Lean Startup is THE ultimate method when building a lean and especially customer-focused startup. The concept can be traced back to Eric Ries who used the concept with great success to revolutionize product development and services offered in almost every industry.
Why You Should Use the Lean Startup Method
Something you really have to avoid as founder is developing behind closed doors and going public with a finished product. Worst case – you invested a lot of time and money without designing a product that satisfies your target group. Lean Startup prevents that. Using this lean and customer-centered method you build an iterative process that factors in possible changes and customer requests at all developmental stages.
The reason is simple: Your overarching goal as a founder should be the development of a product or a service that solves a particular problem your target group is challenged with and consequently is seen as relevant on the market. In our fast-paced society, product requirements and customer requests change constantly. Meaning: You shouldn’t finalize the two most important milestones of your startup journey – Problem-Solution-Fit and Product-Market-Fit – just once and never change them again.
Five Basic Principles Of Lean Startups
- Consider everything that you think you know about your market as an unproven assumption which must be validated.
- Test every single hypothesis on your target group
- Replace refuted hypotheses with new assumptions that must tested again.
- Don’t take huge risks until you have validated all assumptions.
- Learning quickly is the only thing that really counts.
How Do Lean Startups Work?
The core of the Lean Startup Method is getting early, and continuous, customer feedback on your product so that you can test your previously established hypotheses and, if necessary, adapt them accordingly. Learning by doing, basically. Also, developing a first version of your product, the so-called MVP – Minimum Viable Product, as early as possible is important so that you can test it on the market and reduce development time and cost. Product factors that must be tested could, for example, be pricing, design, or distribution channels.
If you use Lean Startup for developing your Startup’s product you can keep your developmental process as lean as possible. This reduces the risk of failure for your idea. Why exactly? Because you don’t develop the idea in your own head and only trust your own hypotheses but you expose your idea to the market and the target group very early.
Ask for feedback and tailor your product development exactly to the wishes of your customers. This is an iterative process where you continously develop, test, learn and optimize something – build, measure, learn!
Build-Measure-Learn: The Heart of Lean Startup
The foundation of the Lean Startup is the so-called buil-measure-learn-cycle. This means that you as a founder follow these steps when developing your product:
- HYPOTHESIS – Establish a hypothesis or an idea, respectively, and find out how you can test it on the market so that you can either prove or refute it. A well-known method is A/B testing. Keep those tests as small possible so that you can use them quickly.
- BUILD – This stage is about carrying out the testing. Depending on your business case and the hypothesis that needs testing you can create e.g., a Mockup or a MVP.
- MEASURE – This stage is about evaluating your tests and measuring their success. The individual instruments of measurement depend on the testing. Essentially, you should filter and analyze the gathered data by quality or quantity.
- LEARN – This is the decisive phase of the cycle because you now have to adapt. Based on the data and the trends you have gathered during the measuring phase you have to decide what to do next. There are two possibilities: Either your hypotheses were proven and you can continue developing or your hypotheses turned out to be wrong and you should pivot, taking your concept in a new direction.
The Lean Startup method’s mantra is “fail fast, fail cheap”. The more often you apply the build-measure-learn-cycle, the more you will avoid problems in your product development process, from business idea to launch.
The Method’s Origin
Eric Ries is hailed as the initiator of the Lean Startup movement. A blog article and his subsequent book “The Lean Startup¨ (publ. 2011) has made him possibly the no. 1 on the reading list of many aspiring founders. Not surprisingly, since his concept can be a decisive factor for success when building fresh companies.
His ideas can be traced back to the Lean Manufacturing model that had been first used by Japanese car manufacturer Toyota. The concept was meant to optimize overall productivity, individual factors in production, product quality in general, and flexibility within the complete process. It worked.
So, Ries took the Lean Manufacturing Model and adapted it for a more general use in company building. The result was the Lean Startup model which is nowadays considered to be a revolutionary milestone in the world of startup launches.
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