The “Lean” Mean Business Machine: How Eric Ries’ Entrepreneurial Philosophy is Making Waves

On September 13th a new book will be released; The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. It aims to change the way businesses develop their products. Eric Reis, the book’s author, has taken the spirit of agile methodology one step further, and is creating some major waves within the ongoing discussion about what makes businesses successful.

Ries’ doctrine of minimal waste and maximum results complements the spirit of the Startup Weekend Events, which is why it is recommended for participants. Since Startup Weekend Hartford will be held in less than a month (September 23rd through 25th) at the Hartford Public library, I decided to give a brief overview about what a “Lean Startup Is,” how this is different from the classic formula, and what business experts are saying about Ries’ approach.

What does he mean by ‘Lean?’

The goal of the Lean Startup Approach is to eliminate waste: wasted money, wasted time, wasted energy. Thus, Ries claims “the first step in a lean transformation is learning to tell the difference between value-added activities and waste.”

the Benefits of the Lean Startup, as seen on leanstartup.com

According to the official website – leanstartup.com, the “Benefits of a the Lean Startup” are:

1.) Be more innovative

2.) Stop wasting people’s time

3.) Be more successful!

How is this Achieved?

Traditionally, product development follows the waterfall method, in which the initial idea is put through a linear step-by-step process. After finishing the entire process, if there is a kink or a problem, the developers return to step one. Proponents of the Lean Startup prefer a more cyclical method, in which there is a constant exchange of feedback and ideas, and consumers help to guide the development of the product.

Rather than working in a vacuum until a complex and fully-formed product emerges, the Lean Startup very quickly produces a product with the bare minimum requirements- to see how it fairs in the marketplace with real consumers. The product is constantly altered based upon this feedback, so rather than halting leaps forward, it rapidly and fluidly evolves into a product that consumers want.

The Waterfall Model, courtesy of Wikipedia Creative Commons- Paul Smith

Since Lean Startups begin by launching a very basic product, the initial development requires much less time, and theoretically, less time is wasted on features that the customer doesn’t want. Because the interaction with consumers is nearly immediate, there’s a faster opportunity for profit. Additionally, cost-minded businesses use free open source tools. Thus, as the New York Times points out, Lean Startups depend on smaller sums of money for initial investment, and might be sustained by a few hundred thousand dollars from an angel investor rather than millions from venture capitalists.

The Competing Lean Startup Model, as seen on leanstartup.com

But has the agile method been tested? Can it really work?

It worked for Facebook. Essentially, this is how Facebook developed. Facebook grew organically, the initial product was simple and features were added over time to fill the customer’s needs. Ries explains “most technology start-ups fail not because the technology doesn’t work, but because they are making something that there is not a real market for” (as quoted in the New York Times).

The key, therefore, is to never lose sight of your market – to employ constant engagement with the customer, and allow feedback to guide product development.  In a guest blog post for Reis’ blog, Kent Beck, author of Extreme Programming Explained: Embrace Change reasoned, “Lean Startups seems far more respectful to me than the ‘build something big and shove it down customers [sic] throats’ model.”

Harvard Business Professor Thomas R. Eisenmann also believes the approach has the potential to “reduce failure rates for entrepreneurial ventures and boost innovation,” (as quoted in the New York Times).

Do you think the Lean Startup Model would be effective, or is classic product development a better bet? If you’d like to learn more, Reis’ book is available for pre-order on Amazon, or attend the  Startup Weekend Hartford preview event at 6:30pm on September 8th at the Hartford Public Library, during which The Lean Startup Model will be addressed as an important aspect of the Startup Weekend philosophy.

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