80% of innovations fail in the market - this framework allows you to prevent that!
Photo by Daria Nepriakhina on Unsplash
What you will get from this article:
What is Lean Startup?
The Lean Startup Feedback Loop
What is MVP (Minimum Viable Product)?
What are the potentials of Lean Startup?
What Is Lean Startup?
If you ever consider starting your own business, or simply interested in the startup ecosystem; you must have heard of “From Zero To One”, “MVP”, “Lean Startup”, “Design Thinking”, “Agile”… to name but a few. These terms seem pretty straightforward, but there’s a lot to learn if you dive deep into one of them. This Medium post will guide you through the basics of Lean Startup!
“The Lean Startup provides a scientific approach to creating and managing startups and get the desired product to customers’ hands faster. The method teaches you how to drive a startup and grow a business with maximum acceleration. It is a principled approach to new product development.” ― Eric Ries, The Lean Startup
Lean Startup method aims to shorten the product development cycles and discover if a proposed business model is viable with the least resources spent. If you already have a business idea in mind, a lean startup teaches you to start fast without spending too much time on trivial details such as writing business proposals, quickly launching the products, pitching investors…
On the contrary, the biggest advantage of Lean Startup is to minimize the risk and cost of creating products or services that no one wants and helps you to identify the value that customers will embrace. That is to say, you should only invest 100% and scale once you are sure it is the right path, the products have market needs, and can solve the pain points of the customers.
The Lean Startup Feedback Loop
Lean Startup Process Cycle (Gartner, Inc. 2018)
The Lean Startup feedback loop constitutes of 3 main elements — Build, Measure, and Learn. It helps establish and continuously improve the effectiveness of new products, services, and ideas quickly and cost-effectively.
Furthermore, it’s also a process where you should keep on going around the loop as you develop your product. This trait echoed with what Eric Ries emphasized that “If you cannot fail, you cannot learn.” Once you learn something faster than the others, you have the chance to win. Thus, if you encounter something that doesn’t match your original assumptions, go back and make new ones and then test the improved ideas with your customers until you eventually deliver precisely what they want.
Minimum Viable Product (MVP)
Photo by Amélie Mourichon on Unsplash
Before we discuss more about the cycle, one important term Minimum Viable Products (MVP) needs to be explained.
“The lesson of the MVP is that any additional work beyond what was required to start learning is waste, no matter how important it might have seemed at the time.” ― Eric Ries, The Lean Startup
That is to say, MVP is one of the crucial implementations of the Lean Startup method. It doesn’t require you to make complicated products to test the assumptions; instead, “remove any feature, process, or effort that does not contribute directly to the learning you seek.” The simple rule suffices. It is not necessarily the smallest product, but the fastest way to start learning how to build a sustainable business with a minimum amount of effort.
For example, if you want to see whether clients will like your APP, you don’t have to start building one right away. Instead, draw your APP mockups on a paper like the above picture shows, and then present this to your TAs to see what are their instinct behaviors and what additional functions they need. Or if you want to sell some products and not sure whether people will like it; run a focus group to show them the products, get some feedback, and then sell them first on Facebook Marketplace/ group to see the response. These are just one of the ways you could do to utilize MVP to achieve Lean Startup!
Build-Measure-Learn
The method is a feedback and learning loop for establishing effective products, services, and ideas; and doing it as quickly and cheaply as possible. The following four steps will guide you through the process:
Plan the experiment and initiate the formula hypotheses
Build a minimum viable product and test it on your TAs
Measure the results and see whether they match your assumptions and whether this business model is viable
Learn from the results, and decide whether to pivot
Cycle back to the beginning of the loop until you develop the right product
Conclusion
The Lean Startup is a continuous learning process where you can make timely adjustments with the least investment. There are multiple successful startups/ big companies that best demonstrate how the Lean Startup method guides them at the very beginning of their businesses — Zappos, Dropbox, General Electric, Qualcomm, Intuit, and many more have all used the method. For example, Dropbox used a video to test product-market fit; GE developed a new battery for use by cell phone companies in developing countries where electricity is unreliable.
For the past few decades, society value establishing strategies and tools for companies to maintain operations and efficiency. Nowadays, companies are facing some disruptive innovations that they have to seek new business solutions and models to tackle these challenges. The pressure for changes force startups, corporates, organizations, and even the governments to innovate with efficiencies and the least resources wasted. And this is exactly why Lean Startup has shown its value and gain tremendous awareness lately.
Photo from Gartner, Inc. (2016)
Gartner had proposed an integrated method that combines Design Thinking, Lean Startup, and Agile. All these methodologies emphasize on the final users through direct feedback. The loop also ensures that no product is created without a purpose to the final user. This is different from the traditional way to start building a real product based on a list of pre-decided features instead of the actual needs of the customers. This new model could be something interesting to look into if you want to learn more about how it can potentially reduce the risk of failure for companies.
For more information on our corporate and startup programs, and modules that integrate the lean startup framework, book your free consultation here. We are looking for to connect!