After writing about how you get your new business started, I now want to take a closer look at the Lean Startup Principles by Eric Ries as one method to get your startup going. I’ve mentioned them before in my post about entrepreneurs.
What are the Lean Startup Principles?
“The Lean Startup method teaches you how to drive a startup-how to steer, when to turn, and when to persevere-and grow a business with maximum acceleration.”
Eric Ries explains that many startups fail because they have an idea and they spend a large amount of time perfecting their product. They are convinced that people will want their product but forget to communicate with potential customers. By the time their product gets on the market they’ve never double checked if people are interested in that kind of product, neither did they get people to know about it!
- Focus on building a Minimum Value Product
- Entrepreneurship requires solid Management
- Test your Value Hypothesis & Growth Hypothesis from time to time
- Using Innovation Accounting to validate progress
- Innovators and Entrepreneurs are everywhere
- Validated Learning is required to benchmark progress and growth
- Build – Measure – Learn is your mantra to tracking progress
- Know when to pivot and move on
Using the Lean Startup approach, companies can create order not chaos by providing tools to test a vision continuously. By the time that product is ready to be distributed widely, it will already have established customers.
Every medal has two sides…
After reading many positives articles and reviews on the Startup Principles, I came across this very opposed blog about startups by Nick Pelling, British director of an IT startup.
Nick Pelling argues in his post that these principles are not a scientific approach after all. Since the lean principles have not been applied by startups that often yet, data is missing to support Ries arguments. Nick claims that Ries simply expresses hypotheses “which is why he so wants you to go test his ideas for him with your money and your business on your customers.”
Michael Imstepf, web entrepreneur in Australia, directly replies to this argument as followed: “[Ries] promotes the continuous testing of hypotheses/assumptions. This is what I believe he means by scientific approach to building a company. Because that’s what positivist scientists do, they take a dependent and independent variable, make an assumption as to how a change in the independent variable influences the dependent variable and then verify or falsify this hypothesis. This is the method/concept“.
Nick Pelling further claims that “Lean Startups are not lean”. He believes that Ries’ idea has much more to do with “learning than reducing process waste” and nothing to do with saving money and getting things done fast because “educating yourself in a constantly changing market” can be a life-long learning process and can cost you your last penny.
The moneysavingchellange blog on the other hand contends that “Being lean is all about being efficient, minimizing waste, testing different concepts and continuously improving. […]To ensure [that] they don’t waste time, money or resource with the wrong product [in the first place], lean entrepreneurs and business innovators carry out plenty of testing to get feedback and continuously modify the product based on this feedback.”
Nick Pelling also makes the point that the Lean Startup Principles do not allow bravery. According to him, basing the production decision on customer feedback leads to an anti-engineering developing of products. In order “to build company value and have lasting societal impact, startups need to be […] revolting.”
I guess the question you need to ask yourself is: Do you want to play it safe and increase the odds of being a successful startup or do you love risk and want to make a change?
According to Janine Darling, American board director, business fundamentals that need to be applied are “Judicious use of resources, flexibility, the ability to adapt, well-considered adoption of risk”.
Isn’t that what the Lean Startup Principles consider? What do you think? Are they the recipe for success?
To leave you with Janine Darling’s mantra of every business:
Lean. Learn. Change. Optimize.
Learn. Change. Optimize.
Learn Change. Optimize.