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What Exactly is The Lean Startup?

You have most likely heard of The Lean Startup or “Enterprise Lean Startup” or “Lean Enterprise” or something similar. It’s been all the rage over the past several years and has been implemented, in some fashion, at countless companies across the globe. Startups live by it to increase their odds at breakout success and major corporations adopt it to fuel disruptive innovation. But even though lots of folks love it and vouch for it, many still lack a precise understanding of what it is.

This post is intended to clearly explain where The Lean Startup came from, what it is, how it works, and what it can be used for.

Where did it come from?

Let’s start with the cold, hard truth that most startups fail. A quick search tells me that around 90% of startups fail. That’s a lot of shattered dreams and a lot of time and energy wasted. Some may say it’s a game of luck, but experts agree that startups primarily fail because either they don’t know who their real customer is or they don’t know what product to serve those customers.

Around 2008-2009, an entrepreneur by the name of Eric Ries decided to figure out why startups fail so often. He was working his heart out at a startup and, after months and months of hard work, their product launched with features that no one wanted. Eric was devastated and knew there had to be a way they could have figured out what people really wanted without spending months and months of time coding. Through his research he realized that traditional management practices don’t work well with startups because they really are working under circumstances of extreme uncertainty. How can you plan for the unpredictable? As a result, he developed a new methodology for the modern era of business — the era in which disruption is the norm. He published his findings and methodology in a book called The Lean Startup.

What is it?

The Lean Startup is a theoretical methodology for building new businesses and products that provides a scientific approach to creating and managing startups, allowing one to get a desired product into customers’ hands faster. It adds structure to something that has historically been viewed as chaos.

The book lays out Five Principles, but I’ll simplify it to just three major concepts:

1. Articulate a solid vision

A clear vision is the foundation of any startup. The vision explicitly calls out why the startup exists and what the ultimate goal is. This rarely changes. The thing that does change over time is your strategy, or your plan for achieving the goal. As you learn more and evolve, you may need to adjust your strategy. This is called a pivot. A pivot, as defined by The Lean Startup, is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.

Switch your thinking from “can this product be built?” to “should this product be built?” In the startup world customer acquisition is everything and a fundamental flaw of many startups is thinking that the product comes first.

2. Use validated learning

Stop covering up failures and start acknowledging them by fostering a culture of learning. Iterative product releases and constant customer feedback are required to generate validated learning.

Venture capitalists bury their dead very quietly. They don’t hesitate to highlight successes, but they do hesitate to mention the more frequent failures. Most enterprises behave the same way. Admitting you fail in business without a culture of learning means telling your leadership that you wasted time and resources.

Ensure you aren’t just collecting vanity metrics. Vanity metrics are the feel good numbers, such as number of hits to a website or number of mailing list subscribers. The only metrics that entrepreneurs should invest energy in collecting are those that help them make decisions —  actionable metrics.

3. Disciplined Action, Disciplined Thought

The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere. Stop assuming and start testing everything. Streamline your product lifecycle process into a continuously iterative loop of building and learning.

Start with a Minimum Viable Product (MVP), the smallest version of a product necessary to do an experiment to start the process of learning. The complexity of your MVP will vary depending on your situation, but aim to use the least among of resources and effort possible to test the riskiest part of your idea.

How does it work?

It’s more of a methodology than a process, which is good news because you can adapt your current processes to this model. The Lean Startup follows the same scientific method you learned in primary school: Ask a question and state a hypothesis, conduct an experiment, analyze the results, and make a conclusion.

The Lean Startup Process – Diagram http://theleanstartup.com/principles

It’s referred to as the “Build-Measure-Learn” loop, but you should always start with learning:

Learn

Start by learning. Perform as much research as possible, then figure out what you need to validate next. State this as a testable hypothesis (not a theory), including quantified targets.

Build

Create the smallest thing you can build in order to prove your hypothesis wrong. Depending on how far you along you are, this could even be as simple as a landing page or paper prototype. In later stages of your product, this turns into more complex things such as actual product features.

Measure

Deploy and test what you built with actual customers. If your hypothesis was valid, proceed to the next assumption you need to validate. If your hypothesis proved false, alter your solution and try again.

You shouldn’t think of it as a step-by-step process because the learning process should never end. All successful startup processes should be geared to accelerate the Build-Measure-Learn loop.

What can The Lean Startup be used for?

It isn’t rocket science — if you want to try something new, test and learn from it in increments. Using this methodology, brilliant minds with brilliant ideas can stop wasting people’s time and accelerate a better future.

Startups can leverage it to use as little resources as possible to test their ideas, ensuring they take continuous steps towards success instead of major leaps in the wrong direction. Established companies can use it create order instead of chaos with more risky or disruptive projects. When developing new products, exploring new markets, or trying to improve internal processes they can work smarter, not harder.

You can find all sorts of resources and guides online, but I also encourage you to grab a copy of the book. It’s not only a quick read, but something you’ll keep near your desk for years to come.

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