What is a Lean Startup? (Part 1 of 3)
Imagine you have created the most delicious snack food on the planet, but no one has ever heard of it. Not only does it taste good, it’s not bad for you either. You realize there is a gap in the market and decide that the world must be introduced to this wonderful item. So you go down the path of building a company, including hiring employees, developing a website, and even opening a storefront. You’re all excited for your grand opening launch and then…nothing. No customers. No sales. Crickets.
Believe it or not, this is exactly how many businesses used to launch themselves – with plenty of fanfare and bravado, only to realize that their customer base just doesn’t exist. Maybe they aren’t interested. Maybe it’s not as tasty as you imagined. Maybe there’s some ethical reason why people don’t want to consume it.
Whatever the case may be, the Lean Startup methodology aims to correct this common, flawed practice of building a business. Created by Eric Ries, after witnessing a similar failure to the one above for the site There.com, the idea behind the Lean Startup is to launch a business quickly using the least amount of resources possible.
The idea has multiple benefits, including:
- Minimizing funding requirements
- Opportunities to acquire feedback from customers and incorporate it into your growth
- Maintaining a nimble structure while adapting to rapidly changing markets
While operating a lean business is often associated with the tech world, the principles of it generally apply to a range of companies and industries. Ries’ methodology is broken out in a book via three areas. They are:
The first step is to adopt what Ries calls ‘validated learning’ to determine whether your business concept is valid – not just today, but in the long-term. Ries challenges entrepreneurs to gauge whether they are making progress, in part by using an adapted version of scientific experimentation.
Once your vision is validated, Ries has instructions for how to build a minimum viable product to test key assumptions about the product, market, and customer base. The good news? If you find some of your assumptions are challenged, the methodology also incorporates a gauge for when it’s time to pivot, and when it’s time to stay focused.
The final step is to apply the Build – Measure – Learn feedback loop (established during the Steer segment) as quickly as possible to stimulate growth. Assuming your product or idea has enough juice to take off, the methodology provides a vision for the future, one that encapsulates the next wave of business concerns – from manufacturing to scaling up to organizational design.
Ideally, the Lean Methodology should be applied to all aspects of your business. It’s not just about getting the business off the ground by determining its viability. You can also apply it to parts of the business that will help you grow – like your brand. Jump next entry in our series on Lean Startups, where we’ll talk about Lean Branding.