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
- Delivery Date
- Target Market & Customer
- Overall position
- Use Model
- Customer needs & Corresponding Features
- Systems & Technical Requirements
- Quality Assurance & Testing
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!