Lean Start Up, What does this mean for you business?
Launching a new enterprise has always been a challenging, how do you predict what will work and what won't? It is uniquely challenging and something I grabble with in my day job. Typical people coming to me for investment will write a business plan, pitch it to me and other investors, assemble a team or we help them do so, introduce a product, and start selling as hard and as fast as they can until something goes wrong and the business fails.
Sometimes, it is down to competition, sometimes it is down to the market not being large enough or as big as expected, sometimes it is down to not careful managing cash and quite often it is down to management, which is why I always invest in people.
top image credit:http://coriolisconsulting.com.au/wp-content/uploads/2016/04/LeanStartup.jpg
There is however a relatively new theory based and grounded in experience of starting up companies, that changes this. It's called the Lean Start Up.
Appealing very much to my scientific mind, The Lean Startup provides a scientific approach to creating and managing startups and get a desired product to customers' hands faster. The Lean Startup method teaches you how to drive a startup-how to steer, when to turn, and when to persevere-and grow a business with maximum acceleration. It is a principled approach to new product development that the founders of Feathr talk about in the corresponding blog to this post.
Too many startups begin with an idea for a product that they think people want. They then spend months, sometimes years, perfecting that product without ever showing the product, even in a very rudimentary form, to the prospective customer. When they fail to reach broad uptake from customers, it is often because they never spoke to prospective customers and determined whether or not the product was interesting. When customers ultimately communicate, through their indifference, that they don't care about the idea, the startup fails.
This is critical, why develop a product, spend thousands and in some cases millions on something that no one wants? and yet it is not hard to do rudimentary market research, people like to talk, especially if you are showing them something they might want to buy, or can test for free, or are incentivised to use because it will be discounted to them at launch. The successful Indiegogo and Kickstarter platforms are based on this premise, you can try a product with customers willing to pay, before you spend thousands making it.
Because startups typically cannot afford to have their entire investment depend upon the success of one single product launch, the lean startup methodology proposes that by releasing a Minimum Viable Product that is not yet finalized, the company can then make use of customer feedback to help further tailor their product to the specific needs of its customers. Using early adopters, people who typically would buy something new and innovative, to test out a product ensures it is ready for the mass market or the more conservative buyers, who need to see product reviews or popularity first.
Rather than engaging in months of planning and research, entrepreneurs accept that all they have on day one is a series of untested hypotheses—basically, good guesses. lean start-ups use customer development to test their hypotheses. They go out and ask potential users, purchasers, and partners for feedback on all elements of the business model, including product features, pricing, and distribution channels. The emphasis is on speed. New ventures rapidly assemble minimum viable products and immediately elicit customer feedback. Then, using customers’ input to revise their assumptions, they start the cycle over again.
Unlike typical year long product development cycles that presuppose knowledge of customers’ problems and product needs, agile development in lean start ups, eliminates wasted time and resources by developing the product iteratively and incrementally. It’s the process by which start-ups create the minimum viable products they test.
With the advance of social media as a means to sell your business and your product, the lean model does lend itself well to creative businesses who can quickly knock up some of their product ideas and put them in front of a large audience on the likes of Instagram, to see how well they sell, if they don't, you pivot and do something else, if they do you invest in producing more, expanding off the back of real customer engagement.
The Girl with The Green Sofa