Lean Startup process cycle
Ries, E. (2011). The Lean Startup. Crown Business, Crown Publishing Group, New York.
“Lean Startup” is an innovative methodology developed by Eric Ries that focuses on building businesses and products under conditions of extreme uncertainty. It is an agile and flexible approach that is based on building rapid prototypes, early validation of ideas and constant iteration based on customer feedback. The Lean Startup methodology takes its name from the lean manufacturing revolution led by Taiichi Ohno and Shigeo Shingo at Toyota. The Lean Startup model is based on fast cycle times and focuses on what the customer wants. Its business model introduces the concept of the Build-Measure-Learn feedback loop, i.e. "Learn fast, fail fast, and pivot if necessary."
The first stage of the Lean Startup methodology is the Construction stage. This involves developing a Minimum Viable Product (MVP), a product with enough features to satisfy early customers and provide feedback for future product development. For example, consider the case of Dropbox, where instead of creating a fully functional product from the beginning, Dropbox created a simple video that demonstrates its idea. This video served as his MVP. It allowed them to gauge customer interest and gather feedback without investing significant resources in product development. This approach helped Dropbox validate its idea and create a product that met customer needs. In summary, Idea: Synchronize files in the cloud, Validation: Simple prototype and waiting list for users, Iteration: Collection of feedback and constant improvements. Result: Company with millions of users.
The second stage is the Measurement stage. This quantitative measurement involves collecting data and learning from it to understand customer response. The key here is to focus on actionable metrics that can guide the company's future decisions and actions. A great example of this is Facebook who focuses on "daily active users" as a key metric instead of simply tracking "registered users" where the former is an actionable metric that gives them insights into user engagement and value. they get from their platform guiding their product development decisions and helping them measure the success of their changes.
The final stage of the cycle is the learning stage. This involves learning from the measurements and deciding whether to persevere or pivot. A pivot is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, and growth engine. In short, the importance of validated learning allows us to empirically demonstrate that a team has discovered valuable truths about a startup's present and future business prospects.
A classic example of a successful pivot is Slack which was originally a gaming company called Tiny Speck, however the gaming company did not take off as expected but the development team noticed that the internal tool they had created for communication was very effective, and they decided to take a turn by converting this tool into what we now know as Slack where it is currently one of the leading communication tools in the business world.
Other real-life examples of companies that have successfully applied the Lean Startup methodology:
General Electric (GE): GE's “Fastworks” program is a great example of applying Lean Startup in a large corporation. They trained more than 5,000 senior managers in Lean principles and created autonomous divisions, resulting in the development of a new product (a refrigerator) with a time and cost savings of 50%.
Toyota: Adopted Lean principles in the development of its Android-based navigation systems. The development team interacted closely with customers to iteratively develop a Minimum Viable Product (MVP), which led to great success.
Intuit: Under the leadership of Eric Ries, Intuit developed Lean StartIN, an intensive brainstorming session where small teams of Intuit staff must generate new product ideas and validation metrics. It led directly to the creation of a new payment tool for Intuit's Mint financial management service.
Zappos: One of the first online shoe retailers, this is another great example of Lean Startup in action. They now sell everything from boots to handbags.
Airbnb: It is an online platform to connect landlords with tenants in accommodation rental services. Their prototype was validated with photos of a house and an inflatable mattress and they iterated adapting the business model and expanding to new cities. Today it is a leading company in the alternative lodging industry.
Spotify: A subscription-based music streaming service, their validation was the beta launch with limited access and iterated on music licensing and development of new features. They are currently a leader in the music streaming industry.
These examples illustrate how the Lean Startup methodology can be applied in both startups and established companies, in different industries, to drive innovation and growth.
CONCLUSION
The Lean Startup methodology provides a scientific approach to creating and managing new businesses, delivering a desired product into the hands of customers faster with its Build-Measure-Learn feedback loop. It emphasizes learning and agility over elaborate planning. By creating an MVP, measuring with actionable metrics and learning when to persevere or pivot, startups and established companies can navigate the uncertain waters of launching a new product or service.
The key to the Lean Startup approach is not just spending less money, it's about wasting less and still doing important things. It is about recognizing that learning and innovation are the drivers of growth with early validation with the customer, constant iteration to improve the product or service and being willing to pivot by changing course if the original idea does not work.
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