A 'Lean Startup' Approach

When setting up a new venture, whether on its own or within an existing organisation, if it is innovative and differs significantly from what has gone before, there is no pre-existing data to inform a business plan. Rather than developing a complex business model based on guesswork, a learning process is undertaken which systematically tests initial assumptions, before major investment is made.

Establishing a Work-Focused Learning Unit is unusual: the educational model is unusual; participants are those who would normally be unable to study; the operational processes that support the learning process are also unusual.

As discussed in the Operational Autonomy section, it is a ‘disruptive innovation’ and organisations generally have great difficulty when they attempt to initiate and integrate a disruptive innovation. It conflicts with what it already does and so does not fit easily into its existing culture and processes.

Almost always, where an existing organisation has successfully established a disruptive innovation unit, it has set it up as a relatively autonomous operation.

So whether a Work-Focused Learning operation is going to be set up as a stand-alone organization or as a new autonomous or semi-autonomous unit, it can best be seen as a startup. Over the last few years a new approach to startups has emerged in the States called ‘Lean Startup’. This stands a number of traditional business management approaches on their heads, and can be summed up as taking a learning rather than a planning approach.

The problem with starting any genuinely innovative new venture is that there is no pre-existing data on markets, customer preferences, expected sales numbers and acceptable pricing,on which to build traditional business plans. Forcing it into traditional business models produces a lot of highly detailed guesswork, which often gets abandoned on first contact with real customers. So instead of starting with a business plan and seeking a large up front investment, the first task is to develop one through staged learning with only the budget required to address the uncertainties and risks at each stage.

Very often the first and greatest uncertainty is whether people, in this case prospective students, actually do want what is being offered, and if so, what are their most important needs that it addresses and what features best meet them, and then at what price. This is done by working with prospective customers from the outset and iteratively developing and testing the product or service with them, learning, adapting, refining, until confidence grows.

The intent is to learn and thus minimise risk. A learning path is set out to test assumptions in a sequence, taking the riskiest first. Each step is reviewed on completion and a decision made as to whether to a) continue, b) ‘pivot’ (significantly change, in the light of feedback, what it was proposed to provide) or c) abandon the project.

At this stage, the cost so far has been directed towards learning: there has been no significant investment in setting up production/service teams, producing detailed course plans and materials, advertising and sales staff, finance and HR staff, in offices, production, advertising or sales channels, etc. This is done conditionally on sufficient confidence being gained through the learning process. Once this has been achieved, the learning switches to focus on how to deliver the greatest value to customers.

What that means in this case, would be take an outline business model, such as the one we present here, adapting it as you see fit, and then translating all the elements into a set of testable 'hypotheses'. Then work through a test programme with potential and early actual students, being ready to adapt and change the assumptions and the business model, until a 'go' or 'no go' decision is reached.