The Lean Startup core idea is to avoid waste of time and resources when developing a new product or service. The term Lean Startup was coined by Eric Ries, in a book named the same. The thing is that many startups begin with a new idea that they believe people want. Then, they spend several months, sometimes years, perfecting this product without ever showing it, even in its most rudimentary form, to potential customers.
When they fail to get paying customers, it is usually because they have never talked to potential customers and heard whether the product was of interest to them or not. And when customers finally test the product and it doesn’t meet their needs as they’d wish, the startup dies. It is a sad and extremely common journey. And the objective of Lean Startup methodology is precisely to avoid this journey.
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The word “lean”, here, has been applied by Eric Ries, Harvard Business School researcher, towards avoiding waste. It involves identifying and eliminating waste in all the processes, from research to production. In short, in this methodology, the company begins by getting to the market to ask the opinion of potential customers about all elements of the business model: product features, price, distribution channels and economic strategies. With this data collected, the startup creates a minimum viable product (MVP) and ask for customer feedback as quickly as possible. Based on the answers obtained, it aims for new versions and adjusts until it finds the ideal product.
It’s necessary to work on manners to identify systematically the waste in every and each step of production, sales, and after-sales. That said, it’s important to reduce or eliminate any and all wasting part, whether they are time, cost, or resources.
“Every activity that does not contribute to learning about customers is a form of waste.” Eric Ries
Notice that everything is about interacting with your customers, testing hypotheses, and iterating during the process – all of that before launching your product on the market.
The Lean Startup cycle, known as Build-Measure-Learn, highlights the speed of a team or company to create an idea, build a minimally viable product, measure its effectiveness in the market and learn from that experience. To put it in a few words, it is the cycle to transform an idea into a product, measure the reaction to it, and decide if it is a good idea, that must remain, or a bad idea, that must be discarded. The cycle generates innovation, as the quick iteration allows teams to identify a viable way to adjust the product, in order to optimize and improve the business model towards success.
Lean Startup is based on hypotheses and utilizes a canvas to be designed. Traditional is based on implementation and utilizes a business plan.
Lean Startup seeks to be quick and uses data that are enough for action. Traditional operates slowly and only with complete data for action.
Lean Startup experiments hypotheses on the market and gets feedback from customers during the process. Traditional prepares the whole product for the market in a very linear plan.
Lean Startup pivots, offering new possibilities, features, and products. Traditional abandons the project and, sometimes, fires teams or executives.
Although there is no guaranteed formula for success, the Lean Startup method can be very useful for any business, as it helps the company to test ideas with its target audience in a faster and more economical way. Download here the Lean Canvas in PDF
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