Wednesday, September 18, 2013

Adapt don't copy if you're planning to succeed

Mapping out a strategy at the Hightech Campus Eindhoven

There is a very thoughtful post over on the Lean Startup Blog which caught my eye. That's because I'm working with a team who are adapting the great practical learnings from Silicon Valley and applying them to building successful high-tech companies in Silicon Polder. 

I see that a discussion about the different business cultures is taking place on September 24th, although it is 3 am here in the Netherlands. Startup experts Kevin DewaltTakashi Tsutsumi and Justin Wilcox will meet for a webcast to compare notes. Not sure if I will be the sharpest at that time of the morning. So here are some thoughts up front. Let's start with that blogpost that inspired me: 

In her post today, Lisa Regan, a writer for The Lean Startup Conference notes: 

Entrepreneurs beyond Silicon Valley, including those working abroad, often have to retool Lean Startup methods to apply them in places with very different business cultures.  Kevin Dewalt—a speaker at this year's Lean Startup Conference—is an entrepreneur, investor and adviser who has served as an investor for a strategic U.S. government fund and as Entrepreneur-In-Residence for the National Science Foundation. Two years ago, he moved to Beijing, where he founded Lean Startup Meetup Beijing, as well as his current venture,, a platform for leveraging one-to-one relationships to build reputation and word of mouth. 

“Two years ago I moved to Beijing...... If you ask people in Asia about Lean Startup methods, they’ll often say, ‘I’m not sure that would work here,’ and in a sense they’re right–many of the familiar methods won’t work if applied unmodified. That’s why I recommend that people focus on ideas rather than tactics. Lean Startup ideas will work even in places as different from Silicon Valley as Asia–the specific tactics will need modifying, though. 

“Think, for example, about the way we talk about sales and customer development and the idea of ‘getting out of the building.’ In Silicon Valley, you can go to people and ask them what their problems are, and what solutions they would value, and they’ll be happy to answer you. People in Silicon Valley are accustomed to openly discussing change, and to talking about what’s wrong or needs fixing —it’s culturally accepted there and you get a lot of practice at it. In most of the world, that’s just not the case. If you walk into a manager’s office almost anywhere in Asia and say, ‘I want to talk to you about your problems,’ he’ll tell you that everything’s fine, that he has no problems. He’ll probably suspect that his boss sent you. Right away, by talking in terms of problems and change, you’ve lost that person; they’ll just shut down. 

“This is not to say that you can’t get out of the building in Asia, too. But you'll need to do the legwork to get introduced, and to become really known to people before you ask them for help or information". 

“Another resistance or challenge faced by people starting businesses in Asia comes from within the startup itself, around getting support from co-founders and investors. There’s often a practice in Asia of locking onto the first idea as ‘the idea.’ Impatient investors and team members give little support to a founder trying to do Customer Development to verify or modify that idea. They often look on this as a waste of time. And then, when customers are not buying the product, the blame will tend to focus inward — on the founder for perceived shortcomings in the product, rather than examining the question of whether the product itself is actually solving a problem. 

Many of the challenges Kevin describe resonate with Takashi Tsutsumi. Takashi has been a venture capitalist for fourteen years, investing in technology startups both in Japan and in the United States. Enthusiastic about the scientific approach for a startup, he personally translated both The Four Steps to The Epiphany and The Startup Owner's Manual into Japanese. On weekends, he evangelizes Customer Development and runs a Lean LaunchPad class nationwide in Japan. Takashi spoke to us specifically about what it’s like to try to bring Lean Startup methodologies to a business culture as conservative as Japan’s. He described two challenges, and two pieces of good news. [Ed note: Takashi emphasized to us that his ideas here are his own and not affiliated with any companies that he works for or is involved with.]

“Japan is known for its conservatism and the norm of lifetime employment, both of which result in a lack of entrepreneurship. The following are a few examples.

“Challenge #1:  Perfectionism and detail-oriented culture

“Japanese are known for their perfectionism and the Japanese culture is highly detail-oriented. This culture particularly contradicts with minimum viable products. Entrepreneurs worry that they will lose their trust and reputation with customers if their products compromise features, UI/UX, quality, etc. In addition, although entrepreneurs come up with good MVPs, they gradually add more features as customers say that A, B, and Z are missing, resulting in a ‘maximum’ viable product instead. Therefore, one of the keys for success to practicing Lean Startup methodology in Japan is to encourage entrepreneurs to be patient in minimizing their products. I sometimes refer the nice rule of thumb from Eric Ries, ‘Take what you think is right now and cut it in half and do that two more times and ship it back.’

“Challenge #2:  Pivot is failure?

“Pivoting is a key Lean Startup concept, but in Japan, pivot mostly means failure. The Japanese perfectionism affects this thinking in that people consider it right to complete a plan once it’s developed. First, this is true for entrepreneurs. They stick to the initial idea (i.e., the hypothesis) even if facts tell them it’s wrong. They just hate to admit being wrong, or they believe themselves too much to change their mind. Second, and more important, stakeholders, such as investors and management, think this, too. Even when entrepreneurs get used to the principle of Lean Startup, in which a pivot is not necessarily a failure but is progress, their stakeholders don’t share the sensibility.

“Good news #1: Perfectionism and detail-oriented culture

“Perfectionism and detail orientation inhibit adapting Lean Startup methodology in Japan, but they turn out to be strengths once people buy in. Once they buy in, entrepreneurs in Japan follow and execute Lean Startup exhaustively. 

“Good news #2: Customer Discovery nurtures entrepreneurship

“Customer Discovery is never easy in Japan. Ordinary people do not talk to strangers, knowing they hate unsolicited inquiry. However, the more customers an entrepreneur talks to, the more they learn. What surprises me, however, is that talking to customers also turns non-entrepreneurs to entrepreneurs because they feel a sense of fun and confidence in their idea. 

I hope these thoughts encourage you to explore the full post.

In my work with Startupbootcamp HightechXL, a hardware accelerator right in the heart of the High-Tech campus in Eindhoven. With Philips, ASML, NXP next door, and with 60 nationalities on site, it's one of the most inspiring ecosystems I have ever worked in. And it's expanding rapidly so 10,000 people will be on site within a couple of years, 2000 more than now.

Kevin and Takashi are spot on when they say you should adapt the ideas to fit the local culture. We've taken the lessons learned from Eric Ries and Steve Blank and adapted a few things. European VC's usually have a financial background rather than experience in running a start-up themselves. Explaining that a Business Model Canvas needs to come way before any thoughts of a plan are alien to many, especially those who worked in research units that then spun out into their own companies. Companies invented for you, making huge guesses behind high walled fences. 

Plenty of friendly faces at the recent Expat meet and greet in Eindhoven
We're seeing in the South of the Netherlands much less of the arrogance that you see in big cities. May be it is because they have to try harder to find and keep the international talent. But it is also because Philips and others were some of the first to adopt an open innovation approach based on trust and collaboration. 

Getting start-ups to present their idea in a clear, logical, interesting format is much harder in Europe than in the US. Sometimes it is the language barrier - you write a news story in French or Dutch in a different way to English. It is more like a zoom in rather than a zoom out. Which is why English VC's shout at many European startups to get to the point. 

The other challenge is the mainstream media. Science reporting has been seriously neglected by many European public service broadcasters. It is either event journalism with no substance, or foreign material (often excellent) reworked into a local language. That means that local ideas and developments never get the credit they deserve. The work that the Dutch have done with wifi, bluetooth, and chip design are known only to few. That may be because companies like ASML make the machines that make the chips, but there is never an ASML inside label on the outside. So startups in this part of the Europe may have world-class technology. But they have to work 3 times as hard to get the attention of the public as well as investors. Fortunately the better accelerators realise this challenge and help the start-ups build a media strategy as well as finding a context for the new product or service.

Can I also say thank you to the Lean Startup Conference and the eco-system around it for all the inspiration and guidance you have given through books (we bought the Kindle versions), podcasts and blogs. We understand that content is king and putting the ideas to work in a new context is probably King Kong. 

We're blogging about our adventures on these pages and we're always willing to share our experiences with those in this vibrant community.

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