In 1999, the day before his eighth startup went public, Steve Blank decided to retire at the age of 45. With time to reflect, he sat in a ski lodge and began to write a memoir with a "lessons learned" section at the end of each chapter. "In hindsight, it was a catharsis of moving from one part of my life to another," he told me.
"I was 80 pages in when I realized there was a pattern. When I sat inside the building things didn't go very well, but when I got outside the building things turned around and got much better," he remembers. It was that insight that would lead him to a second, even more storied career as a business guru.
Today, almost 20 years later, the Lean Startup has become a full-fledged movement, complete with an entire ecosystem of books, conferences and practitioner-consultants. It has also moved far beyond startups to encompass government labs, large bureaucracies and major enterprises. The biggest question today is not whether it is a better way to build companies, but where it's going next.
The Road to the Lean Startup
Blank's original epiphany about the importance of "getting out of the building" did indeed lead to a book, but it wasn't a memoir. The Four Steps To The Epiphany, published in 2005, soon became a bible for startup entrepreneurs. Its key insight, that a startup is not a smaller and newer version of an established company, but "a temporary organization used to search for a repeatable and scalable business model" pointed towards an entirely new way of doing things.
He began teaching entrepreneurship classes at Stanford and UC Berkeley and noticed another problem that needed solving. Throughout his career, whenever he encountered an complex issue that needed to be resolved, he would draw it up on a whiteboard. Yet strangely, no one had come up with way to do the same for a business.
"We were puzzling over how to represent a business graphically," Blank remembers, when his teaching assistant Ann Miura-ko, who is now a top VC in Silicon Valley, told him that she had come across a book with exactly what they were looking for and wanted to show him. "No," he said, "I want to show you this PhD thesis I came across first. It's exactly what we need!"
As luck would have it, both the book and the thesis were written by the same former beach volleyball player from Lausanne, Switzerland. His name was Alex Osterwalder and, as luck would have it, he would soon be visiting Palo Alto. Steve arranged to meet him for coffee and then invited Alex to spend the weekend at his ranch for an extended discussion.
That initial encounter would lead to a close friendship and a long and fruitful partnership. Steve would combine Osterwalder's Business Model Canvas with the Customer Development process he outlined in The Four Steps To The Epiphany. Eric Ries would later add elements of agile software development and the concept of a minimum viable product to form what we now know as the Lean Startup.
Bringing Government-Funded Science to the Marketplace
In 2011, Blank was driving on the Stanford University campus when the announcement of a troop surge in Afghanistan came over the radio. Just then, a call came in on his cell phone and when he answered, the caller announced, "The US government needs your help," to which Blank replied, "Sorry, the US government already had my help for 4 years in Vietnam."
A bit flustered, the caller tried to explain that Blank wasn't being drafted into the army. "I'm from the NSF," he said.
"What's the NSF?" Blank asked.
"The National Science Foundation and we think you've invented the scientific method for entrepreneurship," came the reply.
With that, Steve pulled over to the side of the road and began to listen intently. The caller, Errol Arkilic, was a Program Manager for SBIR/STTR, which offers grants for the commercialization of government-funded science. While there had been some notable successes over the years, such as Qualcomm and Symantec, overall the results had been disappointing. Even breakthrough discoveries were having a hard time finding success in the marketplace.
Arkilic wanted Blank to help design a program to train SBIR/STTR grantees in the Lean Startup process and he wanted to start in 90 days. Blank agreed and, once again, a seemingly chance encounter led to a long and fruitful partnership.
Today, the program that Blank and Arkilic spawned, called I-Corps, is taught at 86 separate sites and has led to the formation of dozens of companies. It has tripled the success rate of commercialization grants and I-Corps is now mandated for every government agency that offers a SBIR/STTR program.
Hacking 4 Defense
While Blank was teaching his "Lean LaunchPad" course at Stanford, one student, a highly decorated ex-Special Forces operator, blurted out that Blank's methods seemed a lot like what they were doing at the Rapid Equipping Force (REF). "What's a Rapid Equipping Force?", Blank asked, repeating the pattern that had previously led to the development of I-Corps.
As it turned out, the former Director of the REF, a retired Colonel named Pete Newell , had recently relocated to Palo Alto and had a small office in town. Blank went to meet him for a short coffee, but what was scheduled for 20 minutes turned into a four-hour discussion. The two men realized that not only did their methods have a lot in common, they also had a lot to offer each other.
The meeting also reminded Steve of a problem that had been nagging at him for some time. As a Vietnam veteran, it bothered him that most of his students, many of whom will go on to be leaders in society, never get any experience with government service. His discussion with Newell led him to believe that he could apply elements of his Lean LaunchPad class to solve problems in government.
Yet Blank also realized that his methods would need to be adapted for organizations that don't serve paying customers. So he and Newell began to collaborate with Alex Osterwalder to adapt the Business Model Canvas for government agencies and nonprofits and created the Mission Model Canvas for that purpose.
Together, they developed the Hacking 4 Defense program, which allows top minds at some of the country's best schools to work on solving problems for the Defense Department. While it began at Stanford, the program has spread to dozens of universities. It has also moved beyond its military roots with programs like Hacking 4 Energy and Hacking 4 Impact.
The Journey Continues...
What most people fail to realize about the Lean Startup is that it was never really about being lean, or even about startups for that matter, but a continual search to find a better way to solve problems. Perhaps not surprisingly, Blank sees no shortage of problems to be solved just about everywhere he looks.
One thing in particular that concerns him is the lack of civic engagement, particularly among the talented young professionals he sees at places like Stanford and UC Berkeley. "Most of my students believe that the only thing you need to be a citizen is maybe paying your taxes, not even voting and then they're unhappy with the government they get," he told me.
"The social fabric has disconnected over the last 40 or 50 years," Blank continues. "The internet has fragmented the media market and with it much of the common experience. What kind of common things can we do that allow us to share some common values? How do you create radical change in government?"
He didn't offer any answers to these questions, but I got the feeling that sometime in the future, a seemingly random phone call or a chance meeting for coffee will lead to an extended discussion, a new partnership and a practical solution to a thorny problem. The search continues and we'll all be better for it.