Lean startup is a methodology for developing products and services. The methodology shortens product development cycles through business-hypothesis-driven experimentation, iterative product releases, and validated learning. Lean startup methodology is based on the idea that if startup companies invest their time into building products or services to meet the needs of early customers, they can reduce risk and lower capital requirements.
What are the key concepts of lean startup methodology?
Build, measure, learn: perhaps the most fundamental practice of lean startups is applying the scientific method to product and service design. Build, measure, learn consists of defining a hypothesis, building a product to test that hypothesis, learning from its use and adjusting it accordingly. This allows products and services to become more and more effective as they are refined through the process.
Minimum viable product: in more traditional product development cycles, whole prototypes would often be built before significant testing took place. Using lean methodologies involves finding the minimum amount of development required to iterate the next cycle of build, measure, learn. This allows the product to be refined without having to build it completely, minimising costs and effort.
Validated learning: lean methodologies try to ensure that the right learning is done during the build, measure, learn cycle, rather than focusing on vanity metrics which only give the illusion of progress. For example, an online business focusing on growing the number of facebook likes it receives may not actually be gaining traction, but an online business focusing on growing its total daily users probably is.
Innovation accounting: this process allows startups to demonstrate the effectiveness of their build, measure, learn cycles. Initially, a startup must establish a baseline of demand and customer satisfaction, then make individual changes to measure the change’s impact. From there, a business can determine whether enough progress is being made to justify persevering or whether the business needs to pivot.
Pivoting: this simple concept is the major difference between successful and unsuccessful entrepreneurs. Those who are able to identify when a product or service is not meeting its goals and find a way to redirect the company towards something better are the ones who survive long term.
Continuous deployment: the general idea of continuous deployment is to be iterating the build, measure, learn cycle as quickly as possible, and getting the new and improved version of the product out immediately. This allows startups to learn faster and outpace their competition.
The 5 whys: this practice comes courtesy of Eric Ries, who developed lean startup methodology. He believed that by asking ‘why?’ 5 times, you could determine the root cause of an issue. Let’s start with the example “the product falls apart”:
Why does the product fall apart? Because the joinings aren’t strong enough to hold it together.
Why aren’t the adhesives strong enough to hold it together? Because the parts are too heavy.
Why are the parts too heavy? Because they are made from metal.
Why are they made from metal? Because we couldn’t find any durable alternatives.
Why couldn’t we find any durable alternatives? Because we don’t have access to an expert in durable materials.
Trying to solve the problem before asking the 5 whys would lead to a make-do solution, which failed to address the core issue.