How to Start a Startup with the Lean Start-up Methodology


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Similar to any other methodology, Lean Startup proposes a scientific approach to developing and managing certain processes. In this case, the process relates to creating and launching a new business model, a product or a service when customers need it. Since this methodology relies on scientific research, validated processes and iterative product releases, it delivers one of the best mechanisms that a startup business can use to develop and promote its innovations.

Understanding the Basics

The Lean Startup movement consists of building a solution based on a testable hypothesis, which must link to an idea that can be built and is expected by consumers. The result will be a new product or service that validates or invalidates the initial theory. Thus, the main purpose of this methodology is to quickly verify if consumers are interested in what a particular developer plans to create. Evidently, this helps startup entrepreneurs avoid spending time, energy and money in developing ineffective solutions.

Lately, experts have created innovative Lean Startup strategies that encourage entrepreneurs to keep on building a series of iterations, which will eventually guide businesses forward. By simply applying these strategies, businesspeople can delineate key metrics and measure the efficiency of certain solutions. This is the only practical thing entrepreneurs can do to ensure they are on the right track.

However, what an entrepreneur should bear in mind is that the entire process, which starts with the initial idea and ends with its manifestation, shouldn’t take longer than writing a regular business plan. That’s because the quick development of new business models, products or services is one of the few elements that weight heavily in the balance of success.

How to Implement the Lean Startup Methodology

So how do you start a startup with this new, promising approach? Putting the Lean Startup methodology into practical effect is quite tricky. However, it can be done. That’s because this methodology works for every business, regardless of the industry niche. According to its developer, Eric Ries, anyone can implement the Lean Startup methodology by following two basic steps.

1. Develop and Validate a Hypothesis: This stage begins with the formulation of a particular hypothesis and continues with consumer interviews, hypothesis validation and exploration of market attractiveness.

  1. Hypothesis Formulation: To develop a successful business model or product, an entrepreneur has to make sure that he or she delivers an effective solution for a certain consumer group. A well-formulated hypothesis must comprise a breakthrough idea or a cheaper, faster, or better solution compared to the available ones.
  2. Consumer Interviews and Hypothesis Validation: Consumer interviews enable business owners to validate or invalidate their hypotheses. The best consumer group for validating hypotheses is the one that includes people who have one or more problems; have been actively searching for a solution to their problems; have created their own solutions out of piece parts; and have money to purchase the best solution when they find it.
  3. Market Attractiveness: After validating a hypothesis, the entrepreneur must explore its market attractiveness by studying competition, market size and company’s capabilities to manufacture the solution. A thorough analysis of these three elements will confirm whether a particular innovation should be developed or not.

2. Develop and Validate the Solution: If a solution addresses specific market needs, it should be developed. This stage can also be completed with the help of three steps.

  1. Develop the Feature Set: An entrepreneur must find the most effective way to create a set of functional features for the new solution. Business owners should bear in mind that consumers are more likely to choose familiar features, which are, however, subject to modification during subsequent meetings.
  2. Develop a Prototype: After consumers validate a certain solution along with its set of features, the entrepreneur can develop the prototype. The best prototype is a virtual model, which enables businesses to discover the most suitable and affordable technologies to produce the final product or service.
  3. Test the Solution: This step is essential since it allows entrepreneurs and consumers to test the solution. During this stage, project managers can make last minute modifications

Important Concepts

Minimum Viable Product

A minimum viable product (MVP) is the "version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort." The goal of an MVP is to test initial business hypotheses and to help entrepreneurs begin the process as quickly as possible.

Continuous deployment

Continuous deployment is a process "whereby all code that is written for a software application is immediately deployed into production," which results in a reduction of business process.

Split testing

A split or A/B test is a field test in which "different versions of a product or service are offered to customers at the same time." The goal of a A/B test is to study changes in behavior between the two customer groups and to measure the impact of each version on an actionable metric.

Lean Startup Benefits

Lean Startup is renowned for three major benefits. Firstly, this methodology allows entrepreneurs to fully control their businesses. That’s because it teaches business managers how to create new business models and products without outside funding, which generally implies handing over the control of a business to an investor.

Secondly, this methodology makes it possible for entrepreneurs to pivot when they realize that initial assumptions are incorrect. By applying the “release early, release often” principle, a businessperson can identify problems and make adjustments when needed.

The third significant benefit of the Lean Startup methodology is that it helps business owners get hefty profit margins regardless of how much money they make. Although most business managers are obsessed with revenue, this methodology can help them match the profit of a traditional startup even if they collect less revenue compared to their competitors. This is possible because Lean Startup focuses on drastic reduction of initial funding need and startup costs.

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