Lean Startup is a method for business- and product development that was first introduced in 2011 by Eric Ries – an entrepreneur who had experienced several StartUp-launches (most of them failed). Influenced by principles and ideas from Lean Manufacturing, he proposed a new way of working for StartUp-business which was based on his own experiences.
The fact that 75% of all StartUp fail made it not so hard to realize that some improvements have to be made to the old StartUp-formula, which basically is: Writing a business plan, pitch it to investors, assemble a team, introduce a product, and start selling as hard as you can. The Lean Startup methodology is instead based on a typical lean- and agile process based on starting with a ”sketch” of a product, which is shown to potential customers, and then iteratively developed until a fully launchable product is reached (”build-measure-learn” it is called in the method).
Lean Startup – Basic Concepts
The Lean Startup methodology has a number of basic concepts which are used and developed by its practioneers. Some of them are well-known to Lean Software-people, some of them are more or less inventions of the method’s developers.
Validated Learning is a central concept developed by Eric Ries and is according to the model a measurement of a StartUp’s progress. Every Product, every feature, every marketing campaign, is understood to be an experiment designed to achieve validated learning in order to in the end launch a successful product. But it is important to point out that not any learning is considered to have any value. Only learning that makes the team to discover valuable truths about a startup’s present and future business prospects is considered to have value – therefore one talks about ”Validated Learning”.
Minimum Viable Product (MVP)
A Minimum Viable Product is a ”version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort. The goal of a MVP is to test fundamental business hypotheses (or leap-of-faith assumptions) and to help entrepreneurs begin the learning process as quickly as possible.
A split or A/B test is a method which has been used in direct- and webmarketing and web-development for several years. In the Lean Startup method it is an experiment in which ”different versions of a product are offered to customers at the same time.” The goal of a split test is to observe changes in behavior between the two groups and to measure the impact of each version on an actionable metric.
Actionable metrics can lead to informed business decisions and subsequent action. These are in contrast to ‘vanity metrics’ – measurements that give “the rosiest picture possible” but do not accurately reflect the key drivers of a business.
Pivot it is called when a company makes a strategic turn of direction based on feedback from the marketplace – something that is often considered to be a failure for traditional StartUp-companies, but for Lean Startups it is only considered to be a natural step in a company’s evolution.
Lean Startup Movement
After Eric Ries started to blog and talk about the Lean Startup method it was quickly popular and adapted by several tech-companiew in Silicon valley. The ideas spread rapidly and local Meetups emerged in more and more places where startup-people gatherhed and changed ideas. Today the Lean Startup movement has Meetup groups in 100 cities in 17 countries, which is said to engage 20 000 regular participants.