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My guest for Episode #248 of the My Favorite Mistake podcast is Bruno Pešec, A Croatian living in Norway.
Bruno Pešec helps business leaders innovate profitably. He is the rare innovator who can claim he's worked on a regulation-defying freight train and an award-winning board game. In addition to his corporate experience with brands like DNV, DNB, and Kongsberg Group, Bruno runs a community of entrepreneurs of several thousand members. He is currently undertaking a doctorate in organizational change, with a specific focus on the issues with innovation in large enterprises. Bruno has co-authored the Augmented Strategy book, a practical guide to decision-making based on data and human intuition.
His academic credentials include a master's degree with distinction in industrial engineering and management, specialization in production and quality engineering, and an advanced management diploma specializing in strategy and innovation.
He has also been trained by Toyota in corporate value creation and innovation. Bruno is currently undertaking a doctorate in organizational change, with a peculiar focus on the issues with innovation in large enterprises.
In today's episode, Bruno shares his favorite mistake story about a revolutionary freight train design that seemed to deliver against impossible customer requirements — but it seemed too good to be true! We also discuss how Bruno moved past his initial skepticism about the “Lean Startup” methodology to be a big advocate for the approach. We also discuss his educational board game, “Playing Lean” and mistakes he learned from during that journey.
Questions and Topics:
- Was it a mistake to ignore Lean Startup initially 2008 before starting to pay attention in 2012?
- Like me, you’re an Industrial Engineer – with Toyota Production System origins… what did you experience and learn through Toyota?
- “Playing Lean” and “Playing Lean 2”
- Were you able to talk with any non-buyers to get feedback??
- Not just experimenting on the product, but also on the business model?
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- Full transcript
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Episode Article
The Intersection of Engineering Innovation and the Human Element
Innovative Engineering: Freight Trains and the Challenge of Product Development
Engineering innovation often requires more than just a deep knowledge of the science and math behind product design. A fascinating example of this comes from the development of a new freight train. Modern freight trains are impressive feats of engineering designed to last more than 50 years, with a lucrative business model revolving around long-term maintenance and operations. But what happens when engineers are tasked with delivering the impossible?
Take the case of a team of young, ambitious engineers, including individuals like Bruno Pesec, who pushed the boundaries of conventional design by taking on a seemingly insurmountable challenge: creating a freight train that was light, spacious, affordable, and made from plain steel. They conducted endless simulations, crafted prototypes, and even spent weeks in full hazmat suits testing the prototype with cement powder to ensure its functionality. And they succeeded—defying expectations by creating the lightest, fastest-discharging freight train on the market.
Human Skepticism: The Barrier to Breakthroughs
The conundrum was that, despite the overwhelming success from an engineering standpoint, the clients and the market at large doubted the feasibility of the final product. How could something that defied conventional wisdom possibly be real? It's a stark reminder that innovation isn't just about creating a product; it's also about navigating the complex terrain of human perception, expectations, and value—which can be surprisingly intangible and subjective constructs.
The engineers' victory with their groundbreaking design was muted by the fact that the client could not believe what they saw with their own eyes. This disbelief significantly delayed market acceptance. For Bruno and his team, it wasn't just an engineering mistake; it was a lesson in the importance of understanding and managing the human aspects of innovation and product development to ensure that breakthroughs are recognized and embraced.
The Role of Experience in Innovation
Experience, or sometimes lack thereof, can critically influence innovation. For instance, Bruno mentions that their lack of deep expertise in discharging powder allowed them to reexamine and innovate in ways that experts constrained by conventional methods might not have. This fresh perspective facilitated the development of a more efficient discharge process for the freight train, leveraging mechanical engineering tricks and focusing on every detail, down to the angles of the structure to improve functionality.
Peering through the lens of inexperience advocates for innovation free from preconceived notions and traditional solutions, consequently leading to the discovery of novel and sometimes better approaches. However, such achievements have repercussions, too. As competitors reverse-engineered and caught up with their design, it demonstrated the transient nature of innovative advantages—and perhaps the importance of also innovating in the areas of intellectual property and competitive strategy.
Collaborative Engineering and Customer Involvement
When product development is done in isolation, it can result in skepticism and disbelief, hindering adoption even if the product meets or exceeds expectations. Had the client been more intimately involved throughout the design and development process, they might have had more faith in the feasibility and value of the final product. This involvement could lead to buy-in sooner, facilitating a faster and smoother transition from prototype to market acceptance.
This story also illustrates that innovation isn't purely a technical process; it's equally social and must account for customer relationships and politics, especially in the complex network of international business. A collaborative, iterative approach, engaging customers every step of the way, could be the key to aligning engineering breakthroughs with market expectations. It serves as a reminder that the path to innovation is not only paved by the vibrancy of fresh ideas but also by the integration of stakeholders throughout the journey.
Concluding Thoughts on Strategy and Innovation
Across sectors, the story of freight train innovation highlights a universal truth: engineering marvels require more than ingenuity and can sometimes be derailed by the very people they aim to impress. Managing the human element of expectation and belief is just as critical as the technical challenges—and entrepreneurs and innovators must weave this understanding into their strategies if they hope to see their creations not just function but also succeed in the market.
Striking that delicate balance between technical excellence and human-centered design is at the heart of Bruno Pesec's work, reflecting the essence of augmented strategy—a blend of data, human intuition, and the intricate dance between creation and perception.
Navigating International Business and Regional Politics in Engineering
The world of international business can be a tricky one to navigate, especially when it comes to large-scale engineering projects like freight trains. Deals between countries often hinge on relationships far beyond the specifications and performance of the products themselves. Engineers and business developers must be aware that politics, both regional and organizational, play a significant role in getting technical solutions adopted in the market.
Working in an integrated market such as the United States simplifies some aspects, but still involves dealing with the complexities of politics and relationships. A typical scenario might involve weighing the benefits of ordering trains from one country, which might bundle additional incentives, against purchasing from another which could offer cost savings through discounts. Bruno Pesec's experiences bring to light the critical importance of evaluating the broader implications of these international relationships.
The interconnectedness of global markets means engineers and innovators must be savvy not only about the technical aspects of their products but also about the diplomatic intricacies involved in getting those products into new markets. It's not uncommon for potential clients to weigh geopolitical considerations as heavily as, or even more than, the performance and price point of the engineering marvels they're evaluating.
As Pesec highlights, sometimes the key to unlocking market potential lies in recognizing the unobvious connections and relationships between countries and industries. For engineers often focused on technical details, paying attention to these broader dynamics can be the difference between success and stagnation.
Lean Startup Methodologies: Bridging Engineering and Business
Lean startup methodologies have emerged as transformative in bridging the gap between the rigorous process of engineering and the agility needed in business development. Bruno Pesec's introduction to such methodologies was delayed by his initial skepticism, attributable to an era saturated with ‘Lean' prefixed trends. However, as these methodologies matured, he recognized their utility in fostering innovation that is both effective and inclusive.
Lean startup encourages rapid learning through iterative prototyping with minimal spending, which contrasts with the heavy engineering-focused approaches found in traditional Lean processes. Meanwhile, processes such as Design Thinking emphasize empathy towards customers, thus aligning product development much more closely with market needs.
For non-engineers, lean startup methodologies offer a lightweight framework that is easier to grasp and deploy, democratizing the process of innovation. The success of lean startup as a grassroots movement underscores its flexibility and comprehensive approach to product and business development without requiring a deep engineering background.
Combining Lean Principles and the Toyota Way in Modern Innovation
Pesec's training with Toyota in Europe helped illuminate a less discussed aspect of Lean philosophy—that of a holistic and almost artistic approach to production. This approach emphasizes collaboration, cooperation, and out-of-the-box thinking, moving beyond the rigid structures typically associated with the Toyota Production System.
The heavy emphasis on softer skills such as collaboration and respect for people was a major takeaway from Toyota's methods. Pesec learned that while it's essential to critically assess ideas, it's equally important to deliver feedback with respect for the individuals involved. A key takeaway from Pesec's experience is the philosophy of challenging ideas robustly, without diminishing the value of the people presenting them—a principle that resonates strongly with Lean methodologies' continuous improvement ethos.
This realization ties back to the importance of recognizing not only the technical merits of a new engineering innovation but also the human elements involved in bringing that innovation to life and to the market. Bruno Pesec's experiences with Toyota echo one of the core tenets of Lean thinking—respect for people—and are a reminder of the need for gentleness and empathy in the innovative process.
In summary, engineering achievement in the context of globalization requires a multifaceted approach that involves understanding cross-border relationships, leveraging lean startup methodologies, and promoting a culture of respect and collaboration, in line with Toyota's philosophies. These factors contribute significantly to sustaining innovation in an ever-evolving market landscape.
Maximizing the Learning Experience through Gamification
Recognizing the value of hands-on learning and the engagement that gamification brings, educators and trainers are increasingly turning to interactive tools to enhance the educational experience. Board games, such as “Playing Lean,” offer a tangible and dynamic way to understand complex methodologies. It's an acknowledgment that a new form of literacy beyond textbooks is necessary for the modern learner who thrives on interactive and experiential learning.
The Role of Gamification in Education
Gamification taps into the natural human desire for learning through play. When learners are actively engaged, they are more likely to absorb the material and apply it effectively. Here are some reasons why gamified learning is gaining traction:
- Increased Engagement: Games naturally motivate players to reach the next level or achieve a certain goal, keeping the learning process interesting and engaging.
- Immediate Feedback: Players get instant feedback on their decisions, allowing them to adjust their strategies and improve their understanding in real-time.
- Safe Environment for Experimentation: Games create a risk-free space for learners to experiment and learn from their failures without fear of real-world consequences.
- Behavioral Change: The fun and interactive nature of games can lead to more profound learning experiences, which have a higher likelihood of translating into behavioral change.
The Importance of Design in Educational Games
An integral part of gamification in education is the design of the learning tool itself. “Playing Lean” exemplifies how critical aspects like aesthetics, rule clarity, and relatability to real-life scenarios make a difference. Here's what makes a well-designed educational game:
- Visual Appeal: Quality design and visually pleasing elements can make educational tools more approachable and enjoyable to use.
- Clarity and Accessibility: The rules and mechanics of the game need to be easy to understand to ensure that players can focus on learning rather than deciphering how to play.
- Relevance to Real Life: Connecting game scenarios to real-life applications enhances the practical understanding and retention of the concepts presented.
Learning from Feedback: A Case Study with “Playing Lean”
Bruno Pesec's journey with “Playing Lean” showcases how pivotal feedback is to the success of any product, especially when it comes to educational tools. His experience underlines several key lessons:
- Identifying the Actual Market: Often, creators assume they know who their audience is, but real-world interactions may reveal otherwise. For “Playing Lean,” the real customers were not the initial target audience of players, but educators and trainers seeking effective teaching tools.
- Adapting Based on Customer Insights: After recognizing the true market for “Playing Lean,” Pesec listened to the educators' needs and retooled the product to cater to them, which significantly increased its value and utility.
- Pricing According to Value: The pricing strategy was grounded in the value provided to facilitators. The game's cost was justified by its ability to recoup the investment through the facilitation of just one workshop.
- Articulating the Value Proposition: Clearly communicating how the product pays for itself and continues to return value sets a compelling proposition for educators and trainers to invest in the game.
As Bruno Pesec's anecdotes affirm, the collective insights gleaned from various experiences—whether it's addressing assumptions in the freight train design process or iterating a board game for startup methodology training—underscore the importance of understanding and serving your market, pivoting based on informed data, and always seeking to augment the learner's journey through innovative, value-driven methods.
Niche Markets and the Value of Specialization
Gamification in education has revealed the surprising potential of niche markets to foster innovation and satisfy specific needs. Products like “Playing Lean,” whose uniqueness as an educational board game in the lean startup methodology, have demonstrated that there's a clear advantage in specialization. Serving a niche of a niche means dealing with a small, but highly dedicated audience. This section explores the benefits and challenges that come with such specialization:
- Targeted Solutions: Catering to a niche market allows creators to develop highly specialized products that effectively address unique challenges and learning objectives.
- Customer Loyalty: A specialized product can foster a strong sense of loyalty among users who feel that their specific needs are being met, which is often harder to achieve in broader markets.
- Less Competition: A narrow focus translates to reduced competition, allowing the product to become a leading solution within its category.
- Opportunities for Creative Use: Niche products often enjoy a diverse array of applications as their users tend to be creative with how they leverage the tools in various contexts, such as using “Playing Lean” for psychological assessments or to train entrepreneurial skills.
The Freedom of a Niche Approach
Bruno Pesec's reflections on “Playing Lean” indicate a unique aspect of niche products: the freedom from the pressure of mass-market appeal. This can be a blessing for creators who are not bound to the constant need to innovate simply for the sake of maintaining sales. Here are some considerations regarding the freedom a niche product provides:
- Quality over Quantity: By not having to cater to the mass market, creators can focus on crafting high-quality products that truly satisfy their user base.
- Reduced Sales Pressure: With the reduced need for mainstream commercial success, niche product makers can commit to long-term value over short-term sales spikes.
- Joy in Creativity: As Pesec noted, the joy of seeing a niche product being used creatively and differently by its user base can be particularly rewarding for its creators.
- Recognition of Value: The uniqueness of a niche product often commands a recognition and appreciation of its value, particularly when it can still achieve moments of impressive success within its targeted domain.
Leveraging a Niche Product Through Workshops and Engagement
Mark Graban’s dialogue with Bruno Pesec underscores another critical avenue for niche educational tools – workshops. By harnessing the power of direct interaction and tailored experiences, facilitators can significantly extend the reach and impact of a product like “Playing Lean.” Here are reasons why workshops are instrumental for such niche games:
- Hands-on Experience: Workshops provide a tactile and immersive environment where players can deeply engage with the game's content and principles.
- Personalized Learning: Facilitators can customize the experience, focusing on specific learning goals relevant to the participants' interests or professional requirements.
- Community Building: Events create a sense of community among participants, which can lead to networking, shared experiences, and peer learning.
- Market Expansion: While remaining within its niche, workshops allow for a gradual expansion of the market as new participants become advocates and spread the word about their experiences.
In the educational gamification space, the success of a product like “Playing Lean” isn't just a lesson in game design or market fit, but also a testament to the power of community-building and personal engagement. Moving forward, facilitators and educators have a role to play in bringing these niche products to new audiences and leveraging them for maximum educational value.
Automated Transcript (May Contain Mistakes)
Mark Graban:
We are joined today by Bruno Pesec. He helps business leaders innovate profitably. He's the rare innovator who can claim he's worked on a regulation defying freight train and an award winning board game. So who knows where the favorite mistake story comes from, those areas or elsewhere? But in addition to his corporate experience, Bruno runs a community of entrepreneurs of several members.
Mark Graban:
He's currently undertaking a doctorate in organizational change with a specific focus on the issues with innovation in large enterprises. Bruno has coauthored the book Augmented Strategy. It's a practical guide to decision making based on data and human intuition. So before I tell you a little bit more about Bruno, welcome to the show. How are you?
Bruno Pesec:
Thank you, Mark. So happy to be here. And talk about mistakes.
Mark Graban:
Well, good. And, boy, maybe you've got a funny story coming up, or it's good sometimes to be able to laugh about our mistakes. So I'm excited about the conversation here. Tell you a little more about Bruno. He also has a master's degree in industrial engineering and management, specializing in production and quality engineering.
Mark Graban:
And he has an advanced management diploma with specialization in strategy and innovation. So, like Bruno, I'm an industrial engineer, maybe in different ways, in different contexts. There's some background also where Bruno has been trained by Toyota in corporate value creation and innovation. So it'd be good to talk about that. And unlike me, he's a passionate practitioner of the martial arts since 1997.
Mark Graban:
And unlike me, he lives in Norway. But you're born Croatian, is that correct, Bruno?
Bruno Pesec:
That's absolutely correct. Croatia is one of those small, sunny Mediterranean countries, and Norway is one of those big, cold, dark Scandinavian countries.
Mark Graban:
Being late afternoon, it's not too dark yet in Norway, right?
Bruno Pesec:
No, not yet, but soon.
Mark Graban:
So there's a lot to talk about. We have a lot of professional overlap, and I'm really curious to ask you all sorts of things, but the first question, stick to my plan, my standardized work, if you will. Bruno, what's your favorite mistake?
Bruno Pesec:
Okay, so I've been thinking a lot, and I'm going to share one that's, let's say, more engineering heavy. It is one of my favorite mistakes that I can laugh about today, and I am grateful for it because I learned so much. And that was very early on in my career as an engineer. I was part of a team of product developers. We were all very young, very ambitious, very hungry.
Bruno Pesec:
We were biting. And there was a customer, recurrent customer that came to our R&D department and they said, hey, we want a product. That's impossible. We don't want you to use any special alloys. We want you to use only plain steel.
Bruno Pesec:
We want this product to be the lightest in the market. We want it to have very big volume. At that time, all similar products in the category that had large volume were also very heavy and very big. So they were asking for all of that. And of course, it had to be very cheap, and they wanted the best, right?
Bruno Pesec:
Yeah. And the thing was, as they were talking about it, we were listening, and we had so many ideas what we could do about it. But what we noticed was that the client themselves, they were unsure. They were kind of asking for it, didn't expect to get it. But as I told you, we were a bunch of young engineers and we took it really personally.
Bruno Pesec:
So we worked on it for days. Days turned into weeks, weeks turned into months, and we were pulling all kind of. We were running simulations all the time. And just to give you a little bit insight for the listeners, imagine freight trains. Freight trains are basically big compositions that you put on rails, be it in the USA, be it in Europe.
Bruno Pesec:
Yes, standards are different, but it's pretty much the same thing. And trains are actually designed for very long lifespan. We are talking about 50 years plus, which today is almost unheard of, that you have products with such long lifespans. So the business itself is a little bit weird, because manufacturers of the freight trains don't actually earn a lot of money manufacturing freight trains. They earn on maintenance, operations, et cetera, et cetera, et cetera.
Bruno Pesec:
So here we were, not using any special alloys, running these simulations, going, making prototypes. People in production absolutely hated us. Like these guys. What are you making? This is not possible to manufacture at scale.
Bruno Pesec:
But we really wanted to make it, and we succeeded. We succeeded at making a freight train that was the lightest in the market, that had very fancy solutions, that was made only from plain steel, that had very large volume, that was the fastest discharge in the market. And once we came and reported back to the client, they didn't believe us. They didn't believe that that combination of physical properties was possible. We had a working prototype.
Bruno Pesec:
It's not like we had it on a paper. We spent two weeks in full hazmat suits working with cement powder to see if it's discharging properly. And here we have a person not believing their own eyes. So it's not like we are promising them something on a computer. We are showing them, hey, here is the prototype.
Bruno Pesec:
And they didn't believe us, and the rest of the market didn't believe us. So I was there, standing my education, my master's in engineering, my years of studying and preparing to be this engineer. I did everything I knew, people I work with did everything we knew to design the best possible product. And the buyer doesn't want to buy it because they don't believe it's possible. And to me, it was mind blowing at that time.
Bruno Pesec:
And why Sam so grateful for it today is because it made me realize that innovation, even improvement, product development, isn't just about product, just about the process. It's so reliant on that human side, how we perceive reality, what we consider to be valuable. Like in lean, if you want, we always talk about value, but what is value? It is almost a nebulous concept, this subjective concept. It is difficult to put objective measure of value.
Bruno Pesec:
There can be objective measure of value agreed between two parties, but that doesn't mean that it will be the same measure of value for some third party, even if you're in the same market. Wow. I'm just going to pause here for a moment to take a sip of water.
Mark Graban:
Yeah. Well, that's a fascinating story. I've certainly got follow up questions. Gosh, did that potential customer, the company that had asked for this, did they share the belief that it wasn't manufacturable at scale, or did they really just believe the design? I'm just curious to hear more about what about it.
Mark Graban:
Like you said, because it was there and it rolled down tracks, right? It didn't just.
Bruno Pesec:
Yeah, it rolled everything. We used a lot of non standard solutions, so it was more like engineer to order in manufacturing parlance. It wasn't manufactured to stock or something. So it was not a mass production, but it was also, you have a potential client asking for a bespoke solution. So you prepare a bespoke solution.
Bruno Pesec:
It was kind of, well, I cannot go now too much into negotiation specifics. That would be NDA territory. But what I can say is that what ended up is we took our prototype and we paraded it basically for two years on all the fairs, relevant fairs, and people did love it. And eventually sales started trickling in. But as you know, with any engineering improvements, get good enough engineers, they're going to reverse engineer it.
Bruno Pesec:
And that is what happened, because we used a lot of mechanical engineering tricks. We played a lot with angles. Usually to get that manufacturer at scaled, you would just create a plain shell and you would just produce them massively and just put them on a wagon. While we said, okay, we will not do that, we are actually going to carefully calculate every angle. So we both reduce the weight of the train, but that we also increase the speed in which it discharges because it discharges on the bottom.
Bruno Pesec:
So we are paying a lot of attention to these details. And as I said here, I learned another lesson that actually I realized just now as I'm speaking with you, and that is our age played to our advantage, or not age, but letter. Our inexperienced played to our advantage because we were experts in making freight trains, we were not experts in discharging powder. So we had to go and learn how to discharge powder. And we didn't have preconceived notions on established solutions for doing that.
Bruno Pesec:
Of course we looked into them, but we quickly realized, hey, that's actually a bottleneck, right? So that allowed us to kind of play more with that. But as I said, after two years of parading it around, you get few engineers into it, take some pictures, make some measures, and then when competitors start showing up, oh, now it's plausible, now we can start buying.
Mark Graban:
Wow. And had you already moved on from that work by the point that it actually started selling or were you still involved in that industry?
Bruno Pesec:
So I moved on. That was such a long process, as I told you. So kind of we were designing it, we were prototyping it. That by itself wasn't so long, which to me was fascinating. A lot of people that are talking today, they're inspired by this lean startup, agile methods, et cetera, and they think this quick prototyping is only for digital products or intangibles.
Bruno Pesec:
That isn't true. We were prototyping like crazy. These are huge things. We are talking about tons of steel. Of course you do not start prototyping 50 tons of steel tomorrow, but you have paper prototype, you have drawing prototype, you have simulation prototype, you have three d models.
Bruno Pesec:
So it's iterative all the time. And we were moving really fast in this case. What was also really exciting was that you have a freight train that has to be the same security measures as a nuclear power plant according to EU regulations. So you have a chunk of steel that's transporting powder that you must design, so it meets the same safety regulations as a nuclear power plant. So that was an exciting challenge as well.
Mark Graban:
Yeah, I love the point about the lack of experience helping you innovate and maybe challenge the way it's always been done or not being too beholden to certain assumptions that you see innovators in other industries taking that same approach of like let's take a fresh look and see what comes of it. But I think maybe the final follow up question I wanted to ask you, Bruno, around this story, was thinking about the process. I heard you described them throwing some specifications over the wall, as they say, and then you worked on it and you prototyped and you iterated and you had something that worked. And like you said, they didn't believe it. I'm asking you to speculate, but what do you think might have happened if that customer had been more involved in the iteration and the design process in a collaborative way, instead of waiting for you to throw it?
Mark Graban:
We're not going to throw a train, but you know what I mean, waiting for you to just present it to them. What might have happened?
Bruno Pesec:
I would like to think that that would make them believe faster. That's what I would like to think. The cynic in me also recognizes and has learned the hard way that sometimes it's also about politics. Relationship between the countries. Remember, Europe isn't one integrated market like USA.
Bruno Pesec:
So when it comes to large orders of specific types of products, there is also relationships between the countries like, oh, should we really buy freight trains from Croatia? If we buy 200 from Czech Republic, we are also going to get that and that. Or if we go to, I don't know, Poland and get that specific type of product, we might also get discount on is there is always more to the story. And I'm realizing this is also another lesson I took from that project. Like to be attentive to kind of bigger picture that's happening out there, because it's relationships between the things that can sometimes unlock the magic, and they're not always obvious.
Bruno Pesec:
Yeah.
Mark Graban:
And as engineers, we might have blind spots to matters of politics. In this case, maybe regional politics, organizational politics, relationships. I mean, there's so many stories in the history of innovation and entrepreneurship of a great technical solution somehow not finding its way in the market. So you're not alone.
Bruno Pesec:
Unfortunately.
Mark Graban:
And now I know you know you're not alone. And your involvement. Nowadays, I want to shift and talk a little bit about your involvement with lean startup methodologies. And it's blurry behind you, but I recognize the colors and the titles amongst your Lean and Toyota books. I see Eric Reese's books, the Lean startup and the startup way.
Mark Graban:
When you and I talked previously, I can't help but ask you about this, Bruno. You mentioned what might have been a mistake in your initial assessment of the lean startup concepts. Wouldn't mind telling us about that and maybe how you evolved there, because obviously you're now a big proponent of these approaches.
Bruno Pesec:
Of course, I'd be happy to. And those are happy little mistakes, right? That we are proud to share. Well, Lean startup, when we think about it, it came up around 2008, late 2007, Eric Ries started blogging about it, et cetera. And by that time I really liked ligament manufacturing, Toyota production system.
Bruno Pesec:
I was gobbling up all the books, all the work, everything. I couldn't travel to USA, so I tried to grab whatever I could find in Croatia or in the region. And Lean startup was one of those terms that popped up. And I chose to ignore it because at that time it was pretty crazy. In the lean world, I would say there was like Lean wardrobe.
Bruno Pesec:
Okay, Two Second. Lean is fine for Paul Akers, there was some useful stuff, but there was a deluge of lean plus something. And to me, lean startup seemed also like, okay, what is this? I'll just let it go. And if it survives for a few more years, then it may be worth it, because I've always been of the opinion, if it's good, it's going to come back.
Bruno Pesec:
Because you see in the history, like you said, ideas don't find market, but then later they find market from somebody else. To me, it's the same thing with concepts like in the lean world that we have. If they're really good, they kind of research again and again and again. Maybe not the same name, maybe not the same people, but they're going to come up. So it was around, I believe it was much later, it was 2016, that I looked again into the movement.
Bruno Pesec:
And perhaps it was me being more mature. At that time. I recognized that in lean startup there is a set of processes and procedures for product and business development that are integrated and that are so lightweight that you can teach them and people can use them even without big technical background. Because if you look at, for example, a lot of things that came from the lean movement and associated quality movement, like quality function, deployment design for six sigma, lean product and process development, all amazing processes, set based concurrent engineering trees, theory of inventive problem solving, all great, but all very engineering heavy. So if you brought them, let's say, I don't want regulars.
Bruno Pesec:
Regulars doesn't sound very nice, but if you brought it to your colleagues who do not have engineering background, it was overwhelming. Like, what are seven matrices I need to fill out? And it's like, how do I read this? It's going in all those directions. And then you had processes like clean startup that was very lightweight.
Bruno Pesec:
Decide what you want to learn, create some prototypes so you learn it as quickly as possible and try to spend as little money and in peril. You had the design thinking, developing, which was also kind of put yourself in the customer's shoes, speak with people, try to make sense out of it. So you had these very, very lightweight approaches that get you almost the same results as those very traditional, very power oriented approaches with existing structures that demand a lot of work. And that also, frankly, came with a lot of elitism. So it's kind of people in those circles expected you to do it in that specific way and no other way.
Bruno Pesec:
And if you transgressed, you were punished. And you had lean startup design thinking which were much more inclusive, as attested by their massive spread as grassroots movement. But now I'm going like in all the directions.
Mark Graban:
Yeah. A couple of comments. I was part of that deluge of Lean something 2008. That exact time frame you're talking about was the first edition of my book, Lean Hospitals. Not to get sidetracked on that, but I can understand, and this has happened a lot in healthcare where people sometimes are skeptical of something that seems a little too trendy.
Mark Graban:
And I think doing something because it's trendy is probably the worst idea, the worst reason to adopt an idea, whether that's lean healthcare, lean hospitals, or lean startup. And one of the thought you talked about those waves of adoption, I think that absolutely happened with lean manufacturing from in the kind of learned about it in certain ways. And then there was a wave in the 1990s and a wave, each wave, I think, brought better levels of understanding of kind of like the total package of what these ideas are approached. So what these ideas are built upon. So I think sometimes if an organization is waiting for the second wave, they might get kind of what has been collectively evolved into a better version of the methodology.
Mark Graban:
So I know I threw a lot of thoughts and reactions back at you, but I'll invite if you've got other thoughts to share about any of that.
Bruno Pesec:
No, I mean, I completely agree. So I remember you were on the inside. A lot of that was happening in USA, I'm younger guy in Europe, kind know I felt like standing from the side and I tried to grasp, as I said, I'm a Croatian, so I did grow up and I studied in Croatia, then I studied in Norway as well. And I got lucky to do some training with Toyota. And before that I was studying a lot in manufacturing.
Bruno Pesec:
So I had some specific expectations. Toyota finally like, wow, I am coming to the source. And then I get lectured about Japanese toilets, and I'm like, I don't understand. I asked this guy Lean, he's lean and he has translator. What's this kid talking about, and I'm so confused.
Bruno Pesec:
And then later, as I started digging into more and more, then I realized, okay, there were so many different waves. And as you said, in the 80s, different books got translated, but only few actually picked up on becoming popular. And then those made it into the main body, and then it turned into a business, and then it got merged with Six Sigma, and then we got that abomination Lean Six Sigma.
Mark Graban:
Just interrupt for a second. I don't think it was the Lean people who grabbed Six Sigma. I think it was the other way around.
Bruno Pesec:
I think everybody in Lin knows that it's abominable. But that's not to say that I don't like engineering statistics. And the core quality, I think those were brilliant. Wow. That core has survived to today.
Bruno Pesec:
I think it's underappreciated. And I'm actually using a lot of those traditional quality tools. Ishikawa seven quality tools, basic statistics specification, et cetera. I use it in my innovation work all the time. Those tools are so simple, but they allow you to explore large data sets without extensive statistical training, which is very helpful even in the time of big data and AI chat.
Bruno Pesec:
GPT, please interpret this for me.
Mark Graban:
Yeah, well, I'm glad this isn't a debate or argument show, because we're agreeing on a lot of things, but there's similarity in our backgrounds, in our training. And I wanted to ask you a little bit more, perhaps, about what you learned from Toyota. And I think there's often this misunderstanding or an assumption. People associate Toyota and lean manufacturing, or the Toyota Production System as being really rigid, highly structured, only appropriate to highly repeatable, high volume processes. And again, I think that's incorrect, but I'm curious to hear some of your thoughts on what you learned from Toyota about experimental improvement, learning from mistakes, things that are kind of the basis of Eric Reese's lean startup methodology.
Mark Graban:
I see really tight connections.
Bruno Pesec:
Yeah, yeah. Well, it's what I learned from, for example, when I was part of that training and projects, et cetera, with Toyota in Europe, I didn't learn a lot what I would expect to learn, kind of when I was reading Toyota Production System, when I was going to my lean manufacturing lectures and et cetera. It was really a lot about. It's even hard to put it in words. It was almost nebulous to a state.
Bruno Pesec:
It was kind of very disassociated, very pushing for out of the box, very artistic. There was a lot of emphasis on kanji, on calligraphy, on gentleness of movement, on collaboration, cooperation. So to me as a young engineer, that specific project was very interesting because it led me to learn a lot of things that I did not expect I would be learning or that I thought is important to learn, because during that project, I made one of mistakes that are not my favorite. I'm ashamed of that mistake, but it made me better today. So as part of that, because that was a student project.
Bruno Pesec:
So they were gathering students from different universities and different faculties. So it wasn't just engineering students. You had chemical students, you had students from philosophy, from social studies, from marketing, art schools, et cetera. And because at the end of the day, we were asked to come up with car concepts and we were working in teams and we were discussing that. And I remember, so as we were coming up with concepts, one person came up with this specific concept and I said, this is so stupid, you shouldn't even have recommended it.
Bruno Pesec:
I could say, okay, he was young, he was an engineer and all of that. But later on I realized I hurt that person with my comment. I made a person cry because of my feedback. And that was not my intention. My intention was to disagree with the proposed concept, not to hurt the person.
Bruno Pesec:
So I do not regret disagreeing with the concept. I regret hurting the person. But I am thankful. I'm grateful that I recognized what I did. So then, through years of work and working on that, I became better at giving feedback.
Bruno Pesec:
I realized, and today I like to know, go hard on ideas, but always gentle with people. I might disagree with something that Mark said. I'm going to be attacking what Mark said. I'm not going to be attacking Mark. I must always respect Mark to the maximum.
Bruno Pesec:
I have to take that into consideration. And that's why I love when working with ideas, concepts, whatever. I like putting them on paper, whiteboard, pick your thing. And then you and I together, we're going to beat up that paper. We're going to take this idea and we're going to crumple it and we're going to throw it into garbage.
Bruno Pesec:
We're going to go hard on it, but always respectful to each other. And I think in retrospect, when I look at, for example, Toyota production system and how they came together and worked on the manufacturing line, you know what they say, respect for people. Like, they never attack the person who made the mistake. They aggressively attack what was the problem, right, that same thinking, except I had to learn it the hard way.
Mark Graban:
Yeah, well, Bruno, I appreciate you telling that story, especially, and I can appreciate the feelings around that where you said it was a mistake, you were ashamed of. I appreciate you sharing that anyway. And more importantly, as we try to do here on the podcast, celebrate your recognition of the mistake and, and learning from it. Because some people repeat the same mistake over and over again, or if someone gets upset, they'll blame that person and say, like, well, look, I was just being honest, they should toughen up instead of, I think, reflecting, I appreciate you thinking about, well, what does respect for people mean? It means we can challenge people, but like you said, do so in a way that's respectful.
Mark Graban:
And I could even see like, there's this gray area where someone might say, well, that's a stupid idea. But the receiver of that message hears, wait, they called me mean, we can't always have that. And that's why I think words and approach know the Toyota people might ask challenging questions to try to maybe lead someone to draw their own conclusion of, okay, we might not use the word stupid, but okay, yeah, we're going to crumple that up and throw it away. We can be a little bit more helpful, I think, instead of just saying, well, I know best, I know it's stupid because the person saying it's a stupid idea could be wrong, too.
Bruno Pesec:
Absolutely.
Mark Graban:
That could be a different mistake. So I really appreciate you sharing that story, and that's something a lot of us, it's an ongoing challenge of the art of, I heard a Toyota person say recently, critique the process instead of critiquing the person. A different way of saying what you said there. So I also want to ask, because I can see it behind you, and I know this is one of the other things you've been involved in. Board games.
Mark Graban:
I see Playing lean. Playing Lean 2 related to lean startup methods. So I was wondering if you can tell us a little bit about the board game. And I feel like I'm asking you to share too many mistakes, but you're being generous in your storytelling, that there was a bit of a mistake in the build up to trying to launch that game, if you don't mind sharing about.
Bruno Pesec:
Absolutely. So Playing Lean, as you said, is a physical board game for teaching the lean startup method. And it came to life because my friend Simon, he was running a company at that time and they were doing a lot of agile training, and in the training they used a lot of board games. The reason board games are good is because they're basically a bridge between on the job training and classroom training. So kind of they're right in between because our brain has difficulty differentiating experience and emotions in the game or simulation versus reality.
Bruno Pesec:
So as educational tool, they are great because you create this very real chemical processes in the brain and then you as a facilitator or teacher, you can connect that to on the job to really improve the learning. That's more of a theory of why games work. In our case, we knew games work and we wanted to create a game for lean starter because there was nothing in the market. And of course, as I already talked about prototyping, a lot of prototyping, creating first versions, just printing out paper, putting colored sticky notes, et cetera. And we tested it with many, many people to see if the rules work, if the people actually learn Lin startup, can they do something practical?
Bruno Pesec:
After the workshop and it all worked out really fine. Like, okay, we managed to reduce the complexity of the game. It was very playable. It was so playable, people wanted just to play it, even not learn. And then we decided, okay, let's go to the crowdfunding platform.
Bruno Pesec:
Let's try to crowdfund. We don't want to take on investors, we do not want to bootstrap it. We want to go on crowdfunding. And we launch. And of course the game flops.
Bruno Pesec:
It doesn't manage to raise enough funds, but it did raise almost half of the funds. So what we started looking into is like, who are these people that actually left their money and why? And this is where we found our big mistake, through speaking with actual paying customers. Our big assumption was that our buying customers are going to be the players of the game. People who want to learn lean startup.
Bruno Pesec:
But the only people that were actually leaving money were educators, lean coaches, agile coaches, corporate trainers, university professors. So people who basically had the same need as us. We want a teaching tool that will make it easy. We don't want to give them Edikri's book. We don't want to have 4 hours of lecture.
Bruno Pesec:
We want them something experiential. And then we started asking, okay, what is important to you? We took care of the players. So that is what we were testing extensively. But we didn't test anything with the actual educators.
Bruno Pesec:
And this is where we learned. For example, it has to have top notch supporting materials. Rulebook must be very understandable. There must be slides that they can reuse and easily adjust. Put their logo, university logo, whatever.
Bruno Pesec:
It needs to be backed by a thought leader, because it's very important that if they're asking for funding that they can say this is stamp of approval from that and that person. And another thing, the third thing was it has to look good on a shelf. You shouldn't be ashamed of it, because if you think about a lot of lean games, and I'm trying not to throw any shade, a lot of them look horrible. It's not even stock art, it's clip art, kind of clip art just printed. A lot of them are not even games.
Bruno Pesec:
So we partnered with actually not an illustrator, but a professional who is an agile professional, innovation professional who is also an artist. So we had the whole package and we made something that is also aesthetically pleasing. And this is not a mistake I'm ashamed to share because then I came back to the crowdfunding. It was, boom, extremely successful. A few years later, completely sold out.
Bruno Pesec:
Version two, almost completely sold out. Hundreds of facilitators around the globe. So it was a very good early mistake, and we were lucky that it happened, and we were lucky that those people wanted to speak with us, because it's not like we could chase them down. We could only send an email and give a phone call. Hey, would you like to share more?
Bruno Pesec:
Because this failed, but we want to learn why did you invest?
Mark Graban:
Right? That's a great story too. And I hear, I think some learning from the freight train design process. Not direct parallels, but looking beyond just the technical right, you can say, well, this game is technically perfect, but feedback might have said, well, it seems too complicated, aesthetically unappealing. It sound like you looked at the bigger picture of what that product needed to be.
Mark Graban:
So it seems like maybe not directly so, but some learning from earlier mistakes. Am I reading too much into it or is that.
Bruno Pesec:
It's a good connection. It's a good connection. Then it was we, it's always we, it's never alone. But yeah, I was definitely bringing more of that and other mistakes I learned and we knew it was important to involve the customer here. I wouldn't say that we made the mistake of not involving the customer.
Bruno Pesec:
We made the mistake of not recognizing the other customer or the right customer. And that is one of the big lessons of the lean startup itself. Like pivot, but pivot based on data and insight. And one of the things when we set out to make the game, we said it is a game about teaching lean startup. It should only be developed using lean startup principles.
Bruno Pesec:
That's why we were testing so much. And in a way it was good that we made this mistake because then within the game itself, we have a good teaching story. We can literally point out too, hey, this is a very good example where you have multiple customer segments and why it is critical to as early as possible test with all of them and realize who are actually end users and who are actually economic buyers because they might not be one, one to one. And you have to satisfy both if you want to create a successful startup, venture, business, et cetera, et cetera.
Mark Graban:
Yeah, I think it's interesting to look at that assumption that you were testing in the marketplace, the assumption of who was going to be buying it. Likewise, recognizing a problem with the assumption and learning and adjusting or pivoting because you had the contact information of the people who bought. The one challenge is I think you probably never get the contact information of the people who decided not to buy to get their feedback. But it sounds like if I hear you right, when you went back and it sold out, and it sounds like you adjusted based on feedback from the early buyers, not trying to chase, not continuing to chase the ones you thought were going to be the buyers. Is that correct?
Bruno Pesec:
That's absolutely correctly, and you're very correct. Maybe it was the wrong mistake. Maybe if we focused on the ones that decided not to buy and tweak the product to meet their needs, maybe it would have been a completely different story. But unfortunately, no crystal balls.
Mark Graban:
Sure. I wasn't trying to say it was a mistake. I think it's just that fascinating challenge of you can talk to the people you have the contact info from. It would be a different process to try to invite contact from people who decided not to buy. That would be a different process.
Mark Graban:
And again, maybe you stumbled into exactly the right market because it's quite possible that trainers, consultants, educators, they required more content like you said, but maybe they're willing to pay a much higher price than a consumer board game purchase.
Bruno Pesec:
That is 100% correct because the product for them is almost ten times more.
Mark Graban:
Expensive and it should be many times more valuable. Back to as you mentioned earlier, the lean concept of value is defined by the customer and people get in trouble saying, well, we have to charge this price because here's how much it cost us to develop it. The market doesn't care.
Bruno Pesec:
No, we went simple. We said, for playing lean board game, getting like facilitator training and getting the board game, it has to pay back. After doing one playing lean workshop, that's it. And that's what we say you become playing lean facilitator, you run one paid playing lean workshop, you paid back your whole investment. Everything after that is pure profit.
Bruno Pesec:
So it's very valuable deal compared, because now we're going to business model specifics. When Simon and I were discussing it, both of us have our let's say main jobs. I'm a consultant. He's a chief product officer in his company. So playing lean for us is something fun, a way to express our creativity, to do something gamified, etca.
Bruno Pesec:
Our well being does not depend on the success of playing lean. It is nice. It, if it's successful, it is okay, if it doesn't, if it stops selling, et cetera. So that also reduces the pressure. For example, you have businesses that their whole core business is creating educational board games, and then they must keep on pushing out, keep selling, et cetera.
Bruno Pesec:
In my opinion, playing lean is a very niche product. It is a niche of a niche. Lean startup is small niche, and then you have educational board game for that small niche. Yes, it is used by people to make psychological assessments, to train entrepreneurial skills, et cetera. It's used for many different purposes, but when we set it out, it was for a very small niche.
Bruno Pesec:
It brings joy when you see people use it creatively, indifferently and et cetera. But there is freedom in not having to have this massive, smashing success. It's nice when it is, though.
Mark Graban:
Yeah, of course. Well, I'm going to go learn more about that. Bruno, I'm within that niche of people who maybe could help bring that game to people through workshops and we'll put links in the show notes. You can learn more at playing lean. Bruno, this has been a lot of fun.
Mark Graban:
I appreciate you being willing to share so many stories with us and the reflections and the lessons learned. I want to thank you for your willingness to share.
Bruno Pesec:
And Mark, thank you for inviting me. Thank you for creating space, for discussing mistakes.
Mark Graban:
Yeah, well, I'm glad to do so. So again, we've been joined by Bruno Pesec. You can find links and more information about him in the show notes. So again, thanks so much.