Lean Startup by Eric Ries : Book Review
Established companies are managed by making a plan and having someone supervise the people implementing the plan. Most companies make a plan, stick to it and persevere until they reach the goal. Traditional management only works when the company has a history and knows the ins-and-outs. Because start-ups don’t have a history, they need to be flexible. If they don’t know what their customers want, how will they create a sustainable business?
Through consistent validated learning, a business can learn to be sustainable by providing the right product to the right people with the right method. There is no need for a big plan but there is a need for learning and improving through scientific approaches.
When a founder has a thought that something would be successful, he must test two fundamental assumptions: value hypothesis and growth hypothesis.
- Value hypothesis is whether it will deliver value to customers
- Growth hypothesis is whether the product would find a bigger market later
To attain real customer feedback on your idea, you must give a minimal product for the customers to test out, enough to gain useful feedback from them. This is where agile and lean practices comes into play.
There is a process called BML standing for build, measure and learn. The more loops you make through BML, the more you will improve on your path to finding a sustainable business model. Another good method is to conduct split tests where you compare different products given to customers and assess the feedback you received from them.
The important mindset is to pivot and be flexible. Redefining the core values on products, choosing to pursue a different customer segment and changing your main sales’ channel are all different ways to pivot.
It is key to focus on what can be improved and to look at the bigger picture. Questions like, “What will happen this season?” and “How can we change according to the times?” are all useful questions. Every start-up should define its core metrics and analyze them properly. Defining its measurements and continuously evaluating them for the start-up’s long-term goal is essential.
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