What is the Lean Startup Methodology?

Developed by Eric Ries in his book The Lean Startup, the methodology focuses on building products or services based on validated learning rather than assumptions. The goal is simple: avoid wasting time and money on something your customers don’t want by testing ideas early and often.

The Key Principles of the Lean Startup Methodology:

1. Build-Measure-Learn Loop: Instead of investing large amounts of time and resources into building a final product, you start by creating a Minimum Viable Product (MVP) which is a simple version of your product that solves a core problem. You then release this MVP to early adopters, measure their feedback, and use those insights to learn and adjust. This iterative process allows you to quickly adapt and evolve your offering.
2. Validated Learning: With each iteration, you're testing assumptions. The goal is to confirm or disprove your hypotheses with real world data. This data-driven approach enables you to make informed decisions about the product’s direction, reducing guesswork and increasing your chances of finding product market fit.
3. Small Batch Sizes: Experimenting with the smallest option possible allows us to quickly test a hypothesis/assumption and keep waste to a minimum. We find issues faster because we incrementally test the idea in small chunks. E.g In the 2000s, a software company envisioned this amazing ecommerce experience which allowed you to interact with clothing and shoes in 3D models, they raised lots of money from investors and took a 12 months to develop their product. They had not tested their technology on large scale and it crashed too many times to even create any sales, at this point most of their resources had been spent and it was too expensive to continue in a failed, unvalidated product. The power of small batch sizes to validate the technological approach would have allowed this business to make changes or pivot, it is also an important part of the lean manufacturing movement which have propelled Toyota forwards.
4. Pivot or Persevere: The build-measure-learn loop, innovation accounting, and small batch sizes lead you to face a critical decision - should you continue refining your current idea (persevere) or make a major change in direction (pivot)? This flexibility ensures you're always moving toward a successful product market fit rather than wasting time on a flawed concept. There are many types of pivots which will be covered in another blog soon.

Why use the Lean Startup Methodology?

1. Minimises Waste: Many startups fail because they invest too heavily in unproven ideas. They build a product based on assumptions, only to discover months later that no one wants it. The lean startup methodology helps you avoid this trap by pushing you to test your idea with an MVP before pouring resources into full-scale development.
2. Speeds Up Time to Market: Launching quickly is critical for any startup, especially in competitive industries. By focusing on building an MVP first, you can get your product into the hands of customers faster and start gathering real feedback. This lean approach enables startups to rapidly iterate, fine-tuning their product with each cycle instead of waiting months or years for a launch.
3. Reduces Risk: Starting a business is inherently risky, but the lean startup methodology helps to mitigate that risk by encouraging continuous experimentation. Rather than betting everything on one big idea, you’re constantly testing, measuring, and learning. This reduces the chances of failure because you're only making small, controlled bets and adjusting as you go.
4. Data-Driven Decision Making: The lean startup methodology promotes making decisions based on actual customer behaviour, not assumptions. By running experiments and tracking key metrics, you get a clear sense of what your customers actually want, leading to better informed product decisions.

Hopefully from above, you can see how businesses working in uncertainty can benefit from using the Lean Startup Methodology.