What is a Lean Startup?
- Lean startup is a method used to build businesses based on the beliefs that the entrepreneurs must investigate experiment and test as they develop the products.
- It is basically Customer development + Product development.
10 Important points about lean startup:
1. Lean startup uses validated methods and a hypothesis to assess consumer interest. This will help you to understand the needs and demand of the market. Hence, you can produce accordingly.
2. Lean startup gives a lot of importance to customer related information such as product popularity, Lifetime customer value (Profit attributed to the future relationship with a customer) and customer churn rate (Percentage of customers lost during a specific period).
3. In a Lean startup, experimentation is given more prominence than having a fixed plan.
4. Lean startups will release their products in a small quantity in order to assess the customer reaction to the product.
5. The Pivot – A pivot is not necessarily a failure. It means you will change one of the main hypotheses that you had implemented. There are different types of pivot. They are:
- Zoom in pivot – A single feature in the product now becomes the whole product.
- Zoom out pivot – It’s the opposite of zoom in pivot. A whole product becomes a single feature in something bigger.
- Customer segment pivot – The product was right but the customer segment targeted was not. Here, the product remains the same but the segment changes.
- Value capture pivot – Changing how value is captured changes everything in the business. (Cost structure, product, marketing strategy, etc)
- Technology pivot – A new technology can substantially reduce the cost, increase efficiency or performance and allow you to keep everything else the same. (value creation, customer segment, etc)
6. Small batches:
One of the biggest advantages of working in small batches is problems can be identified at a much lesser cost.
For example – If there is a defect in the physical part, stopping the entire production line can be avoided.
7. The Andon cord:
The key to the Andon cord is that it brings work to a stop if there is any big problem that requires it to be investigated.
The activation can bring the production to stop if there is a big issue. This will help the management because it will help in reducing extra cost and increasing the quality too.
8. Kanban:
Kanban is a visual system for managing work through a process. The goal of Kanban is to identify potential problems in your process and fix them so that work process can be smooth without any bottlenecks.
This is also helps in saving money as it helps in recognizing the problem at an initial stage.
9. The 5 Whys:
Using the 5 Whys technique helps you get close to the root cause of the problem. It’s a simple and a powerful technique.
This technique is particularly useful for startups, as it helps them to find the optimal time and speed for making improvements to the detected problems.
10. Minimum viable product:
A Minimum viable product is a product with just enough features to cater to needs of the early customers and this will help in providing feedback for future product development.
These were some important points about lean startup. Hope you liked it. ☺
Also read about startup india here-