Combining big ideas and lean development practices

Lots of Forward Partners portfolio companies have used lean development practices to great effect (many of them with our assistance) and all of them are pursuing big and ambitious projects (defined as targeting £100m-1bn+ exits). Hence it’s been troubling me that for some people lean methodologies have become synonymous with small ideas that offer only incremental improvement over the status quo.

I wrote a little on this topic last week in The importance of intent and the danger of incremental design.

With more thinking, more reading, and more discussions since then I am coming to the conclusion that people are confusing the importance/significance of the idea with the way that the idea is tested and developed.

Screen Shot 2015-06-09 at 10.17.07

The two by two matrix above illustrates that the scale of the idea and the methodology used to develop and test that idea are independent. Big or small ideas can both be developed using lean approaches or using a traditional ‘plan then build’ approach. I’ve highlighted the top right quadrant because big ideas that can be efficiently tested are what most investors are after.

An important point which is often missed is that lean/iterative approaches to developing ideas aren’t necessarily cheap. They are just the most efficient way of testing the idea. By way of example – Elon Musk’s Hyperloop is a big idea that could be tested iteratively by identifying the most important assumptions and testing them one after the other. First up might be to build a 50% scale demo to test whether the air cushion technology works and can be built cost effectively. Then second up might be a single route line from San Francisco to LA to test whether consumers will use the service and at what price point. After that a network might be rolled out nationally. I describe this overly simple to plan to make the contrast with going straight to the final phase of building a full scale national service.

In practice nobody would go straight from idea to national rollout, so this example makes it clear that all projects are subject to some level of iteration in their development. The point of lean/iterative development methodologies is to be disciplined about always identifying the most important assumptions and testing them as cost effectively as possible. That works for big ideas where the tests can be expensive, as well as big ideas where the tests can be cheap.