The lean version of “Lean Start-Ups”

How taking a lean approach can get your business ideas into the market faster and cheaper than you might imagine.

If you are thinking of starting a business, or you already have your own business, the chances are you are action oriented, and like to get things done as quickly as possible, even if you have to cut a few corners along the way?

If this sounds like you then taking a Lean Start-Up approach to getting your business ideas off the ground quickly might give you the best of both worlds. Speed of launch, combined with a scientific approach that might just save you thousands of dollars in costly mistakes.

What is a Lean Start Up?

As I said this is the “Lean Version”. In a nutshell Eric Ries developed the method based on his own experiences in developing what is now a successful online gaming platform. After 6 months hard work, and adopting what I call a “Field of Dreams Strategy” i.e. “Build it and they will come” he realised that he and his team had made some fundamental mistakes in their business plan and product design.  Eric went in search of a better way and drew inspiration from the Lean movement used successfully by Toyota in Japan.

Lean’s success is based on its philosophy to eliminate waste from any business process be that manufacturing and production or the provision of a service.

Lean thinking defines value as providing benefit to the customer; anything else is waste.

What are the main concepts in a Lean Start-Up?

From my perspective there are three main concepts to get your head around. If you want a more comprehensive view then get hold of a copy of “The Lean Start-Up” by Eric Ries or check out

1. Minimum viable product

The minimum viable product adopts the Think Big, Start Small approach and is best explained by the case study of Zappos featured in Eric’s book.

Zappos is the world’s largest online shoe store, with annual revenues in excess of $1 billion. The founder Nick Swinmurn saw a gap in the market to provide a central online site featuring a wide selection of shoes. Instead of conducting detailed market research, lining up warehousing and distribution partners on the basis of future sales he chose to test his idea with a “Minimum Viable Product”.

The Minimum Viable Product is basically an experiment to test your theory of what you believe your customers will buy.

In this example Nick began by asking local shoe stores if he could take photos of their stock. In return he promised that he would post the pictures online and come back and buy them at full retail price should a customer buy them.

The experiment proved that customers were prepared to buy shoes online. From these humble beginnings, confident in the fact that their business model would be successful (based on real information from real customers) Zappos went on to be acquired by in 2009 for $1.2 billion.

2. Build-Measure-Learn

The objective of this stage is to minimise the time and cost it takes you to get your prototype (the experiment to test your theory) in front of real paying customers, and measure the outcomes.

By measuring and studying how real paying customers interact with your product and service you will know for a fact whether the assumptions you made in your experiment hold true.

If you find yourself in the same situation as Zappos then fantastic! No need to go to step 3 – instead you focus on scaling fast and profitable growth.

If not then you are faced with two options. One, persevere with your current marketing and promotion plans. Or Two, Pivot.

3. The Pivot

This introduces one of the key Lean Start-Up mantras “fail fast and cheap” Ok, so your experiment hasn’t lived up to your expectations. That’s the bad news. The good news is that you’ve learned why? And because you used a “Minimum Viable Product” to test the market, it hasn’t cost you a fortune.

This is where the pivot comes into play. Based on what you’ve learned you can adapt your business model or product, and quickly test your new theory with an updated “Minimum Viable Product”

In Eric’s example his original business model relied heavily on the assumption that customers would plug the game into their existing social networks and this would drive the exponential growth he was looking for. As it turned out, customers wanted the exact opposite, and actually valued anonymity and the opportunity to meet strangers online in a safe environment. Once Eric had made his Pivot the game took off.

Take a look at your ideas list, black book or stack of post it notes. Think about how you could test them out on real customers using a Minimum Viable Product. You  might be surprised at how little it would cost to turn those ideas into money in your bank.

If you would like to find out more about how a lean approach can help your business succeed check out my post “less can be more when it comes to setting your prices”


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