In this post, we’ll look at some key concepts from Chapters 5 and 6 of Eric Ries’ “The Lean Startup,” expanding on the important lessons we’ve learned so far reading this book. In case you missed our previous article, please find it here.
The Lean StartUp | Chapter 5: Leap
Chapter 5 of The Lean Start-Up describes the process of turning ideas into value. The essential concept is that products are a means of transferring value to customers.
The Lean Startup | Having Foresight
“What differentiates the success stories from the failures is that the successful entrepreneurs had the foresight, the ability, and the tools to discover which parts of their plans were working brilliantly and which were misguided, and adapt their strategies accordingly.”
It’s important to pay attention to these keywords: foresight and tools.
Foresight is the ability to anticipate and predict future trends, challenges, and opportunities in the market.
For example, we know that technology is going to drive everything in our world eventually. It is not a question of if, it is a matter of when. So, as an entrepreneur, you have to be able to creatively position yourself for the future. Today, there’s a lot of talk about Artificial Intelligence (AI). Right now, the question you should be contemplating is, “How can I use AI to improve my product or business?”
The Lean Startup | Making Data-Driven Decisions
The second keyword is tools. Entrepreneurs must leverage data. This can be in the form of aggregating customer feedback or analyzing customer behaviour using the data tools available to us. For example, Instagram and LinkedIn provide data analytics regarding the performance of our posts. Let’s use these tools to track performance and make data-driven decisions.
The Lean Startup | Value Creation
“The first step in understanding a new product or service is to figure out if it is fundamentally value-creating or value-destroying.”
A value-creating product or service meets a need or solves a problem. This can be in the form of enhanced efficiency, convenience, cost savings, or improved well-being. So, the principal question is, “What is the value of your product to customers?” In other words, what are you promising your customers? This is the heart of your product. The opposite of value-creating is value destroying. In other words, your business is not producing tangible returns in the long term. For example, Ponzi schemes.
The Lean Startup | Genchi Gembutsu
“A firsthand understanding of customers is one of the core principles that underlies the Toyota Production System. At Toyota, this goes by the Japanese term genchi gembutsu, which is one of the most important phrases in the lean manufacturing vocabulary. In English, it is usually translated as a directive to “go and see for yourself”
Go to the location where an issue or obstacle exists instead of depending exclusively on reports or secondhand knowledge. It helps you understand the context and circumstances customers are faced with. This can include socio-cultural beliefs that can influence how or if they even use your product. Moreso, our opinions are shaped by our lived experiences, and that can sometimes lead to assumptions regarding what customers are doing or what they will do when you launch a new product. So, interacting with customers or potential customers can be helpful in understanding the correct situation.
The Lean Startup | Customer Discovery
“The goal of such early contact with customers is not to gain definitive answers. Instead, it is to clarify at a basic, coarse level that we understand our potential customer and what problems they have.”
The goal of customer discovery is to assist you in determining who your customers are and whether the problem you wish to solve appeals to them. It involves asking potential customers open-ended questions regarding the problem (pain points) and your proposed solution.
You could ask about their current approach to solving the problem and how satisfied/dissatisfied they are with it. And whether or not they find your solution adequate or not. It is important to probe for root causes during these interviews. So when they give an answer, ask them “why” to learn more. Another outcome of the discovery process is having better clarity regarding who your customers are. If you had created a user persona based on your assumptions, talking to customers is an opportunity to update your user persona.
“Unfortunately, because customers don’t really know what they want, it’s easy for these entrepreneurs to delude themselves that they are on the right path.”
The Lean Startup | Faster Horses or Vehicles
Prior to the development of automobiles, people relied mostly on horses for transportation, and the concept of “faster horses” may have appeared as a logical response to the quest for faster and more efficient transportation. However, Henry Ford and other automotive pioneers saw that the essential need was not for quicker horses, but for an entirely new means of transportation. They invented the vehicle, which transformed how people travelled. Therefore visionary thinking and innovation must always be a part of the entrepreneurship process.
The Lean StartUp | Chapter 6: Test
Chapter 6 introduces the concept of the minimum viable product.
A Minimum Viable Product (MVP) is a version of a product with just enough features and functionality to satisfy early consumers and gather feedback for future development. The fundamental purpose of developing an MVP is to swiftly bring a product to market with minimal resources and effort while yet giving value to users. It can take several forms, such as a video showing the value of the product (Explainer video MVP) or a manually controlled service that mimics automation (Concierge MVP). These MVPs enable quick learning and validation while conserving resources.
The Lean Startup | Eliminate Non-essential Features
“As you consider building your own minimum viable product, let this simple rule suffice: remove any feature, process, or effort that does not contribute directly to the learning you seek”
“The lesson of the MVP is that any additional work beyond what was required to start learning is waste.”
In other words, your main goal should be to acquire insights and learn about your target market, customer preferences, and the viability of your product or idea.
“Customers don’t care how much time something takes to build. They care only if it serves their needs.”
That is, customers care most about whether a product effectively meets the requirements they have and addresses their pain points, regardless of the time and effort involved in its development.
“The only way to win is to learn faster than anyone else.”
That is, the sooner you engage with your target audience, the more prepared you will be to fine-tune your product, meet client needs, and establish a successful business. Early feedback enables you to make essential modifications and adjustments based on actual consumer usage and preferences.
The Lean Startup TLDR | Actionable Insights from Chapters 5 and 6
- Start thinking about the value proposition for your product. If you haven’t figured it out. Learn how to here.
- Remove the guesswork from decision-making. Let data inform more of your decisions.
- Data is everywhere.
- If you are not sure if an idea will work, start small. The people who REALLY need your product will forgive its initial shortcomings.
- Customer feedback is not everything but it’s a lot of things.
