Lean Startup: The Safety Line for Every Company

Harvard- experts have found that 75 percent of newly founded start-ups go bankrupt. That's three out of four! But how do you get the right product idea onto the market and how do you know that there will be sufficient demand for the product or service? Unfortunately, we don't have a crystal ball, but we do have an empirical method: Lean Startup stands for implementing lean processes in order to confirm our hypothesis and learning through iterative and customer-centric testing.

Lean means fast and economical testing of the market suitability of a product idea or the viability of a business model. It does not mean low budget. Continuous customer feedback and hypothesis testing are used to draw conclusions as early as possible in product development. The process is known as the "build-measure-learn" cycle.

Why do three out of four start-ups fail yet? It may be because the teams behind them are so convinced of their ideas that they don't test them sufficiently as they underestimate the risks. In a lean start-up, you focus on the essentials, which means identifying a need and satisfying it with a product or business model.

1st: Make arrangements

In competitive markets, the ability to successfully and continuously launch new products or services has become the decisive competitive edge. This is precisely where Lean Startup comes in. But before an idea is fully developed, it is tested excessively with Design Thinking, freewriting, PESTEL analysis, SWOT analysis, market analysis, market size identification and competitor analysis. After all, a marketable innovation must solve real problems for consumers. When using the Lean Startup method (Build – Measure – Learn), innovation goes hand in hand with a need that is not yet met in the market.

2nd: Patience and dedication

A central element within the Lean Startup method is creating the MVP: The Minimum Viable Product known from Scrum. The MVP is a basic version of the final product but is already functional enough for the first users (early adopters) to use it, even pay for it, thus showing their interest in this product and providing important feedback.

We can also call this basic product MAP – Minimum Awesome Product. This way we express that already in its first version the product must create a real benefit for which there is real demand. By being “laxer” in completing our first product – we do not strive for perfection – we have the opportunity to conduct successive tests within a short period of time until we find the validation we are looking for. We like to say: Your first MVP needs to be embarrassing.

A business partner and I once hypothesized that motorcyclists in Madrid would be interested in an app for a mobile wash service. Our first version was a WhatsApp chat in which early adopters told us where their motorcycle was and when it should be washed. In a fast-paced and volatile world, this approach has a key advantage: a fast time-to-market (lower time-to-market), which gives us real feedback that is more important than finding the perfect solution to the problem from the beginning. Put another way: The journey shapes the destination. After all, there's no point in planning a product for 2022, because who knows if it will still be relevant then.

3rd: Iterative learning

A cornerstone within the Lean Startup methodology is learning, since it leads to the product we want to develop. After each new iteration, the product is shown to those who will use it later to collect their feedback (from their direct testimony to the analysis of their interaction with the product). The problems that arise from jumping into the unknown are gradually eliminated (Scrum says hi). I'm not talking zero risk (life is wonderful, but not that terrific), but you'll certainly sleep peacefully at night knowing that your product has already been validated and approved by real customers before a pompous launch day.

In a nutshell

Are you planning to launch a new product or set up a new business model? Avoid going in the wrong direction right from the beginning and get eye-opening feedback by applying the Lean Startup Method.