What Is Lean Startup Methodology And How Can It Help?
A high percentage of companies go bankrupt in the first five years. Most of the cases, the failure is due to poor management, since in SMEs the success depends on a large extent on the knowledge that the entrepreneur has. One of the main mistakes is not to test the business idea so that the entrepreneur invests his capital without knowing if there will be customers willing to pay for their product or service. This risk can be minimized by applying the Lean Startup methodology.
The companies try to improve, every day, and apply the methodologies that are developed in the professional environment. One of the most recent changes in this scenario has been the incorporation of Lean Startup techniques in the work routine.
Lean Startup seeks to reduce the time and cost of product development. Avoid that the process does not get stuck in the creation phase of the products or services. In this article, we will discuss what Lean startup is, what does it do for your company and the main benefits of applying the Lean Startup methodology to companies.
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What is the Lean Startup Methodology?
What is the Lean Startup Methodology?
The Lean Startup Methodology is the system used to move from project to company, focusing on the needs of the client, counting on their feedback and modifying the product to develop the final version. It is the concept of fashion in the entrepreneurial world, where the guidelines and resources to develop a project is very different from doing it in a large company.
“We should not fall in love with our project because then we will not see the failures it has.”
Go adapting the product to what the market demands and not our own vision, is the most successful when launching something new.
It is a methodology based on “validated learning”, that is, to validate the hypotheses little by little before having the final product / the definitive startup and start to scale the business.
We define and shorten the development cycles, launching different proposals for a period of time and obtaining a very valuable feedback from our potential customers or users, with which to improve the next final version of the product.
Within the lean startup, we detect 3 techniques :
1. Customer Development
We check if our product meets the needs of the client. To do this, we went out and asked those who would be our potential customers, we showed them the product, they tried it and they gave us their most sincere and constructive opinions. This is how the final product is built, always with the focus on the client.
2. Lean business model (Canvas)
It consists of visualizing and designing a dynamic and visual business model, embodied in a canvas called Canvas by A. Osterwalder. It is divided into grids, each one dedicated to a fundamental aspect of the business model: value proposition, income, expenses, acquisition channels. In these grids, ideas are added and removed continuously until a final version is obtained.
3. Active techniques
It consists of a set of communication techniques and dynamic and rapid product development to propose ideas, improvements and configure the final project in a team. You can use project management software to organize tasks or short and concise meetings to evaluate the work of the previous day and the one that will be done that day, are some examples of these techniques.
The origin of the Lean Startup Methodology
The original concept comes from Steve Blank, entrepreneur and mentor of Silicon Valley, when he began to develop a methodology of product validation based on customer development, which basically consists of knowing if our product meets their needs or desires.
Subsequently, Eric Ries, a student of Steve Blank, popularized it in his book “THE LEAN STARTUP METHOD”, where he gave shape to these ideas by building a methodology applicable to all kinds of new projects.
5 Fundamental steps in the Lean Startup Methodology
1. Pose a hypothesis
A part of a problem to solve and explain why you would be willing to pay for your offer. To identify the problem, we can conduct a series of interviews with our potential clients and identify what really concerns them. We must know if the problem is painful enough to attack it.
2. Validate the hypothesis
From creating a product or service with the basic minimum characteristics to verify if it is what the market wants until a demonstration of how it works, everything is possible. The objective is to know if people would want it and buy it. This first validation will be of the “early adopters”, the first users who will use it and the most sensitive to try new things in our sector.
3. Measure the hypothesis
The best way to know what metrics you will implement is to identify what are the steps to follow to get to your offer and how many times they turned to them to buy. It is essential to identify the KPIs (key performance indicators) of a product, measure them to know if we meet objectives and we are perfecting our product.
4. It generates validated learning
It means that you have made adjustments and changes in the product or service, as well as in the market, suppliers … learning from the environment to which the product is directed. It is essential to listen to all stakeholders (people directly or indirectly involved in the product/service) and incorporate their feedback.
5. Repetitive cycle
You start up the previous steps once again with an improved product or service and start over.
If we applied the previous steps of the lean startup method, the result that we obtain is to launch, first a Minimum Viable Product or prototype (MVP): A very basic product, with the essential functionalities and we test what reaction our target audience has.
With your feedback, we rebuild and improve the product and launch a new version: MVP2 and perform the same process.
So several times to polish the product around what the customer demands and identify why he is willing to pay for our product/service to be successful.
Benefits of applying the Lean Startup Methodology
What Is Lean Startup Methodology And Benefits for Your Business?
The entrepreneurs know that reducing the costs and the time are two major operational benefits in the struggle for business leadership. These are two of the multiple benefits for companies of the application of the Lean Startup methodology.
we will focus on the other strategic benefits that arise from the application of the Lean Startup Methodology in the company.
1. Get the most of the resources
The Lean philosophy is one of the best ways to take advantage of available resources. It is effective, both, in the management of teams and in the fight for business leadership. Among the experts, the Lean philosophy is the best way to obtain the maximum value of the resources, that is, human, temporary and economic resources that the company possesses.
2. Encourage teamwork
The Lean Startup methodology tries to awaken the sense of cooperation and teamwork. The ‘lean leadership’ seeks to promote in the employee the desire to work in a team, to give the best of himself, to dive until finding the best capabilities of the people to put them in common. Creates an environment oriented to continuous improvement, in which everyone is at the time of making decisions: the CEO ‘lean’ becomes a proactive mentor and a strategist, a true team leader.
3. Promote the spirit of cooperation
In relation to the above, the spirit of cooperation is one of the keys to the success of this philosophy is to let the whole team know, clearly and easily, the objectives that are to be achieved in order to achieve success. First of all, we seek to have a spirit of cooperation, which among all is added to the overall success. It is not just about working as a team, but about doing so with a common goal aimed at achieving the objectives of the entire organization.
4. Generate an environment of motivation
One of the advantages proposed by the methodology is to take advantage of the time, energy and talent of our team. That is why it is essential to create a climate of motivation, an atmosphere with self-employed workers and in constant training. Job motivation is key in the fight for business productivity.
5. Promote an open culture
Adopting the Lean Startup methodology is a compact that must involve everyone, not only the person in charge but also those who make up the human team . Since the Lean Startup philosophy advocates to be open and humble in front of the ideas and contributions of other colleagues. In this way, we must be able to recognize different points of view and admit that good ideas come from anywhere.
How to apply the Lean Startup methodology?
The Lean Startup is divided into three steps are represented in a circle: Build, Measure and Learn. The goal is to transform ideas into products to measure the reaction and behavior of customers and thus decide if it is worthwhile to persevere or pivot the idea.
When starting from a business idea, it is difficult to have all the necessary data to create a product that meets the needs of customers. To reduce the risk you have to create the minimum viable product (PMV), which is just a version of the product you want to launch with enough features to make it known to the market and collect the data you need, know what improvements you should apply and get to know your prospect better.
After launching the product you have to measure the results obtained. You should assess if it fits what the client wants and what reception he has had. This phase is essential since it will allow you to elaborate the final product with which you will enter the market, so before launching you must establish a series of indicators that allow you to evaluate and project the possible sales and costs.
All the data you have collected will allow you to better understand the market and your product. They will help you determine if you should pivot, that is, change your business idea completely, if you only need to optimize it or if you must persevere since it is a good product.
Now that you know what the Lean Startup methodology consists of, its origin, its fundamental steps, the multiple benefits that come from it and how to apply it, it is time to take advantage and introduce these changes in your company.
Finally, you should keep in mind that the Lean Startup methodology is not only valid to test a business idea, but you can also integrate it into the organizational culture and apply it every time you want to launch a new product or service.
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