If you follow the startup ecosystem around the world, the term “lean startup” might sound very familiar to you. A lean startup approach is one of the most effective ways to build and grow your startup. This concept was first introduced by entrepreneur Eric Ries in 2008 and then outlined in his 2011 book The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Business.
If you want detailed insight into what the lean startup approach, I would highly recommend you to read this book. However, if you are looking for a brief insight into what this approach is all about, then just continue reading here.
Why Lean Startup?
In his book, Eric Ries explains that the standard approaches to business development are not applicable when it comes to startups. The playing field is a bit different here. Startups are based on innovation, risk-taking, have different objectives, and are funded and scaled differently. They follow a path based on innovation and not one that is set as standard for businesses.
Following the lean startup approach enables you to get your product into the customers’ hands faster. It is a principled approach that teaches you what route to take with your startup, when to pivot, and how to sustain and grow. It is all about creating a sustainable business with minimal waste of both time and money.
Key Components of The Lean Startup Approach
1. Minimum Viable Product (MVP)
This is a very important part of the Lean Startup approach. An MVP is basically a demo, pilot, or prototype of your future service or product with a minimum amount of effort and time. An MVP should have key features of your product. It is created so to serve as the idea proof in an initial stage and also to obtain feedback so that changes can be made accordingly. Hence, a lean approach is based on the customers and caters to their needs and requirements.
2. Pivot
The lean approach implies that no initial idea is the final one. It is always tested, changed, and improved according to the response from customers as well as critics. Such change is called pivot, and the startup’s success largely depends on its ability to pivot. If you are a founder it is essential that you accept that your startup may need to pivot in the future. Because that would be in the best interest of your startup which is exactly what the lean startup approach teaches.
Several founders are unwilling to make pivots since they find it hard to let go of their idea which seemed to be perfect. Pivoting does not mean that your startup failed. It only means to adapt and innovate. In fact, a prompt and correct pivot can save the business.
Key Principles of The Lean Startup Approach
1. The lean startup approach can be a applied to a company of any type and size.
2. Entrepreneurship is all about effective management. The manager should effectively deal with unexpected and difficult situations. Also, innovation should be facilitated and employees should be encouraged to try new different ideas.
3. The Lean approach sees action as something necessary to achieve validated learning. All the hypotheses should be empirically proved. This includes three stages: (1) building a minimum viable product and obtaining feedback and critic on it, (b) trying to put the baseline closer to ideal rates; (c) Picking a direction or accepting that a pivot is required.
Also, it is extremely important to pay attention to the correct metrics and statistics. For instance, likes in social media are so-called vanity metrics that do not represent the actual value. Instead, focus on the engagement that the site or page receives.
4. Build-Measure-Learn loop. This lean startup principle suggests that the product should be launched and put into the market as soon as possible.
Ideas → Build → Product → Measure → Data → Learn. It represents a sort of a trial and error approach to check and analyze what the response is.
5. Innovation Accounting. An entrepreneur should know how to monitor progress, set up deliverables, and understand how to prioritize work. An assessment of the current position of the startup is essential. Improve or pivot accordingly.
Adopting a Lean Startup Approach enables you to look at your startup in a more critical way. You are able to keep your vision in check. At its core, this approach teaches you to work smarter and not harder. You will find this methodology being applied in startups of all sizes all over the world.
