The Lean Startup

December 19, 2009

The Lean Startup vision introduces a methodology for building a technology product. In short, a Lean Startup is a low-burn technology venture which combines the Customer Development methodology and an Agile Software Development methodology.

Startups don’t fail because the technology doesn’t work. They fail because nobody wants what they are trying to build.

Eric Ries

Eric Ries and his blog ‘Lessons Learned’ offer insights on how to build a Lean Startup. A recent presentation from Eric Ries’ on Lean Startups in the Stanford University’s Entrepreneurship Corner explains his approach to building a technology product. In his pragmatic view on how to integrate Customer Development with Agile Software Development, he advocates an approach with two teams. The cross-functional problem team continuously validates the problem hypothesis and updates the product concept, while the solution team uses an Agile Software Development methodology to build the product from the product concept.

The Pivot

A key aspect to any startup is defining the problem that it tries to solve. Customer Development advocates a cross-functional problem team that intensively works with customers and continuously defines and adapts the problem hypothesis.

The systematic approach of Customer Development produces a series of invalidated problem hypotheses. At each iteration, the team adapts one piece of the hypothesis which includes, among others, customer segments, feature set and positioning. Each change builds on the lessons learned in validating the earlier problem hypotheses.

The pivot is the incremental change to the problem hypothesis. Building on the continuous feedback of the early adopters, the pivot represents the minimal change needed to address the barriers of the hypothesis.

The startup’s vision assures a coherent direction despite many incremental changes to the product concept. In the absence of a strong vision, incremental changes may steer the product concept into a random direction.

The Minimum Viable Product

Deciding what and when to ship to customers is a key part of any venture. During bootstrapping, limited resources force startups to find the smallest feature set required to engage with their early evangelists. Eric argues that startup teams often overestimate the smallest feature set by a big margin and that the best approach is to divide that first set down several times. Shipping the minimum set of features may produce surprising results from the customer base.

Despite a limited feature set, customer might actually be happy with the shipped features. Visionary customers are very forgiving as they not only buy into the current product but also in the startup’s vision. Furthermore, the view of the team on required features may not be aligned with the customer’s needs. In the worst case, customers will give their opinion on what features are missing to create a value proposition for them.

By focusing on the minimum viable product, startups avoid the mistake of building a product that nobody wants. By engaging with the target segment early on, the Customer Development methodology offers more advice on building a product for a few engaged customers instead of trying to build a product from the outset for everyone.

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