Comparing Lean Startup and Systems Thinking Frameworks

Systems thinking exists as a way of reevaluating problems in order to create new and effective solutions. Instead of only concentrating on cause-and-effect relationships between actors, it focuses on relationships, boundaries, and feedback to put more emphasis on the wider picture. The breadth of the systems framework is one of its greatest strengths, as systems thinking is used in both the non-profit and for-profit sectors, especially when the problem at hand is complex. Surprisingly, its adoption to date has been limited. This is in part a result of the change-resistant nature of organizations as a whole, but it is also because systems thinking has limited exposure outside of academic circles. However, select elements of systems thinking have been cherry-picked and applied in practice. Specifically, the lean startup method emphasizes some aspects of the systems framework while ignoring others entirely.

The traditional business model often starts with a five-year plan, an initial forecast of the market, cash flows, and risk. Underlying this plan is the assumption that all of these categories can be anticipated and projected for years into the future. Unfortunately, consumer feedback has no place in this model. In fact, customer reactions are only known with any certainty after large amounts of funding and development have already been poured into a project. Lean startups are different precisely because they use feedback as a tool for developing adaptive business models. At the core of the lean startup method is the minimum viable product, or MVP. These are in a sense prototypes developed with customer input that aim to test the market in order to determine demand. Ideally, the prototypes continue to evolve and are improved at each iteration so that when significant resources are finally invested into the product, the end result will have a much higher chance of success.

Although lean startups are not explicitly systems aware in that for the most part they do not claim to take a systemic approach to product development, their underlying philosophy tells a somewhat different story. Their commitment to customer input evokes the feedback loops found in systems thinking, and the rapid prototyping used in developing MVPs to test the market is similar to the systemic approach to defining boundaries. After all, defining the consumer and the scope of the product is a less theoretical way of determining the actors and boundaries involved in any given system.

However, it is important to recognize that in spite of their similarities the lean startup method is not just applied systems thinking. While lean startups are “aware”, in the sense that they seek to integrate consumer responses with their products, they do not show the same commitment to understanding relationships that characterizes systemic approaches. Evaluating the market and adapting to it are vital to startups interested in using lean methods, but a detailed understanding of the connections between sources of capital or within the general system that they operate in is not. Ultimately, it is important to understand that systems thinking and lean startups rely on compatible frameworks that overlap in some areas but diverge in others.

References:

Ackoff, Russell L. "Why Few Organizations Adopt Systems Thinking." Syst. Res. Systems Research and Behavioral Science 23.5 (2006): 705-08. Wiley Online Library. Web. June 2016.

Blank, Steve. "Why the Lean Start-Up Changes Everything." Harvard Business Review. Harvard Business Publishing, 01 May 2013. Web. 7 July 2016.