How to build a successful lean start-up

By July 2, 2012Blog, eCommerce
Applying The Scientific Method

Applying the scientific method that works for entrepreneurs

“Success can be engineered by following the right process,”

insists American tech entrepreneur Eric Ries.

As start-ups are a dime a dozen and such a large portion – estimated at anything from 20 per cent to 90 per cent – of  new online businesses fail in their first year, it’s easy to pass off those who do succeed as lucky.

Despite Australia being named one of the world’s most vibrant start-up “eco-systems” by the Start-up Compass – Sydney and Melbourne are ranked 21st and 22nd globally – the competition vying for market share and funding is fierce.  The ‘lean start-up’ movement provides a method for cash-strapped Aussie companies to overcome these constraints and may prove the Modus operandi required for future success stories.

Champion of the movement is entrepreneur Eric “Mr Lean” Ries, who promotes a back-to-basics approach to creating a profitable business with modest capital. Ries took part in his fair share of failed business ventures before getting it right so it’s worth noting the lessons from his book: The Lean Start-up.

 

Release, test, evaluate, throw out

In it, he spruiks an almost scientific methodology: “release, test, evaluate, toss out what doesn’t work and stick with what does.” Preparation is all important and Ries recommends strategic thinking from the outset. Ask what product he should build and for whom?  And what market can this product enter and dominate?

Release a ‘minimum viable product’

Feedback is important after a company is up and running in order to ensure constant, continuous improvement. In order to learn more about your customers launch a bare-bones form of a product or what Ries describes as a “minimum viable product” which will kick start the process of learning about your customers rather than wasting months (and money) trying to perfect secondary elements and details.

Build-Measure-Learn & Repeat

The lean start-up approach is also centred upon the continual application of a methodical and disciplined approach in order to find a sustainable, repeatable business model.  This means repetitions of the build-measure-learn process. Using key performance indicators and a continuous deployment process, methodically test the value of what you are offering, its point of difference and perceived value as well as the product and customers themselves.

Test assumptions

This will give you insights about your customers’ behaviour, any oversights or unnecessary inclusions and then you can continue to design the product to suit customers’ needs and desires without blowing your budget on an initial launch of a product that isn’t quite right.  It allows you to solve problems based upon real qualitative and quantitative information rather than speculation. Assumptions about what customers want can be rigorously tested.

Ask ‘what creates value’ & ‘what’s wasteful?’

Ask what can you do better and remove superfluous details, concentrating on your product’s purpose and selling-points. For Ries’ it’s about determining which efforts are creating value and removing efforts that are wasteful in a business. Iterations, including changing features and components, need to be done quickly. The software that you build with will need to be change-tolerant as will your team and this approach should allow you to recognise when you need to change tact much earlier with much less waste.

What’s needed for constant innovation?

Lean start-ups require intense focus, adaptability and discipline for constant innovation. Setbacks and failures should be dealt with constructively while grandiose and overinflated expectations must be pared back so budgets can be kept ‘lean’ and time isn’t wasted chasing unicorns down dead ends.

How will your start-up measure up to the lean challenge? At Design Industries we are experienced at applying agile lean methodologies.

We’d LOVE to provide you with advice to successfully launch your start-up. Contact Us

 

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