In the administration world, entrepreneurs learn that to start a business, they must make a business plan. That is a long text describing the opportunity, the problem that the business will solve, and the solution proposed by the company that will be born.
The plan also needs to have revenue, profit, and cash flow projections for the next five years. The Lean Start-up movement has come to put all this in check.
Thinking about solving the challenges that arise in opening a startup, many entrepreneurs have sought to use the Lean Startup methodology to create and manage these businesses.
In this article, we will discuss the lesson to be learned from Lean Startup and its main advantages for a business, using GitScrum features for helping out company’s productivity.
What is a Lean Startup?
Lean Startup is a methodology for creating and managing startups. This method teaches how to create products desired by customers, generating rapid learning cycles, in which changes in the direction of the company’s strategies happen aiming at accelerated growth.
This method was created by the American Eric Ries and is an adaptation of the concept of Customer Development, by Steve Blank. In Steve’s method, you are taught how you should direct a startup’s efforts, indicating when to direct it or when to preserve its strategies for accelerated growth.
Simply, Lean Startup covers the problem and the solution of the consumers, just like using GitScrum features to find better results, where they are discovered through their interactive consultation.
Such queries initiate Customer Development, given that the public consulted possibly becomes the consumer. The goal is to build a low-cost prototype validated by consumers to then be actually inserted into the no-waste market.
How to use Lean Startup Methodology?
This methodology can greatly help the entrepreneur to develop and launch new products on the market. According to Steve Blank, associate professor at Stanford University, in this article, the Lean Startup method is supported by three important pillars:
First, the entrepreneur must be aware that before launching his product – even if he has done a lot of research – he has nothing but hypotheses that he needs to prove.
So, instead of consolidating a long report – the Business Plan – the methodology proposes that the entrepreneur use a tool called Canvas to build their business model.
Basically, Canvas is a diagram that shows how the company creates value for itself and its customers. In this link of the Embarkation movement, you download an example of Canvas.
Second, the entrepreneur must test his hypotheses with the approach called “customer development”, or customer development.
This means that the company will talk to potential users, buyers, and partners to get their opinion on every element of the business model, including product features, pricing, distribution channels, and cost-effective customer acquisition strategies. To do this, the entrepreneur must show a Minimum Viable Product (MVP).
Finally, the lean startup adopts the so-called agile development, which goes hand in hand with customer development. In agile development, there is no waste of time or resources, as the product is developed iteratively and incrementally.
Get to know the impacts of the Lean Startup method on business
By focusing on what really matters for the company’s development, everything will happen faster and more directly. As a result, productivity increases, as well as saving time and money.
It is clear that by eliminating waste, costs are reduced. You must create a workflow method to help you on reducing waste. As steps that contribute nothing to the sustainable development of the organization are eliminated, the expenses will be lower and the profit potential will be greater.
Another positive point of the lean startup method is the closer relationship with customers. The correct application of the proposed feedback cycle within what is Lean Startup will make you better know your customers’ motivations and demands, and this will create greater intimacy between them and your brand.
The 5 principles of Lean Startup
1) Entrepreneurs must be everywhere
Whether out of opportunity or necessity, the act of becoming an entrepreneur has become more recurrent. Therefore, it is possible to find entrepreneurs everywhere, from those who sell handcrafted products to those who cater to a specific market niche, to a luxury product, and whose target audience is high-income consumers.
2) To undertake is to know how to manage
There are no successful entrepreneurs without a respective successful company. In other words, to be a successful entrepreneur it is necessary to take care of managing people, cash, production, ideas, and staff. It is necessary to manage results and reach goals.
To get there, an entrepreneur does not necessarily manage the entire company, however, he is responsible for the team formed and for managing people.
3) Tested and validated learning
Startups exist to teach how to develop a sustainable business. This learning can be scientifically validated through market tests that assess customer reaction to the product and thus guide their need for adaptability.
4) Build, Measure, Learn
This principle is essential for understanding what Lean Startup is, as it briefly defines the path to be followed to transform ideas into profitable businesses. Turning ideas into products and measuring customer reaction are fundamental guides to this principle.
5) Accounting for innovation
It’s measuring progress, setting milestones, and prioritizing work. It’s understanding why something didn’t go right in the background and questioning all the possible factors for the failure of some measure. To obtain such information, it is necessary to have customer feedback, which will show the best path to follow.
The Lean Startup Feedback Cycle (Build-Measure-Learn)
A key component of the Lean Startup methodology is the “build-measure-learn feedback loop”.
This cycle highlights the speed of a critical ingredient in product development. The effectiveness of the team or company is determined by its ability to idealize, quickly build a minimally viable product, measure its effectiveness in the market, and learn from that experience.
This cycle is divided into 3 steps: Build; Measure and Learn;
The first step is the construction of what we call MVP (Minimum Viable Product), which is a prototype made to try to meet customer demand in practice at a low cost.
The idea is that the MVP is molded to the feedbacks and demands of consumers in the market, creating a learning process and improving the product according to the real need.
This is the second stage of elaboration, in which it is necessary to stick to metrics that measure the product’s success in terms of costs, acquisitions, and profits.
At this stage, the company makes an effort to analyze to identify possible errors and successes of the product.
Based on the metrics from the previous phase, it is necessary to analyze whether it makes sense to continue with the product and seek continuous improvements or simply pivot, a term used for the disposal of a prototype that, through the analysis, was identified as being of no use to consumers.
Therefore, it is clear that the Startup Lean methodology makes you test products and solutions to the point of knowing whether they will be effective for the market or not.
And the best thing is, without waste, focusing on the consumer’s feedback as a priority, after all, it is the one who defines whether your product will be a success or just another one on the market.
Is it worth investing in Lean Startup?
Lean Startup ensures that entrepreneurs develop products that customers really want rather than trying to build businesses based on untested ideas.
The professional who prepares to work with the Lean Startup methodology is certainly ahead in the market, as companies seek a differential that can be turned into benefits for the organization’s growth.
Therefore, it is always important to keep up to date and even seek training in courses focused on this highly visible area.
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