Lean Startup - The Right Strategy or Fool's Gold? (Part 1 of 4)

 

Lean Startup - The Right Strategy or Fool's Gold? (Part 1 of 4)  by SmartDraw

Starting a business may be one of the most exciting things you'll ever do. But it isn't something to take lightly. According to a Harvard Business School study, about three in every four business startups fail.

Naturally, entrepreneurs should do everything they can to improve their odds. Many are turning to a strategy known at the Lean Startup.

In this series of four articles, we'll examine the Lean Startup philosophy, how it aims to overcome three huge obstacles to startups, some drawbacks cited by critics of the Lean Startup, and finally, what we believe to be the answer to the question, "Is a Lean Startup the right strategy or fool's gold?"  

What is a Lean Startup?

The Lean Startup methodology was set forth by Eric Reis in his 2011 book, The Lean Startup: How Today's Entrepreneurs Use Continuous Improvement to Create Radically Successful Businesses. It applies concepts of Lean manufacturing toward launching new products or new businesses.

Here are three frequently cited obstacles to startup survival and how the Lean Startup strategy seeks to overcome them.

These obstacles also apply to many mature companies. The Lean Startup strategy is the answer for both new and existing organizations, according to its proponents.

Yet others disagree. Some of them strongly disagree.

To help you decide whether a Lean Startup is right for you, let's take a look at this seemingly logical concept. In Part 2 we'll discuss reasons why some regard it as fool's gold.

Lean Startup Philosophy

The Lean Startup strategy is actually pretty simple. It encourages the entrepreneur to get a minimum viable product (MVP) into customers' hands as soon as possible, then test it, learn from it, and refine it into a finished product. Doing this allows the business to learn what customers want and to focus its development efforts accordingly. This is known as the build-measure-learn feedback loop.

While originally geared toward technology companies, the idea has expanded to encompass nearly all industries, and is even being applied in the government sector.

The strategy draws upon the tenets of Lean manufacturing—the elimination of wasteful practices with a focus on customer satisfaction through continuous product and service innovation. It also applies techniques used in Agile software development—applying iterative and incremental steps in product creation. A Lean Startup incorporates Lean and Agile diagrams such as 5 Whys analysis, A3 Thinking (which can used to create a lean canvas—a specialized A3 thinking diagram for business models), Process Mapping, and Kanban boards.

In Part 2, we'll discuss how the Lean Startup aims to overcome the three obstacles mentioned above.