Sunday, November 7, 2021

Our Business Theory Matters

(First published in the Business section of the Jamaica Monitor October 31, 2021) 

I am writing this as a reflection on The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by tech investor and serial entrepreneur Eric Reis. The book was initially published in 2011, and it subsequently spawned what is known as the lean movement. Grounded in consumer feedback, the Lean Startup Method advocates an iterative experimental development of products and services to guard against the inefficient use of capital while it guides innovators and founders to a profitable business model. As The Wharton School associate professor of management Ethan Mollick wrote in a Harvard Business Review piece in 2019 “The Lean Startup approach was an instant hit in Silicon Valley, as startups embraced this new experimental ethos.” He also noted that it quickly became a mainstay of startup accelerators and entrepreneurship classes everywhere. As always, my thinking after encountering these books is what are the lessons and how can they apply to the current Jamaican business context, and how does it feed into what Prime Minister Mia Mottley calls the Atlantic Destiny. I see this, particularly in the broad span of entertainment - which includes media and technology - cultural and creative enterprises. Have we included any element of this operating in our business models? 

Image Source: Rodnae Productions, Jamaica Monitor

The Lean Startup, as articulated by Reis, is meant to be a scientific approach to creating and managing startups. It takes its inspiration from the manufacturing methods pioneered by the Toyota Motor Company of Japan, which used those methods to rise to supremacy in the global auto market. Often referred to as the Toyota Production System, these methods have been studied by academics and entrepreneurs whose goals are to find ways of improving production, improving sales, and increasing profits. Lean Manufacturing, as we now know these innovations today, has given birth to the idea of lean thinking, and now Reis’s novel application to the context of the startup. Ideas, then, as Reis demonstrates, are adaptable, and it is for us to decide how we will adapt them. 

The argument Reis makes in his book for the Lean Startup Method is compelling, and who knows if any Jamaican startups have in recent times entertained these ideas. The thrust of the method gives a lot of credence to engaging with your customer, finding out what they want, and giving it to them as they want it. Given the experience in the US and specific experiments in Italy on the application of the method, it appears that the Lean Startup Method does improve the rates of startup success. Not all is perfect, however, and Mollick in his piece titled, “What the Lean Startup Method Gets Right and Wrong” helps us by pointing out two potential weaknesses with the method. The first is that it may stymie truly novel innovations because customers often dislike truly innovative ideas at first, and the second is the method does not allow you to ask, “what is your hypothesis about the world based on your unique knowledge and beliefs?” What is it about your idea that makes you special? Mollick asks, therefore, how do we hold on to the good aspects of the method and let go of the bad? 

Image Source: Luis Daniel Fonseca

This discussion is one on business strategy, and strategy is a key determinant in Jamaica’s success in the global marketplace. It is in this context therefore that Mollick’s second point crosses with a theme in some of my earlier writings in this medium where I argue for a theory that guides our own business practice. We ought to have the exploration of a set of ideas that guide how we navigate this global context. I am of the view that given our own historical circumstances that the evolution of a theory of business in our space should not be left to chance. 

In his article, Mollick points us to a 2018 Harvard Business Review piece titled, “Strategy for Startups” by Joshua Gans, Erin L. Scott, and Scott Stern that draws on corporate strategy research to make the case that founders should start with a “strategy - a theory about why your company is going to win”, which then informs the choices the founders make in building their business. As Mollick suggests, this is an expansion upon the Lean Method, which he thinks has the potential to better the success rate of evidence-based startups. This I hope is our objective in Jamaica as well, to better the success rate of our new businesses. My question, therefore, is should we not also consider what is our theory around our own business practices? 

As we seek to encourage the creation and expansion of innovative entertainment, cultural and creative businesses, what processes, or methods can we adapt to lead us along the route of successful commercialization? Do we just wing it - “just do it” as Nike says - or are we going to devise, or perhaps uncover given some of our entertainment business successes, a replicable and efficient method that works for us? The Lean Method has been taken on in many countries, and could it be that the method could be improved with our own insights and used in helping some of our newer entertainment, culture, and creative entrepreneurs succeed. I leave it to our academics, our think tanks, and business associations to engage these issues. One love!

Kam-Au Amen has several years of combined industry experience across the areas of business management, brand licensing, media production, and eCommerce. He is the conceptualizer and first coordinator of the pioneering BA in Entertainment and Cultural Enterprise Management at the University of the West Indies (UWI), Mona.