Entrepreneur Y risk They usually form a perfect pairing. Undertaking is the exploration of unknown terrain, with numerous dangers lurking around. For the entrepreneur, these dangers are well worth facing to discover the promised land. Adrenaline pushes the entrepreneur in that direction. But the statistics are harsh: according to INEGI data, approximately 30% of businesses will die before they are three years old.
Why do start-ups die?
They don’t usually die for lack of attitude, effort or ability. They die due to lack of resources or because the few that were available were wasted designing products or services that in the end nobody wanted, because they were poorly differentiated or because they did not completely solve the problem for which they were created. The entrepreneur, therefore, usually faces a great dilemma: persevere with his solution, or modify the necessary elements in it.although sometimes this means deviating from the original plan.
At the end of the day, the most successful entrepreneurs are those capable of accepting that their resources are too valuable to “waste” them on activities that do not end up adding value.
In 2011, Eric Ries, an American entrepreneur, coined the term “lean startup” to refer to those entrepreneurs who systematically validate business hypotheses through minimally viable product tests. The goal, Ries says, is not to have a method that lowers cost, but rather to reduce waste, a goal shared by manufacturing companies and, in particular, those that have adopted Toyota’s production philosophy.
What can an entrepreneur learn from Toyota?
Toyota It is one of the most admired companies in the world. However, its origins were difficult. Formally founded in 1937, Toyota was born in a complicated context, marked by the Second World War. During the war, Toyota barely survived thanks to a contract to produce trucks for the Japanese army.
At the end of the war, Toyota’s situation could not have been more difficult: the market was small, fragmented, frequent power outages; the company had little flow to continue operating. It was in this context that Toyota began to shape what would be known, years later, as the Toyota Production System (TPS).
How a giant rewrites the rules with the scientific method
Toyota realized that the scarce and valuable resources it had could not be wasted on poor production planning.
The famous just-in-time system is one of the mechanisms he developed to achieve this goal. However, SPT goes much further.
Those who have the opportunity to visit a plant will know: its production system is nothing more than the systematic and rigorous application of the scientific method. For every vehicle it produces, Toyota validates a series of assumptions about its production model: that with highly documented and standardized processes and a continuous moving line, among other things, it is capable of producing high-quality cars at a competitive price. If any failure or error occurs that invalidates these assumptions, Toyota quickly rewrites the rules and implements them through procedural changes. All of this in an iterative process that occurs over and over again over time.
Toyota seeks, as a philosophy, to reduce all types of waste that occur in production systems, be it inventories, non-productive time, unnecessary movements, among other things.
The Lean Startup and zero waste
The movement Lean Startupproposed by Eric Ries, shares the same purpose of reducing waste, through an iterative process, which tests its hypotheses about the customer and the market through experiments, in the form of minimally viable products.
If the experiments invalidate the hypothesis, the business model is reformulated or pivoted.
All this iteratively until the hypotheses are validated and the necessary conditions for scaling are established.
Undertaking implies knowing how to accept and live with certain risks. But, unlike other years, currently the entrepreneur has more tools that help him bring his project to a successful conclusion. Experimentation and waste reduction are something that every good entrepreneur should embrace.
Arturo Orozco Leyva Professor of the area of Operations Management at IPADE Business School and consultant in different companies in the industrial sector and technology-based.
