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Overview[ edit ] Similar to the precepts of lean manufacturing and lean software developmentthe lean startup methodology seeks to eliminate wasteful practices and increase value-producing practices during the earliest phases of a company so that the company can have a better chance of success without requiring large amounts of outside funding, elaborate business plans, or a perfect product.
In particular, such systems focus on: Lean manufacturing was later applied to software as lean software development. Customer development[ edit ] The lean startup methodology is based on the customer development methodology of Silicon Valley serial entrepreneur-turned-academic Steve Blank.
In his book The Four Steps to the Epiphany: Successful Strategies for Products that Win5th editionBlank pointed out the pitfalls of a narrow emphasis on product development; instead he argued that startups should focus on what he called "customer development", which emphasizes "learning about customers and their problems as early in the development process as possible".
Customer validation tests the business viability through customer purchases and in the process creates a "sales road map", a proven and repeatable sales process.
Customer discovery and customer validation corroborate the business model. Customer creation executes the business plan by scaling through customer acquisition, creating user demand and directing it toward the company's sales channels.
Company building formalizes and standardizes company departments and operations. In an article published in the Harvard Business Review inSteve Blank described how the lean startup methodology also drew inspiration from the work of people like Ian C.
MacMillan and Rita Gunther McGrath who developed a technique called discovery-driven planningwhich was an attempt to bring an entrepreneurial mindset to planning. Minimum viable product[ edit ] A minimum viable product MVP is the "version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort" similar to a pilot experiment.
Swinmurn deduced that customer demand was present, and Zappos would eventually grow into a billion dollar business based on the model of selling shoes online.
This undermines the statistical validity of the results, since external events may influence user behavior in one time period but not the other. For example, a split test of two ice cream flavors performed in serial during the summer and winter would see a marked decrease in demand during the winter where that decrease is mostly related to the weather and not to the flavor offer.
Actionable metrics[ edit ] Actionable metrics can lead to informed business decisions and subsequent action.
Vanity metrics for one company may be actionable metrics for another. For example, a company specializing in creating web based dashboards for financial markets might view the number of web page views  per person as a vanity metric as their revenue is not based on number of page views.
However, an online magazine with advertising would view web page views as a key metric as page views are directly correlated to revenue.
A typical example of a vanity metric is "the number of new users gained per day". While a high number of users gained per day seems beneficial to any company, if the cost of acquiring each user through expensive advertising campaigns is significantly higher than the revenue gained per user, then gaining more users could quickly lead to bankruptcy.
Pivot[ edit ] A pivot is a "structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth. Steve Blank defines a pivot as "changing or even firing the plan instead of the executive the sales exec, marketing or even the CEO. A team or company's effectiveness is determined by its ability to ideate, quickly build a minimum viable product of that idea, measure its effectiveness in the market, and learn from that experiment.
In other words, it's a learning cycle of turning ideas into products, measuring customers' reactions and behaviors against built products, and then deciding whether to persevere or pivot the idea; this process repeats as many times as necessary.
The phases of the loop are: Business Model Canvas The Business Model Canvas is a strategic management template invented by Alexander Osterwalder around for developing new business models or documenting existing ones. It assists firms in aligning their activities by illustrating potential trade-offs.
As ofthere are lean startup meetups in over cities and 17 countries as well as an online discussion forum with over members.How to create a business plan, with all sections, in easy steps.
The business plan includes financial statements and an executive summary. Are you starting a business? Even if you don't need financing, it's a great idea to create a business plan. LLC, sole proprietorship, for example) and the process you will use to set up this.
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