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Misconceptions about Lean Startup

Page history last edited by Tristan Kromer 7 years, 8 months ago Saved with comment


 

'Lean startup' is the panacea against company failure

 
A company is a machine. One faulty part can destroy the whole thing even if the rest are working fine. The main one is the mismanagement of resources. One may follow the lean methodology to the T but if they spend more time & money than necessary then the company will fail (this includes mistiming the pivot). The lean methodology helps to weed out bad ideas with no market support and to reduce some of the uncertainty associated with building a new product.

'Lean' means cheap (or having a low burn rate)

 
Customer development, one of the key principles of the lean methodology, takes time. There is no way to predict how long it will take to refine the hypothesis into a problem worthy of solving and then to create a solution worthy of being sold. In addition, the solution may turn out to be expensive to build. Instead, lean startups are lean and mean: all resources are dedicated to solving customers' problems no matter what it takes.

'Lean' means small

 
A company following the lean methodology is like a well-trained body - almost nothing but muscle. It can be large, like a bodybuilder, but only because it needs all those resources (muscles) to build the product customers want & need. However, just like it is impossible to have 0% body fat, it is impossible to have 100% of a company's resources spent on building the right product.

'Lean' is a brand new untested concept

 
Lean startup is partially based on Toyota's lean manufacturing philosophy and shares some key points with it like the minimization of wasteful use of resources. Yes, there have not been any smash hits from startups that dedicated themselves to being lean but only because the theory in its current form is barely two years old. On the other hand, concepts very similar to the ones in the lean methodology have produced amazing results (e.g., minimal viable products by Apple). Also, the number of startups scaling well is much smaller than the number of startups created as it is.

'Startup' means it's for new Internet companies only

 
A 'startup' is a company that is in search for a business model. Existing companies in any market can apply lean principles to improve their operations or to launch new products because the key of the lean methodology is customer satisfaction.

'Customer development' is just a newspeak for feedback

 
The difference between customer development and feedback is that the former is an active way to engage customers and the latter is passive. Creating a system to collect regular feedback yields the responses from the loud minority. Customer development ensures the silent majority is heard by almost forcefully soliciting their views.

'Customer development' makes vision irrelevant & the concept boring

 
The purpose of customer development is to validate the vision. The hypotheses for testing do not appear out of nowhere - that's where vision matters. Some argue that Steve Jobs & Apple do not do any market research. However, most of their successful products were not first movers and looked like responses to complaints about competitor products (e.g. a computer "that just works").

'Customer development' means that you create only what customers want

 
People want flying cars but nobody can build it right now. Does that mean personal vehicle industry stops producing until they are capable of making flying cars? Good customer development brings answers not only to "what?" but to "why?" and "how?". If people want something because it's cool then the product won't last long - it will be just a fad. The "wow factor" is added value not a solution.

'Minimal Viable Product' (MVP) is half-baked beta version

 
MVP goes hand-in-hand with the idea of fast lean production. It is not a wireframe website or a assemble-it-yourself cellphone. It is simply a product with the minimal set of features that accurately solves customers' problem and provides enough added value to make it competitive.

 

'Pivoting' is simply changing your business model or product

 
As pivoting has become a widely-used term, it has lost part of its core meaning. A pivot maintains the aspect of the business that works, and changes the parts that don't - it refers to making a specific change of direction based on validated learning. In a Lean Startup sense, validation refers to repeatable market feedback from the Customer Development process. This can be based on consistent qualitative feedback from prospective customers (see Customer Discovery) or significant quantitative feedback from market tests (see Customer Validation and Startup Metrics.) 

 

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Comments (2)

Denis said

at 8:20 am on Mar 18, 2011

Salim, MVP is built using the findings of early customer development and its purpose is to further validate/disprove hypothesis. What confuses people is that landing pages and alpha versions of products are both considered to be MVPs. The difference is that the purpose of a landing page is to test the interest in the problem and an alpha version of a product test the solution and pricing.

Dharmesh Shah and John Greathouse wrote some great articles explaining the perfect MVP:
http://onstartups.com/tabid/3339/bid/12999/From-Minimally-Viable-To-Maximally-Buyable-Product.aspx
http://infochachkie.com/mvp2/

Salim Virani said

at 4:45 am on Mar 4, 2011

I've found that MVP is quite a source of confusion, even among experienced Lean Startup practitioners. It's probably best to avoid getting into semantics - which 'what is an MVP?' is prone to do - and focus on the goals and principles.

I'd consider clarifying that one of the main goals associated with MVPs is putting something into the market early and often is to learn in a validated way. The goal is to reduce the waste caused by building something noone will buy, or that you won't be able to market profitably.

The longer term goal is to arrive at a product with the minimal feature set that satisfies a larger set of customers. This is also a Lean Startup ideal associated with MVPs but not the same thing, and not to be confused.

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