Lean Startup is a process for developing products and services that rely on validated learning, customer feedback, and iterative design. This guide will show you how you can use the Lean Startup to build a winning product. This article includes everything about lean startup methodology, method and lean startup model.
Market research as a method: The Lean Startup
With the market launch of the first product comes the moment of truth. Prepared over years, in which distribution channels were built up and finances were corrected repeatedly, the market is now to decide whether the product can be meaningful and useful for the consumer. But if it fails to meet customer requirements and is perceived as immature, this usually means the end of the startup. These are well-known consequences that no one would want for their business. And at the same time, Lean Startup allows the young entrepreneur to be more flexible and, in the end, more successful.
Failure in Silicon Valley
The term "Lean Startup" goes back to Eric Ries. With Silicon Valley stratup There Inc., he had to go through similar experiences as other founders. Years of secret research and innovative developments only led to failure. The founder's "virtual online world" failed catastrophically in a market that the entrepreneur had completely misjudged.
But Ries drew his conclusions from the debacle. In his blog startuplessondlearned.com, he developed his concept of a Lean Startup. After three years of discussion with his users, he published "The Lean Startup" in 2011, a book in which the failed founder summarizes and analyzes his experiences and comes to unusual conclusions. The book became successful, and numerous digital startups in the U.S. took their cue from the lean organization approach, which particularly addresses the issue of costs. Airbnb, Dropbox and Zappos are already successfully applying the concept, but in Germany the method is as good as unknown so far.
Names are smoke and mirrors
"Lean Startup" comes from English and means nothing more than "lean startup." The buzzword has been circulating in the startup scene for some time, but few entrepreneurs seem to have devoted their focused attention to the concept. Accordingly, misconceptions are piling up. "Lean" doesn't necessarily mean self-funding or minimum budget, and the approach isn't exclusive to startups or small businesses. It certainly has nothing to do with software, and its application is certainly not limited to digital companies.
More specifically, Lean Startup is about aggregating processes that help make a business idea a reality which can be useful when starting a business. The central element of the method is a quick market entry with the first variant of a product with only basic functions and the special features of the "full version", a prototype in other words. Ries uses the term "minimum viable product," or MVP for short. It is crucial that customer acceptance is first tested at this early stage and that a company is not built up immediately with "all in". It does not bring in reliable countervalue for the costs. Only bit by bit the product is improved as the result, adapted again and again to the conditions of the market. In this way, a marketable version of the business idea is created over time. This improvement loop is run through again and again. Ries describes this procedure with the formula "Build - Measure - Learn", namely as building, measuring and learning.
The prerequisite for this continuous changing of the product, which in many cases goes hand in hand with a modification of the business idea, is a flexible company with a lean structure. Lean Startup model is therefore not limited to product development. Rather, all areas of a company are affected by the ongoing change and are involved in the transformation process.
Development under uncertainty: The Lean Startup as a method
In any case, pragmatism offers the decisive advantage of perceiving the reaction of the environment and thus reducing the uncertainty of one's own limitations. Especially by collecting and evaluating the received data, clarity emerges and uncertainty is reduced. Then data analyses are the concrete basis of product development, vague assumptions are no more. As the product approaches the market, the likelihood of meeting customer needs increases. Very early in the evaluation of market interest, it becomes apparent which idea can be viable and which cannot. This increasingly reduces the possibility of failure through Lean Startup.
It allows to read the market better and in more depth and avoid previously undiscovered market gaps. Repeated change also generates unexpected reactions as expressions of need, which can be the start of a new project. In addition, customer loyalty increases, because feedback repeatedly involves the customer directly in product development in the Lean Startup. Furthermore, resources are not wasted unnecessarily, because those involved recognize aberrations and unnecessary functions at an early stage.
Also the Startup Business Model is crucial for the application of the Lean Startup Approach.
Product development in a Lean Startup
MVP and its quality are decisive factors for a successful implementation of the Lean Startup. It forms the basis for the following tests and investigations. Based on the business idea, the prototype is limited to core functions so that it can be immediately determined whether a reliable market exists in principle. In this early phase, additional functions should be avoided, because they distract the developers from the core idea and should better not be integrated at this stage. The Lean Startup advantages are thus already apparent in the integration of the conception into the product design.
However, because the functional scope cannot be particularly extensive with these reduced requirements, the main focus is on the flawless functioning of the main features and their perfect implementation.
The Lean Startup demands a deliberate approach especially when releasing the prototype. There should be absolute clarity about the core features and their realization. Likewise redundant features may be of little relevance at the beginning and are therefore set aside for the time being. Resources are to be defined that are necessary for the MVP. Finally, it is worked out in which way and with which of the available methods a maximum gain in knowledge can be achieved. In other words, how can a maximum of relevant data on customer satisfaction with the project be generated.
Initiated by the MVP, new iterations are created again and again, corrected versions of the product with minimally improved or extended features. Thus, the orientation or scope of the original version is repeatedly extended or changed in Lean Startup methodology.
Five Principles for Evidence-Based Development of a Business Idea
Eric Ries has presented his Lean Startup method in detail in his book and describes the Lean Startup benefits. The characteristics and basic ideas can be summarized as a Lean Startup definition of the five principles.
Anyone can become an entrepreneur
Starting a business is not tied to a time or place. It doesn't take the "New Market" to program groundbreaking software. Time and again, the advancement of technology presents individuals with new challenges to drive things forward with innovation and commitment.
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No entrepreneurship without management
An entrepreneur's responsible actions and the right strategic decisions ultimately lead the founder to success. It is obvious that new business models need new methods. This is especially true for Lean Startup, which sets methodical action as a principle and works as part of the Lean Startup definition.
Learning and validation
Developing products and then making profits - that's how most founders imagine their startup. But whether the result is actually convincing and serves its purpose, you know later. Ries calls for the opposite approach. The market should be researched with almost scientific interest, according to the principle of trial and error, to start again and again.
Others leave it at trial and error, but this is where the Lean Startup method begins for Ries. Each new product variant is a test to explore market behavior and finally present the appropriate edition of the idea. The prerequisites are always relevant data and reliable evaluation.
Progress must be measurable. The prerequisite is therefore the precise definition of stage goals and sensible priorities in the hierarchization of tasks. Only in this way is structured work possible, and every failed approach to the market then reliably proves to be a falsification of the idea. This is where the key Lean Startup advantages become apparent. If it is precisely defined what is to be "measured", orientation is maintained in a complex development process and successes become clearly recognizable.
Build, Measure, Learn
The empirical procedure of the Lean Startup method is summarized in the BML formula. By constantly repeating these processes, the product development is continuously improved. In addition, situations arise again and again that give reason to optimize the business model. Learning processes in validated form ensuring that the product moves reliably and verifiably towards the market.
While traditional founders present a business plan and follow it no matter what, a Lean Startup model is much more flexible. Gradual adaptation to the market and perpetual reorientation is an essential part of the Lean Startup definition. Failures hit most companies completely unexpectedly. However, Ries builds failures into his concept from the beginning, which is also a key advantage of the Lean Startup benefits.