What approach is right for a startup: project management (PMI) or lean philosophy?

I have recently had an interesting and very emotional discussion with Mr. X from Govermental Agency that supports innovative companies in Russia. The main point we were discussing was what view point should entrepreneur take in order to think about his venture: market-driven approach or product-driven approach.

Mr. X argued that everything starts from product requirements and market requirements and startup should follow PMI methodologies in order to develop his project. In other words, he should focus on technology and the rest will follow. I was asking: “What about uncertainty? Where is this variable in your equation?” The answer was – every big companies do this. They have product development and marketing. They work together and produce what is called MRD (Market requirements Document) and Product Requirements. His point was that every startup company should have this docs or at least a part of this before entrepreneur will start the project (meaning before concept development and architecture stage, and of course before prototype, alpha and beta versions). Explaining a little bit more MRD is part of classical project management/system engineering approach and typically written as a part of product marketing or product management (according to Wikipedia). The checklist of MRD could be as follows:

  • Executive Summary
  • Purpose
  • Goals
  • Delivery Date
  • Target Market & Customer
  • Overall position
  • Competition
  • Use Model
  • Customer needs & Corresponding Features
  • Systems & Technical Requirements
  • Quality Assurance & Testing
  • Appendices

 The same is for Product Requirements Document. In overall, Mr. X believes that project management approach is applicable to startups and startup’s life cycle could be viewed through PMBOK methods. WRONG! Let me explain why project management and system engineering are hardly could be linked to ventures.

Startup is a company, a partnership or temporary organization designed to search for a repeatable and scalable business model. (see Steve Blank and Wikipedia definition). This mainly means that startup doesn’t know the market yet, doesn’t know the product he wants to implement, doesn’t know… Key message here is uncertainty that surrounds the project. 

My point in the discussion was the opposite – you need to go from market and from customer needs. There is no point to build prototype or write technical requirements if you will not understand is there really a problem worth solving. Moreover, applicability of project management standards by PMBOK is nonsense for the startup by definition. Just to put big point here. Project (according to PMI) is  temporary in that it has a defined beginning and end in time, and therefore defined scope and resources. That is why you are able to define market and product requirements in the beginning of the project. You can identify key stakeholders, define scope, resources, make a plan and go ahead implementing it. But this is not the case for a startup. Startup can have everything except certainty. My two startup projects shows exactly this and I think eveidence from lean movement, customer development methods are more or less the same.

However, I still think that some parts of project management and systems engineering could be applied to a startup. For instance, there is prominent stage-gate model with checklists. Startups could have them in order to understand are they moving in the right direction or no? Thus, describing a general path (if it is possible) of a startup in terms of technology, market and customers, investments, team could give us differentiation of the life cycle in stages. Each stage will have the end with a checklist in all categories described above. Passing or not the checklist will give an understanding is this project still valid or not.  In conclusion, I think we need be very careful in blind application of standards and methods especially when we think about entrpreneurship.

If you have another opinion, please share it with me and community of readers!

 

Lastly, would like to remind you The Customer Development Manifesto by Steve Blank. Enjoy and good luck!

manifesto-poster4-e1333000967226

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5 thoughts on “What approach is right for a startup: project management (PMI) or lean philosophy?

  1. Actually, I don’t see how any project management methodology will work for a startup where even the main product/service is unknown. I think we have gone to the point where we want to apply a PM methodology on something that doesn’t exist, which is pure overhead and utterly useless.

    • Good point. I am asking the same question myself for more than 2 and half years. I had two startups where I was trying to implement both approaches personally PMI methods for managing startup project and lean management techniques. First didn’t work really well, it only complicated the project and made it more rigid in terms of adapting it market needs. However, it helped to make processes of R&D more efficient. Thus, it’s not so obvious and clear that PMI methods are not applicable. Some surely can be applied, some not. I will devote certain posts to this problem. However, already at this point of time I’m sure that you need to combine two viewpoints. PMI approach helps to lead the project from the product development perspective. However, it should be always adjusted to the rapidly changing market needs where its better to applt customer development model.
      Further questions could arise: what comes first: technology that could solve a problem or a market need that needs disruptive technology? How it was, say with IPad or PC or car?
      Another possible question what are those methods from PMI stack that could be used in startup development? Which are applicable at a given point of time?

  2. I agree with most parts of the article, but there are some things to consider.

    First of all, what you call “PMI methodology” is not a methodology. The PMBOK Guide is a set of best practices / lessons learned gathered through the last decades by a bunch of project managers around the world.
    You have to check what processes in PMBOK can be applied to the context of your startup/company. You don’t have to use all the 47 processes if you don’t need them.

    In my opinion, startups can take great advantages from using 3 areas described in PMBOK: scope management, time management and risk management.

    Scope management because the uncertainty is high, and knowing what is the scope to be done and communicating it clearly to the team is very helpful.

    Time management should be considered because you need to release the product to the market, and, in most of the times, if you don’t delver the project result in the target date you can miss your strategy goals. When the product is entirely new, the market can wait, and time management maybe would not be essential (at this time).

    Risk Management is good to describe all the imaginable risks and consider them. Sometimes there’s no way to avoid or mitigate a risk, and the risk should, at least, be considered (accepted) when executing the project.

    I work in a Brazilian startup since last year and I have gone through some difficulties of you mentioned above. I have found that I have to keep in mind is that a plan is just a plan, and if the strategy changes the project has to change along with it. Startups do not have time to waste on uncompensated efforts.

    Where I work we are trying to implement portfolio management. We have so many demands that dealing with them as a single project was very difficult. So we changed the strategy to the portfolio level. The same idea applies here: I check the PMI standard of portfolio management, check which areas we can use and, after using it for a few months we gather the team and discuss: if we stop using this good practice, would we miss it? If yes, keep using and improving it very day. If no, throw it away and study new good practices to be tested.

  3. It´s easier than it seems: projects,startups or products where basically problem and solution are relatively known, may need process innovation, for improving execution but where the project, the product or the startup is trying to expand or explore new ideas(2 different scenarios) where almost all or all is uncertainty, Lean philosophy and methodologies will work perfect, and PMI scope will be useless.

    • Plans are useless; planning is invaluable. I forgot who said it but the statement got stuck somewhere inside my mind for good.
      I have worked with technology projects within established organizations (non-startups) having huge uncertainty and still found benefits using PMI methodology.
      Startup do still have scope, cost, schedule and quality defined until it decides to change any of these and go for replanning. With startups, the uncertainty being high, such re-planning may occur more frequently than others however the PMI methodology should still keep helping for running ‘a’ plan towards successful execution. The key will be in using it ‘how’ and ‘how much’.

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