Chuck LEAN Business Consultant
Do you have experience with a Lean Startup?
Lean Startup Definition
The word “lean”, here, has been applied by Eric Ries, Harvard Business School researcher, towards avoiding waste. It involves identifying and eliminating waste in all the processes, from research to production.
In short, in this methodology, the company begins by getting to the market to ask the opinion of potential customers about all elements of the business model: product features, price, distribution channels, and economic strategies.
With this data collected, the startup creates a minimum viable product (MVP) and ask for customer feedback as quickly as possible. Based on the answers obtained, it aims for new versions and adjusts until it finds the ideal product.
What are the pros and cons of a Lean Startup?
Statistics say that the majority of startups face a dismal fate. You may have heard that 8 out of 10 startups fail. However, this is not quite correct; according to a [removed] performed by Statistic Brain, more than 50% of U.S. companies fail after five years, and more than 70?il after 10 years after creation. Nevertheless, the fact is that startups obviously face challenges that many of them cannot overcome.
Why does this happen? Eric Ries, an American entrepreneur and the creator of the Lean Startup methodology, believes that the standard approaches to business development are not applicable to startups. Unlike businesses, startups operate innovations; they are funded and scaled differently, and they have different aims. Startups’ aim is to bring an innovation to the masses rather than to follow a beaten path of the well-known business schemes. Eric Ries defined a startup as a “human institution designed to create a new product or service under conditions of extreme uncertainty”.
Ries sees two reasons for startups’ failures:
– Application of traditional business instruments of management, success measurement, building strategies and market investigations. These conventional tools are almost useless for startups, which act in conditions of uncertainty.
– Exactly the opposite reason: seeing that all this doesn’t work, entrepreneurs start ignoring the abovementioned tools and any other management strategies, arranging a sort of business anarchy under the “Just do it” banner.
Both directions are inefficient, and it seems it’s a tough way. No panic — the Lean Startup method races to rescue. Eric Ries proposed this approach in 2008 as a methodology that aimed to manage high-tech startup enterprises. The principle itself and the eponymously named bestseller [removed] that was published in 2011, have got an enormous success and have been helping many startups to avoid mistakes.
The Lean Startup methodology can be characterized as “a guideline system for solving a problem”, and it copes with the task highly efficiently, slicing and dicing every single aspect of the innovative enterprise. Any startup is a huge experiment that was created to answer a question, and the question is not “Can we create this product?”, but rather “Should we create this product?” and also “Is it possible to build an effective business around this set of services and products?”