The "Lean" Startup

“A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty”.

Far too many entrepreneurs start a new business based on what they think is a great idea or product.  It often seems obvious to them that if they build it, the customers will be knocking down their door to buy it.  Unfortunately, this traditional approach has led to a failure rate of 30% of new businesses during the first two years and 50% within five years and the #1 reason for failure is that the startup was building something that nobody wanted to buy.  Startups fail because they focus on their product and not their customers or business model.

The Old Way To Build Startups

The Lean Startup is an approach to building new businesses based on the belief that entrepreneurs must investigate, experiment, test and iterate as they develop products.  Success depends on developing a viable, customer-centric business model that answers these questions:

1. Who specifically is the customer?
2. What problem do they want solved or aspiration fulfilled?
3. What value will they derive from the solution?

The New Way To Build Startups 

It is essential that every entrepreneur gain an in-depth understanding of the following key principals of the Lean Startup process to optimize their opportunity to create and grow a successful business:

1. A startup is a temporary organization designed to search for a repeatable and scalable Business Model.
2. It is not about your idea or product, it is about solving a need or a problem. Customers don’t care about your technology, they just want to solve their problem. Your customers do not exist to buy your product, you exist for them. 
3. Customer Discover is about identifying a problem and exploring how you can solve it.
4. Get out of the building and talk to customers (Customer Discovery). You don’t know if you have a company until you can prove that customers will pay you for your product and they will pay you enough for the startup to become successful.
5. You must test, validate and determine the minimum features and only those features that the “early adopter” customers will pay for. You then use product feedback to build the next version to grow the number of customers who will pay.
6. You must prove with data that your product will meet the needs of the customer, otherwise you are only guessing. Make decisions based on facts that have been validated by your customers, not assumptions.
7. The primary objective of a startup is to not be a startup.

This post was contributed by Gary Grenter, Owner and Principal Consultant of Alpha-Flow Management Consulting.  Visit his site at www.alpha-flow.net to learn how Alpha-Flow Management Consulting LLC can help you start and grow your business.