Why "Lean Startup" is No Longer a Buzzword

There is no “Perfect Business Model”. While this may seem like common sense, there are still a great deal of startup companies trying to approach their business with a “cookie cutter” approach. Company founders go through the process of developing a plan by assessing the opportunity, applying the problem to the assumed solution, and developing a five-year business forecast with information that is unsubstantiated and quite frankly, unknown. Recent studies show how customer-first methods are able to revolutionize the process, dramatically reducing the failure rate of startup organizations. In an article published in the Harvard Business Review, professor and principal investigator Steve Blank explored the merits of the “Lean Start-up” approach.

The first contrast of the Lean Start-up approach regards the development of a framework. Using a template known as the Business Model Canvas developed by Alexander Osterwalder and Yves Pigneur, entrepreneurs are able to understand the building blocks to their organization, including categories such as Value Proposition, Customer Segments, Key Resources, and Key Partners. The business model canvas allows you to develop relationships within your building blocks, understanding the most successful approach to presenting your start-up. These approaches can be resource-driven, customer-driven, offer-driven or finance-driven as explained by Osterwalder.

The Lean Startup approach involves a recursive approach of customer development and continued feedback. The process of customer development followed by customer validation then circling back to customer development involves constant feedback. The process involves creating a prototype, running it by customers, understanding complaints or confusions, building customer interest, and repeating the process until you are able to present a final product from several iterations of minimum viable products. The concept of a minimum viable products is best explained from the analogy of developing a mode of transportation. In understanding customer needs, the first minimum viable product would be a skateboard. After feedback, the next iteration would be a scooter, followed by a motorcycle, and finally a car. Only the most critical features are added during each stage of the minimum viable product. This process allows users to quickly develop and improve a product without spending considerable time and financial capital. The contrasting approach to this step would involve starting with 4 wheels, adding an engine, inputting a powertrain, and providing a frame to create a pickup truck only to find out that the customer wanted a sedan.

It’s important to note that these approaches are more than applicable for companies of all sizes. Looking to customers for input and building businesses around key metrics with quick implementation of change has been how large companies such as GE have made significant headway into new industries.

So whether you are a new organization or large corporation, there are always new ways to adapt your organization for an agile entrance into the market. If you are a Northeast Ohio organization looking to implement select aspects of the Lean Start-up approach, send me a message. With the work we are doing at MAGNET thanks to our recently developed Commercialization Center, we are able to offer a wide variety of consulting and business growth services. Ranging from value proposition creation to competitive analysis and market trends, we have the resources to help you grow your business.

Want to know more? Call us at 216.391.7766 to get started!

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Posted by MAGNET Ohio in Lean, Management Tip

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