According to convention, the first thing every founder must do is create a business plan, a static document that describes the size of an opportunity, the problem to be solved, and the solution that the new venture will provide. It includes a five year forecast for income, profits and cash flow. It’s just a research based document written by an entrepreneur before actually building a product, unaware of the actual problems that are going to sneak in while executing the idea.
After raising a funding, entrepreneurs build a product without even taking substantial customer feedback and when ready to sell those, they realize that most features of the product weren’t necessary at all.
The Lean Startup Method
Proposed by Eric Ries in 2011, Lean startup method adopts a combination of business-hypothesis-driven experimentation, iterative product releases and customer validation.
Lean startup method removes the obsolete ‘Stealth Mode’ operations of business and lays importance on ‘Consumer Feedback’.
It can put down in three simple steps.
1) Rather than planning and research, entrepreneurs find a series of untested hypothesis or good guesses. Rather than writing B-Plans, they summarize stuff in a Business Model Canvas
2) Then they take up a ‘get out of the building’ approach to test their hypothesis. They ask potential users, purchasers, partners and try to analyse problems and solutions that come up. This process is iterative and feedbacks are taken care of in all subsequent product stages.
3) They make a MVP(Minimum Viable Product) by assembling their analysis reports and collected feedbacks. This product is developed by a practice called ‘agile development'(Quick, Responsive Development) which works hand in hand with customer development and reduces the yearlong product development cycles.
It means startups invest their time into iteratively building products or services to meet the needs of early customers, they can reduce the market risks and sidestep the need for large amounts of initial project funding and expensive product launches and failures.
Today, the lean startup’s popularity has grown outside of its Silicon Valley birthplace and has spread throughout the world.