This document discusses applying lean startup principles from innovative startups to traditional manufacturing industries. It proposes a four-stage innovation lifecycle model combining lean thinking and agile methods to improve mature companies' product innovation and time-to-market. Startups focus on solving customer problems and developing minimum viable products quickly through continuous learning and iteration. The model suggests mature companies adopt similar practices like focusing on product-market fit, building products iteratively based on validated customer needs, and accepting failure as part of the process to innovate faster.

1. VTT TECHNICAL RESEARCH CENTRE OF FINLAND LTD
Best practices from lean startup
innovation processes to
traditional manufacturing
industries innovations
POMS2017, 6th May, Seattle, USA
Senior Scientist Jukka Hemilä (jukka.hemila@vtt.fi)

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INTRODUCTION
The product design and engineering in manufacturing industries has
been the way to competitive edge
In the 70s-80s the manufacturing industries focus was on the
streamlining and speeding up the production
Toyota's focus on quality, eliminating waste, and continuous
improvement made the Toyota Production System benchmark for lean
production globally
Lean principles (Womack and Jones, 1996)
Principle Description
Value Specify the value desired by the customer
Value Stream Identify the value stream for each product providing that value and challenge all of
the wasted steps currently necessary to provide it
Flow Make the product flow continuously through the remaining, value-creating steps
Pull Introduce pull between all steps where continuous flow is impossible
Perfection Manage towards perfection so that the number of steps and the amount of time and
information needed to serve the customer continually falls

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RESEARCH DESIGN
European companies are over designing and engineering products
before commercialization.
Together lean thinking and agile methods have been successfully
applied to product development at startup companies, which is called
the lean startup methodology
However, many lean startup principles may also be of benefit to
established firms.
The research question: how to improve mature (age 5+ years)
companies’ product innovation lifecycle and time-to-market in
traditional product-based businesses?
The study is based on the state-of-the-art of innovation processes in
startups from the literature review and on the empirical case data
evidence from the multiple case studies.
The outcome is a four-stage innovation lifecycle model.

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INNOVATIONS AND TIME TO MARKET IN
STARTUPS
Innovation is the core for the startup: should provide something new for
the market, or otherwise their existence is questioned
Time to market innovation process is really fast, or otherwise the entire
business opportunity might be lost.
In product development, the Minimum Viable Product (MVP) is a
product with just enough features to gather validated learning about the
product and its continued development.
The concept of MVP is hardly heard by mature companies’ employees.
Startups are focusing to solve some customer problems and create
business model to solve that customer problem.
Only then startups are developing real product, and firstly MVP.
Mature companies have a business plan how to operate, and product
innovations are done in linear or step-by-step methods.

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NEW METHOD FOR ACCELERATION IDEA TO
MARKET IN MANUFACTURING INDUSTRIES
Acceleration: the study understands acceleration as accelerating
innovation go-to-market and commercialization.
Acceleration is a combination of means: processes, tools and methods,
which help companies go faster to the right markets
It is time for mature companies to change their innovation culture
towards their origins, the way successful startups are innovating.
Companies should focus on searching for a product-market fit and a
sustainable, scalable, profitable business model
Mature companies, the business model is not typically changed.
focus on the development of new product, which does not actually bring
competitive advantage today.
Product innovation should be continuous and lean process: Idea stage,
Problem/Solution Fit, Product/Market Fit, Scaling

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DIFFERENT STAGES OF ACCELERATION
Self-test available: http://selftest.accelerateproject.eu/

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WHAT LEAN STARTUPS DO DIFFERENTLY
Strategy Business model
Hypothesis-driven
Business Plan
Implementation-driven
New-Product Process Customer development
Get out of the office and test
hypotheses
Product management
Prepare offering for market following a
linear, step-by-step plan
Engineering Agile development
Built the product iteratively and
incrementally
Agile or waterfall development
Built the product iteratively, or fully
specify the product before building it
Organization Customer and Agile development Teams
Hire for learning, nimbleness, and speed
Departments by Function
Hire for experience and ability to execute
Financial Reporting Metrics that matter
Customer acquisition cost, lifetime
customer value, churn, viralness
Accounting
Income statement, balance sheet, cash flow
statement
Failure Expected
Fix by iterating on ideas and pivoting
away from ones that don’t work
Exception
Fix by firing executives
Speed Rapid
Operates on good-enough data
Measured
Operates on complete data
Lean Traditional
Blank, S., Why lean startup changes everything, Harvard Business Review, May 2013.

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CONCLUSIONS
A lean product development helps companies to launch
products that customers actually want, and more quickly and
cheaply than traditional methods.
To ensure survival and growth, mature and even large
companies need to keep inventing new business models
Traditional manufacturers have usually long technology
development cycles, which actually has been one of the main
reasons for startups to failure
Our model suggest improving design, engineering and product
launch time in traditional companies.
Self-test available: http://selftest.accelerateproject.eu/

9. TECHNOLOGY FOR BUSINESS