Lean Methodology – What you should know and how to apply it

Lean Methodology – What you should know and how to apply it

18-Oct-2013 by Patrick de Zeeuw

This week, Startupbootcamp NFC & Contactless was all about Lean Methodology. Lean is the foundation of everything we do here, it is our guideline throughout 3 months of acceleration. Our own Lean evangelist, Kees van Nunen,organized multiple Inspiration Sessions to familiarize the startups with it and show them how to use it. But we believe that every startup should be Lean, and so we’ve decided to share the content of Kees’ amazing Session, to help you launch your startup better and smarter.

Why Lean

Many startups fail. According to research done by Statistic Brain half of all startups fail within 4 years. The rate of startups still operating after these first and vital years lies between 38% and 58% – depending on the industry. One of the reasons for failure is the order of the steps startups take in their earliest phase. The traditional formula for starting a business goes a bit like this: you write an elaborate business plan, you find a team, and start raising investment. Once you have enough money, you build your product and then launch it to the market. At this point, the marketing machine starts running and you do all you can to sell as much as possible. But ask yourself: do you actually know if your product-market fit is great? Does your market want your product and do they want to pay your price for it? Have you ever stopped and researched these questions, or have you been making assumptions? In most cases the answer is “no, you haven’t, you have just been assuming all this”. Lean offers a different approach.

How to become Lean

Steve Blank has written about the solution for these problems in his publications about Lean Methodology. He can explain why the Lean Startup changes everything. Blank says: do it differently, from the very beginning. Don’t waste time on writing a huge business plan, it will most likely be tossed away after the first contact you have with your customers anyway. As Mike Tyson puts it: “Everybody got plans, until they get hit”. As a startup you don’t look to execute an existing business model, you look to find a new one. After all, you want to disrupt existing markets, make a dent in the universe. That’s the difference between you and everybody else.

A great start is creating a Business Model Canvas, on which you can write down all your hypotheses without losing valuable time. Because this valuable time needs to be spend on testing your hypothesis with possible prospects. This is called “customer development” and means you will go and talk to as many potential customers as humanly possible. This doesn’t include going up to family and friends who love you dearly and would be willing to pay much more for your product because it’s you. It means you go and talk to your actual target audience, embrace their answers and use it to your advantage. Be open, inquisitive and take all feedback in. Remember, these are the people who will have to spend money on your product, and you can be sure that they won’t unless they really think you solve an important problem/pain with your idea. Based on their feedback about your product features, pricing, distribution channels and acquisitions strategy, you adapt your hypothesis. And then you do it again. And again. You continue until your product-market fit is perfect, not according to you – according to your clients. This probably means you have to make many Iterations, and maybe even Pivot. Mac from TagaPet explains: “we are going to have to iterate a lot. Sometimes you have to kill your darlings to become better, to grow. We will not take it personal, but just listen and optimize our ideas

And so should you, because in the end it’ll all be worth it. Lean will allow you to move quickly and cheaply form failure to failure untill you have found a business model that works for you. As Paul from Relayr puts it: “ You just have to talk with your customers to test your assumptions. Your market will tell you if its the right thing.Jackson from Relayr adds: “Stop planning and start measuring to build something worthwhile. Challenge all your assumptions and try to talk to your peers. If you know any other startups, let them brainstorm about your Business Model Canvas. Peer to Peer mentorship is priceless

So, if you’re a startup, looking to become successful in the most effective and efficient way: go Lean. Throw away your oldfashioned business model, and start validating. Get as much feedback as you can, iterate, improve and measure. Continue to build-measure-learn untill you have found your own perfect formula and are ready to change the world with your startup.

Must read list

Are you interested in Lean and do you want to become familiar with it? Check out these links:

About Kees

Thank you Kees for these great insights!

Stay tuned to find out more insights from our Inspiration Sessions and to accelerate along with our startups.

Patrick de Zeeuw

Patrick is a Co-founder of Startupbootcamp Amsterdam and board member of Startupbootcamp Global. He is an active angel investor, building media, online and mobile companies. Patrick was the former CEO of Endemol Belgium & Poland, the Founder of 3Circles Media, CCO of SBSnet, and MD of United Broadcast Facilities International and Unitedesign. He coaches Start-ups in the online & mobile industry and sits at the advisory Board at Netgamix & Mobitto.