Getting a business to start from ground level is tricky without any tools or resources. There have been many instances when a business or firm crashed before it hit the market. At these times comes Lean start-up, which is a methodology for the development of businesses and products. This methodology helps to decrease the timeframe for the development of products. The main speculation of a lean startup is that startup companies can reduce market risks by investing their time to meet customers’ needs. This would lead to requiring less funding for the initial product launch.
Developed by Eric Ries in 2008, this methodology is used extensively by individuals and companies looking to launch new products. This terminology was first introduced in his bestselling book, The Lean Startup, which was published in September 2011. The Lean Startup was the best-selling business book in 2011.

What made Lean Startup popular?

Before understanding the popularity of Lean Startups, it is necessary to understand the roots of lean startup, which will enable everyone to understand the reasons for its popularity. The production process of vehicles developed by Taiichi Ohno, known as the father of Toyota’s Production System (this became Lean Manufacturing in the United States), and the principles established by Henry Ford were the sources of inspiration for the development of Lean Startup.
Ries borrowed and repurposed the software development methodology, making it work better as a Lean Startup. The popularity rose when Ries and his team started an annual technology conference called Startup Lessons Learned, which later became popular called the ‘Lean Startup Conference.’There are lean startup meetings in almost 100 cities and 17 countries, with over 20,000 regular participants and online discussion forums. The best part of this conference, as well as a unique part, is the introduction of The Lean Startup Machine, which allows the participants to start a new company in three days. It is reported that over 600 start-ups have begun through the Lean Startup Machine.
Companies such as Dropbox, Zappos, and Intuit have employed the lean startup methodology. Even the United States of America’s government started using some lean startup ideas. Other than the influence of lean startups in various departments of the United States government, the introduction of the Presidential Innovation Fellows program gathers top innovators and government officials to work on high-level projects together.

Methods of Lean Startup

Various methodologies have been explained through Lean Startup. Let us discover some of the most popular methods.

Build-Measure-Learn.

This methodology is used for new products as well as those already on the market. It is one of the popular scientific methods derived from lean startups. By creating a hypothesis, products can be tested, and then the results can be analyzed and improved upon if needed. The Build-Measure-Learn cycle is a quick method as it emphasizes speed. The company’s success is set by its ability to create a minimum viable product and measure its success in the market.

The phases of the loop are: Ideas? Build? Product? Measure? Data? Learn

The Minimal Viable Product (MVP)

While traditional product development takes time and resources, Minimal Viable Product is quickly iterated through a single Build-Measure-Learn cycle. A strategy towards making and selling is MVP.

The objective of the Minimal Viable Product is to test the business hypotheses and help the entrepreneurs process the developments. Frank Robinson created and explained the term in 2001, but Steve Blank and Eric Ries popularized it. The results obtained from the minimum viable product test show whether or not the product should be built.

The Pivot

It is seen that some firms become successful while others fail because successful companies can discover tools to modify and the foresight to observe. The most laborious feature of a lean startup is decision-making, which leads to pivot. This is mainly because entrepreneurs and inventors are emotionally tied to their products with the energy and money spent on them. A pivot determines how successful the project is and can be said to be a “structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.” The principal kinds of Pivots are:
Zoom-in pivot where a single feature increases exponentially and becomes the entire product.
Zoom-out pivot is the opposite of a Zoom-in pivot
The customer segment pivot is where the product is correct, but the customer has to be changed.
Channel pivot where the internet has created many channel options for startups to develop and promote.
Technology pivot is where the latest technology is used to balance the benefits and keep things like before.
Groupon is one company that has successfully utilized pivot to become a billion-dollar business.

Split testing

A split test, also known as an A/B test or bucket test, is an experiment to determine the selection choices of different groups. Here, the customers are given two different versions of the same product simultaneously, and their responses to selecting one are noted. One of the variants would be the one currently in use, while the other would be its modified version. A/B testing can also be performed incorrectly, undermining the results’ validity. This could happen by conducting both phases of tests at two different times or assigning users to one A/B version of the same product using any non-random method.
A few other tests, such as multivariate or multinomial testing, are similar to A/B testing. Still, the difference is that they test more than two variants of the same product.

Different Uses of Lean Startup

Lean startup concepts have been used extensively in different areas in many ways. Two of the unique purposes of Lean Startup is as follows:

Lean Manufacturing

Lean manufacturing, also known as lean production, is a waste minimization method without compromising system productivity. It provides information for improving the manufacturing operations’ effectiveness, efficiency, and profitability. It also considers waste generated through overburden and uneven workloads. Lean manufacturing focuses on what adds value more. Its philosophy was derived from the Toyota Production System, one of the leading motivations behind the lean startup.

Lean Software Development

Lean software development converts lean manufacturing practices and principles to software development. The term ‘Lean Software Development’ originated from a book by Mary Poppendieck and Tom Poppendieck. The book redefined traditional lean principles and compared them to agile practices.

The Model Canvases Inspired by Lean Startup

Lean Startup started a revolution among business firms around the world. The two most prominent inspirations from Lean Startup are Business Model Canvas and Lean Canvas.

Business Model Canvas

Developed by Alexander Osterwalder in 2008, Business Model Canvas is a management template for developing business models. It contains elements including:

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Customer Segments denote the different groups of people or organizations the business strives to reach and serve.
Value Propositions represent the products and services that create value for the business model to flourish.
Channels describe how the business communicates with its customers.
Customer Relationships denote the communication and rapport the company shares with customers. They are the key factor in determining the overall customer experience.
Revenue Streams denote how the company will generate revenue from all sources.
Key Resources are the most critical factors that the company utilizes.
Key Activities are the most critical and essential things the company undertakes to be resourceful and profitable.
Key Partnerships describe the relationship between the company and suppliers, retailers, and partners.
Cost Structure describes the total cost incurred along with the operational costs.

Lean Canvas

Created by Ash Maurya, the Lean Canvas is a one-page derivation of the Business Model Canvas, which addresses broader customer issues and is used explicitly for startups. It replaced the sophisticated business model canvas with a more straightforward plan. A few changes were made to the canvas. Key Activities and Key Resources have been removed. He replaced the Customer Relationships box with the Channels box. Key Partners were extracted from the canvas because lacking partners did not cause the risk of inefficiency.

Future of Lean Startup

Lean Startups have taken the world by storm, and the success stories of firms that employ them are inspiring. The number of businesses taking up Lean startups is increasing daily, and using lean methods across a wide range of startups will result in fewer failures than using traditional methods.
The lean startup approach is changing the entrepreneurial landscape. Through its research and stats, products that are loved by customers are launched instead of launching and waiting to see if the customers like them. Since the entrepreneurs have all the information beforehand, the risk factor is very low. With access to various types of financing increasing daily, the future of firms using lean startups is promising and bright.