lean startup

Innovation is the key to success, especially when it comes to businesses. As Steve Jobs, the chairman and co-founder of Apple Inc., states, it is an innovation which “distinguishes between a leader and a follower.” Since the significance of innovation is adduced by such a big name in the business world, it becomes an unarguable fact that if a business does not innovate, it is soon left behind in this fast-changing world.

However, innovation is not always easy. You have to keep certain factors in mind before you introduce a new product. You need to determine whether you are not only ready to produce, but also launch a new product into the market. Hence, there are always risks, things that can go wrong if your experimentations do not bear fruit. However, there are ways that can solve this problem, if used correctly. One of such ways that help in determining whether the world is ready to accept your innovative ideas is Lean Startup Methodology.

Lean startup methodology, introduced by Eric Ries in his book The Lean Startup: How Constant Innovation Creates Radically Successful Businesses, published in 2011, involves the adoption of a combination of business-hypothesis-driven experimentation, iterative product releases, and validated learning to help shorten the span of product development cycle for developing products as well as organizations. Plus, it aids in checking if a proposed business model is not only applicable but also feasible. Simply put, the term Lean startup, coined by Steve Blank, can be defined as a blueprint for how to run a startup. This article analyzes some of the ways through which the lean startup framework can be used to encourage innovation.

Lean Startup Methodology

  1. Test your Vision

A lean framework isn’t about going cheap. It is more about adopting a methodical approach around the development of your new product to ensure that it sells.

The success of a product depends more on its demand than on how innovative it is. Indeed, Eric Ries has claimed, “The big question of our time is not Can it be built? But should it be built?” When you come up with an idea, lean startup encourages you to eliminate uncertainty by testing it out on your consumer market before its final launch. It suggests talking to your targeted market first and determining whether they really want that product. Hence, one should survey what people actually want today before investing large amounts of money into it.

For this, you can adopt the build-measure-learn methodology, which involves building a small sample of your product around your hypothesis, testing it with your consumers, learning how it can be changed, and then making subsequent changes. While there are several advantages of this method, perhaps the most important one is that it will help you in determining whether it is worth continuing to invest time and money on the product or whether you should stop working on it altogether.

  1. Build Your Product:

To carry out the build-measure-learn methodology, you need to develop an MVP, or a Minimum Viable Product, if you are following the lean startup framework. Calling it the most important step of a lean startup, Eric Ries defined the term as “that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.” This basic product is considered fundamental in understanding the interests of your customers. MVP allows you to interact with your customers on a personal level, both literally and metaphorically, ensuring that you either get validation for your product or learn about the changes you need to make to make it successful.

Before you start working on your MVP, you need to be aware of some common pitfalls to ensure that you get an accurate assessment of the effectiveness of your product. Only after your MVP has received the approval from your consumers, can you invest further time and energy on your product without the fear of it turning out to be a failure. However, instead of trusting the results blindly, you need to validate your learning, which brings us to our next point.

  1. Validate Your Learning

Eric Ries considers ‘validated learning’, to be the unit of progress for lean startups. He defines it as “a rigorous method for demonstrating progress when one is embedded in the soil of extreme uncertainty.” First, you need to ensure that you are validating your MVP with the real consumers of your product, not with people who find it interesting but never plan on actually using it. Second, you need to check whether those results are trustworthy. For this, you have to ignore the vanity metrics and focus firmly on your final goal.

This can be further explained through an example. Consider that you are building a new social platform. The vanity metric, in this case, can be the number of accounts people create. The success of your MVP then is not determined by that number. Rather, its real value and popularity is only dependent upon the number of hours your users spend on it per day, or the number of times people return to it every day. Hence, it is imperative that you know everything about validated learning before you decide to implement it.

  1. Avoid Waste

While validated learning can only help you avoid building features that your consumers do not need, it cannot help you in making the manufacturing process itself more productive. Lean startup framework has the solution to this problem as well: avoid waste. For the lean framework, anything which does not contribute to learning what is currently in demand is a form of waste. Similarly, spending on resources with any other goal other than the creation of value for the consumers is considered to be a waste.

To take some examples, you should use kanban cards to signal only when the necessary inputs to production are needed so that you can reduce assembly waste altogether. Or you can make use of your quality control checkpoints during assembly to identify imperfections in any part of the product as early as possible. This way, you can avoid manufacturing a faulty product in the first place. Similarly, you can stop spending on the overproduction of your product in the beginning and instead, wait for its popularity and demand to increase. There are several other ways through which you can avoid wastage in the manufacturing process by adopting the lean framework.

  1. Have the Courage to Pivot

The results of your validated learning might not always turn out to be positive. At times like these, entrepreneurs should have the courage to pivot or change the course of their hypothesis. Defined by Eric Ries as the “structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth,” pivot is not always a negative thing. Consider the example set by YouTube itself. At its outset, the company aimed to provide video-based dating services, allowing users to upload short, videos introducing themselves and elaborating what they were looking for in an ideal partner and find the perfect match. However, it soon saw its potential as an online video streaming platform, and hence, it pivoted to become the huge name it is today.

There are various kinds of the pivot. For instance, there is the zoom-in pivot where one aspect of your product becomes your whole product. On the other hand, there is the zoom-out pivot where the entire product becomes a single feature of a much larger product. The type of pivot you adopt depends on the feedback you receive from your MVP. As long as you have the confidence to pivot from your previous designs, you have the chance to innovate and hence, prosper and grow. Since there are several ways to pivot your business, it is entirely up to you to choose the one you think is closer to your vision and will foster growth.

  1. Ask yourself Why- Five Times!

To innovate successfully, especially as a new business, you need to identify all problems from the outset. For Eric Ries, most of the problems arise, not due to a technological malfunction, but due to a human error. To reach the root of any problem you face initially, the lean startup framework recommends asking yourself the basic question, why. Not once, but five times.

In an article published in the Harvard Business Review, Eris Ries himself provides an example of how the five whys work:

  1. A new release broke a key feature for customers. Why? Because a particular server failed.
  2. Why did the server fail? Because an obscure subsystem was used in the wrong way.
  3. Why was it used in the wrong way? The engineer who used it didn’t know how to use it properly.
  4. Why didn’t he know? Because he was never trained.
  5. Why wasn’t he trained? Because his manager doesn’t believe in training new engineers because they are “too busy.”

It is clear from this example that what started out to be technical fault turned out to be a human fault; it existed because the managers did not have enough time to train their new employees. By adopting this method, one can solve problems both effectively and efficiently.

This article has only listed some of the ways Lean Startup can be used to drive innovation. There are many other ways presented in Eric Ries’ ingenious book, which had already sold more than a million copies by 2011 when it was first published and today, has been translated into thirty languages because of its overarching significance. The importance of adopting Eric Ries’ Lean Startup Framework cannot be emphasized enough. If human beings continue working without a methodical process, they are bound to fail, no matter how hard they work. Similarly, while innovation is certainly necessary for any business to prosper, there can be no denying the fact that it involves several risks. As Eric Ries himself says, “Innovation is a bottoms-up, decentralized, and unpredictable thing, but that doesn’t mean it cannot be managed.” To manage innovation and progress successfully, it is hence imperative to follow a methodical way. And Eric Ries’ Lean framework provides exactly that.