The Lean Startup
Everyday entrepreneurs are starting business with what they believe is a great product or service, but are they armed with the tools to make it a success and business that endures?
There is methodology that is being embraced and implemented around the world across many industries, in startups and established businesses called The Lean Startup. It was created by Eric Ries through his trial and error in his own business and ultimately the huge success of IMVU, an avatar social community.
The idea is that there are entrepreneurs everywhere from the people who have lost their job, the person with successful businesses behind them as well as people working within huge corporations. The understanding is that entrepreneurship is the management of business with the goal of achieving a sustainable enterprise. It also establishes the concept that startups exist, not to make money or even serve customers, but to learn how to build a sustainable business.
Most entrepreneurs start out with an idea and hustle or prod along until they either are successful or fail – as Reis mentions, “usually in spectacular fashion”. Ries argues that businesses should use a method of validated learning to grow their business and start with the minimum viable product. This requires being able to adapt their product through a process of learning what the customer or market place wants and to continue this cycle of launching, learning and adapting, to ultimately becoming a sustainable business. The idea is to get back to the build or adapt phase as quickly as possible after learning what the market place wants. The quicker the iteration, the better your chance of survival.
Reis also refers to the idea of innovation accounting. This is the lackluster side that will enable a company to be successful. It is important to set goals, milestones and objectives that one can be measured against. By doing this one will be kept honest about one’s performance and will help one to prioritize the tasks at hand.
A great example of The Lean Startup methodology in practice was Zappos, the billion dollar a year online shoe retailer that was eventually bought by Amazon. It started when Nick Swinmurn wanted to debunk the myth that shoes couldn’t be sold online and create a whole new retail experience online. He began by approaching local shoes stores and asking if he could photograph their stock, post it on his website and if he sold them he would return to the store and pay full price for the shoes. Very quickly he understood the customers wants and the rest is history.
Check out more Lean Startup case studies online or watch this great presentation by Eric Ries here https://www.youtube.com/watch?v=fEvKo90qBns