Lean startup

From CEOpedia | Management online

Lean startup is methodology product and company development, based on the assumption that entrepreneurs need to explore, to experiment, test and iterate as product development[1].

Assumption

The purpose of this methodology is to minimize the product development cycle and to quickly discover whether the proposed business model is profitable[2]. It launches large, complex products on the market. Faster and cheaper than any other method. Making sure every function meets the needs of clients, the lean startup method is moving towards success [3].

Benefits

Reducing the risk of economic losses accelerates the development of the product[4], which is in the early stages. It helps quickly find out what does not work to make changes immediately[5]. Recommends a refund or stop if the initial plan does not work. Progress can be tracked by user activity, commitment and retention[6].

5 core pricncples

The application of these principles is the foundation of this methodology, - thanks to them we can provide customer products they need and want to use them[7]:

  1. Entrepreneurs are everywhere, due to the multitude of entrepreneurs and startups, there are many opportunities that entrepreneurs can use to build a successful business
  2. Entrepreneurship is management startups require management like any other company, flexible, learning-oriented management makes for a successful lean startup.
  3. Validated Learning customer orientation. Adaptation to the needs of the target market, through experimentation, find what works best. Gaining knowledge about what customers want.
  4. Build-Measure-Lean learning based on feedback and improvement in the iterative process. Minimum viable product (MVP) is released on the market, improvements or total changes are introduced based on feedback.
  5. Innovation Accounting keeping detailed records of tests and analyzes to find out what works best.

Examples of Lean startup

  • The most common example of the Lean startup process is the Build-Measure-Learn loop. This process involves creating a minimum viable product (MVP) with the most essential features and testing it with potential customers to collect feedback. The feedback is then used to refine the product and make it even better. This process is done iteratively until the product is ready for launch.
  • Another example of the Lean startup process is the use of customer development interviews. This involves talking to potential customers to understand their needs and pain points. The information gathered from these interviews can then be used to create a product that meets the needs of the customers.
  • A third example is the use of split testing. This involves creating two different versions of a product or website to see which one performs better. This allows entrepreneurs to optimize their product and make it more successful.
  • Finally, another example of the Lean startup process is pivoting. This involves making significant changes to the product or business model based on customer feedback or market conditions. These changes can be drastic, such as changing the target market or the type of product.

Limitations of Lean startup

The limitations of Lean startup are:

  • It can be difficult to measure whether a product is successful without a longer period of testing. As Lean startup encourages rapid experimentation, it may be hard to determine whether a product has been successful or not, as it may take longer than expected to reach the desired results.
  • It can be difficult to prioritize tasks. As the Lean startup methodology encourages experimentation and iteration, it can be hard to prioritize which tasks should be completed first, as the results of one task may lead to the need for further tasks to be completed.
  • It can be difficult to know when to stop experimenting. As Lean startup encourages experimentation, it can be difficult to know when to stop and when to move on to the next stage. This can lead to over-investment of resources in a product that may not be successful.
  • It can be difficult to scale. As Lean startup focuses on small experiments and iteration, it may be difficult to scale a product if it is successful. This can lead to the product becoming unsustainable and not reaching the desired potential.

Other approaches related to Lean startup

A Lean startup approach is based on the idea that entrepreneurs should explore, experiment, test and iterate, in order to develop successful products and companies. Other approaches related to Lean startup include:

  • Agile Development: Agile development is an iterative approach to product development, which focuses on delivering working software quickly and responding to changes in customer needs.
  • Design Thinking: Design thinking is an approach that encourages problem solving by focusing on the customer, understanding their needs and creating solutions to meet them.
  • Continuous Delivery: Continuous delivery is a software engineering practice that focuses on delivering working software quickly and frequently, allowing for frequent feedback from customers.
  • Customer Development: Customer development is a process of understanding customer needs and developing solutions to meet those needs.

In summary, the Lean startup approach emphasizes the importance of exploration, experimentation, testing, and iteration in product and company development, and there are several other approaches that can be used to supplement this approach.

Footnotes

  1. ↑ Ries E., 2011, p.12-16
  2. ↑ Klein L., 2018, p.47
  3. ↑ Owens T., Fernandez O., 2014, p.215
  4. ↑ Klein L., 2018, p.192
  5. ↑ Gelobter M., 2015, ch. Change in change itself
  6. ↑ Ries E., 2011, p.12-16
  7. ↑ Ries E., 2011, p.8-9


Lean startup — recommended articles
Innovation cycle — Innovation models — Product development processes — Stage-Gate process — Lean software development — Lean development — New product development process — Agile software development — Lean product development

References

Author: Agnieszka Katarzyna Sikora

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