The Lean Startup is a methodology for developing products and services that quickly learns what customers want and need. It is based on the idea that businesses should start with a minimum viable product (MVP), which is a product with just enough features to be usable by customers. The business can then collect data on how customers use the MVP and use that feedback to improve the product.
The Lean Startup Methodology
Build-Measure-Learn (Central Loop):
Build: Start with a Minimum Viable Product (MVP). This is the most basic version of your product that allows you to start the learning process as quickly as possible.
Measure: Collect data on how customers use the MVP. Use actionable metrics instead of vanity metrics.
Learn: Analyze the data to learn what customers truly want, and then decide whether to pivot (make a fundamental change to the product) or persevere (keep improving on the current course).
Principles of Lean Startup:
Entrepreneurship is Management: A startup is an institution, not just a product, and it requires a new kind of management specifically geared toward its context of uncertainty.
Validated Learning: Startups exist to learn how to build a sustainable business. This learning can be validated scientifically by running experiments that test the startup's vision.
Innovative Accounting: To improve entrepreneurial outcomes and hold innovators accountable, we need to focus on the boring stuff: how to measure progress, how to set up milestones, and how to prioritize work.
Pivot or Persevere:
Regularly decide if a change in strategy is required based on feedback and metrics.
Pivot Types: Zoom-in Pivot, Zoom-out Pivot, Customer Segment Pivot, Customer Need Pivot, Platform Pivot, Business Architecture Pivot, Value Capture Pivot, Engine of Growth Pivot, Channel Pivot, Technology Pivot.
Lean Startup Process:
Vision: Start with a clear vision that drives the startup.
Steer: Develop a product iteratively, based on the Build-Measure-Learn feedback loop.
Accelerate: Use lean thinking to make the process as fast and efficient as possible.
Types of MVPs:
The Concierge MVP: Deliver the service manually to understand customer needs.
The Wizard of Oz MVP: Present the front end of a product, but manually perform the service behind the scenes.
The Smoke Test: Advertise the product and measure how many customers it attracts.
Growth Engines:
Sticky Engine of Growth: Focus on customer retention.
Viral Engine of Growth: Prioritize product features that encourage current users to refer new ones.
Paid Engine of Growth: Invest in advertising and other channels to acquire new customers, relying on the revenue each customer generates to cover the cost.
Adaptive and Iterative:
Small Batches: Release products in small batches to speed up learning and reduce risk.
Continuous Deployment: Keep updating the product based on real-time feedback.
Split Testing: Conduct A/B tests to make data-driven decisions.
Build a Sustainable Business:
Value Hypothesis: Test if the product or service truly delivers value to customers.
Growth Hypothesis: Test how new customers will discover the product or service.