A Lean Startup is a methodology that aims to reduce product cycles, eliminate waste, and reduce costs. It provides a scientific approach for startups to become successful and to make sure that the product reaches the customers’ hands as fast as possible.
The Lean Startup method teaches us how to drive a startup, when should we pivot, when should we persevere, and to grow with maximum acceleration.
One of the most common reasons why startups fail is that they come up with an idea and think that this is what people want.
“Think”– this is the word that creates the main problem. Startups start with a lot of assumptions and then start working on it day and night, spending months or years developing the right product without ever feeling the need to show the product to the customer, no matter if it’s finished just 20% or 30%.
Then, after months and years of hard work, they find out that the customer doesn’t even need this product and the startup fails. This results in a huge loss of time as well as money.
Eric Ries has written a wonderful book on LEAN STARTUP which is a must-read if you want to study in-depth about how lean startup works.
Build-Measure-Learn is a continuous loop that a startup must follow. It has proven to be successful for many businesses. It insists on realizing your mistakes quickly and turning the initial failures into success.
First, you have to come up with an idea and build a hypothesis for your experiment which means what’s your prediction at the end of this experiment. For example: “Attracting new customers for your product.”
Once you have developed the hypothesis, work on creating the MVP, i.e. Most Viable Product. MVP means to create the smallest possible product to test your hypothesis.
Don’t commit the mistake of making the whole product at once. Instead of putting all the advanced features in your product, work on creating MVP to check the customers’ reactions.
In this step, you should check the progress of your experiment and see whether the hypothesis formed is proving out to be right or not. See whether the customers are showing interest in your product.
This is a very crucial step that will help you determine whether to pivot (shifting to a new strategy) or to persevere (keep going).
No matter whether your hypothesis succeeds or fails, you have to learn from it and work on improving yourself. If your hypothesis fails, it doesn’t mean that you did something wrong, it only means that the customer has less willingness to buy your product.
The Build-Measure-Learn cycle should be carried out continuously for the startup to succeed. This is one of the core lessons from a great book written by Eric Ries- “THE LEAN STARTUP.”
Some of the lessons to learn from Lean Startup are:
Failures are a part of every startup. Every startup fails but the startup that will succeed in the long term is the one who fails quickly and learns and grows. Failing quickly helps to learn from these failures and adapting as per the customers’ needs.
Vanity Metrics are the metrics to which almost all of us fall into. It includes reading the numbers which might seem to be very beneficial but can actually be a trap. For example, A company’s customer base increases from 1000 to 2000, that’s a 100% growth but if we dig deeper and find out that the customers who used to bring revenues to the company by paying for services came down from 500 to 250, that is actually a negative sign. Don’t always be fooled by the numbers!
Assuming is the biggest mistake made by startups! No matter how great or innovative your product or service is, if the customer is not interested, then that is a waste of your time and money. Interact with customers, let them test your products, and act accordingly.
In simple terms, split testing means offering two different versions of the product to the customers at the same time. This type of testing will give your quick results and help you see the change in behavior between the two groups.
Eric Ries has described Validated Learning as “the unit of progress for lean startups.” It means that success is not measured by how many units you can manufacture but by the real measurable responses from the customer. Validated Learning means the ability to measure and validate a small amount of progress. The advantages of validated learning are reduced cost, faster development, and more agility.