Lean startup methodology: key to success in modern entrepreneurship
A scientific system for verifying, with reduced time and costs, whether a product or service works in the market: this is the essence of the lean startup methodology. Developed in 2008 by Eric Ries, this method proposes a new approach to launching innovative products and services, especially suitable for startups, which by definition need innovative processes to survive and thrive.
What is the lean startup methodology and how does it work?
Lean startup is a set of methodologies used to develop sustainable businesses in uncertain environments. The method emerged in Silicon Valley in 2011 and quickly spread among companies worldwide. It is a radical approach to the launch of innovative initiatives—whether emerging companies or new projects within large established corporations—that helps identify a path toward a sustainable business while drastically reducing time and costs, and therefore the risk of failure.
The term lean startup comes from the application of Lean Thinking theories developed by Eric Ries and the use of so-called “agile” methodologies, a set of theories and practices that allow changes to be made without excessive costs. Due to its wide range of applications, this methodology is carefully studied in the MBA, which prepares entrepreneurs for a constantly evolving market.
Ries’ method involves the continuous application of the three phases build-measure-learn, meaning ideation–verification–modification of the project, in order to build the product (or service) as quickly as possible, measure and verify results, and finally use the data obtained to improve the product, repeating the cycle continuously.
The idea is to start with a minimum viable product (MVP), and then adapt the product to customer needs based on their feedback. In this way, it is possible to deliver a coherent response to customer needs and, by reducing time and costs, minimize market risks. This minimalist approach throughout the process is the origin of the name, literally meaning “lean startup.”
What is the lean startup methodology used for?
Although the lean startup methodology can be successfully applied to any type of product or service (Ries was inspired by the “lean manufacturing” philosophy used by Toyota in the 1970s to minimize waste of money, time, and materials), it was specifically designed for startups. These emerging companies often operate with limited financial resources and cannot afford to launch products or services that do not achieve rapid customer acceptance.
As Ries explains in his book The Lean Startup, the goal of this methodology is not to save on production, but to produce innovation only when users need it. If an innovation is not immediately accepted by the market, it is considered a waste of time and resources and should be quickly abandoned.
However, the lean startup methodology should not be limited only to startups or SMEs. Even traditional companies can apply it, as long as they clearly define their objectives—or more specifically, their business drivers—and proceed with incremental technological solutions that allow for small adjustments without taking excessive risks.
However, there are those who argue that having a solid strategy is more useful and important than running multiple market tests. According to these critics, continuous market testing does not guarantee business success, and excessive customer feedback can even confuse entrepreneurs. Moreover, the lean startup method may produce false negatives, leading to the premature death of good ideas, as there is no clear rule defining when a test should be considered a success or failure.
How to apply the lean startup method in your venture
That said, to survive today, adopting a lean startup approach and overcoming perceived threats when launching a new business can be extremely helpful. One common perceived threat is the fear that an idea might be stolen—something that has no place in lean startup methodology, which values execution more than the idea itself.
Another challenge is the fear of competition, which can be overcome by quickly learning how the product performs in the market and how it can be improved. There is also the burden of a strong brand that may be resistant to innovation, which can be addressed by using fictitious brands to test new products.
To overcome all these fears, lean startup offers two innovative alternatives: the first is prototyping, or testing a product before fully developing it; the second, as already mentioned, is the Minimum Viable Product (MVP), meaning the definition of the minimum set of features a product must have in order to be viable (capable of reaching the consumer and being used).
To apply the lean startup method, a company must activate a much faster production cycle than the traditional one, testing each stage as it progresses. It is necessary to learn what happens in each product cycle and adapt the pace accordingly. Each cycle is evaluated with a real sample of customers through a conversion funnel (funnel), which shows how users convert into sales.
In short, the lean startup method allows both startups and traditional companies to build products based on customer needs, reducing time and costs while minimizing market risks. This approach has enabled companies such as Facebook, Uber, Alibaba, and Airbnb to become global giants, despite not owning physical assets or content, redefining the limits of the global market in which companies and individuals operate. These limits are no longer traditional geographical or sector-based ones, but purely digital.
