You must have come across the term Lean Startup several times. But, what exactly does it mean, and why it’s vital for your business? Here we tell you all about it.
There is a common conception that if you have a good idea and you are really committed to work on it, you will succeed. Reality shows us that it is not about your determination level or how awesome your idea may be. Execution is a key factor. Here is when the concept of Lean Startup comes up, a concept that Eric Ries started in 2008 with the book “The Lean Startup”.
The Lean Startup concepts are nowadays widely known and applied in most startup and several other companies, but let’s review them. The main idea goes around the Build, Measure, and Learn feedback loop.
It states that planning is good when our environment is stable –something that doesn’t happen most of the time, especially in new products or startups. Too much planning makes things risky.
The same situation applies when you create products without having the potential client’s feedback. You are risking making a product that no one needs.
Content related: Lean software development: accomplish more by doing less
FACING THE LEAN STARTUP CONCEPT
In order to avoid the uncertainty regarding the product direction, Lean Startup takes the “just do it” approach: Work on small tasks or experiments straightforward and fast, and skip all the typical company bureaucracy. You just do things and learn about the whole process. You start with a hypothesis or what is called “leap of faith assumptions”—what has to be true for the product to be a good idea.
How do we face the just do it approach? We do this with an incremental and iterative methodology that replaces assumption with knowledge and certainty. Yes, this is the already mentioned Build, Measure, and Learn feedback loop.
Here is when we get to another Lean Startup core concept—The Minimum Viable Product (MVP), which is a product with just enough features to satisfy early customers and provide feedback for future product development.
There are some initial types of MVP, among others, in order to validate a potential product that can be helpful:
- Video MVP: You show what you want to validate in a video, but your product does not exist yet. Companies like Dropbox started like that. Crowdfunding sites like Kickstarter or Indiegogo tend to have this kind of MVP listed on their site.
- Wizard of Oz MVP: The idea is to create effective prototypes quickly but not really building the proposed solution. You pretend to have developed a product while you are manually operating it in the background.
- Concierge MVP: You select a target audience, focus on a single or few customers, and solve the problem. Meanwhile, you are validating if your product is useful or not.
Going back to our Build, Measure, and Learn feedback loop, when we arrive to the point of Learning, we should validate our hypothesis. If we find out that we are going in the right way, we should persist and keep on going that way and keep on testing new ideas.
If we are not getting to the point we want, we should pivot. Be flexible and change the strategy. That is one of the main ideas of Lean Startup: Keep on growing our idea, or change fast.
How do we do that? There are infinite ways of pivoting, but some classic ways of pivoting are the following:
- Customer segment pivot: When you find that, the public that you are aiming at may not be as interested as you think, but some other group may have enthusiasm in the product.
- Customer need pivot: Instead of pivoting to a new customer segment, in this case, you change your product design to satisfy the customer segment that you already have.
- Value capture pivot: Change the way you monetize your product, like deciding to give something away free and charge for advertisement.
- Zoom-in feature pivot: This is when a single functionality in your product becomes the focus of your value proposal or the product itself.
So, finally, let’s glue everything together:
We use the Build, Measure, and Learn loop in order to reduce uncertainty and create validated products. We must first figure out what we want to validate, like a hypothesis. We quickly go into cycles, using small experiments or different types of MVPs. With this validated learning, we take away what we do not need or what does not give value fast. Eventually, we should be ready to pivot when we see that we are not getting to where we want to be, or we cannot validate our product hypothesis.
How do you apply this to your already working medium to large-sized company?
Applying all this on a new domain will obviously require some additional work. The first thing that should change is the mindset: Mid-sized and large companies (usually) do not have an entrepreneurial mindset. Therefore, the first big step is to work on “The startup thinking”.
Taking into account that large companies might not conceive the idea of making mistakes in order to build something new within their culture as many times as needed, people tend to perceive failing as negative in their professional careers. People think that failure will prevent you from growing and being promoted, but the truth is that it is the main driver and incentive in a corporation.
There are some particular implementation phases of Lean Startup that have been experimented with in both mid-sized and large companies like Unilever, Toyota, Intuit, General Electric, P&G, and even the White House. The idea is to create innovation groups that can cut the company bureaucracy and adopt the Lean Startup culture.
Once they are mature, it will be time to start training your people and implementing the idea across several areas within the company.
Let’s review the phases:
- Phase 1: Critical Mass
The idea is to create a dedicated cross-functional team. The Lean team will wield the golden Sword—you have to let them cut through company bureaucracy in order to use the stated Lean Startup principles.
- Phase 2: Scaling up
First, you obviously Lean from the Critical Mass phase and then train your existent management/leaders. Agile learning involves training from the experience and not just the theory. The first Lean time that you created in the very beginning will be key in this phase—getting everybody on board. You should also create a company specific “playbook” that fits the company’s needs.
- Phase 3: Deep Systems
As you can imagine, this comes as the last phase, and the idea is to “attack” the more conservative departments of the company like legal, finance, and HR.
To Sum Up
Lean Startup is a way of generating innovation and fast delivery of great products. Companies will have to change their mindset in order to implement it. A relevant action is to set up an Innovation team to cut through the bureaucracy and work with the Lean Startup approach.
The result significantly reduces the time to market and working on better products that suits the client’s needs better.
Let’s start and be ahead of the competition!
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