Nobody has the ability to read the mind of a customer, but the Lean Startup method is about as close as you can get. Every entrepreneur’s nightmare is committing vast amounts of passion, time and energy to a product which will ultimately fail to sell. The Lean Startup method overturns the classic way of starting a new business – going straight from a business plan to the completed product – and involves the customer in the process from the get-go, so you minimise risk, save time and create something that people can’t wait to get their hands on.
Let’s face it – when you’re creating a new product or service, you’re gazing into a crystal ball. No matter how much research you’ve done, ultimately you’re making an educated guess about what people will want. Whether you’re launching a startup or an initiative within a large corporation, the classic formula dictates that you start with a business plan. This document describes the size of an opportunity, the problem to be solved and in what way the product will solve it. It usually involves predicting how the venture will perform financially in the coming five years, even if the product doesn’t exist yet. A classic business plan is written in solitude, backed by research but lacking any input from customers. You proceed to pitch the plan to investors, assemble a team and build the product. Then, you introduce it into the market and hope for the best.
75% of all startups fail, so an educated guess most likely won’t be enough to make it as a business. You need to stand out from the crowd by knowing what your prospective customer is looking for and adapting to this at a fast pace. When done right, the Lean Startup method teaches you how to grow a business with maximum acceleration.
How does it work?
The Lean Startup method was introduced by entrepreneur, blogger and author Eric Ries. When two of his past ventures failed, he realised that he lost a large amount of money and time building products without ever verifying if they solved a real problem. They didn’t and naturally, the products flopped. Ries knew he needed to build his business in a way that would cut back the risk of this happening again.
As the founder of a lean startup, you don’t start by writing a business plan, but by searching for a business model. Instead of writing a detailed plan based on assumptions, you use a framework called The Business Model Canvas to summarise your hypotheses. The Business Model Canvas is dynamic and changes over time. Founders of lean startups test their hypotheses and learn from their own misconceptions and failures. You will fail, but believe it or not, this is the best thing that can happen to your business.
Success through failure
Failure in the right circumstances is what makes a startup thrive. It’s important to realize that failing quickly means winning in the long run. A lean startup will most likely get it wrong multiple times before finding the ideal approach. The Lean Startup method uses a minimum viable product (MVP), which is an extremely basic version of your product, and introduces this to customers early on in the process. An MVP is not a costly, labor-intensive prototype, but rather a rudimentary version with just enough features to be able to gather feedback from customers. This way of developing eliminates wasted time and resources. An MVP is minimalistic, but helps you to learn what’s working, what isn’t and in which direction to steer the business. You can use this information to quickly change your product or business model to meet consumer needs. If an idea doesn’t work out in the real world, it’s best to find out fast and adapt. Sometimes you need to make small adjustments (iterations) to your idea and other times the collected input might call for more substantial ones (pivot).
And you don’t ask for customers’ opinions once – you keep interacting with real-life buyers throughout the whole creative process. There will be many development cycles, each giving the product a better chance of surviving and even thriving in your market of choice. Building the final product will come at a later stage, when feedback has been implemented time after time, ideas have shifted, MVP’s have been tested and you know you’re creating something of real value. If you think that sounds like a lot of work – think about the amount of labour wasted when you create a fully functioning product only to find out that no one is interested in buying it.
Why Lean Startup?
Every entrepreneur knows that launching a startup can be wildly thrilling, but is not without personal and financial risk. The Lean Startup method helps minimise risk by implementing the build-measure-learn feedback loop, which is at the core of the Lean Startup methodology. Build your MVP, listen to the input of customers and learn from it. The Lean Startup method is a process that will allow you to create a made-to-measure solution to a problem that exists in the real world, while doing this fast and cost-effectively. If you want to create a sustainable business with minimal waste of both time and money, the Lean Startup method is for you.