Only the best startups go on to become successful companies.
One critical issue that holds startups back is that they sometimes start with a product idea and then invest significant funds into building it before making sure the product works or has a market. More often than not, a startup will fail because it does not deliver something that people want or it does not offer a proper solution to a problem.
About 14% of startups fail due to not taking customers’ needs into account.
You can’t deny that paying attention to customers’ needs is essential. This is where lean startup comes in.
The principles of a lean startup approach attempt to solve this problem by scientifically using specific principles and processes to pin down precisely what problem you’re solving for customers before investing significant funding into a product.
Let’s learn more about the 5 lean startup principles and how to apply them to your business.
What is Lean Startup Methodology?
Eric Ries first introduced the methodology behind lean startup in his 2011 book, The Lean Startup. A lean startup plan is a scientific approach to launching a startup that depends on user feedback data to guide and speed up the product’s interactive development. As Ries defines it, the lean startup is “an institution of people organized to make a new product or service in incredibly uncertain circumstances.”
The critical difference between the lean startup methodology and a traditional business is that lean focuses on innovations instead of an established business model.
DropBox was one of the first successful lean startups. Before investing funds into product development when they first started, they made sure to test out the waters and focus on data and refining their product’s features.
Why is Lean Startup Important?
All startups need to minimize risk, and that is exactly what a lean startup method does. The lean startup method is essential for startups to genuinely understand the customer’s problem and identify a target solution for that problem that customers will pay for.
With frequent product releases based on target customers’ data, the methodology helps save both time and money. It also plays another highly important function, validating whether customers need the product.
What are the 5 principles of lean startup?
Without further ado, here are the 5 principles of lean startup:
Entrepreneurs are Everywhere
Anyone who has a startup is an entrepreneur who can apply the lean startup principles. It doesn’t matter if you work in a garage, a bedroom, or a dedicated office. Your business could be two people, 20 people, or 100 people. If you’re looking to save time and resources, a lean startup could be right up your alley.
Entrepreneurship is a Management Role
A startup needs management just like any other business—although the type of management may look a little different than a traditional business. The management process might not be as protocol-based as it would be if it were an established business with a set operational model. However, entrepreneurs should still react in risky situations, manage investors, and allow employees to experiment as long as the risks are well calculated.
Lean startups are about building a sustainable, practical business model through validated learning. This means conducting experiments, retrieving results, and basing all decisions on relevant data. Does your product focus on solving a serious problem for individuals? If not, how can you pivot and adapt to focus your product on the issue?
To successfully create a sustainable business, entrepreneurs must make the right decisions based on what the data shows are appropriate. Entrepreneurs have to be competent in monitoring processes objectively, setting up milestones, and prioritizing work.
Build, Measure, Learn
The “build, measure, learn” loop influences learning through the well-known minimum viable product (MVP) stage where the experiments are conducted. The fundamental principles of build, measure, learn can be broken down further into four stages:
Build, measure, learn is a loop meant to be repeated, but we can segment it into four stages. It starts with the entrepreneur’s idea based on assumptions about their ideal product. From there, the cycle is broken down into these four steps:
- Build the minimum viable version of the product and get it into the customer’s hands.
- Let customers test the product and report to the entrepreneur about their questions, concerns, and suggestions.
- The entrepreneur takes in this information, measures the data, and translates it into insights.
- Based on these insights, the entrepreneur learns about the customer’s needs and sees whether a feature is significant or needs to be upgraded or scrapped.
After the 4th step, the entrepreneur either needs to add the new features or repeat the cycle. This cycle saves many entrepreneurs time and resources. This process gives the entrepreneur the foundation to scale upon while also knowing the product works, is complete, and has devoted customers.
One last note: It’s essential for entrepreneurs to emotionally detach themselves during this process and base their decisions on hard data.
Find the Next Step for Your Startup with NEXT Studios
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