Emma Robinson and I recently had a meeting relating to Lean North East, at which I was asked to put together a summary of Lean Startup. The following text, documents and links are what I compiled, including the following quote.
How you enjoy the content, and please feel free to comment at the bottom!
“For those of you who haven’t read the Lean Startup by Eric Ries, the basic concept behind it is that we have been going about the startup process all wrong.
Instead of writing long business plans, raising early funding, and building initial prototypes over the course of a year, we need to foster startups that constantly learn and iterate around a minimal viable product.
By constantly tweaking, or occasionally pivoting the product, service, and business model in response to early customer feedback, startups can improve their likelihood of success or at least fail faster and cheaper.” http://www.fastcoexist.com/1680269/smart-cities-should-be-more-like-lean-startups
It is not a prescriptive set of answers, rather a framework for thinking through how to creating “something new under conditions of extreme uncertainty”, with the primary goal being minimising ‘time to learning’. I.e. get into the marketplace as quickly as possible, and get feedback from potential customers in order to “Build–Measure–Learn” in an iterative loop. It is a way to harness the energy of young businesses into small, practical steps and create immediate feedback and momentum.A ‘minimal viable product‘ is often the most basic product offering that can be put together – in order gain feedback from users and test the market. Ideas are less important than the ability to execute on them.
A ‘pivot‘ is what to consider when market feedback suggests there is not a sustainable business model based on the initial value proposition. In basketball, a player can change direction by keeping one foot on the ground, and moving the other; in Lean Startup parlance, a pivot means keeping in mind the vision for the business, and moving to a new way to realise that vision (“a structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth“, according to Eric Ries).
In many ways, using the Lean Startup approach is about building a ‘machine’ which continually tests the educated guesses you have about your business, in order to find a sustainable customer base, market offering, and profitable business model. This is in contrast to the “build it and they will come” model.
Customer Development and Business Model Generation
The Lean Startup is usually considered in conjunction with two other bodies of knowledge – around finding customers, and also creating the profitable business model above. Steve Blank, who invested in a business Eric Ries co-founded, is a successful tech entrepreneur who lectures about how to create successful startup businesses.
Steve’s model, commonly known as ‘Customer Development‘ implores business founders to regularly meet their customers in order to create a product these customers want to buy, rather than that which the founders wish to sell. Direct and regular feedback, in person, gives founders the prompts and genuine learning to create solutions which solve pressing customer needs.
Steve advocates doing this work upfront and starting small, rather than developing expensive full-service offerings, and details several very expensive failures from the dot com bust. Customer development aims to create ‘product/market fit‘ (a term popularised by Marc Andreesen of Netscape fame and now a VC).
Product/market fit means providing something that customers want to buy – which is ‘pulled’ by customer needs, rather than ‘pushed’ by expensive marketing. Steve is the author of two books on customer development, and a major advocate of Business Model Generation, a concept coined by Alexander Osterwalder.
Business model generation is a book and approach which divides any business into nine components, and presents a series of questions and case studies to help readers clarify their own thinking, and review and iterate a way to make money. There is also an additional ‘plug in‘ which helps to clarify the value proposition businesses (and other organisations) have or could offer. I have also come across a canvas for service model generation, and in a similar vein, there is a book called Business Model You to help individuals clarify their own career path. Dave McClure’s “AARRR for Pirates” sets out metrics for entrepreneurs.
Taken together, these elements provide a framework for early stage businesses, those innovating inside established organisations, and those who wish to innovate under conditions of uncertainty. It also provides a vocabulary, a body of knowledge, and a community of innovators to help test new ideas and share the practical lessons.
This is, necessarily, a potted summary of the potential offered by this material. I hope the embedded links and resources below provide a prompt to help minimise waste and speed up time to learning!
Lean Startup docs on Scribd
I’ve uploaded three documents to Scribd:
- The text above
- A list of questions from the Business Model Canvas
- Questions from the #bmgen Value Proposition Designer
Docs with questions are useful to get clearer about what you’re seeking to deliver to customer, and how you can create an effective business model as a result.
I hope you’ve found this useful, and please seek out @leannortheast to get involved!
Links I’ve compiled
I’ve used Listly to start a compilaton of Lean Startup links, I hope you enjoy. I think you should also be able to add your own…!
If the widget doesn’t fire for you, please use this link
Lean Startup materials
Stuff that folk can investigate, vote on, and add to re Lean Startup.
The Lean Startup: How Constant Innovation Creates Radically Successful Businesses: Amazon.co.uk: Eric Ries: Books
Many of Steve's blog posts turned into podcasts. Genus!
The official website of all things Lean Startup presented by Eric Ries.
Running Lean: Iterate from Plan A to a Plan That Works Lean O'Reilly: Amazon.co.uk: Ash Maurya: Books
Eric Ries gives a talk at the LSE in London - podcast
Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers: Amazon.co.uk: Alexander Osterwalder, Yves Pigneur: Books
You may have read my previous posts about the Lean LaunchPad class taught at Stanford, Berkeley, Columbia, Caltech and for the National Science Foundation. Now you too can take this course. I’ve wo...
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The Startup Owner's Manual: The Step-By-Step Guide for Building a Great Company: Amazon.co.uk: Steve Blank, Bob Dorf: Books
Become a Lean Startup Guru. Learn from Lean experts like Eric Ries, Steve Blank, and more.
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Speaker, author, and entrepreneur Eric Ries shares rapid fire wisdom on building nimble, responsive, and efficient online software-based businesses. He also offers his wisdom on streamlining processes and progressing engineering systems, and puts forth front line insight into why some new ideas succeed where others have failed.
Blog post at Lean Blog
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Stanford instructor and seasoned serial entrepreneur Steve Blank looks back at the commonalities and quirks of the quarter's previous speakers. Blank outlines a thorough checklist of questions and analysis helpful to any new enterprise leader, and offers insight and case studies from industry giants and new technology plays alike.
Entrepreneur and business model innovator Alexander Osterwalder discusses dynamic, yet simple-to-use tools for visualizing, challenging and re-inventing business models. Osterwalder articulates how to use the visual language of his business model canvas framework, and shares stories of how this approach helps organizations of all sizes to better create, deliver and capture value.
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The Lean Startup Conference—Dec 3 & 4, 2012 at the InterContinental SF—brings together innovators from startups and established companies alike to share lessons for building profitable lean organizations. We’re announcing new speakers every week, and registration is open, with new blocks of discounted early-bird tickets available regularly.