The Lean startup approach is useful for companies trying to increase the efficiency of their capital and improve their effectiveness in harnessing human creativity. By focusing on specific principles, companies using the Lean Startup method can benefit from less of a risky beginning in the big business world.
What part of a business is helped by a Lean Startup approach?
To understand how the Lean startup methodology can help a company, ideally we need to understand what a methodology is. In the case of businesses, a methodology is used as a system of guidelines for solving a particular problem. Methodologies consist of a set of methods, rules and hypotheses. The methodology allows companies to consistently perform tasks and evaluate everything as it is developed and performed.
Consistently evaluating progress and performance allows different models to be utilised, and consequently a business plan can become adaptable and flexible. Consequently, different methodologies are used by businesses worldwide in all departments to target specific issues and challenges. In the context of the Lean Startup methodology, the problem being targeted is how to find a sustainable business model.
How can Lean Startup be implemented?
There are several principles within the Lean Startup methodology that can be implemented by any business, large or small.
Understand validated learning
Any new business idea is exciting, and for any business entrepreneur, having belief in this idea is essential if the idea is to be transformed into a business. But no matter how much you believe in this idea, you must be prepared to listen to your customers. Rather than telling them what they should want, you must understand what they actually want. Consequently, businesses must be capable of learning what works and what does not work, and must be willing to adapt to any failures.
Discovering what a customer wants is not the easiest thing to do, and a business must be prepared to experiment, fail, and iterate. As customer data is collected, businesses can start to analyse emerging patterns and accommodate these patterns into the original strategy. Thus, knowledge gained from this type of research ensures that your product and business will become valuable to customers. This concept is often described as validated learning.
Focus on management
If a business is just about to get started, management might be one of the last things to be considered. Business entrepreneurs typically spot an opportunity and pounce on it, and prepare to launch a new business. Yet, in order to effectively and efficiently harness that opportunity, these entrepreneurs must embrace management as part of the process.
As any new business starts, certain teething problems will be encountered. This is unavoidable for any business, regardless of how good the product or service is. However, businesses can learn from failures and bad experiences and adapt to improve and grow. In order for this to be achieved, failures must be managed. During the early stages of company growth, areas such as product development and marketing, as well as networking and scaling up require effective management to keep the business focused and successful.
Build while being capital-efficient
Using the Lean startup method, companies learn to build while being capital-efficient. Put simply, companies learn to recognise to make changes and alter development process sooner rather than later. This reduces the amount of time and money wasted on something that the company might steer away from eventually anyway.
For any new business, the products and services being developed should be seen as experiments. Once the product has been identified, development must begin. While being developed, measuring and assessing these stages will allow companies to visualise whether or not they are making any progress. At this point the development process may be altered to adapt to any data collected from the measurement. In this way a feedback loop is created.
Many of the processes of the Lean startup methodology focus on using validated learning, quick cycles of scientific experimentation, and techniques to reduce the product development cycle. In addition, the method teaches companies to reliably and accurately measure the progress they’re making, and truly understand what their customers need. Overall, the major benefits of this methodology are that companies learn to become more agile with their decisions and plans. Business approaches and developments can be changed rapidly at every stage of the process, allowing companies to respond quickly to change while continuously assessing their progress.