Lean Startup Comes Home

How the automotive giant that started it all, uses lean’s younger, hipper cousin to test business ideas.

Back in December of 2013, a team from Toyota took the stage in San Francisco to speak openly about some of their challenges in adopting lean startup for their connected car services. The talk was a surprise hit with the crowd, coming from a company often spoken about in whispers and awe, at an almost mythological level in the lean community.

Except that this talk shouldn’t have come as much of a surprise.

Many of us have mistakenly underestimated the multiple, giant leaps of faith from Lean Manufacturing to Lean Software to Lean Startup. Even Toyota, who is pretty good at Lean Manufacturing by the way, doesn’t find these leaps trivial to make.

Let me explain.

In Lean Manufacturing, a stack of car doors that never get placed onto an automobile is waste.

In Lean Software, a stack of requirement documents or .PSD files that never make it into a product is waste.

In Lean Startup, a stack of features you’ve built that never get used by a customer is waste.

(Tip: There is more to lean than eliminating waste, this is merely one example.)

However, one of the main reasons you haven’t heard much about Toyota navigating these leaps is that they’re going off brand with much of the experimentation.

“Why would a corporation go off brand?”

Corporations launch new products and services all the time, usually with their logo on it, to much pomp and circumstance. Multiple media outlets trumpet well placed praise or scorn as thousands (if not millions) of people rush to check out the next big thing. If it has your brand on it today in the world of social media, it has to be perfect.

It has to be better than perfect.

As William Gibson would say, we live in a time of endless now. The judgement comes swift and at a scale never seen before in our history.

These public, on brand launches also include months of signs offs, and re-sign offs from branding, marketing, legal, and well, you get the idea.

And yet the aftermath of such a public, on brand launch for something new is often a painful slog of finding a signal in all of the noise. Much of it circling around one burning question.

“Did anyone come back after launch day?”

Toyota, like many corporations I advise at Neo, would prefer to begin by testing the market quickly without all of hype and buzz, especially with ideas they are not quite so certain about. It is cheaper than ever to test the market with a product to learn, especially if you can bypass all of the corporate bureaucracy and decrease the cycle time in doing so.

Corporations do not lack ideas, but rather have a hard time deciding on what ideas to invest in. One of the ideas Toyota had recently was around gas payments.

“Do people want to pay for gas from the convenience of their car?”

Instead of building for several years with a large team and launching gas payments on brand, Toyota quickly registered a new domain, created Facebook Ads and drove traffic to an off brand landing page to test their value proposition.

A landing page the team created and launched in under 2 days.

“The question was simple, if this wasn’t Toyota, would anybody even care?”

Once the landing page had a steady stream of traffic, initially spending only $100 a day, the team kept conducting problem and solution interviews with potential customers. This included those recruited off of craigslist, approached at gas stations and even those who signed up on the landing page.

(Tip: Not enough teams I work with reach out and interview those who’ve signed up for the landing page. This is important, since you don’t really know why they signed up until you ask them.)

“Getting out of the building is an extension of Genchi Genbutsu.”

Genchi Genbutsu is a core part of the Toyota Way. Coincidentally enough, that mindset can be extended outside the company walls to “go and see” with customers.

In this case, getting out of the building meant recruiting people off of craigslist to meet the team at a gas station. The team tested their Minimum Viable Product (MVP), which was installed in the car and integrated with one gasoline pump using iBeacon, to learn whether or not their value proposition carried any weight in the real world.

(Tip: Your MVP should be optimized for learning, not scaling. What the team tested did not have to scale yet.)

The Toyota team preparing for their tests at a local gas station in Silicon Valley.
The MVP Toyota installed into a Camry and integrated with iBeacon to test with customers.

“What did they learn?”

They learned a lot, specifically about their value proposition.

For instance, their MVP wasn’t any faster than getting out of a car and paying for gasoline the existing way. I mean sure, it was cool to do it from their car and such, but by the time people selected their pump from the interface, they could’ve just stepped out and swiped their card. The team realized however, that this could be remedied with refining the UX.

An updated UX for the in car MVP.

The biggest learning came from women.

“Women repeatedly told us that the value was safety. “

Many women explained after going through the experience with the MVP, how they’d rather not get their purses out at night to pay for gas, especially at a dimly lit gas station. If they could simply get out and put the gas nozzle in, they’d be more aware of their surroundings and feel safer.

Even though this particular group had both men and women on the team, they had not previously landed on that value proposition in the comfort of their conference room.

“Just one example.”

This experiment is just one of many that Toyota has been running since their 2013 talk about lean startup. They’ve had off brand business ideas featured on ProductHunt and go viral on Twitter and Facebook. The great thing about this, is that these ideas are going viral (or not) based on their own merit and not on a brand or corporate PR campaign.

(Tip: Bringing the ideas back on brand is not difficult, however you encounter new challenges that I’ll cover in an upcoming article.)

If you would like to learn more, visit the Precoil library where you can access lean startup and design thinking tools, templates and videos.