The Lean Startup is a technique for developing and launching new products and services, that emphasizes rapid iteration, testing, and learning. It attempts to reduce waste and minimize the risk of failure by creating a minimum viable product - MVP and continuously improving it based on customer feedback.
The Lean Startup method was made famous through a book called "The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses" written by Eric Ries, an entrepreneur in the early 2000s. He based the book on his experience in establishing and managing startups and is inspired by both, "The Lean Manufacturing principles" that were proposed and applied by Toyota in the mid-20th century, as well as the agile development method.
Nowadays, many companies, entrepreneurs, and startups follow the Lean Startup method to boost innovation and remain competitive.
What makes the Lean Startup method popular is how practical and efficient it is in its approach to founding and running a business.
It is especially suitable for tech businesses, where It helps keep pace with the modern tech environment that is changing and evolving very rapidly.
The Lean Startup method has at heart the process of validated learning, through customer feedback, testing, and iteration; this way startups can rapidly pivot strategy and offering based on market conditions and demand.
It equally helps mitigate the risks and unpredictability that come with starting a business.
There are 5 core principles for the Lean Startup, these are:
Build-Measure-Learn: this is the main cycle of the Lean Startup. Entrepreneurs need to build a minimum viable product (MVP) quickly, test it with customers, and then improve based on the feedback received.
Validated Learning: the purpose is to prove or disprove the hypotheses about the new product or the market and the pain points of the users in a fast and cost-effective way.
Emphasize Customer Discovery: the priority goes to understanding customers' problems and pain points and solving them. Then, comes perfecting the product.
Rapid experimentation: it's essential to test your ideas in a rapid and cost-effective way. The keyword is fast iteration.
Innovation Accounting: progress and decisions are data-driven, and success is measured with pre-defined metrics.
By following these principles, a startup can rapidly understand which ideas are worth proceeding with and which are not, while saving resources and producing an MVP rapidly.
The Lean Startup process is comprised of 5 steps, these are:
Problem/Solution Fit: this includes defining a problem and using customer feedback to decide whether the solution they offer is valid or not.
Minimum Viable Product (MVP): when the valid solution is determined, the next step is to create a minimum viable product, which is a basic form of the product used to test the solution with real users.
Validated Learning: this is where the startup gathers data and customer feedback about the MVP they released. This data helps the startup improve the product and understand whether their assumptions were valid.
Iteration: after the learning comes iteration, which includes improving or adding features. The steps from 1 to 4 are then repeated over and over again until the product is developed enough to meet the customers' needs.
Scale: after the product is ready and the startup has enough understanding and experience with the market, they can proceed with scaling up and expanding their business.
The whole point of this process is to build startups that are flexible, fast, and iterative; Lean Startups can make decisions and correct course in a fast and efficient way.
Dropbox: Co-founder, Drew Houston explained that they used the Lean Startup method by launching an MVP version of the product to test market reaction. They validated the need for the product by having a waiting list of users before the launch.
Zappos: The shoe-selling startup that is now owned by Amazon, started with a small target market and kept growing and improving based on user feedback. Their feature implementation was built on user needs and rapid response to market shifts.
Airbnb: The accommodation giant started with a basic website, gathered feedback, and iterated. In their early days, they rented air mattresses in their houses to validate their idea and improve based on feedback.
The Lean Startup method and product management have the same goal, introducing successful products that address a customer need to the market in an efficient way.
Product managers can use The Lean Startup method as a framework for prioritization of features that is guided by feedback, as well as testing and validating ideas and assumptions.
Through this method, product managers can save time and resources and base their decisions and iterations on data and feedback. This means, faster, better products, efficient prioritization, less risk, and happy customers.
Every startup is unique, and the needs and goals of the business and the users vary, however, the below template can serve as a step-by-step guide to help you apply the Lean Startup method to your business.
Problem/Solution Fit: identify the problem your users are facing and test the solutions you have for it.
Customer Development: engage with your target market to understand their needs and validate your product.
Minimum Viable Product (MVP): create a basic version of your product to test your solution on real users and gather their feedback.
Metrics: define what success means to you by identifying important metrics. This will make it easier to iterate.
Pivot or Persevere: use the feedback you gather to decide whether to maintain the state of your product or shift course and pivot the product.