Running a profitable business is difficult enough, so how do you go about starting a new business from scratch? How should you approach developing your ideas and finding out if there’s a market for your products? Lean Startup is an approach that can help entrepreneurs find the answers to these and many other important questions.
Lean is a philosophy that has been adopted by some of the largest and most successful companies in the world, including Toyota, Intel and Nike. Once seen as the preserve of manufacturing firms, Lean methodology has been adapted and applied by many domestic and global banks and other financial institutions.
Lean methodology aims to increase customer value by improving the efficiency of processes. ‘The Machine That Changed the World’ and ‘Lean Thinking’ are renowned and authoritative books that describe the history, principles and application of Lean.
But what does this have to do with starting a business?
The answer can be found in two books that apply the concept of Lean specifically to starting new businesses. Unlike many books on the subject, these deal with the ‘how to’ of startups, not just the ‘what’.
Eric Ries’s 2011 book The Lean Startup draws heavily on his experience as co-founder of IMVU, a company specialising in 3D avatars for instant messaging. The book blends Lean principles with startup methodology based on the author’s experience and analysis of other startups.
The Lean Startup is a valuable guide for anyone planning the develop and launch a new product. It explains concepts such as Minimum Viable Product (MVP), the Build-Measure-Learn feedback loop, and how to decide if and when to change direction - known as a ‘pivot’. These are terms that are now a familiar part of the entrepreneur lexicon.
For a more practical hands-on guide, we’d recommend Ash Maurya’s book Running Lean. Ash provides a roadmap for getting your product to market, building on many of the key concepts outlined in The Lean Startup.
Running Lean provides many useful tools, organised in a logical and structured way. The Lean Canvas business model diagram is a great way of describing your business model. Because it’s simple and visual, it’s much more practical than a written business plan and is likely to be useful as you continue to develop your business. The Lean Canvas is based on Alex Osterwalder’s Business Model Canvas, described in depth in his book Business Model Generation.
Lean Startup provides a valuable framework for your business to build on and iterate as your business develops. Early development of your MVP and feedback from your target market (the build-measure-learn cycle) should reduce the risk of wasting time and cost on a product that doesn’t sell.