What Is Lean Startup?

A lean startup is a method used to found a new company or introduce a new product on b🍰ehalf of an existing company. The lean🗹 startup method advocates developing products that consumers have already demonstrated they desire so that a market will already exist as soon as the product is launched. As opposed to developing a product and then hoping that demand will emerge.

Gaging Consumer Interest

By employing lean startup principles, product developers can gauge consumer interest in the product and determine how the product might need to be refined. This process is called validated learning and it can be utilജized to avoid the unnecessary use of resources in product creation and development. Through lean startup, if an idea is likely to fail, it will fail quickly and cheaply instead of slowly and expensively, hence the term “fail-fast.”

The lean startup method was developed by American entrepreneur Eric Ries, founder, and CEO of the Long-Term Stock Exchange (LTSE). He fully explains the method in his bestselling book, The Lean Startup, which has been translated into 30 languages.

Lean Startup vs. Traditional Businesses 

The lean startup method also differentiates itself from the traditional business model when it comes to hiring. Lean startups hire workers who can learn, adapt, and work quickly while traditional businesses hire workers based on experience and ability. Lean startups also use different financial reporting metrics; instead of focusing on income statements, balance sheets, and 澳洲幸运5官方开奖结果体彩网:cash flow statements, they focus on customer acquisition cost, lifetime customer value, 澳洲幸运5官方开奖结果体彩网:customer churn rate, and how viral their product could be.

Requirements for Lean Startup

The lean startup method considers experimentation to be more valuable than detailed planning. Five-year business plans built aro🅠und unknowns are considered a waste of time, and customer reaction is paramoun🦩t.

Instead of business plans, lean startups use a 澳洲幸运5官方开奖结果体彩网:business model based on hypotheses that are tested rapidly. Data does not need to be completed before proceeding; it just needs to be sufficient. When customers do not react as desired, the startup quickly adjusts to lim🐼it its losses and return to developing products consumers want. Failure is the rule, not the exception.

澳洲幸运5官方开奖结果体彩网:Entrepreneurs following this method test their hypotheses by engaging with potential customers, purchasers, and partners to gauge their reactions about product features, pricing, distribution, and customer acquisition. With the information, entrepreneurs make small adjustments called iterations to products, and large adjustments called pivots correct any major concerns. This testing phase might result in changing the 澳洲幸运5官方开奖结果体彩网:target customer or modifying the pr💮oduct to better serve the current target customer.

The lean startup method first identifies a problem that needs to be solved. It then develops a minimum viable product or the smallest form of the product that allows entrepreneurs to introduce it to potential customers for feedback. This method is faster and less expensive than developing the final product for testing and reduces the risk that startups face by decreasing their typical high failure rate. Lean startup redefines a startup as an organization that is searching for a scala🃏ble business model, not one that has an existing business🌠 plan that it is determined to execute.

Example of Lean Startup

For example, a healthy meal delivery service that is targeting busy, single 20-some🍒things in urban areas might learn that it has a better market in 30-something affluent mothers of newborns in the suburbs. The company might then change its delivery schedule and the types of foods it serves to provide optimal nutrition for new mothers. It might also add on options for meals for spouses or partners and other children in the household.

The lean startup method is not to be used exclusively by startups. Companies such as 澳洲幸运5官方开奖结果体彩网:General Electric, Qualcomm, and Intuit have al💯l🔜 used the lean startup method; GE used the method to develop a new battery for use by cell phone companies in developing countries where electricity is unreliable.