The Lean Startup Principle is a methodology for developing businesses and products, which aims to shorten product development cycles and rapidly discover if a proposed business model is viable. The approach relies on validated learning, scientific experimentation, and iterative product releases to gain valuable customer feedback. Here’s a breakdown of the framework:
Core Concepts
- Build-Measure-Learn Loop:
- Build: Develop a minimum viable product (MVP), which is the simplest version of the product that can be created quickly and with minimal resources. The goal is to start learning as soon as possible.
- Measure: Collect data on how the MVP performs in the real world. This involves setting up key metrics and measuring customer responses and behaviors.
- Learn: Analyze the data to gain insights. This step helps you understand whether your assumptions about the product and market are correct or need adjustment. The learning process should inform the next cycle of building and measuring.
- Minimum Viable Product (MVP):
- An MVP is a version of a new product that includes only the essential features. The idea is to get the product to early adopters as quickly as possible to start the feedback loop.
- The goal of an MVP is to test hypotheses and learn about customers with the least amount of effort.
- Validated Learning:
- This is the process of demonstrating empirically that a team has discovered valuable truths about a startup’s present and future business prospects.
- Each iteration of the build-measure-learn loop should provide data that confirms or refutes assumptions about the business.
- Pivot or Persevere:
- Based on the learning from the MVP, a startup must decide whether to pivot (make a fundamental change to the product or strategy) or persevere (continue with the current strategy).
- Innovation Accounting:
- This involves tracking progress through metrics that make sense for startups (such as learning milestones) instead of traditional business metrics (such as revenue).
- The focus is on measuring what matters for learning and growth.
Principles
- Entrepreneurs Are Everywhere:
- The Lean Startup methodology can work in any size company, in any sector or industry.
- Entrepreneurship Is Management:
- A startup is an institution, not just a product, and requires a new kind of management specifically geared to its context of extreme uncertainty.
- Validated Learning:
- Startups exist to learn how to build a sustainable business. This learning can be validated scientifically by running experiments that test a startup’s vision.
- Build-Measure-Learn:
- The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere.
- Innovation Accounting:
- To improve entrepreneurial outcomes and hold innovators accountable, we need to focus on the boring stuff: how to measure progress, how to set up milestones, and how to prioritize work.
Applying the Lean Startup Principle
- Identify a Problem: Find a significant problem that a potential customer is facing.
- Develop Hypotheses: Formulate hypotheses about the product/service that will solve the problem.
- Build an MVP: Create a minimum viable product to test your hypotheses with real customers.
- Test and Measure: Launch the MVP to a small group of customers and measure their reactions and feedback.
- Analyze and Learn: Use the data collected to validate or invalidate your hypotheses.
- Pivot or Persevere: Decide whether to pivot (change your approach based on feedback) or persevere (continue refining your product).
- Iterate: Repeat the build-measure-learn loop, continuously improving the product and refining the business model based on validated learning.
The Lean Startup Principle helps startups to reduce waste, optimize resources, and increase the chances of success by focusing on iterative development, customer feedback, and scientific experimentation.
