As IMSA students, we are all fairly acquainted with the process known as the scientific method. It is a system of validating theories. Entrepreneur and author Eric Ries has taken the scientific method and translated it to the business world with a process known as the ‘Lean Startup.’ If one uses a product as a hypothesis for solving a consumer problem, a whole realm of data validation opens up to truly find if your product is of use to a customer.
This whole cycle of data can be condensed into what is known as the feedback loop. The three main steps being Build, Measure, Learn: turning ideas into products known as MVPs, measuring how customers respond, and then learning whether or not to pivot or preserve.
An MVP is a version of a product that does or shows the very basic functions of solving said problem and they come in many different forms. For example, Dropbox didn’t even build theirs but rather showed how it would work (click for video link) and garnered 75,000 beta testers from the video.
Testing is the next major component of the loop which measures growth in things aside from vanity metrics (revenue, venture capital, customer acquisition cost). For example, analyzing sections of your customers (cohort analysis) to better target marketing to segments rather than wasting time on marketing campaigns on people who won’t be drawn in by them.
The other facet of testing is experimenting with ideas of your product. Building features and seeing if more customers use it with the new feature can validate that the feature will help the success of the product. The last step, learn, is taking the information you have learned and seeing if something needs to change or if you should stay the same which is known as pivoting or preserving.
The purpose of the Lean Startup is to save time and rather than spending months, even years, coding something that no one will buy, one can build only the features that are useful and test to see if customers respond well. Using this data, you can expand, change the focus, etc. of your company to better allow success. The reason it outshines all other methodologies is the basic fact that startups operate in circumstances of such uncertainty that adaptability is needed, which the Lean Startup provides.
Interested in learning more about the “Lean Startup”? Check out Eric Ries’ book or take a look at the Lean Startup website.