The Lean Startup methodology is recognised as a proven strategic management system that combines entrepreneurial principles, innovation development activities and an iterative learning-based process to enable startup ventures to make better decisions about how to create customer value.
The approach has at its heart the philosophy that a startup is an experiment. It is searching through testing hypotheses to create a sustainable business model, managing risk at each stage of the problem-solution design-customer fit journey. This is based on a focus of customer development and putting customers at the heart of a startup’s business model.
It forces the entrepreneur’s thinking to focus on the problem they’re solving, recognising customers are forever in motion, and demands that a startup constantly explores, learns, iterate and adapts to create a value proposition. Lean strategy aims to be what Ed Catmull, founder of Pixar, calls a balance between clear leadership and chaos.
Many people tend to fall in love with their ideas and start tunnelling, seeing early stage funding as a validation of an idea or business. People prefer to spend an incredible amount of time building the perfect product instead of getting a quick ‘Not that, but this’ and then finding out how to improve it.
However, the Lean Startup recognises that strategy is a bet on the future, a hypothesis about how the customer landscape is going to evolve . Under these conditions of extreme uncertainty, the Lean Startup provides clarity with its framework and principles and that every statement about the future strategy should be seen as a hypothesis to be tested, not accepted based simply on a hunch.
Creating hypotheses allows us to move away from spending time and effort designing a product in isolation before we reveal it to the customer, and encourages the creation of prototypes and experiments to find out if the customer actually values what we are planning to make. Get out of the building is the call to action, find out what the real problem customers have, and what value they place on a solution.
As Ben Yoskovitz’s says, Lean Startup allows entrepreneurs to move from providing the right answers to asking the right questions (preferably early and often). This underlying narrative also captures economist Keynes’ sentiment of it’s better to be roughly right, than precisely wrong in your business thinking.
It’s more important to learn about what customers value, and improve your value proposition by shaping a MVP, than to ship more stuff early and more efficiently, no matter how tempting that is. The focus is on learning, not revenue. We first need to determine what customers value enough to pay for, before we invest our time into building a business that offers products that might end up on the shelf.
The main point of MVP is that you can start to gather feedback and behavioural data, which provides validated learning. At this point, you’re no longer relying on your subjective hunch and belief, and can proceed to develop those bells and whistles based on the real needs of your customers.
This build-measure-learn feedback loop is another core principle of the Lean Startup approach, identifying key themes and using metrics to guide future decision-making based on developing the MVP. Themes are discovered through customer interviews, user experience testing and analytics.
This enables the entrepreneur to focus on their North Star, guided by the one metric that matters. This one metric approach allows everyone to focus on the same thing, creating freedom for experiment whilst ensuring effort is focused.
The MVP is a thoughtful, structured approach for curating development of a startup’s product, making it fast and releasing it, listening to customers and data, data, data – and adjusting accordingly. It enables a startup founder to make a series of bets, make them quickly, and learn from them.
Whilst entrepreneurs have a free-thinking style, the methodology shapes their actions, providing a focus and a discipline that underpins any methodology. It’s a toolkit that provides a process supporting a sense of direction to follow from a product engineering perspective, and aligns thinking and doing.
I see the Lean Startup as a growth hacking tool, supporting entrepreneurs’ high tolerance for ambiguity and shaping an entrepreneur’s habits. For me, this is one of its unrecognised yet key benefits. In guiding their behaviour, thinking and actions via a roadmap of routines and processes, all of this cultivates an entrepreneur’s habits around iterative and incremental learning.
So, what do I see as the key habits that the application of the Lean Startup supports?
Habit 1: Always looking forward Being a startup innovator is all about being bold and forward thinking, to go beyond simply following current market trends. You need to be a pioneer, always keeping your eyes open for new opportunities to create your own market space. This means taking chances, and if anything is a critical part of a good habit set, it’s a willingness to do just that. The Lean Startup provides a framework for evaluating the outcomes of taking chances, supporting innovation and discovery.
Habit 2: Be customer centric Startup success requires an unwavering commitment to the customer. You need to develop an obsessive habit and mind-set of living in your customer’s world. Understanding customers’ wants and needs provides you with a greater opportunity to earn their attention. Focus away from profit as the purpose of your startup, focus on finding, winning and keeping customers. This is the core of the Lean Startup approach.
Habit 3: Make decisions You have to be decisive. From product feature to customer conversations, waffling with indecision won’t work. The ability to make decisions is directly related to your velocity and direction of progress. The Lean Startup provides metrics to help guide you – flagging where you can trust your judgement but combining gut instinct with facts along the way.
Habit 4: Avoid the crowds Conventional wisdom yields conventional results. Joining the crowd – no matter how trendy the crowd or ‘hot’ the opportunity – is a recipe for mediocrity. Remarkably successful people habitually do what other people won’t do. They go where others don’t because there’s less competition based on a hunch. The Lean Startup enables an entrepreneur to turn their instinct of opportunity into hypothesis, and provides a framework to test them.
Habit 5: Always be selling I once asked a number of startup founders to name the one habit they felt contributed the most to their success. Each said the habit and ability to ‘think selling’. Selling isn’t manipulating, pressuring, or cajoling, but convincing other people to talk with you, and then work with you, to build long-term relationships. You don’t need to sell, you just need to communicate. Get out of the building is the Lean Startup call to action, and an essential habit for startup success.
Habit 6: Start at the end The Lean Startup is based on an entrepreneur’s vision, and then supports a disciplined planning approach to lay out every step along the way to make it happen. Never start small where goals are concerned, the habit of thinking big, looking to the horizon and working backwards is vital to growth. Make visioning a habit to be supported by disciplined execution.
Habit 7: Make small bets and pivot There is no guarantee anyone will buy your great idea. Your resources are limited and you don’t want to risk everything on one roll of the dice. Get out in the market fast and let potential customers tell you if you are onto something. Using the habit of pivoting allows a startup to respond to circumstance to change course and act. The habit of pivoting allows us to respond to changes without being paralyzed with fear and uncertainty.
Habit 8: Don’t be afraid or embarrassed by failure James Dyson, creator of the Dyson vacuum, is no stranger to failure. He made 5,127 prototypes of his vacuum before he got it right. There were 5,126 failures – that’s a lot – but he learned from each one – that’s how I came up with the solution he said. If you want to create something new, you’re bound to fail a few times and that’s okay. Validated learning embraces failure as an entrepreneurial experience, from which we can pivot to the next iteration.
Habit 9: Look for 80/20 outcomes There’s a strange phenomenon in life that almost always holds true: if you examine your life, you’ll often see that only 20% of the things you do account for 80% of the results you get. Being productive and being busy are two different things. If you want to quadruple your productivity, focus on the 20% first, and if you can, cut the other 80% that just makes you busy. The Lean Startup has its roots in the Lean philosophy, so make sure lean thinking is a core habit.
Habit 10: Ask ‘Why?’ like a five year-old Entrepreneurs aren’t satisfied with the status quo, they ask ‘Why?’ over and over again, until they get to the bottom of things, rather than accepting the explanation ‘That’s just the way it is’. This relentless inquisitiveness in fact helps entrepreneurs find and fix the 20% wrong that causes 80% of their problems, and the use of hypotheses testing helps them get there. Great entrepreneurs have the habit of curiosity.
Each of the habits detailed above are set in the context of having another good habit – having a passion, a vision and a purpose for your startup endeavours. This ensures your actions are aligned with the intention behind your goal, to avoid being side-tracked along the way. It’s impossible to grow a business when you’re always busy putting out fires, the distractions waste time, money, effort and opportunities to grow.
You need a guiding north star to ensure the critically important decisions don’t get lost by you jumping straight into tactics. Without having a big picture, ‘doing stuff’ is letting the tail wag the dog – you’ll be chasing your startup, not leading it – chasing sales for numbers and not chasing customers for learning, and consequently your business is managing you and not the other way round. This is a bad habit.
We are what we repeatedly do, nothing is stronger than habits. Use the Lean Startup approach to help guide your entrepreneurial flair, and adopt the framework to instil good habits. In doing this, you will live less out of habit and more out of intent.