The lean startup methodology is a new approach to business development which can be applied to any new enterprise, from tech start-ups to corporate in-house initiatives. Like lean manufacturing, which was pioneered by Toyota in the 1980s, lean startup is based on eliminating waste, particularly during the product development stage. The goal of lean startup management is to produce a successful launch without requiring a “perfect” product, a great deal of outside funding or elaborate business plans.
Lean startup is a completely different approach from traditional management practices. Rather than planning, it relies on experimentation, testing and customer feedback to tailor a product to the target audience. Lean startup is all about learning more quickly what works and discarding what doesn’t.
The Fundamentals of Lean Startup Methodology
Lean startup is becoming a more mainstream practice, because it works for today’s quickly changing, global business environment. Instead of five-year plans and projections that are nearly impossible to forecast, lean startup begins with an idea or vision and is based on the following principles, as established by Eric Ries, author of Lean Startup:
- Entrepreneurs Are Everywhere: Anyone can be an entrepreneur, whether they are self-employed or work for someone else. Entrepreneurs are all around us, tinkering in garages, selling at the farmers market, working at non-profit organizations and big corporations, and even organizing high school fund-raising events. Entrepreneurship is a universal idea that is the foundation of our economy.
- Develop a Minimum Viable Product: A minimum viable product (MVP) is meant to begin the customer feedback and learning process as quickly as possible. It means that you figure out a problem that needs to be solved, and deliver a product (even in an unfinished state) that does the job. This eliminates the costly and wasteful practice of developing a perfect product, only to discover there is no market for it. Measuring and learning through elicited customer feedback comes next.
- Validated Learning: In lean startups, validated learning is how progress is measured. Without learning what customers really want, entrepreneurs may continue to spend time and money developing the wrong products. Continuous testing will improve the product or service and increase growth.
- Innovation Accounting: Lean startups require agility and flexibility in all business operations, including accounting, with in-depth analysis of what’s working and what changes are needed. Innovation accounting allows for such in-depth analysis that can objectively demonstrate whether milestones are being reached and the vision is viable. If not, it’s time to pivot and start the process over.
Benefits of Lean Startup Management
Lean startup management reduces development cycles, lowers risk, reduces costs and helps companies deliver products and services their customers actually want. By eliminating waste and relying on testing and customer feedback, the lean startup methodology can help entrepreneurs everywhere – in every industry – enjoy more successful launches, whether they work for themselves or someone else.
New ventures continue to fuel the 21st century global economy, and with lean startup management, more entrepreneurs can find success, grow their ventures, hire more people and spur new development.
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