{"id":267,"date":"2013-08-06T23:50:00","date_gmt":"2013-08-06T23:50:00","guid":{"rendered":"http:\/\/scqa.hult.edu\/en\/news\/hult-labs\/2013\/august\/the-lean-mindsetand-what-it-takes-to-measure-innovation\/"},"modified":"2026-03-23T13:24:08","modified_gmt":"2026-03-23T13:24:08","slug":"the-lean-mindset-and-what-it-takes-to-measure-innovation","status":"publish","type":"post","link":"https:\/\/www.hult.edu\/blog\/the-lean-mindset-and-what-it-takes-to-measure-innovation\/","title":{"rendered":"The Lean Mindset\u2014and What it Takes to Measure Innovation"},"content":{"rendered":"<p>At the 2012 Olympics in London, Om Yun-chol, of North Korea, won a gold medal for weightlifting in the men\u2019s 56kg event. He did it by lifting three times his body weight\u2014only the fifth man ever to do so. Think about that next time you\u2019re moaning about retrieving your suitcase from an overhead compartment. It doesn\u2019t just take brute strength to lift an incredible amount of weight\u2014it takes mental toughness. It takes a very specific mindset that\u2019s shaped and chiseled by hard work, achievement, failure, and the kind of resilient drive that allows you to steamroll through obstacles. So you may wonder: how much does this apply to business? How about 100%?<\/p>\n<p>Whether you are interested in lifting twice or triple your body weight (good luck with that) or starting up what you hope will be a successful business venture, your mindset will make or break you. In our <a href=\"https:\/\/www.hult.edu\/blog\/the-lean-startup-methodology-a-movement-transforming-business\/\">last post, on Lean startups<\/a>, Professor Mike Grandinetti had this to say on the approach: \u201cIt\u2019s a different method that requires a great amount of discipline, intellectual honesty and humility. You just can\u2019t do it halfway. It\u2019s necessary for you to re-frame your mindset in order to be able to say: I don\u2019t know\u2014the market knows.\u201d\u00a0 Confronting that level of ambiguity takes mental toughness.\u00a0 But it also takes more than that, especially when taking those first steps to turn an idea into a business.<\/p>\n<p>In her article \u201c<a href=\"http:\/\/startupbeat.com\/2013\/05\/08\/ground-rules-for-a-startup-build-your-app-with-a-lean-but-bold-mindset-id3240\/\">Ground Rules for a Startup: Build Your App with a \u2018Lean, but Bold\u2019 Mindset<\/a>,\u201d raw engineering CEO, Neha Sampat writes: \u201c[Our company] has enjoyed its initial success because we have maintained a certain mindset: cost-conscious, bold, simple, and most of all, humble.\u201d Sampat includes other nuggets to consider when building a Lean venture\u2014some of which may sound counterintuitive to the traditional startup model (because they are): \u201cEmbrace your garage; there\u2019s no need to run and get an office.\u201d And, \u201cThe world is your sounding board\u2014talk to everyone&#8230;if you don\u2019t put your idea out there, it cannot manifest into a market-ready product.\u201d All this to say that it\u2019s wise to plan ahead (call it training?) before taking those initial steps to build a Lean business. After all, Om Yun-chol didn\u2019t lift his greatest weight when he walked into a gym the first time.<\/p>\n<p>OK, you\u2019re probably getting the point that starting a business and staying competitive takes several crucial mental elements and attitudes. And perhaps you already knew that. But there\u2019s one more critical piece to consider as part of the mindset shift, which Professor Grandinetti also brought up with Hult Labs: \u201cThe traditional mindset is all about using financial ratios to measure the success of an idea\u2014something you can\u2019t do early on with your venture because you have no meaningful financials at this point\u2026Rather than financial ratios or traditional accounting metrics, you should use something known as innovation accounting.\u201d Eric Ries, who created Lean Methodology (and which has origins in lean manufacturing) has joked that there\u2019s a big difference between innovation accounting and \u201cinnovative accounting.\u201d We\u2019ll explain.<\/p>\n<p>The Financial Times Lexicon describes <a href=\"http:\/\/lexicon.ft.com\/Term?term=innovation-accounting\">innovation accounting<\/a> as \u201cthe rigorous process of defining, empirically measuring and communicating the true progress of innovation\u2014such as customer retention and usage patterns\u2026When traditional accounting measures are used to measure innovation, it often has the effect of stifling or suffocating the new product or start up company [because] traditional accounting tends to work best when measuring established products.\u201d<\/p>\n<p>The definition goes on to point out that typical key performance indicators, like ROI, financial ratio analysis, and cash flow analysis are not very useful when a fledgling startup is \u201cburning cash well in excess of revenue.\u201d In this way, traditional accounting metrics can actually fail startups in a really big way because they don\u2019t truly capture what matters most as a startup is, well, starting out. Any wonder why you sometimes hear that accounting is killing innovation?<\/p>\n<p>During the Inc. GROWCO Conference in 2012, Ries asked audience members to imagine themselves as part of a startup that had failed to produce revenue in its first year of existence. Imagine further, suggested Ries, that you get a second chance\u2014and one more year\u2014to try again. So a year later, you pay a trip to your VC to provide a progress report. And here\u2019s where the VC could use a little telepathy, because: \u201cThey literally cannot tell the difference between whether you have spent the last year actually on the brink of success, or\u2026goofing off and doing nothing,\u201d says Ries. \u201cIn both cases the numbers would be very much the same\u2014very few customers and no revenue\u2026A+ or F [performance] looks exactly the same using the standard accounting methods of the 20<sup>th<\/sup> century.\u201d<\/p>\n<p>The bottom line is this: Lean Methodology isn\u2019t for the faint of heart; it requires shifting some pretty ingrained thinking about how to start a business, and the type of key indicators you need to track progress. But if you hold firm to the main tenets of the process, it could increase your chances of translating a really great idea into a business venture that works. And it will take some mental toughness, along with believing in something others view as an impossible feat\u2014just ask Om Yun-chol.<\/p>\n<p><em>Photo courtesy of <a href=\"http:\/\/www.flickr.com\/photos\/betsyweber\/\" target=\"_blank\" rel=\"noopener\">Betsy Weber<\/a>.<\/em><\/p>\n<p>Like game changers? Break the mould in the business world with a <a href=\"https:\/\/www.hult.edu\/en\/programs\/masters\/disruptive-innovation\/\">Masters in Disruptive Innovation from Hul<\/a>t. To learn more, take a look at our blog <a href=\"https:\/\/www.hult.edu\/blog\/why-every-leader-needs-growth-mindset\/\">Why every leader needs a growth mindset<\/a>, or explore overall business challenges with a Masters in International Business instead. Download a brochure or get in touch today to find out how Hult can help you to find out everything about the business world, the future, and yourself.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>At the 2012 Olympics in London, Om Yun-chol, of North Korea, won a gold medal for weightlifting in the men\u2019s 56kg event. He did it by lifting three times his&#8230;<\/p>\n","protected":false},"author":4,"featured_media":1856,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[24],"tags":[180],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v18.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Lean Mindset\u2014and What it Takes to Measure Innovation | Hult International Business School<\/title>\n<meta name=\"description\" content=\"At the 2012 Olympics in London, Om Yun-chol, of North Korea, won a gold medal for weightlifting in the men\u2019s 56kg event. 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