Introduction to the Lean Startup
This lesson briefly describes the changes that have occurred in teaching and learning entrepreneurship. Historically there has been a focus on developing feasibility studies and business plans. More recently, the Lean Startup methodology has become popular. The key to the Lean approach is to build a simpler plan, called a Business Model Canvas, or Lean Canvas as a starting point. From there we identify the assumptions inherent in the Canvas, and then focus on working with customers to get a feel for how well the assumptions in the business model are actually supported.
The Lean Startup impacts how equity can be split up among students. Since so many things happen with students on projects and so many changes, the Slicing Pie model provides a dynamic equity split that handles people leaving and joining the entrepreneurial endeavor.
The readings include a great article on Why Lean Changes Everything and several pointers to short articles on how the Lean Startup has been implemented by Groupon and Product Hunt.
The Learning Objectives for this lesson are:
- Understand the difference between the business plan and the lean startup approach
- Recognize how this difference impacts students studying entrepreneurship and instructors teaching entrepreneurship
- Know two good examples of pivots
- Comprehend dynamic equity splits and why they are considered better than traditional equity splits
The theory behind the Lean Startup is a systematic approach to building and launching new products and companies that aims to minimize waste and maximize learning. It is based on the principles of Lean Manufacturing and the Lean Startup methodology was developed by Eric Ries after taking Steve Blank's Stanford University business course.
The key theories behind the Lean Startup are as follows:
- Validated learning: The goal of the Lean Startup is to minimize the risk and cost of product development by testing key assumptions about the product and its potential market as early as possible. This process of validated learning helps minimize waste and maximize learning by allowing you to gather feedback from customers, validate your assumptions, and make informed decisions about future development and direction.
- Build-Measure-Learn: The Lean Startup uses a cyclical process of Build-Measure-Learn to test and validate key assumptions about the product and its potential market. The process involves building a minimum viable product (MVP), measuring customer response and feedback, and learning from this data to inform future development and direction.
- Customer Development: The Lean Startup places a strong emphasis on customer development, which involves understanding the needs, wants, and pain points of potential customers. Customer development helps you validate your assumptions about the market and develop a product that meets the needs of your target customers.
- Continuous Innovation: The Lean Startup encourages continuous innovation and improvement, with a focus on learning from customer feedback and iterating on the product. This helps you continually refine and improve the product to better meet the needs of your target market.
In summary, the theory behind the Lean Startup is a systematic approach to building and launching new products and companies that aims to minimize waste and maximize learning by using validated learning, the Build-Measure-Learn cycle, customer development, and continuous innovation.