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LEAN STARTUP METHODOLOGY- METHODS, RULES, AND POSTULATES

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Introduction

Lean Startup methods have captured the business publics attention. Terms such as “MVP” and “pivoting” are now seen in mainstream business publications. These terms have become so popular that many people confuse the methods with the methodology.

What constitutes a methodology and how does this help explain Lean Startup?

Benefits

A methodology can be described as “a guideline system for solving a problem”. In the Lean Startup context, the problem is how to discover a sustainable business model.

Methodology provides a consistent way to perform and evaluate activities. It is a requirement for creating a repeatable and scalable business. Consistent evaluation criteria allow for comparison of business models by both entrepreneurs and investors.

Methodology
A body of methods, rules, and postulates employed by a discipline1

Let’s examine each area of the definition- methods, rules, postulates as it applies to Lean Startup.

Editor’s note

There are two major tenets of Lean Startup that help to understand the material that follows.

  1. the Goal- Learn how to develop a sustainable business model
  2. the Method- Apply the scientific method to startup business activities to reach the goal

All methods, rules, and postulates exist to guide the pursuit of the goal.

Methods

Lean Startup has popularized a variety of techniques that make it easier to manage experiments, analyze outcomes, and make management decisions with the results.

Some methods have spread to the larger product development community. It is not uncommon to hear the terms like MVP or “Get out of the building” in product launch discussions. Other methods such as Five Whys root cause analysis have been slower to take hold.

Method
A systematic procedure, technique, or mode of inquiry employed by or proper to a particular discipline or art2

Build methods

  • Kanban3
  • Minimum Viable Product(MVP)4
  • Small Batch5

Measure methods

  • Cohort Analysis6
  • Innovation Accounting7
  • Split(A/B) Testing8

Learn methods

  • Analogs and Antilogs9
  • Customer Architeype10
  • Engines of Growth11
  • Five whys12
  • Genchi Gembutsu13
  • Get out of the Building14
  • Pivot15
  • Pull(Hypothesis)16
  • Validated Learning17
  • Waste/Value18

Rules

The Lean Startup methodology is designed to operate in conditions of extreme uncertainty. It may seem counterintuitive, but imposing constraints helps to focus the process of learning.

Rule
An accepted procedure, custom, or habit19

Build-Measure-Learn rules

There are two major rules in Lean Startup that regulate the Build-Measure-Learn loop.

  1. As you consider building your own minimum viable product, let this simple rule suffice: remove any feature, process, or effort that does not contribute directly to the learning you seek.20
  2. Innovation Accounting reports must be Actionable, Accessible, Auditable21

Postulates/Assertions

Every discipline requires a set of principles or assertions to build upon. The Lean Startup identifies five key “principles”. More assertions are made throughout the course of the book that it in some way relate to these five core ideas.

Postulate
To assume or claim as true, existent, or necessary22

Lean Startup “Principles”

  1. Entrepreneurs are everywhere23
  2. Entrepreneurship is management24
    • Leadership requires creating conditions that enable employees to do the kinds of experimentation that entrepreneurship requires.25
  3. Validated Learning
    • Startups exist to learn how to build a sustainable business. This learning can be validated scientifically by running frequent experiments that allow entrepreneurs to test each element of their vision.26
    • The goal of every startup experiment is to discover how to build a sustainable business around that vision.27
    • In the Lean Startup model, every product, every feature, every marketing campaign everything a startup does is understood to be an experiment designed to achieve validated learning.28
    • Learning is the essential unit of progress for startups.29
    • This is one of the most important lessons of the scientific method: if you cannot fail, you cannot learn.30
    • Validated learning is the process of demonstrating empirically that a team has discovered valuable truths about a startup’s present and future business prospects.31
  4. Build Measure Loop
    • The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere.32
    • In the Lean Startup model, an experiment is more than just a theoretical inquiry; it is also a first product.33
    • Customers don’t care how much time something takes to build. They care only if it serves their needs.34
  5. Innovation Accounting
    • To improve entrepreneurial outcomes and hold innovators accountable, we need to focus on the following: how to measure progress, how to set up milestones, and how to prioritize work.35
    • A startup’s job is to (1) rigorously measure where it is right now, confronting the hard truths that assessment reveals, and then (2) devise experiments to learn how to move the real numbers closer to the ideal reflected in the business plan.36

Additional Core concepts

Startup
A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.37
Innovation & Uncertainty
A company that does not innovate on some factor is not a startup. To open up a new business that is an exact clone of an existing business all the way down to the business model, pricing, target customer, and product may be an attractive economic investment, but it is not a startup because its success depends only on execution so much so that this success can be modeled with high accuracy. 38

References

Whenever possible, I attempted to use Eric Ries’ book The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses as the primary source for the information listed below. 39

Steve Blank’s Harvard Business Review article defines Lean Startup as a methodology.

  1. http://www.merriam-webster.com/dictionary/methodology

  2. http://www.merriam-webster.com/dictionary/method

  3. Ries, Eric (2011-09-13). The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses (p. 138). Random House, Inc.. Kindle Edition.

  4. http://www.startuplessonslearned.com/2009/08/minimum-viable-product-guide.html

  5. Ries, The Lean Startup, (p. 182)

  6. Ries, The Lean Startup, (p. 123)

  7. Ries, The Lean Startup, (p. 123)

  8. Ries, The Lean Startup, (p. 136)

  9. Ries, The Lean Startup, (p. 83)

  10. Ries, The Lean Startup, (p. 90)

  11. Ries, The Lean Startup, (p. 208)

  12. Ries, The Lean Startup, (p. 229)

  13. Ries, The Lean Startup, (p. 86)

  14. Ries, The Lean Startup, (p. 88)

  15. Ries, The Lean Startup, (p. 77)

  16. Ries, The Lean Startup, (p. 202)

  17. Ries, The Lean Startup, (p. 38)

  18. Ries, The Lean Startup, (p. 48)

  19. http://www.merriam-webster.com/dictionary/rule

  20. Ries, The Lean Startup, (p. 110)

  21. Ries, The Lean Startup, (p. 143)

  22. http://www.merriam-webster.com/dictionary/postulate

  23. Ries, The Lean Startup, (p. 9)

  24. Ries, The Lean Startup, (p. 9)

  25. Ries, The Lean Startup, (p. 35)

  26. Ries, The Lean Startup, (p. 9)

  27. Ries, The Lean Startup, (p. 9)

  28. Ries, The Lean Startup, (p. 55)

  29. Ries, The Lean Startup, (p. 49)

  30. Ries, The Lean Startup, (p. 56)

  31. Ries, The Lean Startup, (p. 38)

  32. Ries, The Lean Startup, (p. 9)

  33. Ries, The Lean Startup, (p. 63)

  34. Ries, The Lean Startup, (p. 109)

  35. Ries, The Lean Startup, (p. 109)

  36. Ries, The Lean Startup, (p. 114)

  37. Ries, The Lean Startup, (p. 27)

  38. Ries, The Lean Startup, (p. 28)

  39. There are some cases in which terms where introduced but not formally defined in the book. In those cases, I provided a definition using the references provided in the footnotes in the book.

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