Lean Management for Early Start Up
Starting a new venture — whether it’s a tech startup, a small business, or a new initiative within a large corporation — has traditionally been a gamble. The old-school approach involves crafting a detailed business plan, pitching it to investors, assembling a team, launching a product, and pushing sales aggressively. Unfortunately, at any point in this process, you might face a fatal setback. The odds are daunting: a Harvard Business School study by Shikhar Ghosh indicates that 75% of startups fail.
However, as early as 2008, Eric Ries has already introduced this MVP (Minimal Viable Product) approach, staying lean and minimizing investment of resources until the proof of concept is conducted. It massively changed the game and made entrepreneurship way less risky.
This approach prioritizes experimentation over extensive planning, values customer feedback more than gut feelings, and champions iterative design rather than the traditional “big design up front.” By doing so, it aims to dramatically reduce the risks associated with starting a new business.
The whole idea is, if you fail — fail fast, fail cheap.
Why lean startup?
In today’s fast-paced market, few companies can afford the luxury of wasting time and resources on projects that might not succeed. The traditional method of investing months or even years into creating a complete product that might not align with customer wants is increasingly precarious. For many entrepreneurs, the lean startup methodology offers the answer.
By embracing a fast and efficient iterative process, lean startups can significantly reduce their financial risks as they experiment with a variety of ideas and products. This approach helps them identify successful products early, discard non-viable ideas quickly, and avoid the costly pitfalls of failed product launches.
Most importantly, with software based startups, whether or not you’re a Saas, in PropTech, FinTech, marketplaces, RetailTech or any other spaces, this lean startup method still applies, since softwares can easily be moulded into something simpler and cheaper to develop.
The industry changes way too rapidly for anyone to keep up. Time is money. The faster you ship your “undone” product the more likely you can grab the market opportunities.
Core Concepts of Lean Startup Methodology
The principles of the lean startup method can be applied to various product development strategies. Two of the most critical and foundational concepts are the Minimum Viable Product (MVP) and the “Build, Measure, Learn” cycle.
Minimum Viable Product (MVP)
Lean startups kick off by creating a minimum viable product (MVP). This is the most stripped-down version of a product, equipped only with the essential features needed to validate its utility with customers.
By putting the MVP in front of potential users, a lean startup can gauge the product’s viability without investing too much time and money upfront. An MVP can be as straightforward as a basic concept that aims to solve a particular problem.
Amazon is an example of a major company that began with a simple MVP. After reading about the high predicted growth rate of internet commerce, Jeff Bezos decided to identify the ideal product with which to test an online marketplace. He chose books for their simplicity, low price per unit, and variety, and launched Amazon as a bare-bones book marketplace based in his garage. Amazon’s MVP was a success, and the company soon began to expand to new products.
Build, Measure, Learn
The Build, Measure, Learn loop outlines the core steps of the lean startup approach. First, you create an initial version of your product to test a specific hypothesis (the “build” phase). Next, you gather feedback from your target customers (the “measure” phase). Finally, you analyze this feedback to determine what aspects of the product are effective and which areas require improvement (the “learn” phase).
The first cycle of Build, Measure, Learn is the development and testing of an MVP. Once a plan is in place to iterate on the MVP, the Build, Measure, Learn cycle starts again. The faster a business is able to move through the loop, the more quickly it can test and develop viable products.
Pivoting
Often, some of the initial assumptions in a business will turn out to be inaccurate — perhaps a strategy that succeeded with another product doesn’t resonate with your current audience. Instead of throwing in the towel, a lean startup pivots. It pinpoints what went wrong with the earlier effort, makes necessary adjustments, and tries again. When crafting a product using the lean startup methodology, staying adaptable is crucial.
Actionable metrics
Actionable metrics are designed to provide accurate and objective insights into the critical factors that drive your business. Unlike “vanity metrics” that paint a flattering picture, actionable metrics give you a clear view of what aspects of your product are truly effective and which areas need improvement. By focusing on these actionable metrics, lean startups can make smarter decisions and continuously refine their offerings.
Split Test (A/B-Test)
Imagine running a split test where you present two different groups of customers with two distinct versions of your product. By closely analyzing the key metrics from each group and controlling other variables, you can make informed decisions about your product’s direction. This methodical approach gives you the best shot at steering your product development in the right direction.
Lean startup is a strategy to build businesses and products centered on customer feedback, regular iteration, and resource efficiency. By collecting data at the earliest stages, you can quickly identify whether your product has potential — and, if it doesn’t, understand the reasons why.
Pros of a lean startup
The lean startup method is favored by many modern businesses due to its transformative benefits.
Unlike traditional waterfall development approaches that speculate on customer needs based on past product performance, the lean startup approach zeroes in on identifying and addressing those needs early with continuous feedback and experimentation. While no method can ensure a product’s success, lean startup helps you swiftly pinpoint why a product might fail and pivot accordingly.
By minimizing risk, the lean startup method conserves time and money that might otherwise be squandered on impractical ideas. This strategy of rapid iteration and learning from failure enables companies to adapt to evolving market trends efficiently. This dynamic and iterative process empowers businesses to innovate and refine their processes and products more rapidly.
Lean Methodology is the core of what we do at DigitSense
At DigitSense, we incorporate lean startup principles into our clients’ projects by emphasizing rapid experimentation, validated learning, and iterative development. By focusing on creating MVPs (Minimum Viable Products), we help businesses test hypotheses quickly and efficiently. This approach minimizes waste and ensures that only the most valuable features are developed and enhanced. As Eric Ries succinctly puts it,
The Lean Startup methodology is about learning what customers really want, not what they say they want or what we think they should want.
Through continuous feedback loops, we ensure our clients adapt swiftly to market demands, optimizing their resources and accelerating growth.
Implementing lean management strategies in your startup not only boosts productivity but also fosters a culture of innovation and adaptability. By focusing on validated learning, short iterations, and customer feedback, you are better positioned to make informed decisions that drive success. Remember, the key to staying ahead in a competitive landscape is to continuously refine your approach and be open to new insights.
Take the next step towards optimizing your startup’s growth! Book a product strategy meeting with us today, and let’s explore how lean methodologies can transform your business. Schedule now and start your journey toward a more agile and successful venture!
