An introduction to Lean Startup: How it all started
Table of Contents
The Lean Startup, Running lean, The four steps to epiphany, we have all read the books. We use the Business Model Canvas and build MVP’s. The Lean Startup methodology has become very popular not only within the startup industry worldwide, but also amongst companies that want to enable innovation and change. Allocating time and money as efficiently as possible, shorten development cycles and make something people actually want to use.
But what does it really mean to run a lean startup? Why are we doing it in the first place? In this series, I will give a short introduction to the lean startup methodology, Lean Innovation and how to implement this in your startup.
Let’s start at the beginning.
Why do startups need a different approach from all other companies, starting or not? Why did the Lean Startup methodology came to existence in the first place? The use of the word startup is immensely overused and hyped as a marketing term for every single starting company that has something new or is tech related. The term startup, however, is used specifically to highlight the difference between starting companies and startups. According to Steve Blank:
A Startup is a temporary organization searching for a scalable and repeatable Business model
What does that mean? It simply means that Startups have no Business Model. Yet. Me starting the most beautiful and successful hair salon in the world does not make me a startup. It makes me an entrepreneur, and my entrepreneurial skills and passion can certainly make a successful business out of it, but the Business Model behind hair salons is an existing one. I can roughly calculate the amount of money I need to put into the business, to know what I will be able to get out of it. I can differentiate, target niches, be more exclusive, but still, I am not inventing a new model to change what has been done before in a repeatable and, more importantly, scalable way.
The global reset
With the rapid rise of new technologies, easier access to people all over the world, access to tools not available before, it also became possible to disrupt the way business was done for years and years with only a small team and an innovative idea. The digital revolution demands a global reset. New ways to accommodate the new economy and change in social structures and relations. Startups are searching for those new ways, combining new technologies with business insights. Searching for new ways to make things work using new technologies and new insights.
Now no two startups are the same, everything they do is new. Paths to success can not be copied.
What Spotify did for music might work in the world of books, but the path to success is going to be a very different one. For startups, it is important to have a way of minimizing the time and resources in this search for success. Minimize the risk every step of the way in order to optimize the chance of success. You do not want to find out 100K of your savings and 2 years of hard work and no sleep later that you have build something nobody really wants.
This is where the Lean startup comes in. Lean in itself is not new, the concept was coined in the 1980s when Toyota introduced its minimal waste manufacturing principles. This management system based on making obvious what adds value by reducing everything else has since been introduced in many industries.
Some of the main principles of Lean were taken to accommodate the typical startup search phase for a business model. Be as efficient as possible in running experiments, reducing both time and money spent as well as minimizing risk along the way:
- Respect people (customers and employees)
- Solve real problems for real customers
- Improve using an iterative, scientific method
- Be willing to discover the answer by testing things instead of “knowing” the answer
- Do work in small batches and focus on flow and quality
- Ask “why” instead of “who” when something goes wrong
Next time I will tell more about what business model validation means for your startup.
Esther Gons is the award-winning author of The Corporate Startup & Innovation Accounting. Winner of the 2022 Golden Axiom Business Book Award, 2019 Golden Axiom Business Book Award, and the 2018 Management Book Of The Year Award. She is an expert in Innovation Accounting, Innovation Strategy and Portfolio Management.