)software(AgileManifesto,2001),which,initsownmomentumbecomesthemeasure,againstwhichprogressisassessed.Thebuildingofsoftware

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isunderstoodasthelearningprocessitselfthatiscultivatedthroughfeedback,iterationsandthroughtheevaluationofrelevantexperiencesofthepast.Thisquickdeliveryencouragesearlyfeedbackandamplifieslearningfromconcreteresults,avoidingcostescalationsbystrivingforeasymaintainabilityas”onaverage,morethanhalfofthedevelopmentworkthatoccursinasoftwaresystemoccursafteritisfirstsoldorplacedintoproduction.(Poppendieck&Poppendieck,2003,page49).Astypicallyinsoftwaredevelopmentprojects,teamsareself-organized,theyareempoweredthroughtakingresponsibilityforthequalityoftheproduct,thatfuelsmotivation,trustandsupportastheproductispromotedfromaholisticviewpointbuiltonasharedunderstanding.Exemplifiedmethods,asadvocatedbytheAgileToolkit(extract):

1. Scrum Utilizingmechanismsofempiricalprocesscontrol,wherefeedbackloopsthatconstitutethe coremanagementtechniqueareusedasopposedtotraditionalcommand-and-controloriented management.

2. Test driven Development Reliesontherepetitionofaveryshortdevelopmentcycle:firstthedeveloperwritesan(initially failing)automatedtestcasethatdefinesadesiredimprovementornewfunction,thenproduces theminimumamountofcodetopassthattestandfinallyrefactorsthenewcodetoacceptable standards.

3. Extreme Programming Intended to improve software quality and responsiveness to changing customer requirements, advocatingfrequent“releases”inshortdevelopmentcycles(timeboxing),whichisintendedto improveproductivityandintroducecheckpointswherenewcustomerrequirementscanbeadopted.

Therearemanyotherspecifictoolsandtechniques,suchasburndownchartsorpairprogramming(Poppendieck&Poppendieck,2003)thataretypicallyknownfordifferent

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agile methodologies, that will not be discussed more closely in this thesis due to its scope, howevercanbeeasilyexploredfurtherthroughliterature(Poppendieck,Poppendieck,2003).Furthermore,someoftheelementsofToyota’sleanapproachhaverecentlybeenrediscoveredinsoftwaredevelopmentwiththeemergenceofleanITandleansoftwaredevelopment,bothevolutionsofagilemethodologies(Cyrillo,2011).

4.3.2.4 Challenges of Agile in integrating design and business aspects - Clash of the titans

InthefaceofAgile’srelativelyshorthistoryinthebroaderviewofsoftwaredevelopment,scholarsandpractitionershaveidentifiedseriousshortcomingsandobstacleswhenadoptingandintegratingAgileprocessestotheirwork,andmorespecificallythesuccessfulintegrationofuserexperience1(UX)design-theexperiential,affectivemeaningfulandvaluabledimensiontoproductuse-toagileprocesses(Agathos,Coatta,Gosper,Rutter,2011;Cecil,2006;Lievesley,Yee,2006)aswellasaniterativeandholisticbusinessperspective-adjustingtheunderlyingbusiness,saleschannels,tonameonlyafew(Miller,Sy,2008;Ries,2011)-totheoverallproductorservicethatisbeingbuilt.Practitioners’andscholars’effortsonoptimizingagileuser-centreddesignhaveresultedinvastexplorationsbyscholarsandespeciallypractitionersofkeyshortcomingsandidentificationofbestpracticesforinjectingaholisticvision,customerinsightsanditerativefeedbackloopsintotheagileprocess(Sy,Miller,2008).

1. Process-related issues Someofthefundamentalchallengesstemfromthefactthatagileisfirstandforemostadeveloper-centricapproach,asdevelopedbyandfordevelopers,renderingmostofthediscussiongearedtowardssoftwaredevelopers(Budwig,Jeong,Kelkar,2009).“Wecanbeagilebythebook,howeverUXandUCDarenotmentionedinthatbookbutareessentialforgettingstartedonthefirstchapter“(Gothelf,2009).Itassumesabodyofknowledgetobepredefinedorobtained(Lievesley,Yee,2006),complicatingdiscussionsonuserswhenthey

1 AccordingtoISO9241-110:2010(clause2.15),userexperienceisdefinedas:aperson’sperceptionsand responsesthatresultfromtheuseand/oranticipateduseofaproduct,systemorservice.

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arepoorlydefined(Rutter,2011).Agileinitsnaturestartsfromproductioncode(closechasmbetweenuserstoriesandtheiraccordingimplementation),assumingperfectandgap-lessunderstandingfromproductowner’spointofviewoftheusersandtheconnectedbusiness(Agathos,Coatta,Gosper,Rutter,2011).Thoughitexcelsatdeliveringanefficientandwellworkingoutcome,previouslydefinedexternally,byleaningonincrementalvaluethroughincremental trial and error, instead of iteration that may bring about a more drastic change of courseormayevendemandapivot(Ries,2011).Hence,feedback,whetherrelatedtoenduserfeedbackormetricsobtainedindicatingbusinesslogicassumptionstobeflawed,seems–duetothenatureofAgile’sratherrigidprocess–notsufficientlyaddressed(Miller,Sy,2008).

Furthermore,theoverallproductdevelopmentprocessitselfinsideagilecompaniesseemstofollow a waterfall approach, a sequential, downward design process, in which agile is only a componenttobeorganizeddifferently,bringingaboutproblemsofintegrationalnature.Dueto Agile’s rapid speed repeatedly too little time for testing needed, has been reported, as well as agilenotbeingconducivetoacentralizedUXteam(Miller&Sy,2008).

2.Design-specificissuesThecomplexityofthisissueisdrivenbyvariousschoolsthatcontributetoit,thedesignfieldtangenttosoftwaredevelopmentismanifoldandcomplex.Unclearwhichdisciplinesareinvolvedandhowdotheyshapeandworkwitheachother–howthosecomeintothe‘productionsequence’.ForthescopeofthisthesisIwillfocusthisdiscussiontoUXdesignandServiceDesign,comingfromUCDincorporatingusabilityissues,butalsohigherlevelsofdesign,asmanydesignfieldsconflict.IthasbeenacknowledgedthatevenprofessionalUCDpractitionersrarelycompleterepeatableandsystematicmethodologies(Schaffer,2004).

Designprofessionalshaveprimarilybeenfocusedonthechallengeofincorporatingusercentereddesign(UCD)“..intoanextremelyfast-paceddevelopmentprocessthatuseslittledocumentation”(Hay,2011).UCDinvolvesavarietyoftechniquesthatprovideinsightsintousers’wants,needs,andgoals,includingethnography,contextualinquiry,contextual

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interviewing,usabilitytesting,taskanalysis,andothers(Cecil,2006),thatmakedesignaskingthefundamentalquestions(Lievesley,Yee,2006).WhenincludingServiceDesignintothispicture,asincreasinglydonesobymajorsoftwaredevelopmenthouses(Futurice,Reaktor,PalmuInc.),incorporatingapproachesandmethodsfromwidevarietyoffields,suchasUX,IxD,UCD,HCI,productandgraphicdesign,marketingandpsychology,businessstrategyorethnography,embracingexplorationandsurpriseforamorehigher-level,holisticandradicalsystemthinking(Hay,2011)itconflictswithAgile’ssuitabilityforiterativeworkonlowerlevelsofthesystem.

Asaresultoftheculturalclashofvariousdisciplinesworkingtogether,asaUXinteractiondesigneroneseemstobehavingtobepreparedtodemonstrate“anychangesyou’rerecommendingarebasedonsubstantiveevidence,notjustsomeintuitiveoranecdotalsenseoftheusers’needs”(Gosper,2011,page59).However,asUXdesignfocusesonlivedexperiences(Kaye,2007)andissubjectiveandthusneedstobemeasuredbeyondusability,butincludeothersubjectivequalities(Law,Hoonhout,Obrist,Roto,Vermeeren,Väänänen-Vainio-Mattila,2010),posingdifficultieswithAgile’sfocusonvelocity(Fichtner,2012)andhenceconflictingwithAgile’smorerigidnature.Naturally,adesigner’saccountabilityisanothermajorissue,asnotaheroicdesignbutratheronethatistestedwithendcustomersisseekedfor,whichoftenlackofresources(Miller&Sy,2008)andareruninparallelwithagile,ratherthanbeingincorporated(Agathos,Coatta,Gosper,Rutter,2011).CloselylinkedtothisissueisthefactthattheeffectivenessofUXseemshardtobequantifiedormeasured(Law,Hoonhout,Obrist,Roto,Vermeeren,Väänänen-Vainio-Mattila,2010)intermsofROI.

Astheoverallexperienceofasystemorservicefitsintoamuchgreatercontext,agileisprimarilyconcernedwithbuilding,whereasdesignismuchmorecloselylinkedtolearning,bydiscoveringtheproblemstodesignfor.Practitioner’sinsightsonsuccessfullyintegratingUXintoAgile,includeanincreasedoverlapbetweentheworkofteammembersinvariousdisciplines,changingtheirsocialandculturalinterrelationships,instillingincreasedcross-disciplinaryempathyandunderstanding,butalsoreplacingtraditionaldocument-centred

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communication(RamsayasquotedbySix,2011)

3. Business-related issuesAs Agile starts from requirements and production code, though when considering requirements and roadmaps from business units, they often tend to be unclear and poorly defined(Budwig,Jeong,Kelkar,2009).Asstandinginstarkcontrasttotheconceptofemergentstrategies,characterizedbyconstantlearningandadjustment,theoverallproduct,marketingand business strategy is presumed to be fully formulated before any implementation through Agile.Hence,Agilebeingahighlyoptimisedandmeasurableprocess,thequestionneedstobeposedifthe‘right’thingsarebeingmeasured,andifnothowtofindout.

Additionally,alackofbusinessrelevantiterationischaracterisingtheagileprocess,asagiledoesnotofferapathtopivoting–businessaspectsarelacking–asprogressismeasuredwithvelocity(Fichtner,2012,referringtoateamsproductivity,thatshouldbemaximisedatalltimes(Cyrillo,2011),instead.Though,Agileaimsattakingthewaterfalloutofsoftwaredevelopment(Poppendieck&Poppendieck,2003),itdoessoaspartoftheproject,nottheentireprocessthough.Asmanypractitionershavestated(Miller,Sy,2008;Budwig,Jeong,Kelkar,2009),despitethepromisesofexistingconceptsofleanandagile,success-criticalassumptionsandhypothesisconstantlyfailtobevalidated:

“Iwasadevoteeofthelatestinsoftwaredevelopmentmethods(knowcollectivelyknownasagiledevelopment),whichpromisedtohelpdrivewasteoutofproductdevelopment.However,despitethatIhad

committedthebiggestwasteofall:buildingaproductthatourcustomersrefusetouse.“-EricRies,LeanStartup

Thisillustrateswelloneofthemajorshortcomingsofagileandleanthinkingthatconcentratesheavilyonbuildingworking,efficientsoftwaretospecifiedrequirements,eliminatingwasteduringtheprocess,butfailingtoacknowledgeuserneedsandwantsaswellasvalidatingbusinesshypotheseslinkedtothesuccessoftheproductoftenreferredtoasmissingthebig

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picture(Miller&Sy,2011;Agathos,Coatta,Gosper,Rutter,2011;Budwig,Jeong,Kelkar,2009).Learningisperceivedasincrementalanddependent,notradicalanddirectionchanging2(Ries,2011).

4.3.2.6 Discussion and relevance

Leanthinkingisclearlystatingitsambitiousgoaltodriveoutwaste,howeverscholarsandpractitionershavebeenarguingoverhowtoexactlyachievethat,whereasAgileontheotherhandoffersconcreteexamplesandmethodswhenitcomestosoftwaredevelopment.Thenotion of waste in terms of design is a lot harder to grasp and its integration into Agile remains achallengingone(Rutter,2009).AsFuturiceisconstantlystrivingtonotonlygreatlyenhancewaysofworking,butalsoimprovetheirprimaryfocus,customersatisfaction,insightsonhowtobettercrossthosechasmsareconsideredtobeofhighvalue.

Asithasbeenshown,theagileschooloffersprecisemethodsandspecificwaysofworkingefficientlyandrapidly,howeverithasbeencriticizedfortheintegrationchallengesitposestoUCDdesignaswellasitsinabilitytotakeintoaccountunderlyingbusinessaspectsandopportunitiestopivot.Manypractitionershavengiveninsightsinhowtoovercomeandmorecloselybringtogetherbothagileanddesign(Miller,Sy,2008;Budwig,Jeong,Kelkar,2009),duetodifferentdesignfieldscontradictingandsheervarietyoffieldsinvolved,thatinpartconflictwithagilepracticesthatassumearatherdeterministicstartingpointintermsofuserandbusinessrequirementsandconsequentlythefinaloutcome,withdesign’siterativeandexploratorynature.

2 FollowingRies,contrarytotraditionalproductdevelopment,whichusuallyinvolvesalong, thoughtfulincubationperiodandstrivesforproductperfection,thegoalofanMVPistobeginthe processoflearning,notendit.Unlikeaprototypeorconcepttest,anMVPisdesignednotjustto answerproductdesignortechnicalquestions.Itsgoalistotestfundamentalbusinesshypothesis (Ries,2011,page94).

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4.3.3 The Lean Startup

“Asorganizationsstruggletostaynimbleinthefaceofanever-changingmarketplacethatisdisruptedconstantlybyincumbentsaswellasstart-ups,gettingtomarketfastbecomestoppriority.Engaginginlongdrawnoutdesigncyclesrisksparalysisbyinternalindecisionaswellasmissedwindowsofmarket

opportunity. In other words, by the time the company decides internally how the product should be designed, theneedsofthemarketplacehavechanged”

–JeffGothelf,2011

Asrecentadvancesinthetheoriesandpracticesofentrepreneurshiphavefocusedontheneedfortheoreticalframeworksandmethodstounderstandandapproachentrepreneurshipascomplexsocialsystems,amethodologicalfocuscanbeobserved.Asproductdevelopmentresearchhascomealongway,fuelledbyadvancesofleanthinkingtoimprovemanufacturingandprocesses,afocusoncustomerscanbeobserved.

AgileandLeanstartupcommunitiesarebothinexcitementandconflictoverthenewmovement:“[LeanStartup]rocks–itrocksfarmorethanAgile”(Kerievsky,2009),asit“makesthebestpartofagilemoreleanandcombinesthemwiththebrilliantcustomerdevelopmentprocess”.Thoughitisafairlynew‘movement’,theresponseshavebeenmanifold.Duetoentrepreneurs’andstartups’abilitytoheavilyfocuseffortsinthistechnologicaleraofferment,theleanstartupsaimstoanswersomeofthechallengesduetooperatingatthemicrolevel.Furthermore,thetraditionalproductdevelopmentliteratureisarguedtobelapsedandoutdatedandoncerevolutionaryandwidelyacceptedprocesses,suchasthestage-gateprocessareonlypartlyvalidstill,as–justasagiletriedtogetawayfromthetraditionalwaterfallmodel–theyareacknowledgedtobetoostaticandlinear,conflictingwith–asdescribedbefore–thenatureoftechnologicalinnovationsbeingcyclicandorganic.

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4.3.3.1 Background & origins of the Lean Startup

TheleanstartupmethodologywasdevelopedbyStanfordUniversitygraduateandentrepreneurEricRiesandpublishedin2011.Itoffersascientificandhands-onapproachtocreatingandmanagingstartups,aimingtoteachhowtodriveastartup–howtosteer,whentoturnandwhentopersevere–growingabusinessatmaximumspeedwithaslittlewasteaspossible(Ries,2011)Acknowledging,thatitmayseemcounter-intuitivetothinkthatsomethingasdisruptive,innovativeandchaoticasastartupcanbemanaged,Riesarguesthattheymustbemanaged,thoughcounter-intuitivetostartup’sdynamic,innovativeoftenchaoticnature.

TheLeanStartupisbasedontheprinciplesofStanfordUniversityprofessorSteveBlank’sCustomerDevelopmentModelasoutlinedinhis2010publication4stepstoepiphanyinwhichhearguesthatmoststartupsfail(90%)becausetheyonlyfollowthetraditionallywell-establishedproductdevelopmentprocess.However,itdoesnotgiveanyvaluetowhethermarketingeffortswillwork,ifsaleswillworkbecausenoneofthosestrategiesaretested.Hencehesuggestsaparallelprocesstotraditionalproductdevelopment,thathecoinsthecustomerdevelopmentprocess,thatsuccessfulstartsupsconsciouslyorunconsciouslyhavebeenobservedtofollow.Thisprocessisprimarilyconcernedwithdiscoveringandvalidatingactualcustomers,theirneedsandwantstounderstandandverifytheunderlyingbusinessmodel,byfollowingbasicconceptssuchasgettingoutofthebuilding(GOOB)(Blank,2010).

TheLeanStartup,incorporatingandbuildinguponBlank’swork,isaprincipledapproachtoanewproductdevelopment,aimingtotackletheproblemwithmostentrepreneur’splansbeing “generally not that they don’t follow sound strategic principles, but that the facts upon whichtheyarebasedarewrong.Unfortunately,mostoftheseerrorscannotbedetectedonawhiteboard because they depend on the subtle interactions between products and customers” (Ries,2011,page91),linkingtoSaravathy’sworkoneffectuation(Saravathy,2007).

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4.3.3.2 Principles of the Lean Startup

Thebookisbasedonaltogetherfiveprinciples,includingtheconceptualbroadeningofthenotionof‘anentrepreneur’thataccordingtoRiesiscloselylinkedtohisconceptualisationofastartup;“ahumaninstitutiondesignedtocreatenewproductsandservicesunderconditionsofextremeuncertainty”(Ries,2011,Page8).Followingthis,theauthorassumes‘theinstitution’tobeinneedofmanagementspecificallygearedtowardsitscontextofextremeuncertainty,thatderivesfromthethirdprincipleofscientificallyvalidatedlearning,basedonfrequentlyrunningvisionelementstestingexperiments.Hence,accordingtoRies,anyunderlyingprocessshouldbegearedtowardsthefundamentalactivityoflearning;ofturningideasintoproducts,measuringcustomerrespondsaswellsteeringthroughpivotingorpersevering,whereinnovationaccountingprovidesthebasicmeasuresagainstwhichprogressismeasuredandmilestonesandprioritisationarelaidout.TheLeanStartupisbasedonthefollowingfivekeyprinciples:

1. Entrepreneurs are Everywhere Bysignificantlybroadeningthedefinitionofentrepreneursasbeingessentiallyhumaninstitutions that create value, Ries suggests the broad applicable of Lean Startup beyond the startup sphere and beyond people’s professional titles and occupations.

2. Entrepreneurship is Management Startups must be managed and there is a systematic underlying approach in doing so. Furthermore, the second principle suggests that the management of startups is a repeatable, teachable method.

3. Validated Learning Thekeyactivityinanyvalue-creatinghumaninstitutionislearning,thatcanbevalidatedand accountedfor.Itislinkedtothefundamentalquestionofwhatneedstobelearnedandhowthat isachieved,suggestingsimplescientificexperimentstoyieldinsightful,actionablelearning (metrics)asanoutcome.

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4. Innovation Accounting Innovation accounting refers to the way progress is measured, how milestones are being set up and howworkisprioritised.Itincorporatesideasofvanitymetricsversusinsightful,actionable metrics.

5. Build-Measure-Learn Buildingasuccessfulproductorserviceisanaction-drivenactivity,thatmeasureshowusersreact and adjusts accordingly through pivoting or persevering. It suggests that what is being build, canandmustultimatelybemeasured,answeringtosomethingspecific,withtheultimateaimof learning, that is achieved through a cyclic, iterative and continuous process.

FollowingRies’swork,practitionersofvariouscommunitieshavestartedbuildinguponhisinsights.GiffConstable’sworkgivesinsightsonhowLeanStartupcanbeadaptedtoexistingorganizations,focusedoncreatingvalue(Constable,2012).Hestressestheneedofsmall,goal-driven,cross-functionalteams,eachtaskedwithimprovingacriticalbusinessmetric.Accordingtohim,featuresneedtobeginashypothesestobetestedbeforeheavyinvestmentandtheycomenotjustwithacceptancecriteriabutsuccesscriteria.Anyfeaturehastostartasaminimumvaluablefeature,thatthenisiterated.Generallyhenotesthatproofneedstocarriesmoreweightthanopinionandthattheteamneedstotalktorealcustomersonaregularbasis,includingin-person.Theteamshouldworkinagilesprints,withclosecollaborationacrossallroles,communicatesregularlywiththerestoftheorganization,beingtransparentaboutprioritiesandwork-in-process.Furthermore,eachteamshouldhaveregularcheckpointswheredecisionstostop,change,orpursuethecriticalbusinessmetrics,aretaken(Constable,2012).

StartupacceleratorprogrammeYCombinator(YC)hasintegratedLeanstartupprinciplestotheir‘curriculum’,withthemantraoffocussingoncustomerswhilstignoringinvestors,resulting in teams going through YC getting one important push: one team member focuses on

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product(=build),whilstanotherteammembersfocusesonusers(=getoutofthebuilding).

4.3.3.3 Shortcomings and criticism towards the Lean Startup

GenerallyagreeingontheLeanStartupmethodologiesandpraisingthiscross-disciplinaryandholistic approach, based on the discussion and challenges posed by the Lean Startup, the public debatehasstartedtoevolvehowtosuccessfullycreateanddesigntherequiredexperimentsnecessaryforachievingvalidation,causingconfusionandconflictamongstvariousprofessionalcommunities.

SomepractitionershavestartedevangelizingUXtoolkitsasthenecessarycomplementaryskillsinordertovision,steerandaccelerate,givingrisetothecomingaboutofLeanUX,thatiscloselylinkedtotherecentriseoftheLeanStartup(2011)methodology,exacerbatedduetothedenunciationof“professionalbandwagoning”(Bryan,2012).Thereseemstobegeneralagreementamongstvarious(web)sourcesthatthetermLeanUXitselfwascoinedbythebloggerLuxrandmorespecificallyJaniceFraser,describingasLeanuserexperiencebeing“across-functional,principle-drivenprocesscharacterizedbyritualsthatpredisposeteamstopredictable,high-quality,highvelocityuserexperienceoutcomes”(Fraser,2012),arguablylackingofformalization.Itcanbearguedthough,withtheriseoftoolsforAnalyticsandleanframeworks,betterthaneverbeforeonecanmeasuretheactualbusinessimpactofdesigndecisionsmadebyUXpeople(Hay,2012).Havingenteredaneraofcontinuousbetatestings(Fraser,2012)anddeployment,bringingaboutconceptssuchasre-alignment-versuscompletere-designs-indesigningfordigital(Hay,2012).Furthermore,fromadevelopmentperspective,voicesaregrowinglouderforwritingtestsbeforeactualdesignstarts,implyingknowingwhatneedstobemeasuredbeforedesigning(experimentsfor)it.Furthermore,thereseemstobeconceptualandmethodologicalconfusionovertheLeanStartupmethodology,asindicatedintheongoingMinimumviableproduct(MVP)versusMininimumdesireableproduct(MDP)debate,asdesigninganexperienceistheoverarchinggoal.“Theladdersisnotanascentstartupthatcanaffordtoriskitsexistingbrandawarenessandvalueswiththereleaseof

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minimallyviablefeaturesets.Thesefeaturesetscanbelightbutmustadhereto(orexceed)theexperiencetowhichourpayingmemberbasehasgrownaccustomed”(Gothelf,2009).

LeanUX’scoreistochallengethetraditionalsequentialapproach(waterfallmodel)andtodefinedesignanddevelopmentasa“solution-findingteam”thatfollowsadynamic,lightlydocumentedprocess(Cyrillo,2009;Gothelf,2009;Fraser,2011).Itissaidtobefurtheringcompaniesthathaveadoptedanagileapproachsuccessfully,totakethenextstepinintegratingthefullUXandsoftwareprocess(Author,year).AnothercoreideasbehindLeanUXisviewingeachdesigniterationasahypothesis.Gothelfarguesoneneedstovalidate“thehypothesisfrombothacustomerandbusinessperspective.Themorewrongpathsyoucanuncoverquickly,thelesstimeyouarepursuingthewronghypothesis.”

However,this‘mantra’assuchisnothingnew,asalreadydescribedinstrategyliteratureasthe‘keytosuccess’:“Thekeytosuccess:Investalittle,learnalot..”throughknowledge-buildingexercisesandexperiments(Fraser,2011),followingasimple3-stepmodelof1.Identifying critical areas of uncertainty,2.Executing Smart Experiments,3.Adjust and Redirect, with all steps following keyprinciplesof:Makeaprototypebeforeyoubuild./Test before you commit./Borrow before you buy. /Contract before you hire. /Outsource before you ramp up./Research before you execute.AsJaniceFraserputitataconference:“Investindollars,spentinpennies”(Fraser,2009).

ThesuggestedapproachfromthestrategicschoolofthinkingisextremelysimilartowhatUXexpertshavetoofferinexactskills(localizingalaunch,usingemployeesforbetatesting,spendingadayinthelifeofyourcustomer,tonameonlyafew),whichiswhereLeanUXtakesitsmainlineofargumentation.Followingfromthis,therepractitionerscriticiseLeanUXasabuzzword,asitsimplypresentsanewdescriptionforwhatpeopleintheuserexperiencerealmalreadydo(Gothelf,2009)withconceptssuchas”probeandlearn”3presentingwell-known3 Arecentstudyofthisphenomenon[Lynnetal.,1996]reachedtheconclusionthatconventional marketingtechniquesprovedtobeoflimitedvalueatbest,andwereoftenwronginthese environments.Whatprovedtobemoreuseful,theyfound,waswhattheytermedthe“probeand learn”process.Inthisprocess,thecompanies“developedtheirproductsbyprobingpotential marketswithearlyversionsoftheproducts,learningfromtheprobes,andprobingagain.Ineffect,

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andcommonlyusedmethodologies.SomeontheotherhandarguethatLeanUXisessentiallyapplyingthescientificmethodandistoberegardedratheramarketingphenomenon:

“ForalltheLeanStartup’semphasisonthescientificmethod,nooneknowswhetheritreallyworks.Anargument can be made that the companies cited as Lean Startup success stories aren’t strictly evidence of Ries’wisdom.Dropboxfamouslydebutedwithavideodepictingabetaofitsyet-to-be-releasedproduct—

spurring 70,000 users to sign up for the service within 24 hours. Butthecompanydidn’tbaseitsentirestrategyonLeanStartupprinciples.”

-Subramanian,asinterviewedbyGreenwald,2012

Additionally to that, the argument has been brought forward, that though lean startup elements,butmaybenotentirestrategy(Bryan,2012),itbeingessentiallystrategic(Gotthelf,2009)asopposedtopragmaticliketheagileUXapproach,asitis:“arelatedwayofworkingthatusesdesignthinking,leanstartup,agile,andUXmethodstogoaftervalue.AgileUXon the other hand is a set of practices that UX practitioners can use to integrate into agile developmentprocesses”(Seiden,2009).Designbeyondpurelyaesthetic,buteverydesigndecisionessentiallybeingabusinessdecisionaswell(Ries,2011).

Thereseemstobeahypeaboutlean,asstartupsconsciouslytrytostay‘fatfree’alsointermsoffinancialmeans,followingMintzberg’shypothesisofshortcomingsturningintoopportunityandenhancingcreativity(Mintzberg,1987).“Thepresentationcatalysedamovement.Start-upseverywhereadoptedalean,low-burn,low-investmentmodel.“Tothisday,companiesseekingfundingat[our]venturefirm,AndreessenHorowitz,proudlyproclaimintheirpitchdecksthattheyareraisingtinyamountsofcapitalsotheycanrunlean”(Horowitz,2010),turningrunningleanintoanend,riskingrunningoutofcash.Therapidspeed,andminimaloperationalcostishighlyattractivetonotonlycompanies,butalsogovernmentsandpublicinstitutionsasawaytoinnovate.CriticismtowardstheLeanStartupandrelatedLeanUXstemsfromthefactof

theyranaseriesofmarketexperiments—introducingprototypesintoavarietyofmarketsegments.” Thisprocess,asdescribed,understandsthenatureofemergingmarketsanduncertaintechnology. Probesaresimply“feelers”togetabettersenseofthemarket.

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bothpresentingrelativelyrecentfieldsofinvestigation,anddespiteitswideandenthusiasticadoptance,withtodateonlyasmallnumberofevangelists,yieldingfewempiricalcasesandnoacademicresearch.

DespitethecriticismRiesisfacing,hebelieves“acompany’ssustainablepathtolong-termeconomicgrowthistobuildan‘innovationfactory’thatusesleanstartuptechniques.”(Ries,2011,Page34)Customersattheendofthedayarebreathing,thinking,buyingindividuals.Evenwhenoneissellingtolargeinstitutions,asinthebusiness-to-businessmodel,ithelpstorememberthatthosebusinessesaremadeupofindividuals.“Allsuccessfulsalesmodelsdependonbreakingdownthemonolithicviewoforganizationsintothedisparatepeoplethatmakethemup”(Ries,2011,page88).Hence,itcanbearguesthatRies’smodellooksveryattractiveandthushasreachedhightraction,by–inasimpleandstraightforwardmanner–stressfocus,efficiencyandprogress,offeringgreatpromisetonotonlystartupsbutalsomedium-sizedcompaniesandlargeenterprisesthataretryingtoinnovatetheirownserviceandproducts.

4.3.3.4 Keypoints

Riesisoneofthefirst,aimingtodeconstruct,analyseandreproducetheprocessesobservedto be applied in startups, operating under high uncertainty with great limitations in regards to, forinstance,financesandresources.Theoutlinedprinciplesshowdeepdomainknowledge,thoughofpurelyautobiographicalnature.Asresearchonrelatedtopicsisscarce,thereseemstobeaneedforvalidationandfurtherempiricalandscholarlywork,asthereisanevidentlackofscientificbackupandproof.

However,withpractitioner’scommunitiesinexcitement,asRiesseemstohasaddressedissuesandchallengesconcerningpracticalwork(agileandUXintegration)inprofessionalcommunities.Underlyingideassuchasgettingoutofaprojectmindset(Gothelf,2009),breakingdownsilos(Fraser,2009)andworkinggoal-driven,outcome-focused(Fraser,2011)resonatedeeplywithpractitioners,explainingsomeoftheimmensetractionthis‘movement’

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hasreached.Thougharguablyutilisingtheessentiallythescientificmethod,itdrawsonempoweringteamsthroughactionableknowledgeobtained,presentingaccountabilitytomakedecisionsaffectingnotonlyincrementalpartsbutmaypotentiallyinformandaffecttheunderlyingbusinesslogic.

“Therealpowerlieswiththepeopledeeperintheorganizationwho decide which proposals will be presented to senior management.

Whatarethecorporatefactorsthatleadmid-levelemployeestoignoreorkilldisruptivetechnologies?”

-Christensen,1997

4.3.3.5 Summary

TheLeanStartuppresentsahighlypromisingsetofprinciplesthatfocusongeneratingvalueby focussing in on the user, the product and the underlying business logic, that are argued to beequallyimportantwhencreatinginnovativeproductsandservices.Theprinciplesintheirnaturearesimplistic,yetseemeasilyadoptable,makingitpossibleforcompaniestonotjustimitatestartups,butratherintegratetheoutlinedprinciplesasfoundsuitableforthespecificenvironment.

HencethepromisefortheLeanStartupmethodologyconcerningitsapplicabilitytoanysizedcompany,equalsahypothesisorassumptionitself,demandingempiricaltestingandvalidation,whichrestatestheaimofthisthesis.

With proper foundation, lean startups can grow to become lean enterprises that maintain their agility, learning orientation, and culture of innovation even as they scale.

Eric Ries, 2011

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5. Futurice

According to Ries, “with proper foundation, lean startups can grow to become lean enterprises thatmaintaintheiragility,learningorientation,andcultureofinnovationevenastheyscale”(Ries,2011,page182).Thus,thefollowingchapterpresentsasynthesisofthegatheredresearchandinsightsformappingFuturice’sculture,aimingatprovidinganoverviewofFuturiceasacompany,itshistory,describingitsculture,companystructure,strategyandvalues.Thesynthesisisbasedonpersonalexperienceofworkingatthecompanyforoverayear,tacitknowledgegathered,companyartefacts,informaltalks,interviews,focusgroupdiscussions,observationsandworkshops.Additionallytothat,duringthedatagatheringprocess,arangeofvisualisationswereco-produced,toaidandstimulatethediscussions,lendingthemselvestothedocumentationprocessatthesametime,thatcanbefoundfromtheappendix,alongwithintervieweesnamesandtitlesaswellastheprojectcasedescriptions.

5.1 Background

FuturiceisanITvendor,thatprovideshighqualitysoftwareondemand,thatofteninvolvestailoredsolutions(JT)withprojectsmainlycarriedoutaroundwebandmobiletechnologiesandsolutions.Thoughsoftwarebeingthecoreofthecompany,theserviceportfolioincludesbusinessconsultingaswellasdesignandlife-cyclemanagementandtraining,inanattempttoofferholistic,full-circleexpertise(MC).AspartoftheDeloitteTechnologyFast50,Futuricehadbeenplacedfirstin2008,5thin20061and13thin20072,makingitoneofthefastestgrowingcompaniesintheFinnishinformationtechnologybranch(Wikipedia,2012).

Asacontractor,thewaysofworkingwithinthecompanyarestronglyinfluencedanddependentonaccordingcustomer’swaysofworking(MC,TT,PH),andisrenderedthroughtheirdegreeoffamiliaritywithagileandthetechnologyinquestion(PH).

1 http://www.deloitte.com/dtt/section_node/0,1042,sid%253D144717,00.html2 http://www.deloitte.com/dtt/article/0,1002,cid%253D183098,00.html

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5.2 History - past & present

5.2.1 Early years as a startup

Originallyfoundedintheyearof2000byahandfuloftechnologystudentsfromTKK(AaltoUniversity,SchoolofTechnology),rightaftertheinternetbubblehadburst,thecompanyinitiallystartedoffworkingonmobiletechnology,thoughanownproductwasbeingdevelopedinparallel,thatbecameknownasKuvaboxi;aphotosharingservicethatshowssignificantresemblancetothenowadayswidelyknowFlickrservice(MC),thatwasthebiggestofitskindinFinland.However,theservicewaseventuallysoldin2005,withthecompanyreachingapivotpointturningitseffortsolelytowardsthecontractorbusiness.Thetransitiontoasoftwarevendorresultedinestablishingandaffirmingoverallorganisationalstructureofproject-basedsalesthattouchedbaseinsmallfirst-offtrialprojects,drivenbyanurgeofexcellenceandqualitytobecomingtrustedreferralstosecondaryandcontinuationsalesandprojects.

5.2.2 Present situation as a fast growing medium sized IT vendor

Asaresultofafastgrowthfrom2005whenrevenueamountedto1million€comparedtothisyear’sestimationmatching15million€,thecompany,tothisday,hasgrowntoanabout150person(Wikipedia,2012)strongenterprise,withfourlegalentitiesacrossEurope,namelyinHelsinki(FI),Tampere(FI)-establishedin2008,Berlin(GER)-establishedin2009,andLondon(UK)-establishedin2012,andwithafifthoneinDüsseldorf(GER)currentlyintheprocessofbeingsetup.

Thecompany’syearlyturnoverin2011amountedto11.65million€,withanincreaseof25%in2012amountingtoacurrentestimateof15million€.Theexpectedturnoverfor2013isabout20million€(TS).Generally,theEBITisusedasacompany-widemeasuretoindicateprogressmadeandsharedamongstallemployeesonamonthlybasis.

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Futurice’sbusinessistoprovidecustomerswithsoftwareondemand,whichisdeliveredintheformofprojectsasaservice,aimingatasoundcollaborationwiththerespectivecustomer(JT).ThecompanyhasthusfargrownorganicallyandhasbeenawardedNo.1inFinlandandEuropeintheGreatPlacetoWorkcompetition2012.

5.3 Organisational structure

Theoverallorganisationalstructurecanbedescribedashierarchicallylowstructure,asmerethreelevelsareapparent,includingemployees,teamleadersandmanagers,includingtheCEO.IthastobenotedthatFuturice’smanagementgenerallyfollowsafunctionalstructureintheory,howeverhasinpracticeadoptedthelatestofall:ateam-basedstructure,benefitingfromanoverallflexibilitythatitoffers.Furthermore,adivisionalstructurethatisgeographicallydeterminedexists,howevernonethatisproductandservice-based.

Futuriceisbeingdescribedasleanandagile(MC,PH,JT,TT),basingdailyactionsanddecisions on the principles of eradication of waste and empowering employees, enabling transparentdecision-makingonalllevels(Brandbook,2011,page22),asthecompanystructureevolvesaroundflexibleteams,microteams,interestgroupsandsuch,claiming“Futuricegiveseveryonetheopportunitytoshowtheirstrengths.That’swhywedon’tbelieveinstricthierarchiesandset-in-stonejobdescriptions”(Brandbook,2011,page24).

5.4 Direct and indirect competition

Bothdirectandindirectcompetitionwasidentifiedduringtheinterviewsandworkshopswithverydifferentreasonstowardsthecompanyoffering.Asclosest,directcompetitors,medium-sizedFinnishsoftwaredevelopmenthousesanddigitalmarketingagencieswerelisted,thatismainlyfacedthroughsimilartraditionalsoftwarecontractorssuchasReaktorandLuxus,toonlynameafew.Theyarefoundtobecompetingongroundsofefficiency,quality,trustworthinessandcustomersatisfaction(MC).Thecompetitorssloganshighlight

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thesimilarityintheirmarketingmessagesstressingthosevalues(Reaktor:“Wedeliverresults”3, Luxus:“WeareLuxus.Adigitalmarketingagencywithadifference.(..)Weareheretogeneraterealresults.”4)Alsobigger-sizedsoftwarehousessuchasTieto,AccentureorLogicacanbeconsidereddirectcompetitors,howeveraregenerallythepreferredoption,wheninvolvinglarge-scaleprojectsandoftenpublicprojects.Alsoontheotherendofthescale,smallcompaniessuchasKiskoLabscancausecompetitionascompetingomsimilargrounds(KiskoLabs:“KiskoLabsmakespeoplehappybysolvingtheirproblemswithdigitalservices”5),promisingtodeliveratgreatspeed.

IndirectcompetitionisposedbyothercreativeagenciessuchasFjord,Idean,PalmuandNordkapp.WithFuturicehavingcreatedan“allunderoneroof”softwareservice(MC,JT)offer,competitionalsoarisestowardsthe‘frontend’oftheprocessencompassingconsultinganddesignwork.Thoughtraditionaldesignagenciestendtobeprioritizedfordesignrelatedwork,offeringend-to-endsolutionsoffercertainattractiveadvantages,includingnohand-offs,fastandefficientoveralldevelopmentandimplementable,highlytailoredandusabledesignsthatresultineasilymaintainable,functionalsoftware.Asinvestigated,thoughFuturiceisindeedconsidereddesignpartner(JT)–allunderoneroofphilosophyspearheadedbeforeothers,buildingtrustandcompetenciesforseveralyears,themoretraditionaldesignagenciesdoovertakeFuturiceintheirin-depthdesignoffering,anddiversedesignportfolio.Ontheotherhand,Futuriceoffersspecificknowledgeinthedigitalmobilitydomainwithastrongfocusonconsumerservices,whichisperceivedastrategicadvantagebyitscustomers(MC;Brandbook,2011,page12).

5.5 Value proposition and strategy

Futurice website’s front page promises Smarter software, better business which highlights the company’seffortsinbrandingthemselvesasanotonlyasoftwarehouse,butastrategicpartner

3 http://reaktor.fi/en/,asseenon27.08.20124 http://luxus.fi/,asseenon27.08.20125 http://kiskolabs.com/#home,asseenon27.08.2012

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thathasbroadexpertise,exceedingmerelytechnicalones,creatinganimperativetothinkandactholistically(JT;Brandbook,2011,page18),whichisinlinewiththeLeanStartupprinciples.Theservicesthatareofferedbythecompanyincludeconsulting,websolutions,mobilesolutions,enterpriseIT,lifecyclemanagement,trainingandevents.Theserviceofferingshowsbroadcapabilitiesthatiscapturedbyanefforttocreateabrand of agile maintenance6, thathastrusted,smallandhighlyskilledteamsatitsheartthatprovidehighcustomer-andhenceend-customer-satisfaction.Accordingtothecompany’sbrandbook“Futurice’sbrandpromiseisthatourclientswillenjoytheprocessofworkingwithus,aswellastheendresult.”(Brandbook,2011,page20).Softvaluesaretransparency, trust, customer satisfaction and caring, thataresupportedbypracticalprinciplesappliedineverydaylifeasdiscussedinthefollowing‘culture’chapterinmoredetails.

Theoverallstrategyforthecompanycanbeextractedfromasetofkeygoalsformulatedfortheyear2015,developedinastrategyworkshopinautumn2011.Despitearangeofnumericachievements,suchastheemploymentof300people,3000TwitterandFacebookfollowers,aswellastenkeyaccounts,therearefivetopgoalsthatareonamoregenerallevel.Theyinclude reaching an ultimate way to do software, structuring sales, forming systematic cycles of improvement,acceleratingcompany-widelearningandincreasingqualityassuranceinclusiontoprojectstoprovidevalue.Followingakeyaccountstrategy7, the company has consciously movedawayfromapreviouslypredominantproject-basedsalesstrategy.Keyaccountmanagement is needed to shift perceptions8 from a commodity or product supplier and its implicationsintermsofpricesensitivityandloyaltytoavalue-addandpartnerrelationship.Caringhasbeenidentifiedasakeydifferentiatingfactorandvalue(MC),torealisethedeep,meaningfulandvalue-addingpartnershipsseekedfor,highlightingthecommitmentandhonestexpertopinions,customerscanexpectfromFuturice(SN;Brandbook,2011,page24).

6 http://blog.futurice.com/defining-our-brand-of-agile-maintenance,asseenon1.8.20127 Keyaccountstrategyisbasedontheimmutablebusinessfactthat80percentofrevenuescomefrom 20percentofthecustomers.Itthereforepaystofocusonthosekeycustomers,makingkeyaccount management one of the ways to ensure repeat purchases, additional purchases and referral to other prospectivecustomerslikethemselves.8 Therearefourlevelsofhowakeycustomermaycurrentlyperceivethebusinessinrelationtotheirs.

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Withinthisstrategicchange,designwasrecognisedasacentralfunctiontothevalue-addingoffering,enablingtodeepenexistingcustomer-relationshipstoformstrategicpartnerships.Hence,theformationofkeyaccountsbuildsontrustandvariedcompetencies,withaneverdeeperimmersionintothebusinessinquestion(JT).Designthinkingandinteractiondesigntoolsforinstancearerecognisedashelpfultounderstandingthebusinessanditsend-customersarchetypes.However,LeanStartupandLeanUX’sapproachtounderstandingallasaprovisionalhypothesisuntilthestrategyhasshownviavalidatedlearning“that[one]canservethistypeofcustomerinasustainableway”(Ries,2011,page90),andhaswidelybeenacknowledgedasthemainbenefitoftheLeanStartuptowardsFuturice’sbusiness(MC,PH,JT).

Theperspectiveonwhatiscurrentfocalpointandbeingmeasuredismostlydonethroughquestionnaires,howeveraprominentpartofthecompany’soverallmeansofassessmentofprogressmadeistheEBIT(TS)-ortheearningsbeforeinterestandtaxes-thatgivesimportantinsighttohowthecompanyisrunandcommunicatedtotheemployees.TheEBITiscommunicatedtotheentirecompanyonaweeklybasisalongsidewiththecloselyrelated‘employeeutilizationrate’-theshareofbillablehoursasreliableandaccountablemeasureofindividualprofitability-thataresharedandannouncedinweeklyteammeetingsandaredocumentedinawayvisibletoeveryoneelse(JT).Inthosemeetings,alsoindividualnumericalindicatorssuchasprojectprogress,bill-abilityandindividualworkloadaresharedamongsttheteam,aswellasmoreintangiblefactorssuchasoverallmoodandpersonalworksatisfactionaresubjecttothediscussion.

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Fig. 9: Image depicting Futurice’s lean culture, encouraging employees to question what they are doing.

Fig. 10: Image of a poster found in Helsinki office, depicting the company’s values.

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5.6 Culture

Whenmappingtheorganization’sculture,IamreferringtoEdgarH.Schein’sworkonculture9, asreflectingandencompassingpractices,sharedvaluesandbeliefs,andunderlyinggoalsandpractices,withorganisationalresearchmostlybeinginagreementover.Criticalaspectscharacterising the company culture, are the company’s sociocultural heritage, the challenging timesduringwhichitwasfundedandestablished,anditsrapidgrowththatfollowed.Afterhavingmanoeuvredrathercarefullyduringthetumultuouslystartingyears,thesubsequentrapidgrowthperiodwassteeredtobeorganicandcontrolled,howeveralsofurtherresultingincertainpainpointssuchasstaffingandteammanagement(TT),asconservingtheFinnishcharacteristicsofhumble,transparentandhighlyreliableandcommittedwork,wastobesustained.Generally,peoplerefrainfromrigidity,asanagileandleanmindsetiskeytothecompany’soperations(JT,TT).Hence,fundamentaltothecultureofFuturicearethreeguidingphilosophies10 that are:

1. “Make it easy” Focusing on customer satisfaction as well as employees satisfaction, driving for constant improvementandlearning,producingsmarterwaysofmakingsoftware

2. “Make it happen” Listeningcarefully,puttingeffortintodeeplyunderstandingcustomer’sneedsandwantsaswellas the‘biggerpicture’issues,constantlykeepingtheend-productinmindandhowthatwillservethe customer’s needs.

3. “Always look at things from the clients point of view”9 “Culture”:apatternofbasicassumptions—invented,discovered,ordevelopedbyagivengroupasit learnstocopewithitsproblemsofexternaladaptationandinternalintegration--thathasworked wellenoughtobeconsideredvalidand,therefore,tobetaughttonewmembersasthecorrectwayto perceive,think,andfeelinrelationtothoseproblems.(Schein,1985,p.9)10 asadaptedfromtheFuturiceBrandbook,p.22ff

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Clearlyandexplicitlystressingauser(customer)focusedpointofview,takingintoaccounttheir degreeoffamiliaritywithourwaysofworking(lean,agile)aswellasthetechnologyinquestion, resolving any worries or uncertainties that may arise.

Thethreeguidingphilosophiesareaccompaniedbysimplyformulated,everydayapplicableprinciples and actions patterns of 3x2 and AskWhy and Welovefeedbacktoaiddecisionmaking,bring about employee empowerment and nourish learning and smarter ways of doing as central components:

a) 3x2 principle - employee empowerment The“3x2”principleisasimpleformulationagainstwhichtoweighupbenefitsanddrawbacks inherentinanydecisionmade.Withallemployeesofthecompanybeingabletomakedecisions toalargeextendwithoutanyfurtherconfirmation,itessentiallyasks,whomy(purchase,project, process)decisionisbenefiting(customer,Futurice(numbers),employees),fornowandinthefuture?

b) Ask why - learning impetus Futurice’semployeesareencouragedtoproactivelylearnthemselves(seminars,conferences, etc.),butalsotocreateandactivelyparticipateininitiatives,suchasmicroteamsand interestgroups,tomaximiseauto-didacticandpeerlearning.Itisanencouragement-inalean fashion-toaskwhy,togettobottomofissues,ratherthanacceptingsimple,uninsightfultruths. Another example illustrating this encouragement are events, such as FutuFridays held once a monthsacrossalloffices,withemployee-initiatedpresentationsandworkshops,followedbyAsk theCEOhalfanhoursession,providingopportunitytoasktohighermanagementanythingatall.

c) We love feedback - customer satisfaction monitoring Feedbackisacentralthemetothecompany,withteam-basedexercisessuchastheweeklyheldUX rinkki,fast,loosely-structuredweeklyfeedbacksessionfortheUXteamtoreceiveandprovide feedbackondesigns.Feedbackisgenerallysaidtobereceivedwithrecognitionandacceptance.Furthermore,marketingmaterialssuchasposters,stickers,flyersandmore,havebeensubject

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Fig. 11: This is marketing material (selection) of the Futurice brand.

Fig. 12: Futurice aims at being a highly visual brand: the marketing material is widely used.

Fig. 13: Futurice also aims at creating an employee brand, as shown in this image.

11 12

13

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tothisinvestigation.AsFuturiceisaimingforahighlyvisiblebrand11, they are understood as a visuallanguage,thatreachesalllevelsofthecompanyinahighlysuccessfulmanner.

Officialmarketingslogansare(intimelydescendingorder):

“Smartersoftware,betterbusiness” “Yourrapiddevelopmentpartner” “Highendsoftwareboutique”

Culturalchange,asaffectedthroughinternalaswellasexternalforcesencouragingandresistingit,generallycanbearguedasbeingperceivedpositivelyinFuturice,astheperpetuationofculturalideasandpracticessuchaslearningandagility,themselvesconstantlybeingsubjecttochange,aredeeplyingrained.Newmodelsofwaysofworkingarebeingexploredandtested,enablinggenerativeactionwithin.HenceasnotedbyRies,“..themostvitalfunctionislearning.”(Ries,2011,page38),Futuricecanbearguedtobefollowing,embracingandpromotingthatnotionstrongly.Inthesamelineofargumentation,Futuricehasnotedtobeoneofthefirst(MC)tointroduceanUXteamalreadyin2009,followinganall-under-one-roofphilosophy,workingagileandholistically,asreinstatedthroughtheir–sincethenexpanded–broadserviceportfolio.

5.7 Project case studies

InordertogetanunderstandingofthenatureanddynamicsofprojectscarriedoutatFuturice,Ihaveanalysedfourprojectcases,thathavebeenselectedduetotheirvarioussettings,forinstanceconcerningtheirlength,budget,teamformationandtasksetting.Theactualdescriptionscanbeobtainedfromtheappendix.

Typically,Futuriceiscarryingoutsmallcustomerprojects,ofteninvolvingtailoredsolutions

11 Eveninthelavatoriesofthecompany,educatingposterscanbefound.

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foreachcustomer’sspecificneeds(JT).Theteamsarecross-functionalandoftenworkinginclosecollaborationwiththecustomer,operatingunderthecompany’sindividualbusinessunits(MC,TT).OnlytheUXteampresentsanexception,asitisorganisedandavailabletotheotherteamsasaresourcepooltotapinto;ofteninvolvingdesignersinmultipleprojectsatthesametime,reactingandadjustingtocurrentprojectsituations.Adhocassemblyoftheteamsisobservedtooftenbetheoperationaldefault.

Asfurtherfindingsofthecasestudiesshowed,therangeofprojectscarriedout,indicatedvariousdifferentstartingpointsfortheprojectsthemselves.Often,projectsstartofffromcompleteconceptsandextensivewireframesprovidedbythecustomer(JT),layinggroundsforthevisualdesign,contrastingwithprojectsthatrequireconceptdesigntobedonebyFuturice,thattypicallyisintheneedofgo/no-gocustomerapproval.Thoughunderlyingassumptionsarearguablyinneedtoactualvalidationinbothcases,higheraccountabilitytowardsthecustomerandhencegreateruncertaintyisfacedinthelattercase,makingthemparticularlysuitabletoavalidated,LeanStartupinspiredapproach(PH).“Wearealreadyusingitinconsulting.Themorefront-endweare,themoreaLeanStartupapproachmakessenseto[me]”(MC).

Generally,projectshavefoundtobeagilewithintheimplementationphase,howeverarefollowingquitecloselywaterfall-likestructuresoutsidethatphase(JT).Project-linkedfailureratesandreasonsarehighlytransparentlysharedamongstthecompany,reflectingandhighlightingtheneedforentireteamsbuildingaproduct,tokeepbusinessgoalsandrequirementsinmindtosuccessfullyco-createavaluableandviableprojectwithandforthecustomer,whichisanotherkeyopportunityfortheLeanStartupprinciplestoachieve(MC).

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5.8 Sales and customer relations

Generally,salesarepersonal,outcome-oriented,witheachproposalcustomisedandtailor-made(TT),presentinganopportunityforsellingvaryingapproachesandprocessestoeachcustomer,asisseenfit.Thecommunicationofproposalsandleadsisuniversal,throughtoolssuchasSalesforce,aswithinthecompanytheoreticallyeveryoneisinvolvedsales,providingleadstobepursuedfurther.Salesthemselvesarelinkedtopersonalratesofsuccess.Salespeopleareusuallytechnicalexpertsatthesametime,helpingthecustomerunderstandwhattheyneed,andwhattheirbusinessmayprofitfrom,thoughalackofin-depthprocess-drivenknowledgehasbeenacknowledged(JT).

ConcerningUXsalesspecifically,salespeoplehaveshowntolackbasictrainingindesign,resultinginmissingunderstandingandknowledgetowardsdesignprocessesandtools,hinderingmoreeffectiveUXsales.ThisisinstarkcontrasttotheacknowledgedfactthatFuturiceissellingprocesses,notproducts.Theexpansionofthecompany’sserviceportfolioalsoincludesrecenteffortsinintroducingServiceDesignandAnalytics,aimingatprovidingmoreinsightstooutcome-specificrequirements,butalsoprovidingmeansofmonitoringandassessingtheireffectiveness.Henceincreasedaccountabilitytowardsthecustomerisanopportunity(PH,JT)forvalidation-basedlearningasoptedforbyadoptingaLeanStartupapproach.Evidently,somesalespeoplehavealreadystartedadoptingsomeoftheLeanStartuptools(MC,TT),testingtheminternally,listingandvalidatingcustomer’sassumptionstoaidsaleswork.

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5.9 Summary

TherearearangeofkeyfacilitatorsidentifiedwithinFuturiceforasuccessfulintroductionofLeanStartupprinciples,includingitsstartup-likeculture,corevaluesofcaringandtransparencyandstrategicalignmentasalearningorganisationandtrustedpartner(TT,MC,JT),whichseemstoprovidefertilegroundsforLeanStartup’sfundamentalthinking,asitbearsthepotentialtodrivethecompany’smaingoals(TT),bycaringnotjustforthedeliveredproductitself,butalsoitsdesirabilityanchoredinbusiness-advancingvalidationandahighend-customeracceptance,ascreatingvalueiskeyobjectiveandsharedteam-wideresponsibility(Ries,2011).Thispotentiallycreatesacompetitiveedgeforthisserviceprovider’sprocesses,outcomesandtrainings(PH),advancingthecompanyclosertothecustomerbusiness(JT).

Arangeofkeyobstaclesremaintobeovercome,oneofwhichbeingtheknowledgegapinappropriate(design)methodsinsideaswellasoutsidethecompanydesignresourcepool,suchasservicedesignorLeanUXinspiredmethodsoftheLeanStartupapproach,whichisrecognisedasessentialforbeingabletosellcertainprocessestothecustomer.Thecustomer’sapproachandownperceivedneedisthusheavilyinfluencingthenatureandoverallstructureoftheproject,makingitapull-approach,ratherthanapushed,expertprocesssuggestion,tailor-madefromFuturice’send.

Hencecustomershavebeenidentifiedas‘door-keepers’(MC,JT,PH)tendtobuywhattheyperceivevaluable(TT),puttingthesalespersonnelintoakeypositionforintroducingLeanStartupprocesses,posingtheneedofadequateframeworks,casesandsalesmaterialtosupportdesignandprocess-drivensales.AsFuturiceisdrivenbynumbers(TT),ROIof(design)processesremainsakeyissueasparalleledbytheintroductionofservicedesignintoFuturice(JT,SN).

As Lean Startup processes are argued by practitioners to mostly fall into designer’s realm,

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theresourcepoolstrategyposesanobstacleandalackofLeanUXexpertscontradictswithexpert-rulingmentalityofthecompany.

ThoughtheLeanStartupprocess,thoughnotexplicitly,isalreadybeingappliedtosomeextend,especiallyinconsultingandsomefewcustomercases(MC,TT),effortsremainheroic(TT)andthereisalacktowardsitshorizontalintegrationinsidethecompany(PH).Inordertoachievethat,abottom-upapproachisneeded,utilisingevangelistsasaprovenapproachfor introducing processes to the company, as shown in the broad and successful introduction ofAnalytics(JT).Multichannelandcompany-widecommunicationofthebenefitsregardedaskey(MC,PH,JT,TT),thoughnotwithstandingtheacknowledgedneedforinvolvingthecustomersinanactivedialogueaswell.Bringinginexpertstotraininternalsaswellasexternalsandcustomersisseenasnecessary(PH,MC).

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Fig. 14: Lean Startup workshop proposal.

Fig. 15: Image of the Build-Measure-Learn feedback loop, as used in a customer case.

Fig. 16: Project wall in which a MVP was considered.

Fig. 17: Business Model Canvas, as developed by Alexander Osterwalder, utilised for customer case with critical assumptions list, that the business case was resting on.

17

1615

14

The company that consistently makes and implements decisions rapidly gains a tremendous, often decisive, competitive advantage.

Steven G. Blank, 2012

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Thefollowingfindingssummarisetheresultsoftheliteraturestudy,Futuriceprojectanalysis,workshops,qualitativedataobtainedfrominterviewsaswellasco-createdvisualisationssuchastheinterviewmatrix,tacitknowledgeandartefactsasphysicalmanifestationsofvaluesandideas,answeringtothefourresearchquestionsposed.Themainfindingofthisthesisisastrategicapproachinsevensteps,tointroducetheLeanStartupprocessintoFuturice,asitsuggeststobeofvaluetothecompanystrategicallyaswellasorganisationaly.Furthermore,tangibleoutcomesrelatingtothesuccessfulintroductionarelistedandbrokendown.

6.1 Findings answering the set out research questions: Main RQ 1

Theaimofthethesisistoanswertothesetoutmainresearchquestionandthreesub-questions, that are as follows:

Main RQ 1: WhatisLeanStartupandwhatareitsunderlyingprinciples?

LeanStartupisaprincipledapproachtoaccelerateshortiterativeproductdevelopmentcycles,assumingfeaturestobebasedonhypothesisesthatareinneedofscientific,measurablevalidation.Validationinturnisusedasastrategictooltodeterminewhethertoproceedorpivot.Theprocessutilisedischaracterisedbylearningastheunitofprogress.Accordingtotheliteraturestudyandpractitioner’saccounts,IhaveidentifiedthemainprinciplesoftheLeanStartup to be as follows:

1. Entrepreneurs are Everywhere Bysignificantlybroadeningthedefinitionofentrepreneursasbeingessentiallyhumaninstitutions that create value, Ries suggests the broad applicable of Lean Startup beyond the startup sphere and beyond people’s professional titles and occupations.

2. Entrepreneurship is Management Startups must be managed and there is a systematic underlying approach in doing so. Furthermore,

6. Findings

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the second principle suggests that the management of startups is a repeatable, teachable method.

3. Validated Learning Thekeyactivityinanyvalue-creatinghumaninstitutionislearning,thatcanbevalidatedand accountedfor.Itislinkedtothefundamentalquestionofwhatneedstobelearnedandhowthat isachieved,suggestingsimplescientificexperimentstoyieldinsightful,actionablelearning (metrics)asanoutcome.

4. Innovation Accounting Innovation accounting refers to the way progress is measured, how milestones are being set up and howworkisprioritized.Itincorporatesideasofvanitymetricsversusinsightful,actionable metrics.

5. Build-Measure-Learn Buildingasuccessfulproductorserviceisanaction-drivenactivity,thatmeasureshowusersreact and adjusts accordingly through pivoting or persevering. It suggests that what is being build, canandmustultimatelybemeasured,answeringtosomethingspecific,withtheultimateaimof learning, that is achieved through a cyclic, iterative and continuous process.

Inordertoinvestigatetheprinciples’applicabilitytotheempiricalcasestudyofFuturice,qualitativeresearchwascarriedout.Semi-structured,themedinterviews(Hyysalo,2009)yieldedinsightsintoFuturiceasacompany,generatingfindingsfortheposedsub-questionsofthisthesis.Inordertoanalysethequalitativedataobtainedfromthesemi-structuredinterviewsofthesecondround,therecordingsweretranscribedalongwiththenotesandarrangedinamatrix,outliningthethreepartsoftheinterviews(1.Futurice;2.Strategy;3.LeanStartup)andtheiraccordingmainthemes(1.Culture,Values;2.Challenges,Opportunities,Strategy;3.Pro’s,Con’s,How-to),respectively.TheinterviewmatrixcanbefoundfromtheAppendix.

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6.1.1 Findings answering the set out research questions: Sub-RQ 1

Sub-RQ 1: What are possible enablers and inhibitors for adopting Lean Startup principles, specificallyinregardstoFuturice?

Accordingtotheinterviewmatrix,arangeoftheenablersandinhibitorshavebeenidentified.ThereseemstobeahighculturalfitwiththeLeanStartupprinciples,asFuturiceisleanandstronglylearning-orientedorganisation,makinglearningtheacceptedunitofprogress,mirroringtheLeanStartupphilosophy.However,asthecompanyishighlyoutcome-drivenandsatisfyingcustomerneedsisregardedhighly,anticipatinglearningtoapivotingextendneedstobedoneinaccordancewiththecustomer,thusmakingtheirunderstandingvitalforlearningasaunitofprogresstofullyintegrateasaccountable.ThepursuedstrategicdirectionofFuturicetobeatrustedpartnerinthecompany’skeyaccounts,wasseentocarryambiguouspotential,bothbeinganinhibitorandfacilitator.Aimingatgettingthecompanycloser to their customer’s business, it facilitates the introduction of Lean Startup principles as itmovesFuturiceintostrategicconversations,howevercaninhibitleancultureasimmersingintocustomer’sbusinessrevealsculturalgapmorestrongly.Despitetheintervieweespresenting enthusiasm towards Lean Startup, all agreed on the customers being the doorkeeperstoasuccessfulintroduction,oftendefiningthewayaprojectiscarriedout,aswellascontradictorilyhighlightingalackofaprecedingsolidsalesstoryandstrategy.

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Enablers Inhibitors

• Learning as the accepted unit of progress• Previous successful introduction of ‘novel’ processes

and practices such as Analytics• Pro-active,empowering,hierarchically-low

company culture• Offeringtailoredsolutionstocustomersyields• Familiarity and long list of references with con-

sumer side services compared to competitors

• Masteredagile,customerknowsexpertise• Lean Startup process can advance current prac-

tices

• Shift towards getting closer to customer’s business enteringaninformation-transferrelationship

• Shift results in confrontation of potentially unfa-miliar domains and introducing higher degrees of uncertainty

• Continuousprojects-gettingoutofdeliverablesmindsetbutratherintoprogress-orientedone

• Salesteam,UXandLCMarealreadyusingsomeof the tools

• Enthusiasm of Lean Startups value for Futurice (evangelists)

• Needstobeunderstoodmoreofaframework• Actualbenefitsneedtomeasurable/needtobe

obtained• Numericalandfinancialvalidation

• Internalknowledgeisnot‘readyfortakeoff ’yet• Lackingunderstandingofpotentialbenefitsand

insufficientsupportfrommanagement

• Customersdefinewaysofworking• Customers are unfamiliar with Lean Startup

processesandbenefits• May not want us to do this• High uncertainty is not always given• Outcome-drivenmindsetduetoorganisational

structure(superior’spressure)anddeliverableexpectancy

• Lackofcases-insufficient‘salesstory’• Lackofsalesmaterial&strategy• Leap of faith is needed from customer’s side

Futurice as a learning organisation Conceptual (radical) notion and missing valida-tion

Familiarity with lean and agile processes Unfamiliarity with processes and tools of the Lean Startup

Strategic positioning as key partner Futurice being a software vendor leading to customers as doorkeepers

Lack of framework for salesTools and processes already being used to some extend

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Sub-RQ 2:WhatpotentialbenefitsdoestheLeanStartupmethodologyofferamediumsizedIT vendor,asshownwithFuturice?

MappingthevalueoftheLeanStartupmethodologyasawaytodealwithhighdegreesofuncertainty,itsituatesitselfamongstotherstrategiesandprocessesdesignedtotackledecision-makingandstrategy-planninginsituationsofhighuncertainty,suchasagilepracticesandtheconceptofeffectuation,whereasnoneofthemcanbesaidtobemutuallyexclusiveandarehypothesisedtobevalue-enhancingwhencombinedskillfully.LeanStartupherebyneedstobeunderstoodmoreofaconceptandprocessratherthananabsolutetruth,asvaluecanbederivedfromitinlessradicalnotions,asperceivedbytheinterviewees.Allintervieweesfurthermoreagreed,thatintroducingLeanStartupprinciplesintoFuturicecanbeoffinancialandstrategicbenefittoFuturiceandcanbe“appliedquitedirectlytocustomer’sservices”(MC),asFuturiceiscreatingnewbusinessfortheircustomers.Themainbenefits,asextractedfromtheinterviewsandworkshops,canbelistedasfollows:

1.MovingFuturiceclosertocustomer’sbusinessandcreatingacompetitiveedge In alignment with the organisations’ strategic direction, Lean Startup process can support the company’s goal to move further upstream the value chain, as was already the aim when spearheadingtheintroductionofUXpracticesandtheconsultingteam.Theaimedforcontinuous businesscases,astrustedpartnershipsthroughkeyaccountsarebeingestablished,bringthe companyclosertocontinuousbeta-stagedevelopmentandcontinuousdevelopmentinwhich progressismeasureddifferently,asitgetstheteamoutofthe‘deliverablesbusiness’(Gothelf,2012).

2. Creating increased accountability towards the customer Asmeasuringisasignificantpartofthiscompany,ashighlightedbytheprominentusageofEBIT as measure of progress or the increased interest in Analytics, transferring this practice to customer workcanpotentiallycreatehigheraccountabilityfortheteamasdesignanddevelopment

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decisions can be based on numerical arguments, rather than subjective perspectives.

3. Yielding potentially higher end-customer acceptance and validation for existing processes As scrum and agile are seen as a source of speed, Lean Startup can act as a source of validation, whichinturncanresultinlessheroicefforts.Designdecisionsforinstancecanbetestedand verifiedastestscanyieldnumericalbackupandhelpfacilitatedecision-makingprocesses. Furthermore, Futurice as a company can potentially sell own processes and trainings, also own products are possible to be developed internally utilising the Lean Startup process.

4. Shifting mindsets through accepting learning as the unit of progress Learning as the unit of progress can help shift mindsets inside the company as well as towards the customer.Teamscanpotentiallyactmoreautonomouslyandhigherhourlypricesarepossible.

5. Breaking of silos and increased team responsibility Lean Startup process has been shown to spread responsibility over advancing business case across theentiredevelopmentteam,aseverytestsetupcanpotentiallychangeentirebusinessplans.This in turn can create an increased sense of ownership, as advancing the business case is potentially donewiththecustomertogetherinapro-active,iterative,dialogue-basedmanner.


Sub-RQ 3: How can Lean Startup principles be introduced to Futurice and what actionable stepsneedtobetaken?

Learningfromhowotherprocesses,hithertonoveltothecompany,havebeensuccessfullyintroducedintoFuturice,namelyServiceDesignandAnalytics,ithasprovenefficienttocommunicateacrossallorganisationallayers,utilisinganempoweringbottom-upapproach,aswellasengagingevangeliststomakeastrongcaseandactasnecessarypointsofcontacts.

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ItseemsvitaltoutiliseFuturice’sexistingcommunicationchannelstoraiseawarenessandintroducetheprocessitself,itsbenefitsandtoolsbroadly.Furthermore,astrongverticalandhorizontalintegrationisneeded,includingshort-termaswellaslong-termplanningfoundedonbroadacceptanceacrossthecompanythatisstronglysupportedbythemanagement.ThatcouldbedonethroughaninternalprojecttowhichresourcesarebeingallocatedorthroughvalidatingcommitmentbyforinstanceapplyingforaTekes-fundedprojecttobecarriedout.Overall,introducingLeanStartupprocesstoFuturicehasshowntobeconsideredofhighvalue,howeverisinneedofaclearandactionablestrategy,inordertobetakenfurther.

6.2 A multilayered strategy made up of the Lean Startup Poster, Lean Startup Roadmap and Testbed Proposal

Asadirectoutcomeoftheinterviews,itisacommonagreement,thatasavendor,Futuriceemployeesneedtoputthemselves“intotheshoesof[their]customers”(JT)inordertohelpthemmosteffectively.Furthermore,Futurice’sportfoliobeingthecasescarriedout,theknowledgeandthetechnologiesemployed,thatareingrainedintheteamsandtheirexpertise,itistheemployeesthatare“responsibleforcreatingtechnologicalinnovationsforourcustomers”(MC).Buildingfromthecorecompetencies–asdefinedbyCoimbatoreKrishnaraoPrahaladandGaryHamelasthecollectivelearninginanorganization(Prahalad&Hamel,1990)–assertsthatitisnecessarytoseekcompetitiveadvantagefromacapabilitythatlieswithinFuturice’sexpertpeopleandprocesses.AsadirectderivativeconsequencefromChristensen’sfamousinsight,thatnonexistentmarketscannotbeanalysed,itturnedoutcrucialthatintroducingthisprocessbeyondFuturiceiscritical,inordertovalidateFuturice’scustomersexpresseddemandforprocessessuchasofferedthroughtheLeanStartup,demandingapro-active,learning-by-doingapproachfromFuturiceside.Hence,customisedproposalstoFuturiceasamedium-sizedITvendorshavederivedasfollows:

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Firstly, I introduce a Lean Startup Poster. It results from the insights gathered from literature and practitioner’s accounts and acts as a communication tool to introduce Lean Startup concept toabroadaudienceinsidethecompany,highlightingcorebenefitsandkeyconceptstobespread throughout the company to reach a critical mass of supporters.

Secondly, I introduce the Lean Start strategy roadmap, which is a set of actionable steps that help spread the use of Lean Startup principles and according tools. It combines insights on historically successful proven steps to introduce any hitherto novel process to Futurice, as well astakesintoaccountidentifiedLeanStartup-specificinhibitorsandenablers,leveragingthe organisationalsetupofthespecificempiricalenvironmenttoovercomeorminimiseinhibitors and amplify possible enablers.

Thirdly, I introduce Futurice.com as a concrete proposal as testing and learning ground for underlyingtoolsandprinciplesoftheLeanStartupprocess,highlightingthebenefitsoftesting andapplyingthis.Theproposalaimsatcreatingagenerativeandpro-activelearningground,in which most suitable approaches can be developed and integration with current processes such as agile can be tested and optimised.

Workshop

Bottom-up approach

Vertical anchoring through company project

Yammer

Skype

Benefits

Philosophy

Visuali-sation

Visuali-sation

Presen-tations

Events

Projects / Casesas source of tools already be-

ing used

Teamsas source of tools used

Customersto be involved in dialog

Training

Futu Blog & Website

Presen-tations

Bestpractices

{

Visuali-sation

Cases

Evangelists as point of contacts

Workshop

Visuali-sation

Tools &

Methods

Visuali-sation

Bottom-up approach

Vertical anchoring through company project

Presen-tations

Events

Intranet

Sales material

Customersto be involved in dialog

Conferences&

Talks

Training {

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6.2.1 Lean Startup Poster

CommunicatingthebenefitsoftheLeanStartupinordertocreateanunderstandingabouttheLeanStartuphasbeenconsideredvital(MC,TT,JT).TheLeanStartupPosterismeanttoshowtheiterativenatureoftheprocess,necessaryduetohighdegreeofuncertainty.Itfollowsthe(visual)languageofFuturice,optingforbroadinterestandacceptance.ThiscommunicationtoolismeanttofacilitateconsecutivestepsoutlinedbytheLeanStartuproadmap.Hence,firstandforemostitistobeunderstoodasaninternalcommunicationtoolthatsparksinterestanddiscussionandmaytriggerpro-activityandsupport.

However,theposteritselfisonlyapartofamoreelaborate,overallstrategy,thusasetofrecommendationsgoesalongsidewithit.Thoughbeingaphysicalartefact,itneedstobetakenintodigitalcommunicationchannels,asheavilyusedwithinthecompanyandconsideredhighlyeffectivemean.Itsphysicalitythoughfacilitatesrepresentationofthisdiscussionitemtobepartofbothteam-basedeventssuchasweeklyandmonthlyteammeetingsaswellascompany-wideeventssuchasFutuFridaypresentations,asoutlinedinthefollowingstrategicroadmapaction-points.

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6.2.2 Lean Startup Roadmap

Conductingaworkshopwiththemainevangelistsofthecompany,asetofactionablemilestoneshasbeencreatedthatcanbeunderstoodasastrategicperspectiveonhowtointroduceLeanStartupthinkingtoFuturiceaslistedbelow.AcollaborativeapproachwasusedinordertobringaboutcommitmentamongstthecurrentevangelistsoftheLeanStartupthinkingwithinthecompanyandtocreateasharedagreementandunderstandingofwhatneedstohappeninordertointroduceLeanStartupthinkingonabroadfront.Arguably,thesearespecifictotheenvironment,contextandcultureofFuturiceasalearningorganisation,focusingoninternalcompetencedevelopmentanddevelopingacommunicationstrategythatreachesbeyondFuturice’sownemployees,as“weneedtohaveasharedlanguage”(MC).Theaction steps listed below do not demand to be followed in a chronological order, rather they aretobeunderstoodtoguidedecisionsandactions,necessarytobetaken.

1. Kickstarting the introduction of Lean Startup by evangelists that act as point of contacts Arangeofpioneersandso-calledevangelistshavebeenidentifiedwithinthecompany,to drive this introduction forward, to plan and educate on the topic, who tell customers about the LeanStartupandgetpeopleinterested.Theyactaspointsofcontactandbridgethedialogue between management, internal as well as external employees as well as customers. 2. Communicating of the value of Lean Startup thinking Posters,opendiscussions,workshopsaswellaspresentationsduringcompany-wideeventssuch as FutuFriday, are ways to spread the understanding of what Lean Startup is, what potential benefitsitcanbringincertaincontextsandthebasicprinciplesitisbasedon.Theseformats usuallyinviteforopendiscussionsandtendtobetakenfurtherintheprovideddigitalchannels (Intranet,Yammer,Skype,FuturiceBlog).Aidingtoolsneedtobedesignedanddistributed, suchastheLeanStartupposterandcommunicationneedstohappenontwolevels:internally andexternally.Thus,salesmaterials,suchassalesdecksasartefactforoutsidecommunication, need to be created.

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3. Integrating and anchoring Lean Startup concept vertically into the company InordertocreateadrivingforcearoundtheLeanStartup,itisnecessarytofirmlyestablish aphysicalandmentalspace,aunitoranentitytoit.Thisrequiresbudgetallocationandresources toit,inordertoseriouslyestablishitaspartoforganisational,officialstrategy.Thisway,broad acceptance is validated and communicated across the company, as its status as an accepted, to be seriously explored strategic path, is established and guaranteed for a substantial period of time.Furthermore,aTekes-fundedR&Dprojecthasbeenappliedforinordertoaccomplishand accelerate this deep integration.

4. Learning the underlying methods by accumulating materials and sources and arranging hands-on workshops Educating internally, across all teams is absolutely necessary in order for the principles and overallprocesstobeappliedandprevail.Onlythroughalean“learningbydoing”approach,the benefitscanbeexperienced,theirappropriatenesscanbeinvestigatedandvaluebeproductisedand materialised. Only through internal trials, Futurice will be able to provide customers with real business value and increased quality products and services.

5. Creating a continuous and well-funded test bed for experimentation Additionally to action step 4, an internal project is assumed to be the best source of learning required to adopt Lean Startup principles. However, Futurice management needs to allocate people and budget and a physical space, to which people can go to learn. A testbed can yield crucial learnings, present obstacles as well as opportunities, that can be communicated and shared amongstemployees..Onlythroughpracticallearningsanda“learningbydoing”mindset,thisis assumed to gain greater acceptance within.

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6. Arranging internal and external expert workshops OnceFuturicehasinternallymasteredLeanStartupprocessesandtoolsandhaveidentified and trained eager practitioners, the company will be able to sell the approach explicitely to its customers. However, in order to accelerate learning, bringing in external experts to train Futurice employeesandmanagementaswellasFuturice’scustomersiskey.Activelinvolving customersismeanttotackleoneofthemostchallenginginhibitorsasperceivedbythe interviewees,whoidentifiedthecustomersasdoorkeepers,acknowledgingtheiracceptanceand understanding crucial.

7.ProductisingtheLeanStartupprocessaspartofthecompany’soffering MakingtheLeanStartupprocesspartofthecompany’soffering,ensuresandcommunicatesits importance,willfirmlyanchoritamongstotherprocessesusedandmakesitavisibleservice offeringtoitscustomers.Thisalsoincludestrainingforthecustomersandaffiliates(e.g.externals) toteachthemabouthowtoapplyLeanStartupthinkingintheirowndailyprocesses.

8. Selling lean teams and driving expert knowledge through sharing Bysellingself-directedproductteamsthatfollowthebasicguidelinesofaleanteamassuggested byGiffConstable,potentiallycontributestobreakingdownexpertsiloswithinthecompany andthroughsharingbestpracticesandcasestudies,ahighlyvaluableknowledgebasewill be created that can be shared not only amongst employees and customers, but also with the a potentiallywideraudience.Thiscanbeachievedbyspreadingtheknowledgegainedthroughblog posts,talks,workshopsandconferences,toonlynameafew.

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6.2.2.1 Lean - Leaner - Leanest

InlinewiththeLeanStartupmethodology,theabovepresentedstrategicactionstepsaremeanttobesubjecttochangeanditeration,aspeoplebegintotakeownershipoverthem.Theroadmaphasbeeninstalledinvariousveryvisibleplaceswithinthecompanypremises,tobecommentedonaswellasbeenplacedinvariousdigitalcommunicationchannels,invitingpeopletofindtherightcontactpersonstofindoutmoreandhowtobecomeactive.

Asofthispoint,thedistributedactionstepshavebeenactivelydiscussedandhavebroughtaboutafruitfuldebate,kick-startingactivitiessuchaspublicdiscussionsinYammerandSkypeandtheorganisationofaLeanStartupworkshopinNovember2012,involvingbothcustomersaswellasFuturiceemployees.

6.2.3 Lean Startup Testbed Proposal

Asadirectresultfromvariousinterviewsandworkshops,itisconsideredvitaltocreateaninnovationsandbox(Ries,2011,page261),empoweringinnovationteamstotestnewmethodsandprocesses.Thishelpstocreateasustainablecultureofinnovationinsideacompany,ensuringmotivationandpro-activeattitudeforexperimentation,failingandlearning.Inorderforthistohappen,Riescallsforanincreasedportfoliothinking(Ries,2011,page253),forwhichitisfundamentaltochangemanagementthinking,tooneinwhichnoveltyandideasarevaluedandseriouslypursued.Hence,itisseenvitaltocreateanautonomousgroupandphysicalspaceinwhichtheLeanStartupprocesscanbetested.

Thissettingideallymirrorscertainaspectsoftheuncertainoperationalcontextofstartups,suchaslimited,butgrantedresourcesforconductingexperiments,independenceandthecreationofasenseofownershipanddecisionpower.Ideally,themanagementwouldgrantsomereasonablefundingforaninternalproject,forinstancegrantingsome20.000€forasix-monthsprojecttogetstarted,orsetupaR&DprojectaspossiblethroughforinstanceTekes-

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funding,inordertoestablishLeanStartupverticallyinthecompany.

As of the actual tools of the Lean Startup process still being mostly undetermined and being seeminglyfreelyadoptedfromtangentdisciplinessuchasServiceDesign,UXDesignandothers,theyareexpectedtobefurthersubjecttochange,asthedialoguecontinues(GiffConstable,2012).Thus,theproposedtoolsandmethods,suchasMVPorLeanCanvas–anadoptedversionoftheBusinessModelCanvasbyAlexanderOsterwalder–areinneedoftestingandvalidationthemselves,highlightingthecurrentstateofartofLeanStartupprocess.

However,followingtheLeanStartupprinciples,theproposedtoolsfocusontheactualexperience,ratherthansetofdeliverablesandhelpaproduct,serviceandbusinessstrategytoemerge.Theyaremeanttoachievehighvelocityandyieldinsightfullearningwhenappliedandoptforaproactivelearning-by-doingattitude..

Alistofsuggestedtoolscanbefound,however,duetothescopeofthisthesis,Iwillnotgofurtherintoexplainingthoseorarguetheireffectiveness,butratherutilisethoseasreferencetogetstartedwith,asmeansforachievingvalidation-basedlearning.

Futurice.comasaTestbed Inordertomakepeopletestandlearn-havetofindcreatethatspaceinternally.Iamproposing to utilise the company’s website as a testbed. Having a concrete service and product artefact enables thedesignofexperimentsthatwillyieldvalidatedlearning.Havingaspecific user base, utilising split testing and cohort testing, actual data can be extracted and design decisions shift away from subjective insights to a data reliance. Various methods can be tested and learningarisesthroughdifferentiationofvanitymetricsandvalidatedmetrics.Identifyingand formulating hypothesises can be trained, underlying assumptions be tested and adjusted if necessary.

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Fig. 18: Image of the poster, developed as an internal communication tool for the Lean Startup.

Fig. 19: Image of the strategic road map aiming at introducing Lean Startup principles, as written publicly on wall for Futurice employees to comment and add ideas of their own.

Fig. 20: Lean Startup Testbed proposal concerning Futurice’s own website www.futurice.com.

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Suggested tools to be tested: Criticalassumptionslist,LeanCanvas,pairprogrammingandco-creation,styleguidesand rapid production, designing learning experiments through cohort and split testing, innovation accounting table

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When you put your ideas in the world, then, and only then, do you know if they’re real.

Not expensive, merely frightening.

Seth Godin, 2012

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7. Discussion

LeanStartupprovidesaprocessthatmakesitpossibletodealwithhighlevelsofuncertaintyandtosuccessfullyaddresstheroleofdesigninenablingmakinginformeddecisionsabouta product, its customers and business model, despite problematic and chaotic operational settings.Itquestionsthefundamentalsonwhichoneoperates,optingforaholisticproductandserviceapproachinordertocreatedisrupting,highlycompetitiveanddesirableoutcomes.ItwasdiscoveredthattheLeanStartupthinkingneedstobemodifiedinordertobeadoptable, and it is to be understood more of a concept and process, which has the potential tobringaboutacompetitiveedge.However,inthisthesisIidentifiedaclearlackofempiricalstudies, posing some challenges and possible criticism towards the presented outcomes andartifactsthatareoutlinedinthischapter,startingoffwithpossible,moregeneralshortcomings.

7.1 Possible, general shortcomings

The rate of adoption of the Lean Startup principles is assumed to be high, due to the company’sfavourablesetting,howeverisnotexpectedtoworkinstantlyandwithoutanyproblems.

Thecompanystrategyitselfcanbedescribedasstillgrowingandorganicallydiversifying,ashasbeenhighlightedthroughthediversificationoftheserviceportfolioofthecompanyitself.Hence,therearevariousdifferentviewsonwherethiscompanyisheading,andworldviewsmaycollide.Theoverallstrategythoughseemstobridgethechasmbetweendesign,softwaredevelopmentandbusinessdevelopment,includingconsultingandtomovefurtherupstreaminthevaluechain.Inorderforthattohappen,the‘silos’havetobebrokendown.However,asthecompanyisgrowing,soisthefearofchange.Theproposedstrategicactionpointsmaybeperceivedasadeviationfromthecurrentstrategy,thatstillhasthesoftwaredevelopmentatitscore.Hence,withhelpoftheproposedmethodsandtools,Iamaimingatenrichingthe strategic discussions at Futurice by introducing Lean Startup principles as a possible competitivefactor.

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Therewereotherclearlimitationstothisthesis,suchasitsspecificytoFuturice.Thecompany’sspecificcapacitiesforadoptingtheseprincipleshasbeeninvestigatedandformthefoundationoftheoutcomesofthisthesis.However,asFuturiceitselfisdescribedasadynamicenvironment(JT),theresultsarehypothesisedtobeapplicabletoabroadercontextordifferentsettings,thatcouldprovidefurtherinsightfulresearchdirections.Furthermore,measuringtheoveralleconomicbenefitsremainsacrucialissue,as“thisisanumbergame”(PH),andcanonlythenbefullyassessed.Furthermore,theavailablebudgetforthisthesiswasalimitationanditispresumedthatafull-scaleR&Dprojectwouldprovidefurther,criticalinsightsintotheoutcome’seffectivenessandsuitability.Hence,ithastobenoted,thatoutlinedmeasuresstillremaintobetestedinpracticeandevaluatedagainsttheirperformance.Itneedstobefurtherinvestigatediftheproposedmeasuresdogeneratethewantedbenefitstheyhavebeendesignedforremainstobeseen.Theadoptionrateinternallyaswellasexternallycanonlybeassumedatthispointandheavilyalsodependoncustomerinterestandresponsetoit.Continuousevaluationisindispensabletofurtherinvestigateadoptionrate,successrateandtoallowforadjustmentsasapplicable.

Furtherlimitationsarelinkedtothescopeandframeofthisthesisitself,assomeothercriticalissueshadtobeleftoutthatmighthaveprovensignificanttotheresult,suchasrecruitmentpoliciesandpractices(maybefromstartupstohelptrainpeople).Additionally,someshortcomingsmayresultfromthedatagatheringitself,asabiggercrosssectioncouldhaveprovidedmoredifferentiatedresults.Furthermore,experienceworkingwiththesetoolsneedsto be accumulated and analysed, as they may transform throughout use and their application on aday-to-daybasis.Hence,itiscrucialtohavepeopletakepartinhowandwhentheywanttoadaptthesemethods,thatwouldhelpasenseofownershipandpushacceptance.Furthermore,ithastobenotedthatitismostlyindividualsaredrivingthesuccessfulintroductionofLeanStartupthinkingatthemoment,thisthesisbeingonekindofcontributiontothis,insidetheorganisation.However,asalsoinvestigatedfromtheinterviews,alonetheheroiceffortispresumed not to be enough in order to spread the according mindset and tools and bring about change.Hence,awiderinitiativeisplannedinordertoconvinceinternallyandexternally,

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utilisingtheproposedactionpointsandtoolkitasastartingpointtointroducethistoawideraudience,exceedingFuturiceitselfascustomersandcompanyaffiliatesaregatheredequally.ThefocushencehasbeentoidentifythecorebenefitsoftheLeanStartuptoFuturice,inordertocreatealineofargumenttointroducethisonabroaderscaleandtoprovidetoolsandmethodstoempowerpeopleacrosstheorganisationtostartusingtheLeanStartupprinciples.

Inordertomaintainafocalpointthroughoutthethesishowever,thescopehadtobekeptfocusedaswell.Variousperspectivesandanglescouldprovidefurtherinsights,suchasrecruitment,individualskill,salesandleadershipstyle.Asofthiswriting,LeanStartupapproach remains a heated debate amongst scholars and practitioners, which is why this thesis onlytoucheduponhowLeanStartuprelatestoUXandotherrelateddesignpractices(LeanUX,AgileUX)ordiscussindividualmethodsortools,arguedtobeessentialforLeanStartupthinking.

7.2.1 Outcome-specific possible shortcomings: Lean Startup Poster

Generally,thethinkinginthecompanyhastochangeanditdoesrequireaproportionallysignificantchange,asbudget,resourceandsimilardiscussionshaveshown.Convincinginternallyhasturnedouttobecrucialtoasuccessfulintroduction.However,duetotheweightthatdigitalcommunicationchannelshave,itneedstobetakenintothose,hencethelistofrecommendationsarecrucialtoitseffectiveness.Thepostermaynotspeaktoeveryoneequally,asitrepresentsageneralizedviewontheLeanStartupprocessandcertainlylacksfurtherexplanationbyitself,henceitneedstobeclearlycommunicatedaspartofanoverallstrategy.

7.2.2 Outcome-specific possible shortcomings: Lean Startup Roadmap

InvestigatedLeanStartupphilosophyandmethodology,onceadoptedandimplementedittheoreticallyhasthepotentialtoempowerprojectteamstoinnovatethecustomer’sproduct.

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Furthermoreitprovidesvalidationfordailywork,answeringtoaccountabilitychallengestowardsthecustomer,ensuringanexistingcustomerbaseatpointoflaunchoftheservice,henceoptingforahighacceptanceoftheserviceorproduct.Thiscanresultinsignificantstrategicadvantagesasakeystrategicpartnertoitscustomers.Howeverithastobenotedthat,inordertosuccessfullyimplementthiswayofworking,Futuricepresentsanoverallfavourableenvironment,providingthetools,meansandculturetowardsanintroductionofanewprocess,suchasLeanStartup.Especiallytheculturethiscompanyprovidesaresignificantstartingpoint,asitdemonstratesandenhancesFuturice’scorevaluesoflearning,askingforfeedbackandmakingoutstandingsoftware(products).Furthermore,asrecognisedcompany-wide,it’sstrategicpositioningofsellingprocessesratherthanproducts,makestheLeanStartupprocessespeciallysuitableandpromising.

The Lean Startup Roadmap is a general list of steps, that in itself will be in need of iteration andrefinementastheyarepursued.Thereinforcementandsuccessofeachneedstobeconfirmedandmonitored,thoughtheyarenottobeunderstoodasfollowinga‘stage-gatelogic’,meaningstepsmaybetakenindifferentorderasthingsproceedinordertoenablealeanapproach.LimitationsoftheoutlinedstrategyarelinkedtotheChristensen’sdiscoverythatmarketsthatdoesnotexist,cannotbeanalysed,whichholdsalsotruefortheproposedsteps,especiallyinregardstocustomeracceptanceanddemand.

ForFuturice,aroadmaptointroduceLeanStartupthinkingprovidesactionablestepsthatcanbefollowedupandactuallybeimplementedrightaway.Theypresentawaytobridgegapbetweenincrementalandradicalinnovation,andprovidevaluableinsightsincreatingastrategiccompetitiveedge.Itsadoptionshowspromisesinregardstothepursuedkeyaccount strategy, as a successful implementation has the strong promise of deepened strategic partnerships and enhanced business understanding, resulting in the creation of higher quality digitalproductsandservices,withahigherend-customeracceptanceandrateofsuccess.Hencethisishighlyvaluableinputinstrategicdiscussionsofcreatingasustainablecompetitiveadvantageoverdirectandindirectcompetitors.

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7.2.3 Outcome-specific possible shortcomings: Lean Startup Testbed Proposal

Limitationsforfuturice.comwebsiteasatestbedincludetheneededresources,financialandhuman,beingsubstantialandthoughlowlevelsofhierarchywithinthecompanyexist,theyareinneedofapprovalfromhigherlevels.Asatrainingbeditself,itshowspotentialeffectiveness,howeverneedstomeasuredandverified.Theremaybeevenbetterwaysoffacilitatingtrainingwithinthecompanymayyieldbetterresults.However,themeasure(futurice.com)isatangibleone,reachingandaffectingeveryoneinthecompany,whichmakesiteasytohavepeoplecareabouttheoutcome.Furthermore,theactualmeansofsharingtheresultsandexperienceareconsideredtobeascrucialasthetestbeditself.Anotherobviousshortcominghereisthatfinancingafullscaleprojectsconsideredtohaveanevenbiggerimpact,butscopeofthesiswouldnotallowforthiskindofinvestment.Henceahypotheticalroadmapandsuggestionshavebeencreated,withtheTekes-fundedR&Dprojectpossiblybeingapromisingwaytocontinuetheproposal.

How come what we’re learning only comes up at the end – as an excuse?

Eric Ries, 2012

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8. Conclusion

ThisthesissetouttoexaminetheunderlyingprinciplesofthepromisingandbroadlyembracedLeanStartupthinkingandinvestigatetheirapplicabilityinthecontextofaFinnishmedium-sizedITvendor,namelyFuturice.Accordingtothefindings,theprinciplesareapplicable,howeverneedtobeadjustedtomadefitinwithcurrentprocessesfound,suchasleanandagilepractices.

8.1 Conclusions concerning set out research targets

Initially,thisresearchworksetouttodeconstructtheconceptoftheLeanStartupinorderto answer to the question of what principles are underlying this concept and are potentially relevantforamedium-sizedITvendor.TheprinciplesoutlinedbytheLeanStartupareEntrepreneurs are everywhere, Entrepreneurship is management, Validated learning, Innovation Accounting, and Build-Measure-Learn,howeverthelatterthreehavebeenfoundtobeofmostrelevancetoFuturice,astheyprovideactualprocessesthatnotonlycomplementcurrentprocessesinplace,suchasagile,butprovidepartialanswerstotheirshortcomingsbyansweringandexplicitlyvalidatingtodesign(desirability)andbusinessimplications(feasibility)issues,implicitinthesoftwaredevelopment.Thoughtheunderlyingprincipleshavebeenfoundtoessentiallyemploythescientificmethod,theyintroducearangeofconceptssuchastheMVP,totestessentialassumptions,thatareimplicitineveryfeaturebuilt,howeverarefailedtobeaddressedthrough,forinstanceagilepracticealone.Furthermore,theprincipleshavebeenfoundtohelpsteerthroughuncertainty,oftenfacedinforinstanceopen-endedR&Dprojects.

Secondly,thefindingsindicatearangeofenablersandinhibitorswhenintroducingLeanStartupprinciples.Generally,atooradical understanding of the Lean Startup concept and itsempiricalvalidationasaprocess,theunfamiliarity with the processes and tools of the Lean Startup, customersbeingdoorkeepers and a lackofframeworksandmaterialsforsaleshavebeenfoundtobethemaininhibitorsforasuccessfulintroductionofLeanStartupintoFuturice.However,arangeofenablershavebeenidentified,suchasFuturice’sorientationasalearning organisation,

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its familiarity with lean and agile processes, its strategic positioningaskeypartnerandtoolsandprocesses already being usedinsomeforms.

Thirdly,theinvestigatedkeybenefitsoftheLeanStartupprocessfortheempiricalcontextofFuturicehavebeenidentifiedas1.Moving Futurice closer to customer’s business and creating a competitive edge,2.Creating increased accountability towards the customer,3.Yielding potentially higher end-customeracceptanceandvalidationforexistingprocesses,4.Shifting mindsets through accepting learning as the unit of progressand5.Breakingofsilosandincreasedteamresponsibility.TheidentifiedbenefitshavefoundtobevalidnotonlyfortheempiricalcasestudyofFuturice,butareassumedtobeapplicableandbeneficialtoapotentiallymuchwideraudience.

Lastly,forasuccessfulhorizontalandverticalintroductionoftheLeanStartupprinciples,arangeofmanagerialimplicationsderivefromthefindingsofthisresearchwork.Hence,actionable steps outlining a strategic approach to answer to the posed challenge of introducing Lean Startup principles into Futurice, my empirical case study, are presented and include1.KickstartingtheintroductionofLeanStartupbyevangeliststhatactaspointofcontacts,2.CommunicatingofthevalueofLeanStartupthinking,3.Integrating and anchoring Lean Startup concept vertically into the company,4.Learning the underlying methods by accumulating materials and sources andarranginghands-onworkshops,5.Creatingacontinuousandwell-fundedtestbedforexperimentation, 6.Arranginginternalandexternalexpertworkshops,7.Productising the Lean Startup process as part ofthecompany’soffering,8.Sellingleanteamsanddrivingexpertknowledgethroughsharing.Allpresented, actionable steps recognise the potential of the principles outlined by the Lean Startuptodealwithhighdegreesofuncertaintyevenchaoticenvironments,asposedbythecurrenteraofferment,andhighlightstheroleofdesignasadrivertoprovidevalueincustomerprojectsandcustomerrelationships,increasingFuturice’spositionasastrategicpartnerandtosuccessfullydifferentiatethemselvesfromtheircompetition.

To sum it up, in order to enable Futurice’s ambitious transformation from a contractor softwarepartnertoakeystrategicpartnership,thetransformationhastostartfromthe

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company’scorecompetency,developingasmarterandmoreeffectivewayofdeliveringsoftwareandoutstandingproductsandservicestothecustomerandenduser.Futurice’stransformationisdependentonofferingavaluablerangeofprocesses,ofwhichLeanStartupshowsimmensepotentialforFuturice’scustomerstoinnovateradically,asopposedtopurelyincrementally,highlightingthecriticalfindingofthecustomer’skeyroleinthesuccessfulintroductionandacceptanceoftheLeanStartupprocess.Asofthiswritingandbasedonthisresearchwork,thecompanyhastakenactualstepsinordertoprovidebudgetandresourcesforestablishingaphysicaltestbedandadedicated,internalR&Dproject,aswellassetupfirstLeanStartupexpertworkshopsforcustomersandemployees,tobeheldinNovember2012.

Fig. 21: Image of the Lean Startup workshop call and registration page, as found on:http://www.futurice.com/lean-startup/

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8.2 Contribution

Thisthesis’maincontributionlieswithinthefact,thatanempiricalstudyofthiskindhasnotbeendonebefore.DeconstructingtheLeanStartupandmappingitsvalueandapplicabilityoutsidestartupsisconsideredofvaluebeyondthechosenempiricalcasestudyofFuturice,asitssuccessfuladoptionthroughtheoutlinedstrategicactionpointscanyieldacompetitiveedgeforbetter,fasterandsmartermakingsoftwareandbuildingproducts,asmirroredinthehighinterestedidentifiedfromforinstanceFuturice’scustomers’side.

Furthermore,fromanacademicperspective,thisthesiscreatesvaluethroughcontributingtoabetterunderstandingofthemissingcohesionofthefieldsofsoftwaredevelopment,businessdevelopmentanddesigninsoftwaredevelopmentprojects.Byextractingandgatheringmethodsandtools,someexplicitmeanstobridgethisgaphavebeenprovided.Furthermore,itpointsoutdiscrepancybetweenagileandUXdesign,andthevitalroleofdesignintakingdecisionsoneverylevelofanyproductorservice,alsointermsofbusinessmodellingforinstance,furtherhighlightingtheneedforbetterintegrationofdesignanditssignificantroleitplaysindevelopingsuccessfulproductsandservices.

Forthedesignprofession,thethesisunderlinesandhighlightsthevalueofmultilateralexpertiseandmeta-skillsinhighleveldesign,aswellasdesign’scriticalrole1 in strategic decision-makingexceedingpurelyproductandservice-levelrelevantones,extendingtostrategicandtechnicaldecisions,especiallyinenvironmentsofhighdegreesofuncertainty.Itputsdesigninthestrongpositionofdesigningbeyondtheproductandserviceitself,influencinganddefiningtheunderlyingbusinessmodelandstrategy,throughcarefullydesignedvalidated-learningexperiments,aimingatgivingdirectionandshapetotheentireprojectandbusiness.

1 AsI,andotherpractitioners,haveidentifieddesignasadisciplineneededtodesigntherequired experimentsasessentiallymirroringdesigner’scapabilitiesandactivities.

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However,thisthesishasalsoshownthatdesignersactivelyneedtodevelopandlearn,bybreakingoutoftheirsilosandparticipateinforinstancemakingworkingprototypeswiththedeveloperorbythemselves,whichisanecessityforthepromisedrapidpaceoftheLeanStartup.

ItsapplicabilityoutsidethestartupecosystemmakestheLeanStartuprelevanttoamuchwideraudience.Itisassumedthattheoutlinedresultsareapplicabletosimilarsettings,suchasothermedium-sizedITvendors,digitalagencies,andothers,operatinginsimilarcontexts.Thebenefitlieswithintheenhancedefficiencyandrapidspeedgainedbytargetedandwaste-minimisingprocesses,creatinghighlydesirableproductsandservices,thatarefundamentallybased,testedandtiedtocurrentmarketconditionsandanincreasedbusinessunderstanding.ThoughFuturice-specific,theresultspresentedinthisthesisaremainlyoperationalandhencecaneasilybegeneralizedfordifferentcontexts.Theremayarisecertainchallengesfortheadoption,forinstance–duetoFuturice’sorganisationalset-up–asteamsareabletooperateautonomouslytoalargeextend,whichmayposeachallengetolarger-sizedcompaniesjuxtaposingthiskindofsettingwithapotentiallymorehierarchicalstructure.

8.3 Further research

Inordertovalidateandquantifythevaluebroughtaboutbythisthesisandthemeasuresandactionpointspresented,severaldifferentfactorsanddatasetsareconsideredtoproveusefulforfurtherinvestigation.

OnecoulddofurtherresearchbygoingverticalandmoredeeplyintothiscasestudyandfollowtheprogressatFuturicefollowingthestrategicroadmap.However,anotherdirectionforfurtherresearchcouldbeamorehorizontalapproach,inwhichsimilarstudiescouldbecarriedoutindifferentempiricalsettingstocompareandjuxtaposeresults.

Arangeofideasandthoughtshavecomeupduringtheinterviewsofhowtotrainpeoplefrom

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variousbackgroundsonthemethods,however–providedactualdatawastobecollectedandgathered–furtherinvestigationontheeffectivenessoftrainingandadoptingthenecessarytoolsandhowthosemaymodifydependingontheircontextofuse,mayresultinfurtherfruitfulinsights.Additionallytothat,itisregardedvitaltofurtherinvestigatetheLeanStartupeconomicvalueandtoquantifyresults.Anotherinterestingpathforfurtherinvestigationmaybetheunderlyingpromiseoftheoutcomeofmorerelevant,successfulandquality-boostedendproductsandservices.Furthermore,LeanStartuptool-specificinvestigationsareabsolutelynecessary.Forinstanceifcohortandsplittestingwithonlyafewusersreallyprovideaccountabledata,inordertomakeinformeddecisionsonpivotingorperseveringandifthethresholdsmaychangedependingonthecontextualsetting.

Ithastobenoted,thatthechosenapproachforthisthesisisaimingforstrongcontextsensitivity,especiallyinregardstothespecificcompanyinvestigated.Assuch,themeasuresandpresentedactionpointsmayprovelessvaluableandconciseinadifferentsettingorecosystemofanothercompany,howevergeneralacceptanceandapplicabilityispresumed.Furtherresearchmaybeconductedtofurtherinvestigateifimplementingsimilarmeasureinothercontextsandtheprovidedvalue.AsFuturiceitselffallsintothecategoryofamedium-sizedITvendor,furtherresearchforinstancemayinvestigatesimilarapproachesofintroducingandadoptingLeanStartupprinciplesinlarge-sizedcompanies,ITorevenothertangentfieldssuchasdesignagencies,consultanciesandothers.

List of figures Bibliography

9 & 10

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9. List of figures

Fig. 1: page 35 Transcribinginterviewsfromrecordings

Fig. 2: page 35 Mappingcommentstomatrixtocompareandanalyseresults(right),whichcanbefoundfromAppendix.

Fig. 3: page 45 UnderlyingconceptsoftheDTC-lifecycle,asadaptedfromLambeandSpekman(1997),Foster(1986),AndersonandTushman(1990)andUtterback(1994)

Fig. 4: page 49 ImagedepictingChristensen’stheoryondisruptiveversussustainingtechnologies.

Fig. 5: page 52 TheCynefinframeworkaspresentedbyDavidJ.SnowdenandMaryE.Boone(2007),thathelpsleadersdeterminetheprevailingoperativecontexttomakeappropriatechoices.

Fig. 6: page 63IllustrationbyILOVEDUST,depictingApple’scultureofsecrecy.

Fig. 7: page 63Schematicillustration,depictingApple’sorganisationalstructure.

Fig. 8: page 63RossLovegrove’sGOChair,designedin1998-2001andproducedbyBernhardt.

Fig. 9: page 88ImagedepictingFuturice’sleanculture,encouragingemployeestoquestionwhattheyaredoing.

Fig. 10: page 88ImageofaposterfoundinHelsinkioffice,depictingthecompany’svalues.

Fig. 11: page 91Thisismarketingmaterial(selection)oftheFuturicebrand.

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Fig. 12: page 91Futuriceaimsatbeingahighlyvisualbrand:themarketingmaterialiswidelyused.

Fig. 13: page 91Futuricealsoaimsatcreatinganemployeebrand,asshowninthisimage.

Fig. 14: page 97LeanStartupworkshopproposal.

Fig. 15: page 97ImageoftheBuild-Measure-Learnfeedbackloop,asusedinacustomercase.

Fig. 16: page 97ProjectwallinwhichaMVPwasconsidered.

Fig. 17: page 97BusinessModelCanvas,asdevelopedbyAlexanderOsterwalder,utilisedforcustomercasewithcriticalassumptionslist,thatthebusinesscasewasrestingon.

Fig. 18: page 116Imageoftheposter,developedasaninternalcommunicationtoolfortheLeanStartup.

Fig. 19: page 117Image of the strategic road map aiming at introducing Lean Startup principles, as written publiclyonwallforFuturiceemployeestocommentandaddideasoftheirown.

Fig. 20: page 117LeanStartupTestbedproposalconcerningFuturice’sownwebsitewww.futurice.com.

Fig. 21: page 130ImageoftheLeanStartupworkshopcallandregistrationpage,asfoundon:www.futurice.com/lean-startup/

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APPENDIX

Meetings & interviewsProject cases

11 & 12

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11. Meetings & interviews

31.05.2012 ThesisWorkshop11.06.2012 ThesisWorkshop13.06.2012 LeanStartupHelsinkiMeetup10.07.2012 InterviewAlexKluwe(AK),ProjectManager,Futurice10.07.2012 InterviewSebiTaucic(SB),UXandServiceDesign,Futurice11.07.2012 InterviewTeemuTurunen(TT),ServicesDirector,Futurice08.08.2012 InterviewAnniTölli(AT),HeadofMarketing,Futurice09.08.2012 InterviewMathiasCalonius(MC),HeadofConsultancy,Futurice11.08.2012 ThesisWorkshop21.08.2012 InterviewPetriHeiramo(PH),OrganizationalScrumMaster,Futurice23.08.2012 InterviewMattiJylhä(MJ),BusinessDirector,Futurice24.08.2012 InterviewJanneToivola(JT),SeniorServiceDesigner,Futurice28.08.2012 InterviewSuviNumminen(SN),UI&ConceptDesign,Futurice28.08.2012 InterviewTuomasSyrjänen(TS),CEO,Futurice

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AsamediumsizedFinnishITvendor,ithastobenotedthatthepresumptionoftheLeanStartupstartingpointofworkingingreatuncertaintyonlyposesaconditionaltruthtoFuturice.Asacontractorbusiness,Futuricedoesnotholdordevelopanyownproductsatthispointoftime.However,thoughFuturicemaynotprimarilyaimatcreatingdisruptiveinnovations,thecompanydoesdevelopnewservicesthatarenovelfromacustomerandcustomeradoptionpointofview,aswillbeshownthroughthefollowingcases.

12.1 Case 1 - internal system development project

Who:ConfidentialWhat:UXconsultancyoninternalproductsystemWhen:3months,February2012-April2012,ongoingdevelopment

12.1.1 About

Thetaskathandwastoaidthecustomerindevelopingtheirinternalsystem,whichwasarenewedversionoftheexistingsysteminuse,thatfacilitatesemployeestocarryoutadministrativetaskssuchassigningupnewclients.Inordertoextendthecustomer’sproductandserviceoffering,thecustomerexpressedtheneedtonotonlyrenewtheirexistingsystem,butalsotobeabletoselltoolsandmethodstheyhaddevelopedasindividualproductsandproductpackagesthattheirendcustomerscouldusefreelythemselvesonademand/paybasisthroughtheirrenewedsystem.

HavinghadobtainedtheirUXconsultancyfromadifferentcompanypreviously,FuturicewaschosenasanewvendorconcerningtheUXconsultingwork.Thesoftwaredevelopmentwascontinuedwiththeoriginalvendor.Thesystemathandwasacomprehensiveandcomplexsystem,withvariouslayersthathadpartiallybeentakeninuse,complementedbythecontinuoususageoftheoldsystem.Duetotheintenseusageoftheprevioussystemforseveralyears,thecustomerclaimedthattheyknewtheirendcustomers’needsandwants

12. Project cases

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well,however,havingdecidedonanadditionalserviceofferingbysellingtheirproductsdirectlytotheendcustomerstobeusedandanalysedautomatically,providingadditional,morecomprehensive,in-housetestingforfurtherandmoredetailedandtargetedevaluation.Providedthoseunexploredanduntestedusecases,arangeofhypothesiseswerecreated,includingaspectsrelatingtotheunderlyingbusinessandrevenuemodel,pricing,successfulendcustomeracquisitionaswellasconcerningwhattheendproducthadtobe.

Thewaytheprojectwascarriedoutwasthroughcloseandregulardirectmeetingsoccurringtwiceaweek,involvingthecustomer’sPMandtheUXconsultant,whobothwereempoweredtomakedecisionsabouttheendproduct’sfeatures.Furthermore,therewasconstantanddirectcommunicationbetweenallteammembersviaSkype,mailandBasecamp,sharingfiles,generalprogressandassigningtasksathandtooneanother.

Giventhestructureandbusinessobjectivefortheproject,thesmalldevelopmentteamalmostbehavedlikeastartup.Asthecustomerwantedtooffertoolsalsofortheirendcustomer,theywerelaunchingtheirownproduct,thatwasbasedonabusinessthathadtobetested–henceassumptionswereplentiful.

12.1.2 Challenges / Opportunities for Lean Startup

ChallengesTheprojectitselfcanbedescribedasdiscontinuous,ahandoverbasedonprevious’company’sUXwork.Furthermore,despiteitswide-spanningserviceandproductoffering,FuturicewasmerelycontractedforUXconsultancywork,compromisingatrulyholisticwayofworking.

OpportunitiesThoughanestablishedenterprise,thecustomerwascreatinganewproductofferingfortheirendcustomers.Theywerelaunchinganewproductandhaveanestablishedcustomerbase,thatisidealfortesting.Inretrospective,theprojectteamwasindeedbuildingaMVP,withthe

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aimofvalidatingtheunderlyingbusinesshypothesis,whetherthecustomerswouldactuallysignupandpayforthis.Thoughthecustomerwasnotcreatingacompletelynewmarket,theenteredmarketitselfwasnewtothecustomer,posingarangeofhypothesesforthesuccessofthe product itself:

1.Theproductdevelopedandbuildiswhatpeopleneed. 2.Theproductpricingisappropriate. 3.Theunderlyingbusinessmodelisright(subscription-basedservicesandpackages) 4.Theuseracquisitionflowisrightanduserconversionrateswillpayoff. 5.Thetargetedcustomersarethesameastheirexistingcustomers.

Thefactthatthesystemitselfwasbeingtakeninuseincrementallyaswellasthealreadyestablishedcustomerbaseusingtheservice,offeredanidealgroundforsplittestingandcohorttesting,forinstancevalidatingvariousloginmechanisms.Theidentifiedhypothesisescanbeidentifiedandvalidatedthroughexperimentation,thatsofarhadprimarilybeenbasedonmerebenchmarkingsimilarservicesandofferings.

12.2 CASE 2: Flow Festival 2012 mobile application

Who:Nokia,FIWhat:(free)Marketinghtml5webappforiphone,android,WP7forFlowFestival2012When:2months,April2012-May2012

12.2.1 About

Providingthemainsponsorshipforthe2012Helsinki-basedmusicfestival‘FLOW’,NokiaaskedFuturicetoconceptandimplementacross-platform,html5-basedwebapp,primarilyfulfillingmarketingpurposes,allowingforbasicfunctionality,suchasbrowsingfeaturedartists,creatingacustomtimetableaswellasinteractwiththefestivalmapamongstothers,withits

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overalllookandfeelcloselyfollowingtheexistingCIofthefestival.

Allowingforcross-platformusageincludingiOs,AndroidandWP7,broughtaboutheavydesignaswellastechnicalrestrictions,duetohtml5currentlyremainingunderdevelopment.However,therewaspromisingpotentialtocreatetheappwithareasonablebudget,byutilisingnativewrappers.Though,apreviousiOsapplicationhadbeendesignedanddistributed,adistancedandfreshapproachwasseeked,focussingontheannuallyslightlyadaptedCIaswellasthefestival’sprogrammetakingthecentrestageandactingasastartingpointfortheconcept.

Duetotheprojectpresentingandinvolvingvariousstakeholders,includingthecustomerPOfromNokia’sside,thefestivalorganisationteam,theirdesignagencyathandrelatingtoCIaspects,aswellasFuturice’sprojectteaminitself-–comprisedofaleaddesigner,leaddeveloperandPM–closecollaborationwasidentifiedcrucialfortheproject’soverallsuccess.Hence,weeklydirectmeetingsforpresentingtheconcept,wireframesandworkingprototypes(designandimplementationtakingoffsimultaneously)withthecustomerwerearranged,occasionallyalsoinvolvingtheeventorganiserstodiscusscontentandCI-relatedaspects.Inaddition, constant communication was ensured through emails, drafts and builds, being sent weeklytoallmainstakeholders.


ChallengesDuetothemarketingfocusoftheproject,itcanbearguedthattheprerequisiteofworkingingreatuncertaintyasdefinedbyRies(2011)didnotapply.Astherewasnobusinessmodelthatneededtobetestedandthefactthatthecustomerbasewasarguablybewellknownduetobeingalmostcongruenttoactualfestivalvisitors,littleassumptionsneededvalidation.

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OpportunitiesThetechnicalframework,asintendedtobere-usedanditeratedagainnextyearandforpotentiallyvariousotherevents,bearstheopportunityforvalidationofitseffectiveness.

12.3 Case 3: .Windows 8 application

Who:ConfidentialWhat:Berlin-basedstartup,applicationWindows8When:3weeks,June2012

12.3.1 About

ThecustomeraskedFuturicetodevelopandimplementaWindows8application.Thecustomeralreadyhadusedanothervendortodesignandimplementtheirwebsite,iphoneandipadapplication.Duetotheirspecificexpertise,FuturicewasaskedtoimplementaWindows8application,forwhichtheydeliveredaready-madeconcept.Basedonthatconcept,theyaskedforaclickableprototype,todiscusstheinteractiondesign,beforethedecisionforimplementationwasmade.


ChallengesThecustomerdidnotwantFuturicetochallengetheirconcept,butratheraskedforstraightimplementation.Thoughtherewerearangeofassumptionsconnectedtoportingavalidatedmodelontoanovelplatform,novalidationwasseekedfor,asthecustomerbeingafairlyyoungstartupthemselves,hadlimitedresourcesandtoolsavailable.

OpportunitiesThelevelofuncertaintydealtwithintheprojectwaslimited,thoughtheamountofassumptionswereenormous.Asthecustomerwasaimingatenteringahithertonovelmarket

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tothem,validationconcerningpreviouslysuccessfulstrategieswouldhavebeenvaluable.Acustomisedapproachcouldpotentiallyhaveyieldedamoresuccessfulproductandserviceoffering,specifictothetargetedplatformanditsusers.

12.4 Summary

TheprojectscarriedoutatFuturice,typicallyareofverydifferentnature,rangingfromsimplemarketingapplicationstocomplexenterprisesystems.ThechallengesandopportunitiesforapplyingtheLeanStartupprocesshaveshowntobedecisivelydeterminedbythecustomer.Furthermore,thepotentialbenefitvalidation-basedlearningcanbring,isassumedtobehighlyvaluable,asassumptionsarebeinglistedandtested,ratherthanmerelyacknowledgedbutdisregarded.

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