What is a Lean Start-up?

In a sentence, ‘lean’ is a set of processes that minimizes the amount of time wasted on products that nobody wants.

Resources are usually wasted because most start-ups make invalidated decisions based on faith. Going through a traditional feedback loop (build-measure-learn), lessons are only learned at the end of the cycle. But that is usually after spending time and resources building junk that no one uses.

The cost of learning is hefty. This, according to Eric Ries, advocator of the lean concept, is what causes many start-ups to fail. Below are two key points, which I have learned from his presentation.

The Pivot

Entrepreneurs don’t give up their vision. They maneuver to get there. The pivot is a term used to describe how start-ups change directions but stay firm to what they believe. One foot is firmly rooted to the ground while the other makes the changes. Successful entrepreneurs don’t necessary have better business ideas. They just have better processes.

To be successful, start-ups have to pivot fast. The key to being lean is speed. If a start-up can reduce the time spent between pivots, it can increase its odds of success before it runs out of money.

Optimizing the Feedback Loop

Ries has used his personal experience to explain this point. When he was CTO of IMVU, he spent 6 months writing 40,000 lines of codes just to learn that his product was not able to work. No one downloaded his software. He then questioned if the goal was to learn whether the product would work, why must it take him 6 months and 40,000 lines of codes? He will probably learn the same conclusion by spending a week to understand his consumers’ needs.

In other words, if he were to validate the decision before creating the product back then, it would have helped his company save 6 months worth of resources, which could be better allocated elsewhere. To avoid this similar problem, the key is to always challenge if a decision made is validated and whether it helps to optimize the feedback loop. Ries has provided the above diagram to describe the optimization process. Catch the video to learn more about lean start-up.