Discover how the Lean Startup approach can help businesses of any size and industry develop products that better meet customer needs. Learn the key steps and common misconceptions of this flexible and customer-centric approach.
Lean Startup is a process for developing products and services that relies on validated learning, customer feedback, and iterative design. This guide will show you how to use the Lean Startup approach to build a successful product. It covers everything from the lean startup methodology, to the method, and the lean startup model.
The Lean Startup Method: Using Market Research
The launch of a product marks a critical moment for any business. After years of preparation, including building distribution channels and correcting finances, the market will determine whether the product is meaningful and useful for consumers. If it fails to meet customer requirements or is perceived as immature, it can spell disaster for the startup. These are well-known consequences that no one wants for their business. However, the Lean Startup approach allows young entrepreneurs to be more flexible and ultimately more successful.
Failure in Silicon Valley
The term "Lean Startup" was coined by Eric Ries. With his startup, There Inc., he went through experiences similar to those of 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. The 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 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. Data analyses serve as the concrete basis of product development, replacing vague assumptions. As the product approaches the market, the likelihood of meeting customer needs increases. Early evaluation of market interest reveals which ideas are viable and which are not. This increasingly reduces the possibility of failure through Lean Startup. It allows for better and deeper market research, which can reveal previously undiscovered market gaps. Repeated changes can also generate unexpected reactions as expressions of need, which can be the start of a new project. Additionally, customer loyalty increases because feedback repeatedly involves the customer directly in product development through Lean Startup. Furthermore, resources are not wasted unnecessarily because stakeholders recognize aberrations and unnecessary functions at an early stage. The Startup Business Model is also crucial for the application of the Lean Startup approach.
Product development in a Lean Startup
The 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 not be integrated at this stage. The advantages of Lean Startup 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 core 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. Redundant features may be of little relevance at the beginning and are thus set aside for the time being. Resources necessary for the MVP should be defined. Finally, the available methods are evaluated to determine how maximum relevant data on customer satisfaction with the project can be generated. Initiated by the MVP, new iterations are created again and again, with 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 presents his Lean Startup method in detail in his book and describes its benefits. The characteristics and basic ideas can be summarized into five principles.
Anyone can become an entrepreneur
Starting a business is not bound by time or place. It doesn't take a "New Market" to program groundbreaking software. The advancement of technology presents individuals with new challenges to drive innovation and commitment forward. If you need expertise to build a Pitch Deck, you should check out our Pitch Deck Service.
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