Most Technology Start-ups take the following conventional approach in their endeavour to start a successful business like prepare an elaborate business, plan pitch it to investors, build a team, develop and introduce a product, sell the product.
Lean Start-up Lean Product Development for Start-Ups
Most Technology Start-ups take the following conventional approach in their endeavour to start a successful business :
- prepare an elaborate business plan
- pitch it to investors
- build a team
- develop and introduce a product
- sell the product
Research shows that 3 out of 4 start-ups end up failing in their endeavour somewhere along this path. In most cases, further the stage of the failure from the point of inception, higher is the cost of failure.
The alternative Lean approach for Product Development by Start-ups is essentially based on the following philosophy :
- build a 'minimum viable product' based on continuous 'customer development'
In the Lean Start-up model the founders do not begin with a business plan, instead they begin with the search for a business model. In this approach, multiple quick iterations of experimentation and feedback are conducted which result in a business model that is executable.
This will typically follow the following sequence :
- Translate idea into business model hypothesis.
- interact with one or more customers to test the hypothesis and validate the assumptions about the customer needs.
- create a 'minimum viable product' to fulfill a customer need
- let your customers try out the product and get feedback
- based on the customer feedback develop the next iteration of the 'minimum viable product'
Business Model Hypothesis :
Founders are expected to briefly describe the hypothesis in a framework called Business Model Canvas. This involves listing out how the company will create value for itself and for its customers in the Business Model Canvas (shown below) provided by Business Model Generation. This is a template in which you need to answer a set of questions under 9 key areas resulting in the business model hypothesis.
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