Lean Startup is an iterative method for building products and business models quickly and in a resource-friendly manner. At the core of the method are MVP a repeating cycle of "Build - Measure - Learn". Lean startup is now part of the toolbox of every digital coach and is also used successfully by established companies.
In this post I introduce the Lean Startup Method, show you how to work with it and present examples from startups and corporates.
Origin of Lean Startup
The Lean Startup Method was developed by the American founder, tech entrepreneur and software developer Eric Ries. After discussing the concept in detail on his blog, he published his book "The Lean Startup" in 2012 and thus helped the method to achieve an international breakthrough.
At its core, Lean Startup is based on the idea of agile software development in conjunction with Steve Blank's "Customer Development" method. "Customer Development" is a process during which innovators present their ideas and in this way discover the first ideal customer group. Agile methods propagate the work in recurring iteration loops. In combination, both concepts result in the lean startup cycle.
The Lean Startup Cycle - "Build, Measure, Learn"
At the core of the Lean Startup method is a continuous feedback loop in which ideas are materialized (building), feedback and data are collected (measuring) and evaluated (learning). Based on the learnings, assumptions are adjusted and the loop starts from the beginning. The goal is to minimize the lead time in order to spend as little time and energy as possible on incorrect assumptions.
Step 1: Build
The "building" is certainly the hardest part of the cycle. Whether inexperienced users, creative people or founders, we want to build too much. The first version of our product is like a moon rocket. We stack features that we don't know if the customer even wants them. And those who build a lot need a long time and that contradicts the goal of the lean startup method to minimize lead times. The Lean Startup Method therefore relies on a Minimum Viable Product (MVP), literally a "minimally viable product".
What is an MVP?
An MVP only fulfills one or a few central performance aspects of a product. The most important job of the MVP is to gain data points and insights into your most important assumptions. Incidentally, the term MVP was coined by Frank Robinson in 2001, but only became socially acceptable with Lean Startup.
In order to define an MVP, you need clarity about what is most important to the customer and what problem they want to solve with your product. This requires an intensive analysis of the customer's needs. Your goal is to offer the customer a solution with minimal effort that promises you action-relevant feedback.
Step 2: Measure
A clean and relevant measurement assumes that, when defining the MVP, you have already thought about which actions and actions of the customer will give you information about whether your assumptions are correct. Most of the time, the desired data points result from the customer's journey. At each point you define which actions and actions you want to measure. In order not to suffocate in garbage data, you can ask yourself at each event how this data point would change your behavior.
Step 3: Learn
The final step is easier said than done. How happy we are to be right and to be affirmed in the things we believe. If you want to escape the "confirmation bias", it is best to document and discuss in advance with the team on which assumptions the MVP is based and which decisions you would make based on the results. You can e.g. Define data points which, if not achieved, will consider a certain assumption to be refuted. The end is also the beginning of the lean startup process. Hopefully you were able to validate or discard important ideas in order to build your next MVP with new assumptions. If the findings lead to a fundamentally or radically new orientation of the product or business model, the Lean Startup method is known as a "pivot".
Working with Lean Startup
The path from an initial idea to a marketable product and viable business model is long and rocky. The Lean Startup Method is a very valuable addition to Design Thinking and the [Scrum Method] (). While the Design Thinking method supports you in the very early stages of brainstorming and prototyping, Scrum offers you a process model for continuously developing products. Lean Startup Method offers a bridge between these methods.
design Thinking, Lean startups and Scrum in comparison.
Lean startup is elementary for startups. After all, a viable product and business model must be developed before the financial reserves are exhausted. For corporations and medium-sized companies, Lean Startup is also a valuable method. With Lean Startup, employees are encouraged to look for the "quick way" to the market instead of dealing with long plans and extensive concepts. This new methodological competence is among other things carried into the organization by setting up a digital lab.
Lean Startup Examples
Lean startup has long been mainstream. One of the most famous startups that has proven to work with the method is Dropbox. It's worth mentioning because Dropbox founder Drew Houston faced a particular dilemma and brings a valuable perspective on the definition of an MVP.
When Drew Houston approached investors for his new startup "Dropbox" in 2008, he only had one locally functioning prototype. He lacked the capital for a stable version that would bring him the customers he had hoped for. However, the investors rejected him on the grounds that they had no customers yet.
So Drew decided to be a very creative MVP. The assumption to be substantiated was that customers are interested in his product. So he put a video online ( Dropbox ) showing how the software works. More than 5,000 interested parties registered on his site within a few hours. A video, a local prototype, a landing page. As you can see, an MVP can really be "minimal".
An example of the application of the Lean Startup method in the corporate world comes from General Electric. Based on the Lean Startup method, GE founded its program FastWorks and rolled it out company-wide. The first area that was affected was the household appliances division. GE Appliances CEO Chip Blankenship informed his team in January 2013 about upcoming changes in a product line:
You’re going to change every part the customer sees. You won’t have a lot of money. There will be a very small team. There will be a working product in 3 months. And you will have a production product in 11 or 12 months. Chip Blankenship, CEO GE Appliances
In the same month, the formed team presented its first MVP. For the engineers in particular, the direct contact with customers and the presentation of minimally functional products that were not 100% thought through was a tough learning curve. But the feedback from customers helped to unmask and optimize unwanted features, colors, design etc. directly. A path that pays off for GE. Instead of redesigning new products in secret every five years, GE is now planning in iteration cycles of one year with the involvement of the customer.
With FastWorks we're learning that speed is our competitive advantage. Kevin Nolan, VP Technology
More about GE's learnings in this Harvard Business Review (HBR) article. In addition, Eric Ries has his knowledge from the cooperation with GE and other companies in his book The Startup Way processed.
in the fast lane with Lean Startup
Lean Startup offers you a procedure model to test new products and business models. The method is fast, customer-centered and success-oriented. The key to successfully applying the Lean Startup method is defining an MVP. If that succeeds, nothing stands in the way of quickly running through the "build, measure, learn" loop.