The Lean Startup
Everything You’ve Wanted to Know But Have Been Too Afraid To Ask
While many people know start-ups like ride-sharing service Uber and accommodation sharing website Airbnb, many don’t know that what spawned these game-changing companies can also work for their own businesses.
Whether you’re managing a small to mid-sized business, an enterprise or are in the public sector, ‘Lean Start-up’ principles help you to validate your ideas to deliver exactly what your customers want. The principles are universal and work across any sector or type of business.
Here’s a typical first conversation we might have with someone who comes to us to learn about how to make their business smarter and more customer-focused using Lean Start-up.
What is Lean Start-up? The concept originated with US start-ups and works on the principle they don’t have much money, time or resources before it’s all spent in pursuit of their goal. They’re launching an entirely new concept or venture and working with a hypothetical proposition. Start-ups must validate a lot of guesswork to prove their assumptions are correct before they run out of steam. They do this by systematically testing their assumptions in experiments, delivered in the most time, cost and effort effective way possible.
What can Lean Start-up do for me? It emboldens you to try out new ideas in a way that doesn’t risk the bank. You can validate your ideas in the real world at low or no cost, financially or to your brand.
But I’m in a business with a cumbersome culture; can I still use it? Absolutely. Lean Start-up allows you to fly below the radar to try out small but significant experiments that won’t upset your stakeholders. You can work outside your regular channels to test your assumptions and find new opportunities.
OK how do I get started? Pick your most promising idea and assign a small band of ‘merry men and women’ keen to work on it in their own time. Ask them to figure out the fundamental assumption that holds everything together. For instance, will customers be attracted to your new venture? Then ask your group to build a minimum viable product (MVP) that reflects their core assumption and allows them to test it outside the four walls of your building with real customers.
How do we bring customers along without scaring them? Put customers front and centre. Choose those who are receptive early-adopters and earnestly say to them, “We want your opinion, we’re building this for you and we want you to benefit”. Say you value their input and want to build the solution with them from the ground up. People respond well to hearing a partner ask them what they want at the start of a journey rather than have a product imposed on them based on assumptions that might not be accurate.
Who is using Lean Start-up (and where can I see it in action)? Technology companies of all sizes have used the technique for a long time. They learned many years ago that Lean Start-up is a great way to build something that meets desires customers may not even know they have with minimal waste. US conglomerate GE has even established its own Lean Start-up methodology called GE FastWorks to crystallise the benefits.
So what’s the next step to launch my own Lean Start-up project? The Strategy Group’s eight-week bootcamp uses Lean Start-up principles to validate your business model, engage your customers and deliver fresh business opportunities. In collaboration with your line-of-business teams, we analyse the key value in your business model to build experiments that you take to your customers. As we validate assumptions with customers, we feed the lessons learned back through the workshops for further tweaking, improvement and experimentation.
Who comes along to the workshops? Anyone who has an idea for a new avenue of business. Bring front-liners who are close to customers and want to build solutions for them. It’s a good time to involve anyone who has had their ideas rejected. Ask HR to recommend anyone who, in a performance review, said they wanted to try something different or showed entrepreneurial tendencies (no matter how senior they are or where they are in the organisation). Look for people keen to get out of the building and with energy to burn. Most of all, invite those who might be considered ‘difficult’ because they’re always asking ‘What if?’ or demanding the business move in new directions.
It’s important to involve people who have the seeds of ideas in these sessions because they will most likely get off the ground quickly and gain value. Or else, run an internal idea generation campaigns to elicit ideas from employees so that you can get started.
But it’s also important to realise that whether at the end of the eight weeks you gain a new product or service or just a deeper understanding of your customers, both outcomes qualify as success. Even if you try a new business and the experiments show it isn’t feasible, this is also a positive because you haven’t wasted money and time developing it in full only to have it fall over out in the clear light of day in front of everyone.
Instead, you’ve engaged with customers, employees and management and tested assumptions to come to a new understanding about your new venture idea and how it could work in the market.
Your ideas will never survive first contact with customers; they never work in the real world as neatly as they do on your spreadsheet or in your head. So it’s important to test your ideas in an open and collaborative way with customers as early as possible.
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Julian Kezelman is a Senior Associate at The Strategy Group and has extensive client consulting experience working within major Australian banks, creating funding solutions and developing restructuring strategies for borrowers. He advised large corporate and publicly listed Australian clients in the financial services, mining services, media, medical and retail industries.
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