Slender, slimmer, lean - the figure is no longer the only thing that should be slim today. Excess pounds hurt not only on the hip, but also in your startup business. They make it slow and inefficient, so it can not keep up with the competition let alone overtake it. The same goes for startups, which are already a risky venture anyway. The bacon has to go! And that would be better with nothing better than the lean startup method of Eric Ries. The best way to use them is explained in the following article.
Lean Startup - revolutionary approach to risk minimization
Who founded a startup, knows only one motto: Do or die. Both time and financial resources are in short supply to bring a competitive product and service demanded by the target audience to market. It is self-explanatory that this can not be achieved by all. This assumption is still quite euphemistic in the face of reality, because in reality only very few startups develop into successful models. What would be closer than trying to minimize the risk of failure? That's what Ash Maurya, Dave McClure, Steve Blank, Alexander Osterwalder and above all Eric Ries thought, These are today regarded as pioneers of the Lean Startup concept. This is a pragmatic approach to minimizing risk, which is now used throughout Silicon Valley. In doing so, Lean Startup is not only suitable as an approach to founding a startup, but also as an effective method for changes in existing companies - and especially in the course of digital transformation .
In his seminal book Digital Transformation Eric Ries describes the basic methodology of the Lean Startup approach. Ten methods can be defined that form the basis of this approach. We would like to introduce these to you below so that you can use them for your start-up or for upcoming changes in your company.
1. Build - Measure - Learn
The idea of how to use scientific methods to manage risks has changed radically in recent years.
The best results today are achieved by hypothesizing, building a prototype to test your hypothesis, seeing what happens, and making adjustments based on these findings.
In this way, not only can you thoroughly test new products and ideas, you can also test several ideas for their feasibility at the same time, so that you can finally see which one has the makings of success.
You can use this approach not just for new products, but from website text to customer service in just about anything. The important thing is that you put your hypothesis through its paces to get enough meaningful data. That way, you can figure out what your customers really want - not what they say, they want, or you think they want.
2. The MVP - Minimal Viable Product
Traditional product development requires a lot of groundwork to set the product specifications, as well as plenty of time and financial resources to realize the product. Quite different with the Lean Startup approach: Here only so much is developed and realized, as is necessary, to complete a building-measuring-learning cycle. This is called Minimal Viable Product, the product that requires the least amount of use and the shortest development time. This is completely sufficient to gain important insights about the product, its customer benefit and your previously established hypothesis.
3. Validated learning
As the founder of a start-up, your goal is to find a sustainable business model on the market. At the beginning you can do nothing but vague assumptions about this. This is where your hypotheses about your business model come in, and you'll test them. These should deal with different areas such as product variants, customer promises, distribution channels and customer segments. All your hypotheses are summarized in the Lean Canvas , a special framework. Of course, you are constantly adjusting it. This entire process is called validated learning.
The various tests may prove that you need to make adjustments to your business model called iterations. It may also be that you have to completely redesign this - then it is called a pivot. In addition, it may also turn out that you may even have to completely discard your entire business model.
Ultimately, it's about whether customers accept your product and how you need to design it to do so. But beware: You should not be misled by so-called vanity metrics . These are feigning progress, where in fact they are not. A good example of this is Facebook. The number of likes and maybe even the number of accounts can be described as vanity metrics because they do not tell you the actual value of the company. This can be seen only on the time spent by the users daily on the platform.
4. Innovation Accounting
Measuring innovation is a fundamental part of Lean Startup. You should proceed in the following three steps:
- Set the starting position: This may be a test of your MVP or even pure marketing to see if there is potential customer interest. In any case, here you define the starting position for your building-measuring-learning-cycle.
- Fine adjustment: Now it's time to test your hypotheses. You should only do one change after the other to see if it improves your product. Never make multiple changes at once, but always concentrate on one.
- Pivot or Preserve: Discard or keep, that's the question. And this comes after repeating numerous building-measuring-learning cycles after coming very close to your goal from your starting position. If not, you probably already know what to do and it's time for another business model.
5. Pivot
Pivot means a radically modified business model in Lean Startup. Literally, the English noun pivot with pivot point and the verb to pivot with panning translate. The point is, then, to change direction after it has been proven that the original business model or product is not working.
The art here is to know when it is necessary to give in, when the right time for radical change has come and what needs to be changed. The ability to recognize this and make the swing differentiates successful entrepreneurs from unsuccessful ones.
Traps such as superficial metrics and the wrong hypotheses can quickly lead you astray and present an unsuccessful business model as a success. A pivot itself is not a failure, it just means you have to change one of your hypotheses. There are different types of pivots:
- Zoom-out Pivot: The entire product becomes part of a new, much larger product.
- Zoom-in Pivot: A single component of the product becomes the new product.
- Platform Pivot: Platforms launched as app become an ecosystem because of their success.
- Channel Pivot: The startup changes its channels.
- Value Capture Pivot: The path to value creation is changed. As a result, all other business areas, such as the marketing strategy and the product itself, are also changing.
- Costumer need Pivot: Validated learning makes it clear that customers' problems other than originally thought are more important.
- Costumer segment Pivot: The product remains the same, but the target group is changed.
- Business architecture Pivot: Behind this is Geoffrey Moore's idea of switching from high margin, low volume to low margin, high volume .
- Engine of growth Pivot: Here the growth model is changed.
- Technology Pivot: A new technology is being integrated to cut costs and increase efficiency.
6. Work processes as a whole
What do you think works faster? To completely assemble a product or do every step in the production of all products before the next one comes along? Many tend to answer this question to the second variant, but are unfortunately wrong. In practice, it has been proven over and over again that it is much more efficient to completely assemble a product, rather than completing one step in all products before the next one is on the line. A famous example of this is the folding, enveloping and addressing of letters, which has been found to be much quicker if all the steps in a letter are done at once than if all the letters are folded, then all letters are enveloped and then all the letters be provided with addresses.Known single-piece flow . This is more successful because the overall performance of a system is more important than that of individual workers. That's why you should consider a work process as a whole, because that way you can increase the efficiency. In addition, you can also quickly detect and correct errors, which can increase the quality of the work or the products and also save time.
7. The Andon Cord
Toyota's Andon corduroy is originally a button or pull cord that allows employees to immediately stop equipment in the event of problems. This is not only a kind of emergency brake, but also serves as an indication of the problem site to its location. By using the Andon Cords, problems can be quickly discovered and identified, saving time and money efficiently.
Being able to discover and solve a problem as quickly as possible is an important factor in ensuring efficiency and guaranteeing quality. Not for nothing is the Andon Cord the main reason for the famous high quality of Toyota products.
Based on this concept, Eric Ries recommends the implementation of automatic checks that, for example, check the correct functioning of websites every day. You should stick to it, because the longer a mistake goes undetected, the harder and more expensive it will be to fix it - not to mention that the quality of your work or your products suffers considerably as well.
8. Continuous provision and continuous work input
Imagine doing updates to your production systems every day and all day. Better, you get used to this idea, because constant updates are one of the pillars of efficiency. Only in this way can you ensure that your offer always meets the requirements of the customer and the market, and that you produce neither too little nor too much.
Learn from your customers what they want and create the conditions for your offer to adapt immediately to these needs.
9. Kanban
Originally from Lean Production Systems, Kanban describes the actual consumption of material at the point of use and supply, so that a reduction of local stocks of precursors in the environment of production can be achieved. Eric Ries took up this approach and illustrated it using the example of Grockit, an online skills improvement tool.
Grockit creates stories in the context of product development in order to work out specific (product) characteristics and to test whether these bring an advantage for the customers. Should that be the case, the stories will still be validated to confirm the customer experience improvement.
Kanban is divided into four stages - buckets -:
- Backlog: Elements that are already prepared.
- In Progress: Elements that are currently in progress.
- Built: The item is finished and ready for the customers.
- Validated: The customer benefit of the item has been confirmed and it is now ready for release.
If the story - ie an element of a product - could not be validated, it must be removed from the respective product. When applying the kanban principle, you should make sure that never more than three products or projects can be in one stage.
10. The five Why?
Most technical problems are due to a human cause. However, identifying them is not always that easy. Here's the technique of the five Why? help that is as simple as it is effective.
If it superficially also looks like a particular problem of technical origin or perhaps due to the error of a single person, the true cause is usually in poor training or lack of training. As an example, Eric Ries introduces customers who have complained about a product update to:
- A specific product feature did not work after the update. Why? Because a particular server has failed.
- Why did the server fail? Because a system was misused.
- Why was the system used incorrectly? The technician who used it did not know how to operate it properly.
- Why did not the technician know this? Because he was never trained in it.
- Why was he never trained in it? Because his manager does not care about training new technicians because the team is too busy anyway.
So you see how you can find the real causes of problems with five simple why questions. In addition, this technique also allows you to find out the optimal speed and the perfect time for improvement. It allows you to look beyond superficial problems and to identify the actual problems at the roots. This saves valuable resources and does not waste them on finding bogus solutions. However, you should always keep in mind that the five Why?to find problems caused by bad processes and not by bad employees. They should therefore not be used to point fingers at certain employees and blame them for problems. To avoid this, you should stick to the following principles:
- Create a climate of mutual trust and empowerment. Tolerate errors on the first, but not the second time.
- Focus on the system. Most errors happen due to a faulty system.
- Also look at unpleasant truths in the face. Only then can real improvement take place.
- Start small and specific.
- Appoint a Responsible for the Five Why? , This should be a recognized authority in the company or in your department.
A traditional marketer might make a TV commercial or buy an ad online.
Why run an “awareness” campaign if you can get leads fast and cheap?
Growth marketers differ from Don Draper in that they focus on the entire customer funnel, not just the top of funnel.
Growth marketers are constantly tinkering with ads, tweaking website pages and testing hypotheses, all in the interest of increasing dollars generated by any means possible.
That being said, the concept of growth marketing was around much before the book was published in 2011.
The Lean Startup teaches entrepreneurs to:
The whole startup world has become inspired by the idea of building Minimum Viable Products (MVPs) after Eric Ries popularised it back in 2008. It has become a trendy word in the tech world gradually turning into a misleading concept.
As a result, we have companies that are not willing to use the MVP approach as they don’t 100% understand it, experts who state the concept is wrong and clients who often get hot under the collar after the suggestion to try out a minimum viable product.
Сonsidering the fact that MVP remains one of the most important components when creating software, it would be unreasonable to drop it just because some people misuse the concept.
Let’s talk about why this lean tool becomes confusing, what mistakes you should avoid and, more to the point, what is the right way to build an MVP.
