Why should startups pay attention to the Lean Startup Method, anyway?

image courtesty of brizzle born and bred under creative commons license

image courtesty of brizzle born and bred under creative commons license

We’ve spent several blogs presenting the most important features of the Lean Startup Method. As a startup business, why should you care?

Lots of startups follow a more traditional path to build their business:

  • Write a business plan using market research (but almost no actual contact with potential customers, suppliers, partners, or sales channels)
  • Get startup money (self funding, friends & family, banks or rarely angel investors or venture capitalists)
  • Spend the money building a business
  • THEN reach out to potential customers to find out if they want what you are selling, and are willing to pay enough for it to let your startup earn a profit.

As Steve Blank reports in his book “The Startup Owner’s Manual”,

the embarrassing fact is that in companies large and small, established corporate giants as well as new startups, more than nine of 10 new products fail

He goes on to say,

Winners also recognize their startup “vision” as a series of untested hypotheses in need of “customer proof.” They relentlessly test for insights, and they course-correct in days or weeks, not months or years, to preserve cash and eliminate time wasted on building features and products customers don’t want.

 Founders must search for a business model. The best way to search is for the founders themselves to get out of the building to gain a deep, personal firsthand understanding of their potential customers’ needs before locking into a specific path and precise product specs … Getting out of the building means acquiring a deep understanding of customer needs and combining that knowledge with incremental and iterative product development … Products developed by founders who get out in front of customers early and often, win.

Three of the “deadly sins” of the traditional startup method, according to Steve Blank, are:

  • Assuming “I know what the customer wants”
  • Assuming “I know what features to build”
  • Assuming no trial and no errors

Go through the steps outlined in the previous blogs to confirm that there are customers who have the problem you think they have, feel an important need to solve the problem, and are ready to pay you for your solution to the problem. Expect to make several mistakes while you are doing this. When this happens, “pivot” by changing one of your assumptions/ guesses about your customers and solutions.

When you have chosen a customer set and a solution, your next step is to test your assumptions/ guesses about building the business to a successful size. Here you will be testing your assumptions about pricing, how customers will be acquired, and what channels will be used. The test includes asking customers for the order and trying to collect money. Expect to make more mistakes and do more “pivots”. If you continue to get “go” signals from these tests, then you should have the confidence to start spending money and building your business.

SCORE counselors are available locally or on-line to help you navigate the path to a successful startup. Call us in Pinellas County at (727) 532-6800 or go online to www.pinellascounty.score.org.

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3 thoughts on “Why should startups pay attention to the Lean Startup Method, anyway?

  1. Pingback: From Our Community: Rules for Customer Service and More - KidsProfitOnline.com

  2. Pingback: From Our Community: Rules for Customer Service and More / Infotech Solutions | Web Hosting, Web Design, Graphics Design, SE0, Online Marketing Services

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