Lean Start Up Model
The lean startup methodology developed by Eric Ries is based on the lean manufacturing philosophy of Operations Management. This advocates the elimination of waste in manufacturing and service processes. The application of lean philosophy into entrepreneurship theory and practice is based on the discovering and elimination of the sources of waste that can potentially plague entrepreneurial ventures. The lean startup approach asks entrepreneurs to measure their productivity differently to the emphases we see given in manufacturing and service processes. Startups must prevent building something that nobody wants, even if they complete it on time and on budget. The objective of a startup is to build the right thing as quickly as possible. The right thing is that which customers want and will pay for.
One of the main concepts in the Lean Startup model is the Minimum Viable Product (MVP). The MVP is considered the fastest and cheapest way to go through the learning process of Build-Measure-Learn . The fundamental objective of the MVP is to test the startup hypotheses. There are a number of MVP examples that can be mentioned, from a simple smoke test (an advertisement) to early prototypes with missing features.
One of the classical examples of the MVP is the story of Drew Houston, CEO and Founder of Dropbox. This example is described in detail by Ries in his book. Although apparently easy-to-use, Dropbox implied significant technical expertise in the development process; for example, to achieve integration with a variety of computer platforms and operating systems (e.g. Windows, Macintosh, iOs, Android, etc.) This is considered as one of the main competitive advantages of the company. The challenge for Houston and his team was that testing a prototype was almost impossible because of these significant technical obstacles and the need for a reliable online service component. The solution was to make a video. Houston made a three-minute video demonstration for a community of early adopters. The video was watched by hundreds of thousands of people and the beta waiting list went from 5,000 people to 75,000 people overnight.
Source: Eric Ries. The Lean Startup. How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Crown Business New York. 2011.