The lean startup method for founders & product managers

What is Lean Startup?

The aim of the "Lean Startup" method is to reduce the risk involved in founding new companies and thus increase the probability of success. This goal of avoiding waste and focusing on value creation is derived from the eponymous 'lean management' method, which was popular in the automotive industry in the 1980/1990s. It differs from the traditional way of starting a business, where you draw up a business plan and then look for investors and build your business.

Lean start-ups, on the other hand, begin with an iterative search for a business model. You test individual aspects of your business model and constantly test new hypotheses in order to quickly revise the business model. This method is also very customer-focused and makes it possible to align new business ideas precisely with a target group. The focus is on the dynamic and flexible development of products and business models in order to effectively meet customer needs and integrate feedback at an early stage.

You've probably come across these basic ideas on our blog before - because they overlap with approaches in product development.

Where does the idea of the lean startup come from?

Eric Ries, an American entrepreneur and author, describes the idea and method in his book "The Lean Startup". The concept itself is inspired by lean manufacturing, which was developed in Japanese industry by car manufacturer Toyota, among others. At the time, the aim was to avoid waste in production and optimize processes.

Eric Ries was also inspired by Steve Blank, who is often referred to as the father or even grandfather of Lean Startup. One of the entrepreneur's key concepts was to involve customers right from the start. One of Steve Blank's rules in "The Startup Owner's Manual" is therefore:

"No business plan survives first contact with customers"

It is precisely this customer focus that is essential for lean startups. Whether for startups or in the early stages of product development, it's important to go out and discover the real needs of your customers. This concept will certainly sound familiar to you. It is also known as customer discovery and is becoming increasingly relevant in product management.

Another important concept in lean start-ups is that of the minimum viable product (MVP). This is a minimum viable product that is developed to test market needs and get feedback from potential customers before investing in full product development. Companies such as Dropbox and Amazon have successfully used this concept to iteratively improve their products.

How does Lean Startup work?

According to the definition, a startup is "a temporary organization for finding a functioning business model". With the startup team, you continuously test approaches and ideas to find out whether supposedly discovered truths are actually valid. This aspect of validated learning paves the way for a sustainable business model. The Lean Startup Cycle describes this three-stage process of building, measuring and learning.

The Build-Measure-Learn cycle is a central component of the Lean Startup method, which consists of three phases: Build, Measure and Learn. This method enables companies to receive feedback quickly and improve their products iteratively by focusing on validated learning.

This also means that the challenges in a startup are more fast-moving than in an established corporation, for example. The core of Lean Startup is therefore the realization that startups need a different, more agile type of management than the conservative management of many companies. The goal after going through the Lean Startup process is to achieve product market fit, where a product meets the needs of the market and a solid business model exists.

With this basic knowledge, we can now delve deeper into how it works.

The build-measure-learn loop

The build-measure-learn principle is a central component of the lean startup approach and also describes an iterative process in product development. According to the name, we can summarize it in three steps:

1. Build

In the first step, you build or develop an initial version of the product. This is a prototype or a minimum viable product (MVP), which only needs to be sufficient to carry out initial tests.

1. Measure

In the second step, you define specific metrics that you can use to determine the success or failure of the product. These metrics should be chosen in such a way that they provide meaningful information about whether the product meets customer needs and can be commercially successful. Customer feedback is crucial for measuring the success of the product.

1. Learn

In the final step, you test the product and evaluate the results. Learn from the findings and adapt the product, improve it or discard it completely. This approach is known as "pivot or persevere".

You repeat this build-measure-learn loop until the product is optimally adapted to customer needs and the market. What is optimal is determined by the market and the customers themselves through their feedback. The iterative process helps to refine business models based on customer feedback.

1. focus on the customers

Customers are at the heart of Lean Startup. This is how you ensure that the product or feature meets the needs of the target group.

2. test continuously

By continuously testing the feature or product, you can respond quickly to real, practical feedback.

3. avoid waste

With Lean Startup, you avoid waste by only developing the functions and features that your customers really need.

4. adapt quickly

Lean Startup allows you to react quickly and agilely to new findings or market changes, even with limited resources. The method thrives on incorporating customer experience into the product as quickly as possible and changing the product. The Startup Lean approach helps you to adapt quickly to new findings and market changes.

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