In short: Start small, build as you go, and get to market quickly and cheaply.
A budding entrepreneur spends months researching their big idea. She writes a chunky business plan, builds the product, develops a team, and launches a marketing campaign. It’s textbook stuff, but the high-flying idea does a massive bellyflop.
Undeterred, the entrepreneur starts again. This time she does enough research to create a Minimum Viable Product and gets to market quickly and cheaply. She learns about the idea in real time, from real customers, and adapts the venture to their needs.
Welcome to the world of lean entrepreneurship: an emerging theory that is changing how new products are built, and attracting more converts by the day.
One of a kind
Startup ventures are not small versions of large companies. So ditch those boring management concepts you learned at uni; they were designed for big companies and don’t work in startup land.
Instead, learn how to manage in conditions of extreme uncertainty – the essence of entrepreneurship and a key tenet of the Lean movement.
Launch a hypothesis, not a business
In traditional thinking, you develop a business plan for a concrete idea and follow a linear, step-by-step plan. In lean entrepreneurship, you see if there’s a market for your product by testing a hypothesis, known as your Minimum Viable Product.
Think about it: the most innovative products and services create markets, so how could you possibly know if one exists until you launch it? Who knew they needed a smartphone, iPad, Google, Uber, or Airbnb until they were launched?
Learn, baby, learn
Standard thinking about entrepreneurship is too frontloaded: do most research upfront, write the business plan upfront, and so on. Lean thinking relies on developing feedback loops to understand how customers use the product.
Done well, you effectively co-create the product with customers in real time, building it incrementally and iteratively. That has to be better than sitting in an office and trying to guess what people want, building it in one go, and hoping it works.
Feel the need for speed
Startup ventures never have orderly growth. There can be swings, roundabouts, U-turns, and myriad other gyrations. So get good at changing the product on the run, and build teams that thrive on uncertainty.
Tattoo that critical Lean formula on your venture: chaos + speed + pivots = success.
Roll with the big dogs: scale and repeat
You’ve launched a hypothesis, tested it in the market, learned on the go, adapted the venture, and let customers shape the product. Guess what: it works. Big time. Now that you have a killer model business, scale and repeat it as fast you can.
A final note: Lean entrepreneurship conceptualises what some entrepreneurs have done for years: start small and fast, and build as you go. It doesn’t work for all ventures, but is a powerful weapon for technology-based, insurgent ventures with low fixed costs that are searching for the next great idea and market.
Tony Featherstone is a former managing editor of BRW and Shares magazines.