Running Lean, 3rd Edition

Chapter 6. Validate Your Idea Using 90-Day Cycles

While deconstructing your idea into a business model helps lay a solid foundation for it, it’s important to recognize that no matter how compelling your business model story pitch is, it’s still built on a set of untested assumptions.

The way you turn your designed business model (Plan A) into a working business model is through business model validation.

It can be tempting to take a divide-and-conquer approach to business model validation, where you split your team’s focus based on individual team members’ strengths. But as the example given in Part II shows, focusing on many different priorities spreads your resources too thin and thus is suboptimal. The best way to harness your team’s full potential is by getting them to collectively focus on what’s riskiest at any given point in time in your business model (i.e., your limiting constraint or weakest link).

How do you correctly identify what’s riskiest? Too many entrepreneurs simply guess at their constraints by making a list of their riskiest assumptions and using their intuition, or seeking the advice of other “experts”—but such an approach is highly subjective, and prone to biases (your own and those of your team and advisors).

Incorrect prioritization of risk is one of the top contributors to waste.

So, is there a better way? The answer is yes. It requires using a systems-based approach—specifically, applying the Theory of Constraints (TOC). TOC is a constraints-driven ...