by Jeffrey Walker
| Jan 15, 2014
Today it seems like everyone and their friend’s brother’s uncle is kicking-off a start-up. Undoubtedly, there are lots of advantages to running a successful start-up: the opportunity to turn something you’re passionate about into a business, the chance to change the world, the freedom of becoming your own boss . . . to name just a few. Business ownership has many benefits. But the reality is that starting a small company takes A LOT of work and commitment, and sadly most often fail. Therefore, you absolutely must adopt strategies to differentiate yourself and do exactly what most others are NOT doing. If, as the statistics tell us more precisely, some 8 out of 10 new businesses fail in the first three years, then you need to adopt what has come to be known as a Lean Approach to running your startup.
As Steve Blank points out in an insightful article, the decades old approach to running a new enterprise has been usually to write a business plan, pitch it to investors, assemble a team, introduce a product, and start to sell it as fast as possible. The business plan offers some market research on the idea and a projected 3-5 year forecast of income, profits, and cash flow. Once you pitch the idea and get funding you then invest in a long, protracted development process to get the product out the door. The problem with this approach however is that that the business plan is written at the desk and has no engagement with what the customer actually wants or needs. Some market research is done ahead of time but there is no attempt to test the hypothesis before investing significant amounts of time and money into the initiative to see if the customers really will buy it.
Eric Reis, the co-founder of and chief advocate of the Lean approach, whose book The Lean Startup has generated ripple effects in the startup industry, has this to say:
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.
The Lean Methodology is an alternative approach to building start-ups and running businesses that in the words of Steve Blank “favors experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional ‘big design up front’ development.”
While it has not yet gone mainstream, in just a few short years since its inception the Lean methodology has begun to turn conventional wisdom about start-ups on its head. The notion of such concepts as developing a “minimum viable product” and “pivoting” have become popular expressions in the business world and are now advocated in business school curricula.
A Lean Startup strategy is comprised of several key concepts and principles that together comprise what has become known as the “Build -> Measure -> Learn” feedback loop:
- Build: Rapidly prototyping and launching the MVP (Minimum Viable Product) as quickly as possible.
- Measure: “Getting out of the building” to understand and measure customer needs through direct feedback in order to validate your assumptions.
- Learn: Using this customer feedback to either “pivot” or persevere in order to further drive implementation and improvement of your product.
In the following series we’ll take a closer look at these vital Lean Start-up principles and provide a sampling of resources and tools that will help apply those principles to developing and marketing your startup. By following these best practices you’ll be well ahead of the curve in adopting clear and competitive advantages for your business.
We’ll kick things off in Part 2 by looking at what it takes to rapidly prototype and launch an MVP (Minimum Viable Product). Stay tuned!
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