Growing Your Business
Get Lean, A Guest Post by Tom Morkes of Insurgent Publishing
A lean startup is a term (and a book by the same name) used to describe the building of a business quickly and efficiently.
What makes a lean startup different than a regular startup? Simple: lean startups are about learning and efficiency.
Why is this important?
Because slow learning and inefficiencies cripple businesses.
Slow learning is a byproduct of the conventional business process::
1) Get a great idea
2) Build it
3) Sell it
Of course, this conventional process almost always leads to costly mistakes, products that don’t sell, and plans that don’t pan out.
What the lean startup methodology attempts to do is build a framework around starting a business – something that helps entrepreneurs analyze their business, their market, and their solutions to see if they’re actually viable before they go into full production mode.
A lean startup asks (1) will this sell? and (2) how quickly can I validate this?
At the end of the day, a lean startup is about succeeding quickly by minimizing waste in the business development process.
“The difference between successful entrepreneurs and those who fail is usually a question of which ones figure out the way the business works before the money runs out.”
-The Reluctant Entrepreneur by Michael Masterson
So we know the lean startup methodology is important, but the real question you’re probably asking is: how do I actually apply this framework to my business?
In the following paragraphs, I’ll share with you what I perceive to be the most important aspects of lean starting, drawing from research and study I’ve done on the topic, plus my own experience applying these concepts to my publishing company, Insurgent Publishing.
While this is by no means an exhaustive look at lean starting, I hope this provides you a basic framework to get started.
1) Start with the Problem
Ever since I can remember I’ve enjoyed the idea of business creation and ownership. I knew even as a child that I never wanted to be the grunt on the ground taking orders – I wanted to be the leader, setting a vision and making things happen.
In high school and college I tried (unsuccessfully) to build products and services I thought would be game changers. I’d usually start with a brilliant idea, something like: wouldn’t it be great if there was a company you could text (yes, before smartphones existed) to have beer, liquor or wine delivered right to your doorstep (I mentioned I came up with these ideas in high school and college, right)?
After months of research, reading through local and state regulations, identifying the best market for this potential idea, and even lining up some initial employees, the dream died.
The problem wasn’t my passion or even my execution (pretty decent for a kid, really), but where I put my focus and energy. You see, instead of focusing on the problem, I fell in love with my solution. [TWEET THIS] I never took a moment to step back and evaluate whether I was truly solving a problem people had and, more importantly, would pay to have solved (at the end of the day, people wouldn’t pay a premium to have booze delivered to their doorstep. Who know, right?).
So what’s the lesson here?
Focus on the problem. Understand the problem. Get to know the problem intimately.
Only after you know a problem backward and forward can you begin to craft a solution. Whatever you do, figure out the problem before you work on the solution (otherwise you’re just jumping to conclusions).
“Customers don’t care about your solution. They care about their problems.”
- Dave McClure, 500 Startups
After identifying a problem worth solving, the next step is figuring out a way to solve the problem.
I say “figure out” because more often than not the first solution you come up with probably won’t be the best solution. Putting time, money and energy into producing this first solution is wasteful.
Instead, we should create a precise, testable hypothesis around the proposed solution.
For example, let’s say the customer problem you’ve identified is: disorganized digital files leads to wasted time and lost revenue, several solutions could be:
a. a software solution with an interface that consolidates your files from multiple storage locations (local and cloud based)
b. a less expensive, more robust cloud-based storage system so you don’t need multiple accounts
c. a service that organizes all your files for a small monthly fee
From here, you can formulate your testable hypotheses. In a nutshell, you’re creating an ‘if / then’ statement: If our product does this, then this solution will follow.
A key point to remember: the hypothesis must be measurable.
- How does your solution solve the customer’s problem?
- How can we measure the results and prove it solves the customer’s problem?
- Are the results tangible and verifiable?
The goal of the hypothesis is to frame the solution in such a way that you can validate (or invalidate) an idea before you go into full production.
If you have trouble formulating a hypothesis, come back to the problem and how you can provide value for the customer (actually talking to customers and finding out their pain is the fastest, most efficient way to do this)
“An effective business vision begins and ends with value creation, which is the only reason any business should exist. In a true market economy, for a business to survive and prosper long term it must develop and use its capabilities to create real, sustainable, superior value for its customers and for society.”
-The Science of Success by Charles G. Koch
Once you’ve created a hypothesis, the next step is rigorous testing.
Of course, we don’t want to spend a lot of time and energy creating something to test before we get validation from the market that this is something people will pay for. The trick? Create a Minimal Viable Product (MVP) and iteratively test it with your target demographic.
The MVP should be the cheapest and quickest-to-create version of the solution that still does its job (i.e. the MVP must deliver on the promises made by your proposed solution). Sometimes, this is as simple as creating a splash page and allowing people to opt-in (something I did with my publishing company before I had any books ready to ship). Other times, if it’s a more expensive physical product solution you’re hoping to create, designing a simple prototype may be the best way to test it. And sometimes, all you need to do is help people visualize your solution: the creators of Dropbox created a video of what their product WOULD do and were able to get venture capital to fund its production.
Once you’ve built your MVP, the next step is getting it in the hands of the customer in order to validate your solution. The goal is to get your MVP in the hands of as many vetted customers (read: people who are likely to buy your finished product; also known as your target demographic) as possible and measure and track the results. Generally, this period of testing, tracking and measuring lasts 2-3 weeks.
Quick note: Not every hypothesis will be successful. Most fail. That’s the whole point of lean starting – to iteratively test until you find the right product/market fit.
If your hypothesis comes back negative, this is a good thing. Your job now is to pivot - develop a new hypothesis and begin testing again.
But if your hypothesis comes back positive – if you successfully craft a solution that works for your ideal customer and they pay you for it – the next step is optimization. Begin improving your initial solution while continuing to test, track and measure the response from your customers.
“The best way to differentiate pivots from optimizations is that pivots are about finding a plan that works, while optimizations are about accelerating that plan.”
- Running Lean: Iterate from Plan A to a Plan That Works by Ash Maurya
At the end of the day, successful startups – and successful people – get very good at dealing with failure.
Success is often the result of pushing through dozens (in my case, hundreds) of failed attempts. But there’s a catch – we must actually learn from our failures.
If we don’t create hypotheses with measurable, tangible metrics, we can’t determine what is and is not working. If we can’t determine what is and is not working, we’re not learning anything.
And learning, at the end of the day, is the most important part of business.
So I hope this overview of lean starting methodology helps give you some perspective on not only what you’re building but how you’re building it. And I sincerely hope these insights will help improve your performance and the success of your business.
Let me know in the comments below how you apply any or all of these principles in your business. And if you have any questions, I’d be happy to answer.
Good luck and, whatever you do, keep creating.
Recommended Reading for Learning the Lean Methodology
The Lean Startup by Eric Ries
Running Lean by Ash Maurya
www.practictrumpstheory.com by Ash Maurya
Lean UX by Jeff Gothelf
Bio: Tom Morkes graduated from the United States Military Academy at West Point, is an Iraq War veteran, and even got paid to jump out of helicopters for a while. You can find more of his writing at TomMorkes.com where he applies what he’s learned leading troops in combat to entrepreneurship, art and writing, or check out his new publishing company Insurgent Publishing (subscribe to their newsletter before November 1st for discounts on every product they ever create. Every product. Forever.)