Lean Startup

Only those who change the rules of the game win.

Take a deep breath, open your eyes wide, and face the drastic changes happening in the market right now. Product and service homogenization and maturation are progressing at an incredible speed, making it difficult to differentiate brands solely by appealing to functional value and image value as in the past. Simultaneously, the development of social media has made it commonplace for individual experiences to be shared as collective experiences through recommendations and reviews. Consequently, "events" where hit products emerge even when the fundamental marketing pillars of the 4Ps or STP aren't fully established are occurring frequently. So what connects these two phenomena? It is none other than "experience" (the customer's brand experience). If a brand can consistently provide rich experiences that exceed customer expectations, it not only increases customer loyalty but also establishes a self-sustaining marketing cycle. This cycle allows brands to acquire new customers through the recommendations and positive evaluations of existing customers.

Last May, the author published " Experience-Driven Marketing " (First Press), proposing that experience is the greatest differentiator for brands. By examining the experiences their brand provides from the customer's perspective and revamping marketing processes to maximize customer experience, companies can establish sustainable competitive advantage. What has actually happened? Experience has now become one of the key terms symbolizing marketing innovation, increasingly capturing the attention of management at many companies. The clearest evidence of this is the fact that, as of June when this manuscript was written, requests from corporate executives for the author's lectures and capability presentations have easily exceeded ten. An era has arrived where only those who change the rules of the game will win. Several leading companies have positioned experience as a pillar of their business strategy through top management decisions. They have initiated concrete actions, such as establishing specialized departments to enhance customer experience and drive PDCA management. This movement will only expand further, spurring more companies to act to avoid being left behind.
In this series, "The Final Guide to Experience," I will share the challenges and insights I face with readers through four installments, using four key concepts as my lens: "Lean Startup," "Orchestration," "UX Management," and "Livelihood Words."

What is Lean Startup?

The first theme, "Lean Startup," is a methodology gaining attention for introducing service plans that enrich customer experiences. It involves starting small with a minimal (Lean) service, then agilely (Agile) refining it through customer feedback, incrementally increasing its completeness and reach. This concept, proposed in 2011 by American entrepreneur Eric Ries, involves rapidly cycling through Build ⇒ Measure ⇒ Learn. It has been highly valued and adopted by US IT startups, as the name suggests. Incidentally, "Lean" also means thin air or meat with little excess fat.

Concept Diagram of Lean Startup

The Lean Startup concept can be diagrammed as shown above. While everything starts with an "idea," the idea itself is often just a simple concept word that could fit on the back of a business card or a rough sketch. By building on the idea through brainstorming and workshops (ideation), writing a service blueprint (design plan), and validating feasibility using simple tools like the Business Model Canvas, you create a service prototype—the "Prototype Version 1.0." This prototype is introduced on a small scale, and customer reactions are measured using qualitative and quantitative surveys, social listening, ethnography (participant observation), and other methods. The "data" is evaluated, issues with the trial Prototype 1.0 are narrowed down, and an improved "Prototype Version 2.0" is reintroduced with slightly expanded scale and reach. Essentially, the key competitive advantage for companies lies in how rapidly they can cycle through this PDCA process while maintaining a customer-centric focus. As mentioned earlier regarding competitive rules, the new competitive edge in this era is precisely the "speed of learning."

Whether it's the Apple Watch or General Electric's (GE) Industrial Internet initiative, ambitious new businesses that aim to revolutionize customer experience while simultaneously pursuing marketing innovation have no referenceable "precedent." Of course, innovation cannot emerge from analyst demand forecasts or focus group interviews. Why? Because without delivering surprises that far exceed expectations, we cannot expect a dramatic improvement in customer experience. Even if brilliant service plan ideas emerge from brainstorming or lucky flashes of insight, at that stage they remain mere "hypotheses." Behind the temptation to implement them always lurks the shadow of failure risk. Balancing this ambivalent demand of opportunity and risk is precisely what the Lean Startup methodology is all about.

Advertising agencies should align with companies' Lean Startup approaches

Many readers are likely active in corporate PR and advertising departments or work at advertising agencies. As you've read this far, has something struck you? Yes, this Lean Startup approach actually shares striking similarities with the advertising production process. Creative advertising ideas are presented by agencies to clients in the form of storyboards or comps. At this stage, the ideas contain many unverified elements like casting and production costs, making them pure prototypes. As the creative proposal is adopted by the client's on-site manager and presented to executives and top management, it absorbs various feedback, gradually increasing its level of completion. Simultaneously, ideas that started at the planning level undergo meticulous verification at the production level. They then pass through the actual production process and are aired as creative works. Empirically, this prototyping process is extremely fast, typically taking as little as one month or, at most, a few months. Therefore, the author posits that this prototyping methodology should be deeply ingrained as a habit among those working in the advertising industry.

Furthermore, the competency of advertising agencies like Dentsu Inc. lies in their ability to systematically maintain an end-to-end business style. This involves creating prototypes of ideas, undergoing a rigorous lean startup process, and persistently driving them through to implementation and realization. Advertising agencies should carefully cultivate the capability to closely support client companies and deliver on their promises. In an era where differentiation based solely on functional or image value is difficult, the advertising industry cannot expect further growth by remaining merely suppliers of advertising communication. It goes without saying that advertising agencies should transform their business model into that of a marketing partner, embracing "all brand touchpoints" connecting customers and companies as their domain, and closely supporting companies' lean startup activities aimed at enhancing customer experience. Indeed, leading IT companies like Apple and GE serve as prime examples. Despite facing multiple crises, they successfully transformed their business models by anchoring their efforts in core competencies and rapidly cycling through build, measure, learn.