So many entrepreneurs spend months or years developing a product or service to have it flop when it’s finally introduced to the market. At that point they’ve invested a lot of time, energy and resources. The sad thing is they may not have sufficient funds or resources to make adjustments and save their company when this occurs.
Fortunately, you don’t need to take this sort of risk because there’s another way. It’s a process of identifying a need in the market while minimizing time and money invested. You can get your product or service to market faster while creating a product the market desires. This minimizes your risks and increases the odds of long-term success for your start-up.
This process is Eric Ries’ Lean Start-up Methodology. It involves working smarter, not harder, as you determine if your product or service is viable to support a sustainable business. At this point, you’re probably wondering how to go about applying Lean methodology to your start-up.
The Lean Start-up process
First, let’s take a look at the process employed by the Lean methodology. It involves:
Working smarter – not harder by developing a minimum viable product (MVP)
Learning when it’s time to course correct
Instead of taking a “just do it” approach, to eliminate uncertainty the Lean Start-up approach allows you to continuously test your idea. It makes it possible to identify failure proactively and inexpensively by putting a better process in place for the development of your product or service.
Where most entrepreneurs have historically pursued an answer to the question, “Can this product be built?” This methodology views every start-up as an experiment designed to answer the questions, “Should this product be built?” and “Can we build a sustainable business around this set of products and services?” Working smarter, not harder, by developing a minimum viable product (MVP), allows you to actually test the marketplace instead of simply guessing at the answers. If the MVP is well received, the next step is to secure early adopters by running a campaign. Having these customers makes it possible to gauge interest and gather feedback concerning interest in your offering as well as what needs to change so it’s more attractive to them.
When you have a winning MVP developed, continue adding early adopters and collecting their input on your product or service as it evolves. You’ll be able to gradually add employees to support your growing needs as you eventually start building product. By following this process, you’ll already have established customers when you reach the point where you’re ready for full-scale distribution. And, along the way you will have worked out the bugs and developed concrete specs around what needs to be built.
The build-measure-learn feedback loop employed by Lean Start-up methodology makes it easy to learn when it’s time to course correct. It involves identifying the problem in the marketplace that needs to be solved and creating a minimum viable product (MVP) to start the quick learning process. Through measurement and learning from actionable metrics you’re able to determine if the company is moving in the right direction or if it’s time to make adjustments to the product or strategy.
Unlike manufacturing where the measurement is quality of goods produced, Lean Start-up progress is measured by validated learning. This process can accelerate development considerably by helping you figure out the thing that customers want you to build and are willing to pay for without investing money on an untested product and traditional beta launch. Instead, you’re able to adapt as your product evolves throughout the process.
Five Lean Principles
The Lean Start-up process is based on five key principles. They include:
Entrepreneurs are everywhere is the first principle of the Lean Start-up. The start-ups of the past were often known for starting and working out of a garage. Today they begin anywhere, including a room in your home, and grow from there. There’s never been a better time to innovate than now.
Entrepreneurship is management is the second principle, based on the institutionalizing of a start-up. Start-ups aren’t only about products, they’re where you learn how to manage your specific organization since each one is different than any other. This means you should adapt lean methods to suit your unique business.
Validated learning is the learning process incorporated in the Lean Start-up methodology. It’s a more reliable way to build your company based on the idea that you can’t go wrong with an end product built based on what customers want.
Innovation accounting involves more than documenting revenue, losses, profits and sales. For a Lean Start-up it’s about measuring progress, setting up milestones and prioritizing work, which is referred to as innovation accounting. These things hold entrepreneurs accountable when it’s most important – when they are bootstrapping and have no investors.
Build-Measure-Learn is the critical last principle. It guides you through building your MVP and growing your company around it. This process involves learning from input and metrics from the marketplace and the people using the product as it evolves. Their input is what guides you as you fine-tune and adjust your product over time.
Leverage this process and apply these principles as you launch your start-up business. It will eliminate wasted time, effort and resources while accelerating your product development time and shortening your time to full-scale distribution and profitability. Plus, doing so makes you more attractive to investors and potentially increases the value of your start-up when it matters most. Why not give it a try to reduce risk and increase your odds for success?
If you’re at the right stage in your business, a start-up accelerator program may be just what you need next to grow. The question is, which one is best for you based on the stage of your company’s growth and development?