The Lean Start Up Methodology
For organisations or entities trying to create and deliver value – (products and services) in extreme uncertainty
Uncertainty - You do not know the customer. You do not know value. You do not know the value stream. You do not have a business model
What is a Start Up?
Business Start-ups are not a one size fits all, there are different types of start ups – Freelancers with home offices. Entrepreneurs in fast growth start up organisations that have specific targets and objectives (often driven by venture capital investors). Intrapreneurs or teams working in existing organisations developing new product or service offerings to create and deliver value these can include IT Programmes and Business Transformation Programmes. Any entity looking to find the most effective business operating model.
Why use the Lean Start Up methodology?
Too often we see individuals and teams busily working in their own silo (technical or functional) without focusing on the needs of their ultimate customer. Working purely from limited perceptions and perspectives … managing by anecdote, or just by copying the operating models from established organisations. Entrepreneurial skills can be taught!
Our experiences show when an organisation or entity has too many resources it is likely to create false starts, goes down blind alleys, participate in 'technical orgasms' expending critical resources without creating and developing true value for specific customers. Other common start up wastes include:-
- Adding product or service features or activities no one wants
- Building an organisation that is a replica of a "classic" business with functions and activities your customer does not care about.
Lean Thinking shows there is a significant advantage in Start-up organisations to constrain resources, working to develop the minimum viable product or service carrying out customer discovery to develop the business operating model then adding only those business functions and product features that are necessary to create or deliver value for customers (tuning the engines of growth).
- With the key focus on solving specific customer problems
The Lean Start Up methodology is a defined approach to embed lean thinking skills into any Start Up entity.
- Increasing the speed and likely success of the start up organisation
- Increasing the alignment of value creation and potential customers
- More effective use of resources
- Deliver the most effective business operating model
Since 2008 a number of well-known start-ups including Instagram, Dropbox and Etsy have successfully used the Lean Start Up methodology to develop a highly successful business operating model.
The Lean Start-Up
We believe a start-up should constrain its resources (development, time and financial), set defined milestones to control specific expenditure of resources and then focus on creating and delivering value – importantly creating value someone wants then iterative experimenting to develop an effective business operating models.
The Minimum viable business
Only those functions needed to create and deliver value including essential functions accounts, payroll, marketing etc.
The minimum viable business should comprise a technology expert and a customer domain expert. The start-up team must focus on value adding work using a "build-measure-learn' cycle. The aim of the minimum viable business is to develop a clear understanding of the customer domain or market place, identifying typical customers and customer segments. How value is defined and expected to be delivered to customers.
Minimum viable product or services
Another aspect of the start-up resources that should be constrained are development activities. The start-up should constrain development activities building just the Minimum Viable Product. This is the minimum level of Product or Service that a typical customer would find acceptable.
Build-measure-learn Cycle
At the heart of any Start-Up organisation is a concept or idea. The start-up must make this idea valuable for potential customers.
Start-up organisations must create cultures with a clear understanding of value adding work. Our experience shows that value adding work for any Start-Up organisation is validated learning. This means stepping out of the "technical silo" and developing an understanding of the customer market place. This validated learning is achieved through customer discovery and build-measure-learn cycle. Building or adding a product feature, measuring the customer's perceptions and then understanding what has been learned. The cycle must be repeated iteratively building the start-up organisation and products and services to be delivered to customers.
Recent technological and Social media developments provide start-up organisations a powerful opportunity to quickly iterate this build-measure-learn cycle with minimal resources using techniques such as the Growth Hack.
Tuning the Engines of Growth
Within any start-up there are different engines of growth. A critical aim of the start-up team should be to tune these engines of growth. This is achieved by establishing a series of specific experiments aimed at understanding (The "build-measure-learn' cycle) and developing the engines of growth including customer value, product or service features, developing marketing messages and the value stream - from the customer perspective.
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