The Lean Startup–An Overview

There is more to creating a successful startup business than a great product, a brilliant team, amazing technology, and good timing, or so says Eric Ries, Chief Technology Officer and co-founder of IMVU and now author of The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. The fact is most startups fail, and not for the lack of determination, hard work, or perseverance.  No, they fail because they do not know the process of converting their ideas, their product and marketing insights, into a sustainable business. The goal of The Lean Startup is to improve the success rate of startup businesses attempting to bring new, innovative, products or services to the world.

At heart the Lean Startup Method is based upon five principles.

  1. Entrepreneurs are everywhere.  Ries defines a startup as “a human institution designed to create new products or services under conditions of extreme uncertainty.”  Anyone endeavoring to do this in whatever context is an entrepreneur.
  2. Entrepreneurship is management, albeit one done in the context of extreme uncertainty.  The boring stuff matters.
  3. Validated Learning.  First and foremost the objective of the startup is to build a sustainable business.  To begin with the startup has but “leap of faith assumptions” as to the desirability of its product or services and its potential customers.  These assumptions must be rigorously and scientifically tested.
  4. Build, Measure, Learn.  This is the fundamental activity of a startup.  Build, not a perfect, but a “minimum viable product.”  Great scepticism is often the response to this dictum.  It’s design is to get feedback  as soon as possible, so that we do not waste scarce resources, human and monetary, on a product no one wants.  Measure: scrutinize the feedback data from such customers or potential customers as we currently have, seeking to verify, falsify, or at minimum, clarify, our “leap of faith assumptions”.   Learning from the response to our minimum viable product,  we make small incremental changes in our product and/or business model and offer it once again to the public.  Build, measure, learn is done in cycles.  The faster our cycle time, the sooner we will learn that our fundamental assumptions concerning our product, business model, or potential customers are sound or that they are flawed: the sooner we will know that we are justified in staying on our present course or need to make a major change in our business, to “pivot or persevere.”
  5. Innovation accounting. To improve the success rate of startups, entrepreneurs must be held accountable.  But because a startup is different from an established business, the criterion for evaluation is different. Increases in sales, the total number of customers, the number of clicks on our website do not give enough information to warrant the conclusion that we are on the path to a sustainable business.  Such “vanity metrics”  are to be abandoned in favor of  what Ries calls “actionable metrics.”  The devil is in the details: “actionable metrics” come out of careful evaluations of feedback from the build, measure, learn cycles.

Lean startup principles have been applied to many diverse industries with amazing results.  They are worth the time you may spent examining them in detail.

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