How to Use the Lean Start-up Methodology
The biggest risk for first-time entrepreneurs is that they’ll create a product that absolutely no one wants to buy. Based upon Lean manufacturing principles, the Lean Start-up methodology developed by Eric Ries argues that when you launch a new business or product you should (i) Build a minimum viable product to test a set of hypotheses. (ii) Measure data against that set of hypotheses and (iii) Learn and decide whether the hypotheses have been validated or not.
In the Build phase, you make a minimum viable product (MVP) which is a development technique where the most basic version of a new product is introduced to get feedback from potential customers. It is important to realise that the MVP does not have to be an actual product, nor is it a product with fewer features but can simply be the idea of the product (eg. A landing page, a powerpoint slide, a wireframe etc.). In essence, it is a low fidelity prototype that you can show to customers to facilitate learning. This feedback is used to expand and improve the MVP and after each experiment with your customers, you should have a good idea of what you are going to do next. The key thing to highlight here is validated learning. Validated learning is what propels you forward with your decision making
“The minimum viable product or MVP is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort”- Eric Ries, The Lean Startup
However, critical to this phase is that you document the assumptions that you have made around your idea. An assumption is something taken for granted or accepted as true without proof. While the MVP can give the customer a visualisation of the idea, you still need to understand what it is that you are measuring or testing with them. In documenting your assumptions start with who the customer is and the problem that they are experiencing. Then detail what are the core assumptions that you are making. You can then start to test.
The critical aspect of this phase is to get out and experiment/test with customers. However, before that you must first decide and establish the expected metrics that you are going to measure. Metrics keep us honest and objective to what we find. Without establishing what metrics we will accept up front will result in fudging and ignoring the truth.
The output of the experiments is learning. Based on what you’ve learnt the next decision point is whether to preserve, pivot or, do you need to shut down product development entirely? If your metrics are met, then you preserve. If metrics are not met, then you need to question why? You will have gained insight into the customers thinking and perhaps there a possible pivot that you could make and then re-test again or is it time to quit.