Lean Startup

Lean Startup – Eric Ries

LEAN STARTUP” is a transformation from   “Argumentative” to “Experimentative”. It helps to develop deep customer insights based on market research. Therefore, it also helps to develop foresight.

Lean startup is a baby in which “baby steps” need to be iterative. Needless to say, every further step is more enhanced and firmer than then the previous one.

Definition:

“Lean Startup is not about being less expensive however being less wasteful/removing items not in higher priority and still doing things that are big.”

It is about what we can learn from businesses to improve virtually everything we do. Hence customer feedback is of highest importance. User experience on the product that is been delivered is also a valuable element of Lean Start- ups.

Five principles of the Lean Startup

  • Entrepreneurs are everywhere and the Lean Startup approach can work in any size company, even a very large enterprise, in any sector or industry.
  • A startup is an institution, not just a product, and so it requires a new kind of management specifically geared to its context of extreme uncertainty
  • Startups exist not just to make products or make money, or even serve customers. They exist to learn how to build a sustainable business
  • The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere.
  • How to measure progress, how to set up milestones, and how to prioritize work.

Lean startup principles are more focused on validated learning and validate the hypotheses that were made.

Objective here is to unravel the lean startups with the help of examples.

Example 1: Intuit

Some key ingredients of a lean startup are that they are ready to change and there are no egos involved. In Intuit, simplicity in process is important. That is the reason their Quick Books makes accounting fun and easy to use. Intuit also used the concept of “Disruptive Technology” by defining their competitors as “ACCOUNTANTS”/CPA and not traditional companies. The best part of Intuit is that they were able to push 500 different changes to the product in 2 and half months of Tax season. Also they were running seventy different tests per week.

In a cluttered market of “Payroll generation” the product differentiation is usability/user experience. Intuit UX is the key differentiation.

Example 2:  Zappos

Zappos is the classic example to test the business hypotheses by quickly building Minimum Viable Product (MVP) with very less investment.  Zappos used all lean principles to build viable and profitable business model.

Example 3: Flipkart

From a start-up with an investment of just four lakhs rupees, Flipkart has grown into a $100 million-revenue online retail giant in just five years. A quick glance at Flipkart’s timeline shows it was to start as a price comparison platform, but there weren’t enough e-commerce sites to compare. So, both the Bansals’, who were colleagues at IIT-Delhi, and then at Amazon.com, thought, “why not start an e-commerce site?” That was the genesis of Flipkart. From an initial investment of $8,000, this humble seed of desire now has germinated into a $1 billion e-retailing favorite.  Following are few learning from Flipkart’s success.

If the concept is not new, focus on process and presentation:

Though e-commerce as a concept is not new, but the way these two entrepreneurs presented it and the way they have chosen target customers have fetched these results. Flipkart is a custom made product for Indian customers. They have defined stringent process in all the stages of order processing to bring customer delight.

Choose not explored market:

When Flipkart was started, there was less number of customers who used to prefer online shopping in India. Though, success was uncertain, they have taken risk and chosen Indian market. Because it is unexplored market, there were less number of competitors, and over a period potential customer base has increased, this helped Flipkart to become successful Indian e-Commerce portal.

Customer-centric:

‘Don’t count your customers before they smile’ this is the company’s operating mantra.

Ease of use, pricing, variety of options and last but not least ‘a powerful Supply Chain Management’, in all these aspects Flipkart is trying to bring customer delight. Even I have experienced this when I bought my mobile from Flipkart. It got delivered in one day, much before than the committed delivery date by Flipkart. I was surprised and at the same time delighted with their supply chain management.