“The Lean Startup” is a famous book by an American entrepreneur Eric Ries. This book is a directory for entrepreneurs and business leaders. In this book, he shared some innovative ideas for business growth.
This book helps entrepreneurs to make their businesses successful by using a lean startup methodology. This methodology is a need in this rapidly changing world. Eric Ries claims traditional approaches to starting a new business are usually slow, time-consuming, and unsafe.
The main purpose of this lean startup methodology is the reduction of time and risk. It also focuses on limiting the resources to develop a product for the company and increase the chances of success.
Overview of the Lean Startup
"The Lean Startup" by Eric Ries introduces a groundbreaking methodology for launching and managing startups. Departing from traditional business practices, the lean startup approach emphasizes the continuous validation of hypotheses.
It focuses on gathering customer feedback, and rapid iteration to develop successful and sustainable businesses. This methodology has gained traction for its ability to reduce the risk of launching products that lack market demand and its focus on efficient resource utilization.
"The Lean Startup" presents a transformative approach to entrepreneurship. It is challenging traditional business practices and offering a systematic framework for startups to thrive in a dynamic and competitive landscape.
Entrepreneurs can navigate uncertainties, drive innovation, and create sustainable businesses.
The principles outlined in "The Lean Startup" serve as a guiding light for aspiring and established entrepreneurs alike. It is empowering them to leverage lean thinking to unlock growth potential, minimize risk, and maximize success. This methodology represents a paradigm shift in the entrepreneurial landscape. It helps in emphasizing the importance of agility, customer-centricity, and efficient resource utilization.
Overall, "The Lean Startup" offers a compelling and practical roadmap for entrepreneurs to navigate the complexities of launching and managing startups. By embracing the principles of lean thinking and continuous validation, individuals and organizations can embark on a journey of innovation, adaptability, and sustainable growth.
Key Lessons to Learn from The Lean Startup
The book advocates for lean thinking, which involves doing more with less by identifying and eliminating waste. This approach enables startups to create products that align with customer needs and preferences, while avoiding unnecessary expenditures.
Here we will explore the key lessons you can learn from The Lean Startup:
Create A Minimum Viable Product [MVP]
When it comes to success, many entrepreneurs believe that a perfect and flawless product is necessary for it. But Eric Ries proved this myth wrong.
In his book, he argues that startups should not invest a lot of money and resources to make products perfect. Instead, he should make a minimum viable product to check the customer’s response.
Maybe it's not a physical product but it can be a video describing the concept of the product. Through this, you can get feedback from the audience before developing an actual product.
He suggests that MVP should be created to get the feedback of the audience to check the usefulness or the features that people want.
Use The Build Measure Learn Loop.
The build measure learn loop helps you in the rapid progress of the business. After creating a minimum viable product, Eric Ries suggests adopting the build measure learn loop. Here is what it is meant to be:
Build: a minimum viable product.
Measure: customer’s response.
Learn: to make suitable or informed adjustments.
Validated Learning
There are two types of hypotheses in lean startup methodology.
Value hypothesis
The value hypothesis tests that your products are providing enough value to customers or whether are they ready to pay for them.
For example: If you want to develop a mobile app to help dog owners for their dogs to walk when they are at work. Before investing time and effort into this you should ensure that your audience will like it and will be ready to pay for it.
Your value hypothesis could say that about 50% of people aged between 35 to 50 are willing to pay $ 10 for this.
When you find people of this age group and ask that question then you would be pleased to know that about 70% of people are willing to pay this amount. It means your value hypothesis is successful. And you should focus on app development and make changes according to customers' interests.
But if your data says that the audience is not willing for it then you have to recheck the app before any other hypothesis.
Growth Hypothesis
The growth hypothesis tests how customers receive products or services and your product will grow over time.
Continuing the same example if you think that 70% of downloads of apps are due to word of mouth.
You should develop an MVP and upload a basic version of the app that does not contain all the features. And wait for the people to download and then send emails to ask where they heard of it.
Feedback shows that only 20% of downloads are due to the mouth of the word. In this case, your growth hypothesis is not successful. It means you have to use another way to advertise your product instead of relying on mouth recommendations.
Leverage Innovation Accounting
The lean startup finds differences between the traditional approaches and startups. Traditional approaches measure a company’s performance based on its profit and revenue.
Startups should focus on a small number of key metrics that are relevant to their business. In this way, they can take steps for the progress of their business.
Understand the Three A of Metrics.
In The Lean Startup, Eric Ries suggested people should use real metrics to measure the performance of a startup instead of vanity metrics.
The vanity metrics can be an installation of apps, page views, or something else that cannot show the effectiveness and performance of the product.
For example: Thousands of people can install the new app but they may leave it after using it for a few minutes so it is not worth it. The thing that matters is how long people are using this app.
Eric Ries explains counteragent to vanity metrics which is called actionable metrics and it involves three A’s.
Actionable: Actionable metrics provide clear guidance on what actions should be taken in response to problems and to improve the metrics.
Accessible: The actionable metrics should be easily accessible to the right person or at the right time. These metrics should be easy to measure.
Auditable: the actionable metrics should be collected from authentic resources. This helps in building trust.
This is the most important step that helps in improving the progress.
Decide Whether to Pivot or Preserve.
After collecting feedback from customers, you can come to know whether you have to pivot or preserve it.
Pivot means a change in strategy or changing of your plan depending on the customer's review. Ries argues that pivoting is not a bad thing. It is a natural and necessary part of the success.
If your customer is satisfied with your products then there is no need to pivot and let it be preserved.
Utilize Three Engines of Growth.
Last but not least, here I will explain three engines of growth that are discussed in the lean startup book for the success of businesses.
Here they are:
Sticky Engine of Growth
If you are trying to appoint customers for a long time then this is the best engine for you to focus on. You have to do everything to get your customers back month after month. Before finding new customers pay attention to the present ones.
Viral Engine of Growth
This type of growth is done by word of mouth which is promoted by current customers. If every customer brings one or more customers with them then the startup will grow and will get more successful.
Paid Engine of Growth
This is the paid marketing to acquire new customers and it is very helpful for startups to grow their business.
Conclusion
In conclusion, the Lean Startup book is very helpful for entrepreneurs. Because it has a complete guide for them to establish their businesses and take them to the heights of success in a short time.
This book proved very beneficial and it brought a lot of benefits for entrepreneurs some of the benefits are reduced time wastage, reduced risk, protection from financial losses. These benefits also include increased confidence and improved chances of success.
The lean startup book teaches us how to drive a startup, when to turn, what action should be taken, when to pivot, or when to preserve. This book is a complete guideline for startups so everyone should read it at once before starting any kind of business. No matter if it is small or big.
