Altabel Group's Blog

Lean Startup concept. Your wise choice. *

Posted on: June 22, 2010

Product development in high-tech world is pretty difficult to manage. Often out of budget, behind schedule and draining cash reserves. Then when customers finally have the product in their hands it turns out to be unusable and buggy, or in case of a specified product – simply there is no willing-to-purchase customer group. So, the huge amount of energy, passion, creativity, time and funds result in no value.

If you want to be successful then do not try to “predict the future” based on the common myths and avoid thinking like “the time was paralyzed right before a launch of your first/next product version”. Guide yourself with facts and proper knowledge, not with opinions.

In this respect top three lessons to entrepreneurs sound like:

Firstly, know how you measure progress. In entrepreneurship, learning is progress. Yeah, the unit of progress is that of validated learning about its customers.

Secondly, the speed at which you make decisions is more important than if the decision is the right one. Many are afraid of failure, but failure is the prerequisite to learning. Each iteration must lead to a “pivot” when the company systematically changes some part of the vision to adapt to reality.

Thirdly, work in the smallest batch sizes, try out your ideas within a fraction of the customers because the faster you release, the faster you’ll get feedback.

Based on these “lessons” you may crystallize out the concept of Lean Startup. From my point of view the word “startup” here refers not narrowly to a new company but to any new idea or product.

So, “Lean” is the most capital-efficient way to run a business. Definitely. It is the never-ending process of finding every activity that does not create value for the customer and eliminating it.

The two biggest wastes are overproduction (making things the customer doesn’t want) and inventory (making things that aren’t used immediately).

Thus, start the ball rolling with a “minimally viable product”. The MVP is a product that has the minimum set of features needed to learn what the market wants. The key idea is to spend as little energy is possible figuring out whether what you’re creating is something people want.

Look at what happens after you’ve built the minimally viable product for your market. Then keep adding features based on validated learning results, therefore, working towards the “Maximally Buyable Product” step-by-step.

The MBP has the set of features needed to capture the maximum potential opportunity in a market.  These are the features that make it easy for people to Understand, to Try, to Buy, to Stay, to Leave. Well, at first glance each of the above does not look like product features but seems to refer to marketing and sales mostly. Really, these aspects of the product are not the features that customers are directly paying for, still they are part of the product. It’s a mistake to think of them as being part of finance/ accounting/ operations/ sales/ marketing/ whatever.

Recently the idea of the Lean Startup has become quite popular and with this very misinterpreted. To make your understanding of the Lean startup concept complete please have a look at top five myths about the Lean Startup and the truth behind each misconception:

“Myth: Lean means cheap. Lean startups try to spend as little money as possible.

Truth: The Lean Startup method is not about cost, it is about speed. Lean Startups waste less money, because they use a disciplined approach: rapid hypothesis testing of new products and ideas, validated learning about customers, and a disciplined approach to product development.

Myth: The Lean Startup methodology is only for Web 2.0/internet/consumer software companies.

Truth: The Lean Startup methodology applies to all companies that face uncertainty about what customers will want. This is true regardless of industry or even scale of company.

Myth: Lean Startups are small bootstrapped startups.

Truth: The core thought is actually product/market fit. Or how you do more with less money. But “It’s not about how much money you spend, it’s what you spend your money on and when”. There’s nothing wrong with raising venture capital. Many lean startups are ambitious and are able to deploy large amounts of capital. What differentiates them is their disciplined approach to determining when to spend money: after the fundamental elements of the business model have been empirically validated.

Myth: Lean Startups replace vision with data or customer feedback.

Truth: Lean Startups are driven by a strict vision, and they are rigorous about testing each element of this vision against reality. They use customer development, split-testing, and actionable analytics as vehicles for learning about how to make their vision successful. But they do not blindly do what customers tell them, nor do they mechanically attempt to optimize numbers. Along the way, they pivot away from the elements of the vision that are delusional and double-down on the elements that show promise.”

So, if you have a new idea then try to transform it into a real successful product using this agile approach to business. Instead of building a product over months and jamming multiple features into it, it is advocated to continually deploy new product to test and check if customers actually want a particular feature. That enables you to more promptly decide if the feature is a waste of time, and if so to move on.

*Based on “Lessons Learned” by Eric Ries.

Your opinions are welcome.

Helen Boyarchuk
Altabel Group – professional software development

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