October 2020 | ISE Magazine 37
Traditional management is still widely adopted
throughout organizations today despite of their na-
ture and size. In this kind of management, a great
deal of resources in the form of time and cash are
spent in the planning phase of a product or service
before the first launch.
This method has provided significant results for companies
under stable scenarios – where the market presents a constant
and predictable behavior with time in terms of prices, de-
mands and competitors – and when there is a great amount of
historical data. Under unstable circumstances and new mar-
kets, however, traditional management does not present sat-
isfactory results. In fact, it can create a great amount of waste.
The lean startup method was created by Eric Ries in his
book, The Lean Startup 2011 as an alternative to traditional
management. In his own words, lean startup consists of “the
application of lean thinking to the process of innovation,” or a
method “characterized by an extremely fast cycle time, a focus
on what customers want (without asking them), and a scien-
tific approach to making decisions.” The idea of lean startup
is to perform simpler and faster experiments by creating a
minimal viable product (MVP) instead of asking customers by
conducting surveys. In fact, customers usually are not aware
of their true needs and desires, especially when the product or
service is an innovation.
The lean startup favors experimentation over detailed or
elaborate planning, customer feedback over intuition and it-
erative design over traditional “big design up front” develop-
ment (“Why the Lean Start-Up Changes Everything,” Steve
Blank, 2013) with the promise of accelerating development
processes and new businesses. The experiments provide in-
sights on the product that could not be obtained via survey or
by talking to customers (Ries).
The origins of lean startup are based not only on the lean
manufacturing principles of Taiichi Ohno’s Toyota Production
System (1988), but also on the customer development con-
cepts (The Startup Owner’s Manual: The Step-By-Step Guide for
Building a Great Company, Steve Blank and Bob Dorf, 2012).
A historical literature review on lean startup and on other al-
ternative business model validation methods is found in “Lean
Startup: A Comprehensive Historical Review” by Rafael
Fazzi Bortolini, Marcelo Nogueira Cortimiglia and Antonio
Ghezzi (2018).
The five principles of lean startup include:
1. Entrepreneurs are everywhere.
2. Entrepreneurship is management.
3. Validated learning.
4. Build-measure-learn.
5. Innovation accounting.
Although lean startup is primarily focused on startup busi-
nesses, this method can be applied in different kinds of enter-
prises, including large companies (“Lean Internal Startups for
Software Product Innovation in Large Companies: Enablers
and Inhibitors,” Henry Edison, Nina M. Smørsgård, Xiaofeng
Wang and Pekka Abrahamsson, 2018). Even though the lean
startup has been gaining widespread popularity over the past
few years (“The Influence of the Lean Startup Methodology
on Entrepreneur-Coach Relationships in the Context of a
Startup Accelerator,” Yashar Mansoori, Tomas Karlsson and
Mats Lundqvist, 2019), this methodology still suffers from
limited theoretical bases and operational issues that hinder its
adoption (“Digital Startups and the Adoption and Implemen-
tation of Lean Startup Approaches,” Antonio Ghezzi, 2019).
Within this context, this article aims to start an analysis
about the pros and cons of the lean startup method and also to
propose an alternative to this method called operational excel-
lence startup, or OPEXS.
Some pros and cons of lean startup
Although the lean startup is a relatively new methodology, it
has emerged in a short time due to Ries’ popular books that
provide an easy-to-follow approach for entrepreneurs to create
radically successful businesses by using continuous innovation.
However, Ries also states in his book that, “those who look
to adopt the lean startup as a defined set of steps or tactic will
not succeed ... ultimately, the lean startup is a framework, not
a blueprint of steps to follow.”
In fact, lean startup clearly presents some pros and cons
mainly due to the fact that it is not a complete framework, as
presented by its very creator. The main pros and cons, which
were gathered by startup practitioners and researchers, are pre-
sented in Figure 1 (on Page 38).
Although there is a general understanding that there is a
direct relationship between entrepreneurship, innovation and
successful companies (Innovation and Entrepreneurship, Peter
Drucker, 2006), the question is whether this also applies for
startups. Research on 1,165 Finnish startups surveyed shortly
after their entry into the market, Ari Hyytinen, Mika Paja-
rinen and Petri Rouvinen (2015) found that an innovative
approach is negatively associated with startups’ subsequent
survival. This effect is magnified by entrepreneurs’ greater ap-
petite for risk.
A core principle of the lean startup is the minimum viable
product as a means to collect validated data by introducing a
new version of a product (Ries, 2011). The concept behind
this is beta testing, a technique to release software that is not
finished in order to identify missing and erroneous require-
ments (“Online Experimentation at Microsoft,” Ron Kohavi,
Thomas Crook, Roger Longbotham, Brian Frasca, Randy
Henne, Luan L. Ferres and Tamir Melamed, 2009). Although
companies like Facebook and Microsoft use this technique, for
a startup there is the risk of imitation by a competitor (“Ex-
T
38 ISE Magazine | www.iise.org/ISEmagazine
OPEX startup as an alternative to the lean startup method
perimentation, Learning and Appropriability in Early-Stage
Ventures, Andrea Contigiani,” 2019) due to its scale. What
works for companies like Facebook and Microsoft does not
necessarily have to work for startups.
Lean startups use a “get out of the building” approach
called customer development to test their hypotheses (Blank,
2013). However we know that new products have to mature
and diffuse over time to get a momentum to spread through
FIGURE 1
Weighing the benefits
Some pros and cons of the lean startup method.
October 2020 | ISE Magazine 39
a specific group or social system (“Diffusion of Innovations,”
E.M. Rogers, 1962). Novelty is even often disliked by cus-
tomers (“Disruptive Innovation for Social Change,” Clay-
ton M. Christensen, Heiner Baumann, Rudy Ruggles and
Thomas M. Sadtler, 2006).
Based on research on 250 teams that participated in an
American clean-tech accelerator program over 10 years, it was
found that having a strong strategy is more important than
conducting a tremendous number of market tests (“The Lim-
its of the Lean Startup Method,” Ted Ladd, 2016). Instead of
direct targeting customers, it could be more useful to use big
data in combination with the lean startup (“Combining Big
Data and Lean Startup Methods for Business Model Evolu-
tion, Steven H. Seggie, Emre Soyer and Koen H. Pauwels,
2017).
While the first step in lean is to identify what is value for
the customer (Lean Thinking – Banish Waste and Create Wealth
in Your Corporation, James P. Womack and Daniel T. Jones,
1997), in innovation the customer needs time to get used to
a new product. Seeking validation for breakthrough ideas can
be hard when using customers.
In 2019, authors Arnaldo Camuffo, Alessandro Cordova,
Alfonso Gambardella and Chiara Spina (“A Scientific Ap-
proach to Entrepreneurial Decision Making: Evidence From
a Randomized Control Trial,”) conducted an experiment on
116 Italian startups, with one group being trained in conduct-
ing rigorous hypothesis testing and the other group following
their intuitions on how to assess their ideas. The group that
conducted the scientific approach had the better results. But
could an entrepreneur also be a scientist?
Entrepreneurs can be differentiated from nonentrepreneurs
on the basis of intention and they are more intuitive in their
cognitive style than the general population (“Intuition and
Entrepreneurial Behavior,” Christopher W. Allinson, Eliza-
beth and John Hayes, 2000). Scientists however are data-
driven and fact-based. This seems to be a contradiction to the
natural intuitive decision-making of the entrepreneur.
Another contradiction in the experimentation of the lean
startup are the lean practices which are applied. Lean is about
asking the customer, validating in the design and working
closely together. One of the key concepts in lean manage-
ment is kaizen, or continuous improvement. Kaizen is about
incremental change. Radical change however from the
Japanese perspective is not about kaizen, but about kaikaku
(“Kaikaku-Radical Improvement in Production,” Daniel
Gåsvaer and Jens von Axelson, 2012). Understanding Toyota
and its success is not only about the search for the better way
by continuous improvement but also about understanding
the contradictions in incremental change and radical change
(Extreme Toyota: Radical Contradictions That Drive Success at the
World’s Best Manufacturer, Emi Osono, Norihiko Shimizu and
Hirotaka Takeuchi, 2008).
Author lists lean startup
misconceptions
Consultant Eric Ries is author of
the 2011 book, The Lean Startup:
How Today’s Entrepreneurs Use
Continuous Innovation to Create
Radically Successful Businesses.
The concept is based on rapid
experimentation, shorter production
development times and determining
what customers really want.
Yet in an interview with Zach
Ferres of entrepreneur.com in 2017, Ries also offered four
misconceptions about lean startup that businesses can fall into:
Lean means you’re cheap or not thinking big. Ries
said the first generation of a product, termed a “minimum viable
product,” is a way to test innovation by measuring and learning
early in the development process, saving time and resources.
Even if customers aren’t sure what they want, testing different
ideas to gauge their interest and goals can lead to better ideas.
The lean world doesn’t require venture capital. Even
if resources are saved by eliminating waste in the development
process, companies will still need capital to invest in the long
run. Such a process can still be attractive to investors, though,
based on reduced risk and burn rates.
Lean startups embrace failure. While stumbles along
the way are considered part of the process, the key is to maintain
a quick pace to develop new ideas. If a concept falls short, a
new one should be formed to take its place immediately while
learning from what didn’t work.
A lean approach isn’t beneficial to an established
business. The idea that lean startup is only for nascent
companies willing to throw ideas at the wall isn’t valid, Ries said.
Even long-term companies where the leaders wear suits instead
of jeans can employ an experimental approach to new product
development.
40 ISE Magazine | www.iise.org/ISEmagazine
OPEX startup as an alternative to the lean startup method
The theoretical grounding for the lean startup is thin and
mostly based on lean best practices and the customer devel-
opment methodology. In a comparative study on the impact
of the lean startup approach versus a traditional business plan
on mobile startups performance, it was clear that the startups
were much quicker than the ones with the traditional busi-
ness approach. However, the question is not whether who was
capable of introducing a product first. The question will be
if the product will turn from a question mark to a star in the
growth-share matrix (“The Product Portfolio: Growth Share
Matrix of the Boston Consulting Group,” Bruce Henderson,
1979).
Alternative to lean startup
As an alternative to the lean startup method, we propose the
operational excellence startup method. Developed further
from the lean startup, the OPEX startup method includes
some key tools and concepts from other operational excellence
methodologies to address some of its limitations. One refers to
the lack of scientific knowledge regarding the experimenta-
tion, which includes the hypothesis formulation, the design
of the experiments and the confirmation of hypothesis. The
authors would also suggest some additional elements to the
build-measure-learn cycle proposed by Ries can be consid-
ered, including:
Build: Lean startup is more focused on collecting a prelimi-
nary voice of the customer in order to build an MVP in the
shortest cycle time possible and after presenting to customers.
Depending on the nature of the product or service, using a
“good-enough-to-move-on” approach can be extremely dan-
gerous. In the automotive sector, for example, robust design
is vastly used in order to identify up front the best ranges of
operation for the design parameters to minimize the impact
of noise parameters that could impact the output performance
of the product, especially in the hands of customers. Ries ap-
parently did not consider these scenarios when talking about
minimum viable product.
Measure: Design for manufacturability, design for reli-
ability, design for assembly, design for manufacturing, design
for environment, etc., (DFX) can be applied in order to avoid
high cost on corrective and containment actions when a prod-
uct or service is presented to the customer even as a pilot or a
preliminary version. The closer to the customers, the higher
the cost-to-fix a quality problem.
W. Edwards Deming stated in one of his seminal keynote
talks that it is more expensive to fix a problem when it is in the
customer’s hands. At the same time, it is least costly if we can
design an integrated management system that can prevent prob-
lems in the first place. This requires long-term strategic think-
ing and a commitment of leadership for quality and designing
quality into products right the first time. Ries did not talk about
these tools addressed above when talking about MVP.
Learn: Well-recognized techniques such as failure mode
and effects analysis (FMEA) can provide a more accurate di-
agnosis in terms of potential risks associated with the product
or service that came out of an innovation or continuous im-
provement journey. Moreover, research has shown that design
FMEA is more effective and produces superior results rather
than process FMEA. The severity of an engine problem on an
airplane is different from a code that did not run properly on
a mobile app. FMEA can stratify those scenarios and propose
different approaches for each of them.
Finally, there was no mention of organizational learning in
Ries’ work, which is necessary to support the implementa-
tion of continuous improvement. Organizations cannot build
a culture of continuous improvement unless they incorporate
organizational learning as a core concept around it.
Jiju Antony is a professor of quality management and a lean Six Sig-
ma master black belt in Edinburgh Business School at Heriot-Watt
University, Edinburgh, UK. He has over 25 years of academic and
industrial experience on various continuous improvement and process
excellence methodologies within manufacturing, service and public sec-
tor organizations. He holds a master’s degree in industrial engineering
and a Ph.D. in quality management. He has published more than
400 journal and conference papers and is author and co-author of 10
textbooks on quality and operational excellence-related topics. Contact
him at J.Antony@ hw.ac.uk.
Alexandre Fonseca Torres is a professor at Centro de Ensino Supe-
rior em Gestão, Tecnologia e Educação. He has a bachelor’s degree in
industrial engineering and a master’s degree in industrial engineering
from the Federal University of Itajubá (UNIFEI). He is a Ph.D.
student in industrial engineering at UNIFEI. His research areas are
design of experiments applied in the service industry, multi-objective
optimization and stochastic programming. Contact him at alexandre
fonsecatorres@gmail.com.
Marcelo Machado Fernandes is an ASQ Certified MBB with 20
years of experience in continuous improvement for manufacturing and
service industries. He holds a Ph.D. and a master’s degree in indus-
trial engineering with research focused in operational excellence-lean Six
Sigma. He has trained more than 5,000 people from more than 100
different countries and mentored or coached more than 500 improve-
ment projects in industry and service.
Willem Salentijn is a master black belt at 5ST3PS being elected as
the best training agency for project-and quality management in The
Netherlands. He is the author of Lean Six Sigma voor het hoger
onderwijs (Lean Six Sigma for Higher Education) a handbook
widely used on universities for applied sciences in The Netherlands
and also a Ph.D. student in the School of Business and Economics,
Management and Organization at the Vrije Universiteit, Amsterdam.
His research areas include social outcomes and lean.
