The Lean Startup: a simple guide for new entrepreneurs

Editorial Staff Startup Guidance

Lean Startup Method is a very influential business concept, developed by Eric Ries in 2011. When first released, it challenged much of the conventional wisdom on startup launch and growth, and introduced terms like “minimum viable product” and “pivoting” which have now become a common part of the business lexicon. The lean startup method was developed to capitalize on the advantages that startups have over larger businesses – namely, adaptivity and innovation – and to protect startups from costly failures. The founders of the lean methodology defer on the question of whether their method can make startups more successful, but they are confident that following the method would lead to fewer startups failing. If you are an entrepreneur looking to establish your first company, then the lean methodology can teach a practical approach to managing your business.

First Pillar: Business Model Canvas

The traditional approach to business says that you should start with a business plan which lays out all of the information you will need about your customers, their needs, your product, your costs, and your projected income. For an entrepreneur, this is a daunting task – there are so many unknown factors that it can be very difficult to predict how customers will respond to your product. So the lean methodology favours skipping the business plan and instead laying out the hypotheses which you have so far, and finding ways to test these hypotheses. You can lay out your assumptions on a business model canvas, a framework from which you can test and develop your ideas. Then you can get to work creating your product.

Second Pillar: Customer Development

Perhaps the most important principle of the lean startup method is this: get your product into the hands of customers as soon as possible. To learn about the needs and wants of your customers, you must collect feedback on your product early and often. This can mean sending out versions of your product which are not perfect, or not entirely complete, or that you are not yet fully satisfied with – which is contrary to traditional business advice which posits that you should wait until you have a completely solid product before letting your customers have access to it. The lean methodology emphasizes that you cannot know exactly what features your customers will respond to, either positively or negatively, until you see them interacting with and using your product.

In the customer development phase, your business should be focused on producing a “minimum viable product” – that is, the most simple, basic version of your product that can still function in its role – and getting this minimum viable product into the hands of customers in order to collect their feedback. You may think that you know intuitively what your customers’ needs are, and how they will respond to your product, but there is no more valuable exercise for designers than seeing someone use your product for the first time, without guidance. What features do customers use and enjoy the most? What do they wish your product could do which it cannot do right now? Take note of all of this information, from as broad a pool of customers as you can find.

Third Pillar: Agile Development

Coming from the field of software development, the idea of an agile approach is to evolve solutions collaboratively between self-organizing teams; promoting adaptive planning, early delivery, and flexible responses to change. A similar approach can be used in startup product development, in the phase in which the minimum viable product is developed. This process happens in tandem with customer development, and feedback from customers is integrated into newer version of the product design. So products are developed iteratively: the product is presented to the customer, feedback on it is collected, this feedback is used to design a newer version of the product, which is then produced and once again presented to the customer.

The startup should cycle through this iterative process rapidly, without lengthy and expensive product development and testing phases. Instead of trying to predict exactly what customers will want and then providing them with what you hope is the perfect product, this approach encourages you to get your product out into the world and learn about how it will be used through customer feedback. This leverages the great advantage that startups have over larger, more established businesses: their flexibility and adaptiveness. A small startup can produce, collect feedback, redesign, and reproduce a product in a much shorter time frame than a traditional business in which every decision must be considered and approved. Thus startups can respond to current trends and immediate customer needs, without risking large amounts of time and money spend developing a product or feature which is not what customers want.

The mantra of the lean startup method is “build, measure, learn”, and entrepreneurs can follow this process when they establish their own business. First map your understanding of the market in a business model canvas, then produce a minimum viable product and get it out to customers, collect feedback from customers and use this to guide your iterative product redesigns. This method cannot guarantee success, of course, but it can reduce the risk of you shipping a product into which you have sunk huge amount of time and money, only to find that customers do not respond as you had predicted.