What is Lean Startup?

• A lean startup is a venture formed using a lean startup methodology in order

to launch a new company or product in a short period of time.
• Lean startup is an approach to building new businesses based on the belief
that entrepreneurs must investigate, experiment, test and iterate as they
develop products.
• The concept of lean startup originated in the early 2000s and evolved into a
methodology around 2010.
• Lean Startup takes advantage of the Scientific Method to create business
models. This experimentation-based approach ensures that failure is as “quick
and cheap” as possible.
• In other words, Lean Startup doesn’t waste time or money investing in an
idea without first exploring and determining its viability.
• In this way, the likelihood of failure is understood and has already been
taken into consideration before resources are used in making the idea a
reality.
 What is Lean Startup?

The method focuses on establishing whether a business is

viable by launching a product at the same time as gaining
customer feedback.
A business will look to establish that there is
a desire for a particular product so a market for it will exist
on launch.
This is usually established by the release of
a minimum viable product (or MVP) to a small number of
customers.
This aims to reduce business risk and have a refined product
or solution with a ready-made customer-base.
 What is a Minimum Viable Product (MVP)?

• A minimum viable product is typically a product or

service that has just enough features to satisfy
customers or test a hypothesis for business
education or customer insight.
• These products are often never feature-complete but
are designed to provide customers with an idea of
what the product will look like or how it will function.
• The goal of releasing a minimum viable product to
select customers is to gain feedback that can help
with future development of the product.
 EXAMPLE OF MVP
Amazon started in the mid 1990's as an online catalog of books. At
the beginning, an order on this website would result in Amazon
purchasing the book from the main distributor and then shipping
it to the customer. In the years since, the website went through
dozens of features which began as minimum viable products to
test customer feedback and market fit -- eventually turning it into
complete products contributing to the growth of the largest
online retailer in the United States.

While a minimum viable product can be used by any startup or

established company, it's typically seen as a guiding principle for
fledgling startups in incubators. By utilizing the practices of a
minimum viable product, these startups are able to acquire
valuable early-stage customer insight which is invaluable
information to any company looking to better understand their
product and market.
Three Stages of Lean Startup
 Three Stages of Lean Startup
The Lean Startup method consists of 3 stages:
• Build. Start with a vision, a business idea with some
initial hypotheses, and then build something fast and
cheap that allows for experimentation.
• Measure. Evaluate the results to validate or nullify the
initial hypotheses.
• Learn. Based on the data obtained, decide whether to
move forward as is, revise the hypotheses, or discard
the idea all together.
Lean Startup Principles
 Lean Startup Principles
1. Entrepreneurs are everywhere
• Large enterprises tend to employ creative, ambitious, and competent individuals in
abundance. These are the same traits commonly found in entrepreneurs.
• Large enterprises therefore have the necessary enablers to operate as a Lean
Startup, although they may face a different set of challenges preventing execution
of the Lean Startup methodology.
• Here are some ways to encourage entrepreneurs:
• Unleash the entrepreneurial spirit of front-line employees in sales departments
who engage with customers on a daily basis.
• Empower these individuals with control over generating new ideas and business
avenues.
• Give them the flexibility and autonomy to make decisions and break the
hierarchies that resist change derived from the learnings achieved outside the
building.
• Incentivize experimentation internally, such that an entire ecosystem of change is
appreciated as well as aligned with the real-world needs of the market.
 Lean Startup Principles
2. Entrepreneurship is management.
• The goal of entrepreneurship management within a corporate
environment is not to treat the startup team as a product but to
institutionalize the entrepreneurial venture.
• The startup team itself shouldn’t just focus on experimenting and
producing innovative new products, but to produce means of
continuous innovation. The resulting changes should ultimately transform
the large organization into a sustainable enterprise by means of
innovation changes including, but not limited to, new business models and
products.
• Considering the higher risk of changes to an otherwise stable enterprise,
disciplined management will be required. There is no standardized
approach to manage entrepreneurship within a corporate environment,
but a traditional way of management may not work effectively. Both
cultural and hierarchical changes may be necessary to address the
management requirements of a startup organization.
 Lean Startup Principles
3. Validate learning.
• Large organizations invest significant resources in
research and development, with many initiatives geared toward
technology improvement. For new inventions to translate into valuable
innovation products that would address real market needs and disrupt the
market…
• Both small and startup firms and large enterprises should validate learning
from the very beginning.
• The big difference is that large enterprises can validate their learnings with
controlled experiments to reduce risk of rolling out a new product feature
that nobody in the market likes.
• A viable strategy is to develop semi-autonomous teams that can identify
the real market need and develop a solution before pursuing the mass
market. This is where the concept of MVP comes into play. Organizations
can always validate their assumptions by introducing an MVP into the
market.
 Lean Startup Principles
4. Account for innovation.
• Traditional incentives and accountability processes don’t hold well with the
innovation needs of a Lean startup. A typical large enterprise pays
performance bonus and perks when employees roll out a new product that
does well in the industry.
• Career equity, however, is seen with less importance in comparison.
Employees are encouraged to develop products designed to work well based
on known information of the market and customer requirements. From
another perspective, employees are not necessarily encouraged for
experiments that have a higher degree of failure irrespective of the knowledge
gained during the experimentation process.
• Instead, large organizations should reward experimentation and lessons
learned through failures. Progressive enterprises such as Facebook embrace
the culture of failing fast and early (at least they used to). As a result, Facebook
is able to both:
• Operate at a global scale
• Roll out features and services at the pace of a Lean Startup firm
 Lean Startup Principles
5. Build-Measure-Learn.
• Lean Startup organizations are designed to eliminate friction especially when it comes to”
• Developing new product features
• Measuring performance
• Using continuous feedback to improve the processes, business models, and product qualities
• Large companies may need to overhaul their governance procedures and controls to
facilitate work planning, budget distribution, and team development, among other aspects
of introducing a new MVP to the market.
• To build, measure, and learn:
• Identify appropriate metrics tailored for each entrepreneurial journey.
• Engage end-users into a feedback loop to derive the insightful information that will power
business decisions associated with future product releases.
• For technology-driven enterprises, use the principles of Agile and DevOps to expedite the
Build-Measure-Learn cycle.
• Finally, teams working on startup-like entrepreneurial initiatives in corporate environments
should lean away from all efficiencies and improvements that are ultimately destined to end-
up as waste. Instead, learn what’s truly required to solve end-user pain points at scale, and
focus all efforts into developing tangible solutions to those problems.
 Lean Vs Traditional Startup
LEAN STARTUP CHARACTERISRICS TRADITIONAL STARTUP CHARACTERISTICS
Allows you to develop a product based on Begins with the creation of an extensive
the desires of the market business plan that's used as a rigid
structure for the next few years

Uses validated learning to determine Includes financial projections

customer interest
Focuses on metrics like product popularity Involves creating products in secret where
and lifetime customer value only employees and investors have any
idea about the product

Starts out with a minimum viable product Business plan is used to obtaining funding
to asses the reaction that customers have from angel investors or VC firms
to the product

Experimentation is favored as opposed to

sticking to a strict plan