Posted on February 17, 2017 @ 08:03:00 AM by Paul Meagher
This is the sixth blog in my anticipated 13 blog series dedicated to each chapter of Eric Ries'
seminal book The Lean Startup (2011).
The fifth chapter is titled "Leap". It is the first of four chapters in Part Two of the book (the "Steer" chapters).
To understand the importance of the "Leap" concept we need to downplay one immediate association you might have; namely, the idea
that you have to screw up your courage and launch your business. The "Leap" chapter is not a motivational chapter on the courage required to be an entrepreneur. Rather "Leap" is about identifying the "Leap of Faith" assumptions that are inherent in starting any innovative business. You are betting that people are going to respond positively to your value proposition, that they will pay you for your value proposition, that the value they are willing to pay for it is more than sufficient to justify the effort to deliver it. As a startup you don't know if the answers to any of these questions are true.
The concept of "Leap" is not about "just doing it" and seeing what happens. Rather, you have to strategically figure out where
you should attempt to leap to first. In my blog on the excellent book Getting to Plan B: Breaking Through to a Better Business Model (2009) by John Mullins and Randy Komisar, the idea of engaging in ongoing testing of leap of faith assumptions is central to how they propose that you will find a better business model. For them, the Plan A business model is only there to help you identify the "leaps of faith" in your business model and consequently what business assumptions you need to test first. The result is generally Plan B (or C, or D, etc.). The objective is to get to the Plan B that ultimately works as quickly and efficiently as possible.
An example of testing leap-of-faith assumptions comes from my own experience in trying to start a farm mini-winery. The first major leap of faith assumption that I needed to test was whether I could grow viable wine grapes in this northern climate. There is no point creating a detailed business plan for the farm mini-winery until this foundational
assumption is answered in the affirmative. I would like to say that it is a clear affirmative but after 5 years of growing I still have alot to learn about keeping grape vines alive and thriving. The vineyard has reached two acres and now the challenge is to improve the quality and density of vines on these two acres.
I harvested grapes last year and this will be my second year making wine from them. The first year, I wasn't as careful about controlling
the environmental conditions of my wine and produced a wine that was not very drinkable. So this year, in an effort to test another major leap of faith assumption - that I can produce a drinkable wine from my grapes - I built a fermentation room in my
garage so that I could better assess the quality of the wine I might produce. I tried to perform all the wine making steps when it was appropriate to do so, kept my wine topped up and sealed to prevent oxygen from spoiling the wine, managed sulfite levels so the wine will keep better, etc... I'll be doing some tasting in the next month to see if I have a drinkable red wine (most of my wine is red until more of my white grapes mature).
This idea of testing your most important leap of faith assumptions first is something that many entrepreneurs do already, but it is useful to have a language for talking about this process so we can formalize it a bit more in the form of dashboards used to measure and test the leaps of faith that our business model implies. If you verify a leap of faith assumption, you should double down and go in that direction; if you fail to verify a leap of faith assumption then you need to make either a smaller course correction or a major pivot. A successful company is one that has verified a series of leap of faith assumptions. Each verification becomes the vantage point from which you can search for the next leap of faith assumption you might test to grow your business further.
Even successful businesses will find the need to keep making leaps to improve their business model (or keep it from going stale). This is
why I cautioned against viewing the "leap" concept as a motivational concept imploring you to start your business today. It is more of an analytical framework to think about how you might hone in on a successful business model or expand upon your current one.
Eric Reis chapter on "Leap" owes alot to the "Getting to Plan B" book which is why I have focused on that book to discuss what the significance of the "Leap" concept. I encourage you to watch this video of Randy Komisar explaining role of "Leaps" in guiding startups towards better business models.
I do want to leave Eric with the last word. For Eric, a Leap is a component of the Build-Measure-Learn feedback loop that he argues is critical to "Steering" a startup towards success. A leap in his framework is driven by what you need to learn about the most:
The Lean Startup method builds capital-efficient companies because it allows startups to recognize that it's time to pivot sooner, creating less
waste of time and money. Although we write the feedback loop as Build-Measure-Learn because the activities happen in that order, our planning really works in the reverse order: we figure out what we need to learn, use innovation accounting to figure out what we need to measure to know if we are gaining validated learning, and then figure out what product we need to build to run that experiment and get that measurement. ~p 78.
If you want to maximize validated learning in your startup you need to test the most critical leap(s) of faith first by building something to test the assumption(s) and measuring the responses to it (Build-Measure-Learn).