Launching a new venture is an exciting journey but full of unknowns and risks. Moreover, the famous formula of outlining a business plan, pitching it to investors, releasing a product or service, and starting selling may seem a bit outdated. Though countless companies have implemented this scheme for decades, the truth is that it's inefficient. By the time you accomplish each step of the formula, there might not be a need for the product anymore, and consumer demands might have shifted.
What's more, this old-fashioned scheme moves around assumptions of what entrepreneurs think about the needs that the product addresses without enough market validation. In fact, the entire product development is based on assumptions. Certainly, it's a recipe for disaster.
It's a well-known fact that most startups begin with a lack of certainty. Here is when the Lean Startup methodology takes the stage providing a framework to develop a business idea in a cost-effective way.
Consumer behavior has evolved, creating a dynamic and ever-changing market, presenting a challenging panorama for entrepreneurs. Consequently, a customer-centered approach and data-based feedback are key ingredients for a startup to succeed. So, if you want your startup to thrive while saving time and money in the process, keep reading to learn the key takeaways of this widely-used methodology.
What’s The Lean Startup Methodology?
The lean startup methodology is an innovative approach that enables founders to arrive at the final version of the product as efficiently as possible. That way, the path to developing a product that fills a gap in the market becomes less challenging. Inside this tested methodology, we can find a set of tools and processes that aim to align entrepreneurs' business efforts with the market needs.
It was first presented by famous investor and entrepreneur Eric Ries in 2008 in his book "The Lean Startup." Though it was developed to give founders a cost-effective solution to build their businesses, its use has transcended and become widely used even for design projects.
Ries noticed how much time and money was spent developing a product without even being sure it would address the target customer's needs. And this is a major pitfall for startups as they don't have too many resources and strive to minimize risks when launching operations. In a nutshell, the lean startup approach is based on a build/measure/learn loop. Everything you learn at each step of the cycle will help you improve the product/service you're building.
Benefits Of The Lean Startup Approach
Over the last two decades since the release of the Lean Startup methodology, numerous companies have prevailed experimentation and iteration over the traditional, costly, and elaborated planning. Therefore, whether you are looking to develop a new business idea or expand your company internationally, this strategic approach entails numerous benefits besides just developing better products.
Minimizes uncertainty.
Developing a new business and its products or services is the first challenge in the founder's pathway. There's full of unknowns and just an idea. Thanks to the lean startup framework, you can turn chaos into order and put certainties in the development process, outlining goals and hypotheses.
Product development is more efficient.
This is possible thanks to the Minimum Viable Product (MVP). The MVP is a preliminary version of your final product with the essential features to test its functionality and validate it in the market. Thanks to the MVP, you'll introduce the necessary changes to develop a final product that addresses customers' needs.
Shows founders when to pivot.
The MVP works to measure the product's success (or not), and it's a great resource to pivot. It's key for founders to learn from customers' feedback and make a course correction if necessary before moving on with product development.
A business with the potential to succeed.
Yeah! The most important benefit of implementing the lean startup methodology is the potential to build a successful business. By adding efficiency and saving costs to the development process, there are increased chances of surviving the wretched startup failure rates. According to Investopedia, startup failure rates are around 90% being running out of money the main cause of the disaster.
How Can The Lean Startup Methodology Boost Business Growth?
The lean startup approach can be used for many purposes besides launching a new venture. Whenever business owners look to expand internationally and explore new markets, finding the product/market fit becomes essential. What works at home may not work the same abroad, and that's why this methodology is crucial throughout the internationalization process.
Therefore, below we have drilled down the three steps to make it possible: build, measure, and learn, and they work to boost business growth saving time and money.
Related Read: Product Market Fit: The Key For Expanding Your Business Internationally
#Build
The first phase of the cycle focused on developing a product that fills a gap in the market and meets customers' demands. Here's when MVP comes to life as a prototype to get feedback to be used in the final product development.
#Measure
With the MVP on the market, it's time for measuring feedback collected. This stage is crucial to improve the product, test errors and functionality, and pivot if necessary. Defining clear parameters is key to getting useful and reliable insights for product development.
#Learn
In this stage, initial hypotheses are validated or not with the data collected, helping the company determine which way to go and how to proceed. This means that the product development may continue introducing improvements, or it can be necessary to pivot and start from scratch.
Wrapping Up
It's clear now that the lean startup methodology and its iterative approach are not only targeted at founding new ventures. Any founder in the internationalization journey can implement this strategy to find the product-market fit more efficiently while maximizing resources.
However, if you are looking for a soft landing in the US market, Base Miami is the key partner your business needs. We combine experience and knowledge to create a strategic plan through our programs, to help founders in their expansion journey. Get in touch to learn more!
