Lean start-up means a higher chance of success

Launching a new business has always been a hit-or-miss proposition. A research by Harvard Business School shows that 75% of all start-ups fail.

But recently an important countervailing force has emerged, one that can make the process of starting a company less risky. It’s a methodology called the “lean start-up”. It favours experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional big up front development. You might have heard and started using some concepts of the methodology, such as “minimum viable product” and “pivoting”, and business schools have adopted their curricula to teach them.

The lean method has three key principles:

1. Entrepreneurs accept that all they have on day one is a series of untested hypotheses (good guesses). Instead of writing an intricate business plan, founders summarise their hypotheses in a framework called a business model canvas, which is a diagram of how a company creates value for itself and its customers.
2. Lean start-ups use a “get out of the building” approach called customer development to test their hypotheses. They go out and ask potential users, purchasers, and partners for feedback on all elements of the business model, including product features, pricing, distribution channels, and affordable customer acquisition strategies. The emphasis is on nimbleness and speed: new ventures rapidly assemble minimum viable products and immediately elicit customer feedback. Then, using customers’ input to revise their assumptions, they start the cycle over again, testing redesigned offerings and making further small adjustments (iterations) or more substantive ones (pivots) to ideas that aren’t working.
3. Lean start-ups practice agile development, which originated in the software industry. Unlike typical year-long product development cycles that presuppose knowledge of customers’ problems and product needs, agile development eliminates wasted time and resources by developing the product iteratively and incrementally. It’s the process by which start-ups create the minimum viable products they test.

While success is predicated on too many factors for one methodology to guarantee that any single start-up will be a winner, using lean methods will result in fewer failures.

(based on an article published by Harvard Business Review: https://hbr.org/2013/05/why-the-lean-start-up-changes-everything )