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Lean Startup Methodology and its Benefits

“Lean Startup” is a common word in the startup world. It was first introduced by entrepreneur Eric Ries in 2008 and is a system for creating a business. If you want to know the entire lean startup methodology and philosophy, you can refer to The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Business by Eric Ries. Knowing it will change your approach towards business. This post is to give you a quick overview of this model so that will raise an interest in you.

The beginning of the Lean Startup

The beginning of the Lean Startup can be cited with a risk. For those who are not familiar with risk, it is the characteristic that distinguishes a startup from any other type of business. You may feel it terrible to imagine the experience of quitting a stable, secure job to venture into the unknown.

Rigorous experimentation and a commitment to learning are essential to help companies navigate and minimize these risks through minimum viable products. Adhering to the lean startup methodology is all about creating a sustainable business with minimal waste of both time and money is at its core.

There are two things out of which this concept grew - two failed businesses in Ries’ own portfolio and the streamlined process of creating cars that were developed in Japan after World War II.

While evaluating his problems, Ries saw that he’d spent a lot of time and money building products without ever confirming that those products were solving a real problem. Obviously, they flopped.

The Japanese model of building cars involves reducing and eliminating waste in order to get the end product to the customer at the lowest cost for the highest value. In this model, Ries’ saw a system that could be applied to entrepreneurship.

Disruptive innovation comes from cross-functional teams, comfort with failure, and a rigorous commitment to learning. All the companies, be it large or small, can be a startup. For almost any type of organization, entrepreneurship is a crucial function.

Build, Measure and Learn Lean Startup Methodology

From their initial idea to their design choices to any features, they’re considering adding, entrepreneurs that practice the lean startup methodology are encouraged to question everything.

Entrepreneurs discover their minimal viable product in the following process, which Ries encourages to release to a select group of test customers to determine what improvements need to be made.

A “smoke test site” that is used to validate interest in your product or service while offering a low barrier to entry is a good example of an MVP that fits within lean startup philosophy.

A smoke test site is one that is just a facade. You may feel it like a real service, but in reality, it is just a flat site with no back-end, nothing built out, and no real actions. You can use it easily to track and estimate demand for your business idea. They can also be used to help gather contact information for people who may be interested. This site is mainly to see if anyone tries to buy.

The feedback from the initial group of test customers helps entrepreneurs learn what’s working, understand what isn’t, and figure out what direction they should go, even though the MVP is often extremely minimalistic.

The general idea is that startup founders should follow the model repeatedly, with the goal of turning that MVP into a sustainable business. Ries has named this model “build-measure-learn”. Mostly, this feedback leads founders to pivot from one idea, market, or niche to another in their quest for a great product.

On an idea by idea basis, innovation is a high-risk sport. However, you can dramatically increase the quality and reliability of your outcomes in the way you manage new concepts.

An important part of the lean startup movement is creating structured ideas and then figuring out creative ways to test them, not to mention the scientific method itself. Even if you’re short on resources,  it turns out it’s a great way to innovative.

As creators have to be willing to not only put their creations out into the world before they’re “finished” but also take feedback and implement it, the build-measure-learn is a research-intensive process that can be emotionally fraught.

The lean startup methodology can lead to a company that serves its client’s needs, is sustainable, and is verified before the founder even starts looking for funding, if done properly. A prime example of a big company that used his methodology to get where they are today is Dropbox.

The “Build-Measure-Learn” Method

The goal of Build-Measure-Learn is to maximize learning through incremental and iterative engineering, not to build a final product to ship or even to build a prototype of a product. The “build” step refers to building a minimal viable product. An MVP is not the product with fewer features, it is the simplest thing that you can show to customers to get the most learning at that point in time.

The real intent of building is to test “ideas” not just to build blindly without an objective. The goal of Build-Measure-Learn isn’t just to build things, it is to build things to validate or invalidate the initial idea.

The fact is that the focus on testing specific ideas counters the concern that Build-Measure-Learn is just throwing things against the wall and see if they work.

New ventures don’t start with “ideas” which is what Build-Measure-Learn misses. They start with a hypothesis.

Remember that the words “idea ” and “hypotheses” mean two very different things. The word “idea” conjures up an insight that immediately requires a plan to bring it to fruition for most innovators. On the contrary, a hypothesis means we have an educated guess that requires experimentation and data to validate or invalidate.

The lean startup begins with acknowledging that your idea is simply a series of untested hypotheses is a big idea. As what you build needs to match the hypothesis you want to test, it is a really big idea.

To build to find the right customers, the minimum viable product you’ll need is different from the minimum viable product you need for testing pricing. This is different from an MVP you would build to test specific product features. Another important thing is that all of these hypotheses change over time as you learn more.

Lean Startup Methodology Pushback

There has been some pushback against the lean startup methodology since the release of Ries’ book in 2011. Too easy to oversimplify is the main criticism, which is valid.

It is true that the basic elements of the lean startup are simple., but on the whole, it is a complex system. You can’t just pick and choose the parts that you like and leave the rest, it is similar to any other system.

Read the books and really study the methodology if you’re interested in using the lean startup methodology to build your next venture. Thorough research is very much essential.

As it is a research-intensive process, this has to be considered as the initial step a test to see if you’re up for the challenge. You might want to consider another approach if you find yourself faltering.

Even though the popularity of lean startup methodology makes it seem ubiquitous, also isn’t the only model out there for launching a company. You can also consider he Lean Analytics model, the Effectuation model, and the Timmons model as other possible ways to build a successful startup.


Related Reading

The Lean Startup and the Changes that Happens