what is a Lean Startup?
The Lean Startup is a new current of business thinking about the organisation of startups. This new approach consists precisely in not being a methodical and dogmatic list of how to run a startup, but is based on the idea that the way to run such a company must be constantly changing, evolving and revising, because its newness demands it.
We talk about novelty and dynamism because a startup is a company that creates new products and services, transforms ideas, thoughts and designs and turns them into something tangible and real in the market, which is why it is in constant uncertainty and tension, as not all new ideas are accepted by the market.
The main goal of a startup is quite ambitious: to create a groundbreaking and innovative product or service that changes the world. It would seem obvious to think that, since its goal is different from that of other conventional companies, its organisation and management should also be different. However, many startups with great ideas in their departments have had to fail to come to the conclusion that both types of companies cannot be managed in the same way. Hard work, perseverance and organisation are not enough to ensure that a startup does not fail, nor is it a matter of being in the right place at the right time, as marketing marketing itself tries to sell.
A startup cannot function only with a good strategy and market research, because it lives surrounded by the uncertainty of novelty, and therefore this research cannot always be applied, because a startup does not even know what its product will be and therefore cannot predict who its consumers will be. However, the solution to this is not improvisation and chaos, but somewhere in between. A startup can be managed, but in a dynamic way. Nevertheless, the success of a startup can be designed through a process, and for this purpose the methodology that has been given the name of Lean Startup has been devised.
The Lean Startup methodology brings a new approach to the creation of continuous innovation, i.e. the idea of constantly renewing and restarting the entire company. It consists of an extremely short cycle time, a focus on creating what consumers want and knowing what they want without having to ask them, and a scientific approach to decision making.
The Lean Startup is based on previous ideas about management, marketing and product development, including design thinking, customer development, agile development and, above all, lean manufacturing, from which it takes its name. This methodology is built by leaving relatively aside how other similar companies work and looking at different organisations and sectors, such as industry.
In this case, it is mainly based on "lean manufacturing", a process originating in Japan devised by Taiichi Ohno and Shigeo Shingo at Toyota, a totally new way of approaching the production of goods that creates the basis for a new theoretical framework for this new business idea.
The Lean method alters, for example, the way supply chains and production systems are organised. It reduces batch sizes, controls inventories and produces just-in-time, i.e. it starts the production process once the order has been received and does not accumulate products in the warehouse that may never be used, but have already been produced and have therefore generated costs. This production method requires efficient organisation and fluid communication between all parts of the company as well as with suppliers and distributors. With this ideology, whose main objective is to eliminate all stages of the production process that do not contribute any value, costs for storage and raw materials are reduced.
The Lean Startup differentiates between wasteful and value-generating activities, which is particularly applicable to start-ups, as they often create new products that are unfortunately never sold and often never produced.
The 5 principles of the Lean Startup:
The Lean Startup is based on 5 pillars that apply to the entire philosophy. They are as follows:
- Entrepreneurs are everywhere. Entrepreneurs can be anyone who works within the startup. The Lean Startup approach can work with companies of any size, sector and activity.
- Entrepreneurship is management. A lean startup has to have a type of management that is appropriate to its state of permanent uncertainty.
- Validated learning: A company is not just about producing and making money; every action taken is a learning process, regardless of its ultimate success.
- Create-measure-learn: A startup creates new products from ideas, measures how consumers respond and learns from the results.
- Accounting for innovation: To ensure success, it is necessary to focus on the most tedious aspects: how progress is measured, how tasks are prioritised, etc. No other way to know for sure if you are succeeding.
An example of lean startup methodology is not to organise the company into traditional functional departments, but cross-functional teams .
Finally, it is important to point out that the Lean Startup methodology should be applied to all functions of the company: vision and concept, product development, marketing, sales, distribution... And it should guide workers on how to decide on the dilemmas they face.