On the 12th of February the “Lean Startup Summit” took place in Berlin.
Since I am a huge fan of the Lean methodology, I knew I had to attend this conference. With big expectations I went to two-day summit and joined like-minded people in Berlin. People who are eager to exchange thoughts and learn about different takes on entrepreneurship within large corporations but also tiny startups.
I’ll spare you the wait: I wasn’t disappointed.
But let’s start at the very beginning and go into the basics of the Lean Startup approach before we dive into deeper context. In the following blog I will be explaining what Lean Startup means and why this approach is so valuable.
Lean Startup: Innovation is “hit or miss”, isn’t it?
Whether you are launching a tech-startup, work as a corporate innovator or are trying to contribute to your local community by providing a small business based on demand – it always feels like a “hit or miss” position. You build your business plan, and either it works out or it doesn’t – correct?
It’s a common misconception that building an extensive business plan is the perfect way to go. Can making assumptions and building hypotheses based on unknown factors and variables before experiencing it first hand really be viable?
As a matter of fact, creating a static business plan takes a lot of time. It is often being written by an individual under exclusion of the public (e.g. potential customers / stakeholders) and includes a 5-year forecast for costs, profits and potential margins that make oracles seem like phonies. Rationally speaking, it is not a big surprise that this approach has a low success-rate. This approach of working on extensive research behind closed doors without any real-world validation will most likely result in a plan based on fiction.
Nevertheless, large companies and start-ups often work straight by this book. They stick to this principle in order to convince investors and potential partners with their ideas.
But what is the alternative?
One that seems promising is called “Lean Startup”, that – contrary to the name – can help startups AND corporates with their initiatives by following these three key principles, according to Steve Blank:
Generate your Hypotheses
- Rather than investing time and money in months of planning, founders should summarize their hypotheses in a framework called “Business Model Canvas”.
- The “Business Model Canvas” basically describes how a company/project/business model creates value for the potential customers and itself.
Figure 1: Business Model Canvas based on “Osterwalder Canvas”
- Lean Startup uses the approach of “Customer Development”. That means validating the defined hypotheses in “field interviews” (yes, people go out and actually talk to their potential target groups to collect feedback). In these interviews potential customers and target groups are asked about their opinions and pains, going through all elements of the “Business Model Canvas” to revise assumptions and generate essential learnings.
Figure 2: Lean Startup Loop
Develop your first sketch
- The method of Lean Startup utilizes “agile development”. This term is probably well-known to all the IT Developers among the readers. Unlike typical IT Project release cycles, you focus on iterative development based on short feedback cycles to ensure alignment with customers’ benefit. This is usually the moment when startups and corporate innovation teams test their hypotheses based on a very first version of the product, called MVP.
The lean approach is centered around the customers and their ever changing needs – thus making you agile and more resisting to failing. And personally, I think that that’s exactly what you need.
Now, that you have an overview over the basics of a Lean Startup – what it means, where it is applicable and what the basic methods are, let us dive deeper into the topic!
Make sure to check out my post with my key learnings & insights from the Lean Startup Summit 2019 in Berlin.