Lean Startup
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Lean startup is an approach to business development which is based on the principles of lean production, a manufacturing methodology that values a business’ ability to change quickly.
“The Lean Startup method teaches you how to drive a startup-how to steer, when to turn, and when to persevere-and grow a business with maximum acceleration.”-http://theleanstartup.com/principles
Lean as a concept in manufacturing was an invention by the Japanese. MUDA is waste in Japanese and they strongly believed that Customer ought not to pay for the waste. Host of concepts like Kaizen, TPM, TQM, Kanban, Zero Defect , Six sigma etc have revolutionized manufacturing. These innovations though not radical but incremental ,have helped manufacturing to build quality products and get customer acceptance. The epic book, ‘Toyota Way of Production’, is a good reference to learn the concepts of lean.
The concepts of lean startup can be termed as risk minimizing strategy. It is well known that only 5-10% of start up businesses survive the first year. The lean concepts help in minimizing the failure as the business model has to be agile. These help in changing the model quickly if a product or service does not attract customers..
Why the Lean Start-Up Changes Everything -Steve Blank
Launching a new enterprise—whether it’s a tech start-up, a small business, or an initiative within a large corporation—has always been a hit-or-miss proposition.
https://hbr.org/2013/05/why-the-lean-start-up-changes-everything
Lean Startup- Eric Ries
The term lean startup is often associated with the author Eric Ries.
The most important concept of Ries is that startups are not there to make money or even meet customer expectations but to build a sustainable business. This thought process is a paradigm shift in approach for a startup venture. Of course, you cannot build a sustainable venture without paying customers.
How startups can be successful using lean concepts?
(Based on Eric Ries,John Mullins and Japanese Lean concepts)
I. Validated Learning vs PDCA Cycle
Validated learning
Launch,Learn,Adopt launch, learn and adopt
is similar to PDCA cycle.( Plan, Do, Check and Act)
II. Analogs & Antolog
John Mullins book ‘Getting to plan B-A better business model’, has enunciated this approach.
Why reinvent the wheel if you can learn from your competitors. Analog refers to business, which sets a good example to follow. Antilog is business, which failed using ideas in your plan.
https://www.10minutebiztools.com/better-business-model.html
III. Leap of faith
John Mullins has used the word ‘Leap of faith’ that can be found in Ries’ book also. Only market research and no action will not help the startup business.
You need to have leap of faith and launch your product or service.
IV. Minimum Viable Product ( MVP)
Swimming in shallow waters is what a startup should be doing.
Launch the minimum viable product, as early adopters may be tolerant towards bugs. This will help you to learn quickly and do course corrections, if required.
V. Build, Measure and Learn
Quality Assurance propagates measurements of outcome and use of statistical tools to arrive at improvements. The famous 80-20 Pareto Principle helps to focus on items, which account for 80 % of the results.
What you measure is what you can improve. Many startup entrepreneurs spend considerable time in marketing to identify the right-fishing hole. In their anxiety to acquire customers they do not measure which approach gives them maximum lead generation.
John Mullins has recommended use of ‘Dash Board’ as a measurement approach to do course correction or move to a different plan.
Lean Concept- A sustainable Business
The entire lean concepts enable businesses to do course correction quickly and hit the bull’s eye in terms of building a sustainable business.
