1.2.2 The Lean Approach

Welcome to our discussion on the lean approach, and when to apply the lean approach. The lean approach is a method for dealing with the inherent uncertainty in entrepreneurship. The basic premise of the lean approach is that entrepreneur should be able to create more value for customers with fewer resources. The reason for doing so is perhaps best exemplified by this quote. No business plan survives first contact with customers. What this means, is that your product will always be in a state of flux whenever you have customer touch points, and the lean approach can help you manage that reality. The lean startup provides a scientific approach to creating and managing startups, so that entrepreneurs can get a desired product into the customers’ hands faster. But keep in mind, though, that the lean startup model is just one way to deal with uncertainty. There are many other methods that we will touch on throughout other lectures. Before we start looking at the lean approach itself, let’s talk first about how planning is conventionally done. In the planning of typical projects, there is a well understood and predictable platform of past experience. What this means is that managers can extrapolate future results from past experience. Managers have lots of knowledge and data at their disposal, and have to make very few assumptions. Take for example a construction related project. Housing construction is a relatively well understood process with very little uncertainty. Housing construction project can be developed using a traditional waterfall method. The customer problem is known and all customer needs and product features can be specified up front. In the requirements phase, the entire requirements can be captured. In the design phase, the exact design for the capture requirements can be performed. Then in the implementation phase, the house can actually be built. Other requirements can be integrated and as pre-specified in the design. In the verification phase, the house that is built can be validated against a set of agreed upon requirements. And finally, in the maintenance phase, there are support activities to keep the house up to par. A similar methodology is agile. The distinctive feature about agile is that it is miniature projects within the main project. This makes it great for software development. Since quality assurance and testing are just as important to an application’s success as building its code base. Bugs, performance issues, and security flaws need to be detected and resolved early on, and repeatedly throughout the development process to allow the project to advance. This can be accounted for with agile. Testing and Q and A are constant features of the agile methodologies. Once a new piece of the application is built, it is put through a series of tests to identify bugs in other non-compliant parts. This ensures the new feature will seamlessly integrate with the rest of the application and provides overall quality. So how do you actually plan in an early-stage startup environment? Things are actually very different when you’re planning for new ventures. Using the methodology like agile or waterfall is death in a rapidly changing business. When planning for a new venture customer and markets are uncertain or unknown. Competitor behavior is not obvious, and entrepreneurs must make a large number of assumptions based on very little data and knowledge. That’s where lean startups enter the picture. Lean startups adopt the combination of business hypothesis driven experimentation, iterative product releases, and validated learning. In essence, you are iteratively building products or services to meet the needs of early customers. There are multiple check points as you try and validate how your product fits the market, and how the market fits your product. This then helps reduce the market risks and helps entrepreneurs side step the need for large amounts of initial project funding and expensive product launches and failures. Here’s what it looks like. You first start by deciding upon your idea. From there, you create hypothesis, which then allow you to think about generating your MVPs.
You’ll then prioritize your MVPs, and then run tests on all these MVPs. As you’re running tests, you may decide to pivot, in which case you might start with a new idea. Or start generating different MVPs with different features. Once you’ve run tests that are sufficient, you’ll start to achieve the magical product market fit that you’re looking to achieve.
MVPs are minimal viable products. We will learn about what an MVP is and what it looks like in another lecture. Something to keep in mind is that your MVPs should be developed so that you can test hypothesis quickly and with the least possible expenditure of resources. Again, we will talk specifically about what MVP looks like in another lecture. It is also important to sequence your MVPs in a way that will minimize cash burn while you are learning. You want to be finding ways to minimize investments and commitments until critical assumptions have been tested. We’ll also talk in more detail about how to do this later. As we’ve seen, the lean approach is a method for dealing with the inherent uncertainty in entrepreneurship. This approach entails running tests on your MVP, pivoting and achieving product market fit. The basic premise of the lean approach is that entrepreneurs should be able to create more value for customers with fewer resources. Thanks for joining this lecture.

Jim Rohn Sứ mệnh khởi nghiệp