Startups and the Hacker Way: The (Counter-) Cultural History of Lean Method
Startup entrepreneurs are the grassroots innovators of our time. Unlike traditional entrepreneurs, who pick out opportunities and take a risk by investing in a venture, startup entrepreneurs work fast and lean, starting with risky assumptions and running low-cost experiments to test them. They operate on zero budget, work in state of radical uncertainty, and push at the limits of the unknown. Prototyping ideas and testing them with potential customers, they seek to define new opportunities that address an unmet need, adding value to peoples’ lives, and creating a great user experience.
While not always coders, startup entrepreneurs take their methodological cues from the tech industry, and programming culture in particular. Tapping into a tech vernacular, they call the process by which they grow their customer-base ‘growth hacking’ — a term that speaks volumes about their approach to innovation and the history of startup culture too.
Today, the lean startup way is how high-growth businesses are built and innovation gets done in Silicon Valley and elsewhere. Since Eric Ries finessed the approach in The Lean Startup (2011), lean method has become a key feature of the business design toolkit. Increasingly, corporations are learning to think like startups, embracing the lean approach together with its methodological brethren, design thinking and agile development. These three approaches bear hallmarks of the hacker way, a cultural paradigm that grew up in the computer industry, scaled online in the nineties, and began feeding into the world of business innovation in the naughts.
We are living through an era of cultural evolution, as hacker mindsets and practices, which were cultivated for decades on the margins of business life, spill into the mainstream. The new innovation culture widely associated with the Silicon Valley tech scene is a next generation hacker culture, catalyzed through a marriage between hacker norms and high-growth entrepreneurship. Companies that want to keep pace with these developments need to understand the cultural evolution at play in this event. There is only one way to sustain a culture of hacker innovation, and that is by making space for hacker culture. If corporate culture defines the status quo, this means making space for a kind of counterculture inside the organisation.
Hacker culture got started at MIT in the early 1960s, when a small group of renegade engineers got hands on with the first generation of user-programmable computers. Computers, at the time, were hulking mainframes kept in temperature-controlled rooms. The technicians who operated the machines were the only ones allowed to touch them. For the hackers, this was a major problem. There were, at this point, no user guides to computers. The hackers had to get hands on with the machines to figure out how to program them. They experimented by necessity. When they developed something that worked, they shared the knowledge with their community, so that others could try it out, offer their feedback, and help improve it.
Hackers were running build-test-learn cycles decades before Ries wrote The Lean Startup. Lacking the time, money, or inclination to engage in preparatory planning, they became accustomed to building rough prototypes and sharing them with other hackers for feedback. Working outside of commercial development programs, operating without a budget and organisational support, they were led by necessity to proceed through fast, cheap experiments, or ‘hacks’. Steven Levy claims that for the MIT hackers, ‘[hacking] was such a joy that they would have paid to do it’. Software, in their view, was ‘a gift to the world’, and hacking was ‘a reward in itself’.
Steve Jobs was the first entrepreneur to see the commercial potential of hacker culture. When his friend Steve Wozniak hacked together the Apple I with the help of the hobbyists and countercultural mavericks at the Homebrew Computer Club, Jobs saw an opportunity to hack culture. The Apple II was the first commercial breakthrough in the history of hacking, but the challenges of building Apple Inc. crushed the freewheeling culture that had created the product. Jobs’ divisive, dictatorial approach to management contributed to the cultural malaise, and led to him being fired from the company he had helped create. By the time Jobs returned to Apple in 1997, the hacker mindsets and practices that had originally inspired him had evolved another step, making it easier for him to set the company back on track as a boundary-breaking innovation leader.
The open source software company Linux played a major role in evolving hacker culture through the nineties. Linux established the viability of hacking as a way of organizing large scale software projects. Harnessing the connectivity of the World Wide Web, Linux corralled an army of hacker-users and set them to work on creating its open source operating system. The success of the Linux development model established that open collaboration, user-focused experimentation, and continuous iteration were a viable approach to developing quality software. The availability of open source software, meanwhile, drastically reduced the up-front costs of launching an online business, empowering startup culture in the following decade.
The open source movement spawned a generation of hacker engineers, who cut their teeth on open source projects, and grew up hacking to their heart’s content. Mark Zuckerberg was one of them. Zuckerberg’s commitment to open source software waxes and wanes, but he has always maintained a firm commitment to the hacker way. Zuckerberg was almost expelled from Harvard University in 2003 for hacking the university server to build FaceMash, the precursor to Facebook. Shortly after this incident, Zuckerberg hacked together an online study tool for his art history class that enabled students to share insights and information about artworks that were featured in an upcoming exam. Few who knew him were surprised, in 2012, when Zuckerberg added to Facebook’s IPO document a section titled: ‘The Hacker Way’. In his preface to this section, Zuckerberg professes that his aim is to showcase Facebook’s ‘unique culture and management approach’. Facebook is a hacker generation company, the best of breed. Its stellar success has placed it at the leading edge of a phalanx of companies employing the hacker way.
Hacker generation companies like Facebook, Google, Twitter, and Dropbox primed Silicon Valley entrepreneurs to embrace the hacker way years before The Lean Startup was published. The Lean Startup gave expression to the paradigm, and enabled people outside of the Valley to appreciate what was happening on the ground. But the culture shift came prior the book, driven by a generation of hacker entrepreneurs exposed to the open source revolution.
Open source culture was one of several avenues by which hacker practices entered the startup scene. Hacker practices have fed into the IT industry from the early nineties. The cultural evolution in this field came to a head in 2001, with the online publication of the Agile Manifesto. Agile developers, like startup entrepreneurs, start by addressing the customer’s problems. They work in fast-paced, collaborative sprints to develop a simple product that the customer can use to address their problems. Reconnecting with the customer, they get feedback on their design, agree on the next iteration, and do it again.
Agile coach Daniel Mezick underscores the cultural underpinnings of agile method. ‘Agile is a culture hack’, Mezick claims. To make it work, companies need to hack their cultures to enable self-organizing teams. Agile developers were hacking mindsets and practices in Silicon Valley for at least a decade prior to the emergence of the startup way. Business leaders seeking to implement lean method in their companies would do well to reflect on the sequence of this evolution. Lean method is not just a set of processes. It is a form of hacker culture. To make it work, we must lead with a cultural change.
Design is another field in which we see evidence of the hacker way. Design thinkers start by empathizing with the people for whom they are designing in order to identify with their problems. They brainstorm ideas for possible solutions and build stripped back prototypes to test with users for feedback. The more that designers can learn about the end-user, the more they are able to open up the opportunity space they are working with, and the better able they are to develop solutions to the problems they seek to address.
Like agile developers and lean entrepreneurs, design thinkers cycle the process of prototyping, testing, and learning as fast as they can until they have developed a desirable, feasible, and commercially viable solution. This fast, iterative approach to solving problems was initially developed by the design company IDEO, a veteran of the Silicon Valley tech scene. When IDEO founder David Kelly launched the Stanford dSchool in 2004, he established design thinking as a key part of contemporary design education. Simultaneously, he contributed to embedding hacker mindsets and practices into Silicon Valley culture, consolidating the influence of the hacker way.
When business academics look back on the explosion of startup culture in twenty teens, they will cite the inception of agile development, design thinking, and lean startup method as catalytic moments in the history of this cultural evolution. From the vantage point of the future, it will be clear that these approaches did not spring out of nowhere. Their focus on customer and user engagement, rapid prototyping, and testing and learning with a permanent beta mindset indicate a common lineage. These three approaches — the building blocks of the startup way — are expressions of a next generation hacker culture, a culture that developed for decades on the fringes of the tech industry before making the leap from the wings to center stage.
This insight is not merely academic, however. Thinking the startup way as an extension of the history of hacking has practical value both for entrepreneurs looking to start a business and for business leaders who are trying to transform their companies to embrace lean innovation. The thesis offers a fresh perspective on the nature of contemporary startup entrepreneurship and an instructive insight into how to build a hacker innovation culture.
Thinking the startup way as an extension of the history of hacking brings the evolution of entrepreneurship into relief. The tech industry is spearheading a shift toward hacker entrepreneurship. This is changing the way that entrepreneurs go about building businesses. It is also changing what entrepreneurs see themselves as trying to achieve.
‘Entrepreneurs innovate’, Peter Drucker wrote in Innovation and Entrepreneurship (1985). In coming decades, Drucker adds, entrepreneurs ‘will have to learn to practice systemic innovation’. Systemic innovation consists ‘in the purposeful and organized search for changes, and in the systematic analysis of the opportunities such changes might offer for economic or social innovation’. This is good advice, so far as it goes. But it falls short of describing entrepreneurship as it is currently practiced in the startup scene.
Startup entrepreneurs look for opportunities in change. But they seek to define these opportunities by attending to the problems and concerns of people who are dealing with change, engaging with these people iteratively and experimentally in order to open up an opportunity-space. An opportunity-space represents a new realm of commercial possibilities. The startup entrepreneur will seize on one or more of these opportunities. But they recognize that, to be successful, they will need to create a market for their intervention, and thus they typically encourage other entrepreneurs to explore the opportunity-space they have opened, even going so far as to share commercially-sensitive information with competitors to help them achieve it.
Elon Musk is a prime example. Musk’s company, Tesla Motors, was recently voted the Most Innovative Company in the World by Forbes Magazine. But Musk hasn’t built Tesla to exploit an existing opportunity in change. On the contrary, Musk is engaged in a high-stakes gamble, betting against present day commercial realities in an effort to open up a new opportunity-space and thereby transform the automotive and energy markets as they currently exist.
Musk’s problem is climate change. Musk is acutely aware that the world needs to end its fossil fuel addiction fast. Getting petroleum-driven vehicles off the road is part of the solution. Establishing a new renewable energy infrastructure is another major piece of the puzzle. Starting with this significant problem, Musk brought together some of the finest technological minds in the world, and asked: ‘How do we create a market for electric cars? And how do we create a new energy infrastructure to enable this market?’
Musk values problem-solving abilities in his employees over all else. It is reportedly rare to find people who have previously worked at major automotive manufacturers at Tesla. As Jeff Dyer, Hal Gregersen, and Nathan Furr claim in their feature article in Forbes, Musk ‘[selects] people based upon their ability to solve complex problems–not based upon experience’. Tesla design teams start with problems and work fast and collaboratively on the edge of the unknown to solve them. Dyer, Gregersen, and Furr explain:
After hiring folks with a demonstrated ability to solve complex problems, Tesla deploys them in small teams that sit cheek-by-jowl to hasten the solutions. “Our communication allows us to move incredibly fast,” says chief designer Franz von Holzhausen. “That is an element that isn’t happening in the rest of the automotive world. They are siloed organizations that take a long time to communicate.”
The hacker way involves starting with problems, experimenting with solutions, cycling the process as fast as possible, and sharing the results. Musk demonstrated his commitment to open source sharing in 2014, when he announced that Tesla was opening up its patents to anyone who wants to use them. Grilled by Stephen Colbert about his motivations, Musk referred to the problem he is addressing through the analogy of a sinking ship. ‘If we are on a ship together and there are some holes in the ship and we are bailing water out and we have a great design for a bucket, even if we are bailing out way better than anybody else, we should probably share the bucket design’. Over applause from the audience, Musk added: ‘Because we are all going to sink!’
Understanding how hacker culture is transforming entrepreneurship has implications for the way we understand innovation culture too. Companies are learning to think like startups. The hacker way indicates the cultural background that is required to facilitate this transformation. Companies need to create a hacker innovation culture.
Companies that want to bring startup entrepreneurship inside their organization need to establish new cultural norms in addition to implementing new methods and processes. They need to teach employees to embrace a hacker mentality and style of work: fast, collaborative, agile, transparent, driven by curiosity, and focused on big goals like changing the world. This level of cultural change is a major challenge for an established organisation. But a solution is evident if leaders embrace the hacker way.
Leaders need to take their cue from agile development and enlist their entrepreneurial employees as culture hackers. They need to task intrepreneurs with running collaborative experiments aimed at transforming culture and making it conducive to hacking. Culture hackers start with minor interventions and scale them up into major initiatives. A peer learning session, for example, might lay the ground for an Open Space Event, which feeds into hackerthon, a makerday, or a startup pitch-fest. An initiative aimed to shift the system of motivations and rewards in the organisation, like a ‘pay it forward day’ at the staff cafeteria, or a leaderboard for employees who invent productivity hacks that slash layers of bureaucracy, might be scaled up into an organization-wide effort to transform the corporate governance system.
A culture hacking strategy is the best way to transform the culture of a large organisation. Employees learn hacker culture by embodying it. A strategy of culture hacking puts the responsibility for transforming the organisation in the hands of the people who will need to live with that transformation. Employees not only learn to embody hacker culture, they own it.
The rise of the hacker way is the democratization of innovation. Companies that want to embrace this culture need to let their employees lead.
