How "The Lean Startup" Method Is Changing Small Business

by Stephanie Taylor Christensen on September 11, 2012
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Build big. Go fast. Invest heavily. And fly by the seat of your pants. It’s been the American way for business for decades, and much of the time, it’s worked. But it’s just as often led companies into disaster, too.

Eric Ries attempts to shift this paradigm with his book The Lean Startup, which is based loosely on the Japanese lean manufacturing model. Its grounding methodology is simple: Test your ideas before you invest in them. Through a simple framework, Ries provides logical, easy-to-execute strategies that any small-business owner can implement to make more informed, less costly decisions. The book inspired a devoted following of entrepreneurs who swear by its approach to growing a business.

The Intuit Small Business Blog recently asked a few fanatics what the fuss is all about — and got their takeaways from the book.

Prototype, Test, and Repeat

One of the hallmarks of The Lean Startup is the idea of creating a “minimum viable product” (MVP) and testing it continuously. You essentially take a problem that needs solving, present a solution, and then test and tweak that solution on a “continuous loop,” using real audience feedback, before moving on to the next development phase.

Dana Chen Fischer, co-founder of FutureXroads, an education lead-generation business, says she and her partner used MVP to develop a Facebook app. They developed their first MVP by creating a simple survey at almost no cost. Once the survey validated a business need, their next MVP was a rough prototype — a website that was coded in less than three weeks at very little cost.

After testing the prototype with a small focus group, they continued to hone the offering, all the way down to the creative presentation of the app. Fischer says the team will continue with the MVP test-and-learn approach, because it has proven so valuable in preventing what could have been a misguided and costly investment.

Identify the Real Issue

Jordan Silverman, co-founder of Star Toilet Paper, says he strives to improve his business based on The Lean Startup’s “Five Whys” system. This investigative technique is used to drill down to the root cause of a problem, which is usually hidden behind “more obvious symptoms.”

Silverman’s founding team meets weekly to discuss what worked and didn’t, guided by the “Five Whys” system. “If not enough sales were made, we ask why. If it was because we didn’t reach out to enough prospects, we ask why. If it was because we had too many emails to manage and fell short on time, we ask why. This continues five times until we identify the root of the problem. In this case, the root cause was an inability to plan our time well,” Silverman says.

Start Small and Scale Up

Mike Kelland, president and CEO of Tindr.co, a custom software development shop, found value applying The Lean Startup model to large-scale projects, which “have high failure rates because of unpredictable changes in scope and requirements.” By moving to the “release early and release often” model inside an enterprise project, his team is now able to access metrics from internal users to ensure user alignment and widespread adoption.

Kelland also credits The Lean Startup methodology for reducing the barriers to entry when soliciting new clients. “When we talk to an innovator about building a new product, we can pitch them on starting small with us, with an MVP, and growing the project out based on the test-and-learn loop. It allows us to have more successful engagements.”

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