“The Lean Startup,” a book by Eric Ries that has become a bible for many Silicon Valley innovators, is finding a growing audience among entrepreneurs working in emerging markets.
“Lean Startup is about creating a new institution in extreme conditions of chaos and uncertainty,” Rocio Perez Ochoa, who presented on her work with women’s groups in Western Kenya at the Lean Startup Conference in San Francisco, California, told Devex. “Anything you want to do in a new market is by definition a startup. And how more uncertain can you get than a market that doesn’t exist? I can’t find a better definition of uncertainty and chaos.”
Bidhaa Sasa, which develops distribution channels to deliver products to families in rural Kenya, is built around Lean Startup principles like eliminating uncertainty, working smarter not harder, and developing a minimum viable product. Perez Ochoa spoke with Devex about applications for and limitations of this methodology in developing countries. Here are her tips for other social entrepreneurs.
1. Know the limits of the Lean Startup approach
Perez Ochoa told Devex she cannot apply principles like speed and agility in Kenya as easily as some of her counterparts at the conference launching new ventures in Silicon Valley.
“In my world, speed is not a good thing to have. It confuses people. And you need to be careful how you introduce changes,” she said.
As Perez Ochoa built Bidhaa Sasa, she connected with other emerging market entrepreneurs looking to grow their businesses “with maximum acceleration” by participating in +Acumen’s Lean Startup Principles for Social Impact online course.
Amy Ahearn, Senior Innovation Associate at Acumen, told Devex the course “focuses on examples of social enterprises that have successfully run experiments, pivoted, and remained lean while ethically serving their customers and prioritizing social impact.”
The +Acumen course underlines how the Lean Startup methodology is relevant to global development as well as product development. It explains that in the traditional social sector, the pace is measured, failure is an exception, and the fix is to fire people, pull funding, or cover up problems in donor reports. In the lean social sector, on the other hand, the pace is quick, failure is expected, and the fix is to iterate on ideas and pivot on those that don’t work.
But Ahearn explained that a key distinction between Lean Startup methodologies in the social sector versus the startup sector lies in the experimentation phase, particularly when it comes to products or services that can dramatically improve the lives of the poor.
“It is important to be transparent about what you are testing,” she said. “If you’re an entrepreneur entering a new setting, it’s important to have local intermediaries to help set expectations appropriately among your potential customers. If you feel like your interviews and experiments will surface pains or problems that your product or service will not aim to address, it is also important to be able to refer people to other resources that might be able to help.”
Ahearn commended Perez Ochoa for hesitating to bring on too many Kenyan employees too quickly for fear that pivoting may mean laying them off. She explained that hiring and firing quickly does not have the same consequences in Silicon Valley compared to low income communities where employment is more central to the social impact objective of the company.
“Experimentation means you don’t know what you’re doing until you do it,” Perez Ochoa said. “You don’t know what will work well. And often it involves people. And I’m really not happy, and maybe uncomfortable with, experimenting with staff.”
2. Design businesses around customers instead of products
“The Lean Startup” describes every startup as an attempt to answer a question. Ries says that question should not be whether the product can be built but rather whether it should be built.
Perez Ochoa said she sees too many organizations, and particularly those sending products from developed countries to developing countries, come up with new products before understanding the needs of their customers then designing for those needs. She founded Bidhaa Sasa, which means “Products Now” in Swahili, to get goods to those who need them, in response to a distribution bottleneck resulting from a growing number of companies developing products from water filters to clean cookstoves in East Africa.
Lean Startups see better results when they prioritize the input of the customer over the intuition of the founder. That is why more and more organizations like IDEO, built around design thinking and adaptive innovation, are finding they can add value in helping global startups address needs in emerging markets. It is why the +Acumen course points to the Lean Startup methodology as a way the social sector can avoid wasting time and effort. And it is why Perez Ochoa and her co-founder spent six months getting to know their customers in order to develop a company centered around clients and responsive to their needs.
“She has gained unique and surprising insights about her customers by actually giving them products to test and conducting numerous interviews to learn more about their willingness to pay and likelihood of adopting new products,” Ahearn said of Perez Ochoa.
The emphasis of the Lean Startup methodology on customer discovery is all the more important in global development work, when there is often a huge gap in experience and understanding between producers in developed countries and clients in emerging markets, Perez Ochoa said.
3. Pursue quick rounds of experimentation
The first reading for students in the +Acumen Lean Startup course explains how Jacqueline Novogratz continues to follow the advice a mentor gave her when she was founding Acumen: “just start” rather than waiting for perfection.
As Ries puts it in The Lean Startup, developing a Minimum Viable Product is key to accelerating the build-measure-learn feedback loop.
Interviews with 60 rural families led Perez Ochoa’s team to the Bidhaa Sasa MVP: a solar energy system, a lamp, a radio, a phone, and an efficient cookstove. The team also offers payment plans, makes home deliveries and installations, educates users, and manages warranties. “We analysed the data from both surveys and we drastically narrowed down the list of features of our initial MVP,” Perez Ochoa said at the conference. “We then established ourselves in a small town in Western Kenya and moved to customer validation to test our service MVP with earlyvangelists.”
As the Bidhaa Sasa team works to find a repeatable and scalable sales process, their next challenge is to expand their reach from early adopters and risk takers to everyone else. Perez Ochoa said she and her team are currently focused on the Lean Startup concept of “validated learning.” This means they are specifying goals, deciding on metrics, running tests, analyzing the effects, and then improving, before repeating the process.
“There are a lot of people out there with good intentions, who are looking to change the world, but they don’t have a methodology,” Perez Ochoa said.
She emphasized that, no matter the methodology, startups that follow a set of principles, and share their experiences with a wider community, have a greater chance of success.