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China, the Lean Startup

The Financial Times, among others, recently reported that China is going to experiment with allowing Hong Kong banks to lend directly to Chinese companies in RMB within a special zone in Shenzhen. It’s poignant that this is happening in a Special Economic Zone, which also started out as an experiment that was then duplicated in other parts of China, and finally led to widespread changes in the Chinese economy.

This type of approach, at a national level, is nearly equivalent to the Lean Startup approach of rapidly iterating, testing an idea in the market with an MVP, and then iterating based on the feedback. In China’s case, it regularly creates experiments like this and then, based on the results of those experiments, determines how elements of the experiment can be implemented in the rest of the economy. Indeed, this can even be likened to the Lean Startup approach of Split, or A/B, testing, where you test different approaches to see which version leads to better user feedback or better overall results, and then make changes based on the results of the experiment. These micro-experiments are critical to learning about the market, and therefore to entrepreneurial success. Although the approach at the national level is slightly different from the approach for entrepreneurs, I believe the analogy is still valid and provides further support for the benefits of small experiments while rigorously gathering user feedback.

This basic idea is something I frequently return to during my work. For example, I was recently discussing a business idea with an entrepreneur in China, and kept returning to the fact that we just didn’t know how the market would respond to the idea, so we had to figure out a way to get the MVP in front of some customers and see if the value proposition did, indeed, provide value. This is true in any industry, but is especially true in internet and mobile app development; you just never know what is going to be interesting to people, or what is going to take off. So, you just need to identify a problem or pain point and then experiment with different ways to solve it for people, testing and learning as you go.

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