Lean Startup, Agile Project Management and How to Be in the 10% of Startups That Succeed
We’ve worked with a lot of startups in our time. From helping them to secure grant funding, to assisting them by conducting user and market research, we’ve been there at many points in their journey.
We know that too often the structure of the product and customer development processes are overlooked, perhaps purely based on the excitement to dive straight into creating! Whilst we think that excitement is great (if not totally essential), we’ve also seen first-hand how difficult it is to make a success of a product or service without the right foundations.
That’s why we wanted to take today’s blog post as an opportunity to walk you through the concepts of “Lean Startup”, “Agile Project Management”,and how they feed into each other. That way, you’ll be one step closer to being in the 10% of startups that succeed!
What is the typical ‘build order’ for a startup?
As we said, we’re well acquainted with how startups typically function. So, here’s what the build order with startups usually looks like…
The startup comes up with an idea
They create a prototype
They raise capital for that product or service
They launch
That may sound familiar and even logical to you. However, here’s what the “build order” should be in order to have a greater chance of success:
The startup comes up with an idea
The startup conducts research for breadth to understand the user and context their product or service exists within
The startup conducts research for depth to better understand and empathise with their users
The idea is tested with potential users
The startup creates a prototype
This is again tests this with users
There is an iterative design process based on this feedback
The updated design is refined and tested again
Capital is raised
The product or service is launched
As you can see, this adds a few more steps to the journey. Most crucial we believe, are the steps where users are involved and the design process therefore becomes customer-centric. Not only is this similar to models like Design Thinking and Human-centred Design, which we covered in our last post, but also to Lean Startup and the process of customer discovery.
Don’t worry — we’ll explain!
What is a ‘Lean Startup’?
The book The Lean Startup was written by expert Eric Ries. In it, he describes the five key principles to this term:
Entrepreneurs are everywhere: A startup is therefore “a human institution designed to create new products and services under conditions of extreme uncertainty.’
Entrepreneurship is management: A startup is an institution and needs a new kind of management geared to this context of extreme uncertainty.
Validated Learning: Startups exist to learn how to build a sustainable, repeatable and scalable business.
Build — Measure — Learn: The main activity of a startup is to turn ideas into action through creating products, seeing how customers respond and potentially pivoting based on this information.
Innovation Accounting: Startups should have a focus on measuring progress, setting milestones and prioritising work
Ultimately, the key thing to remember about “lean” is that customers are involved as a way to help streamline products and services. As such, whilst there may be more steps in the build order — as discussed earlier — it is still a more efficient method.
Customer development in Lean Startup
What is Customer Discovery?
“Customer Discovery” is a part of the “lean startup” methodology. During this phase, the founder is seeking to gather evidence to guide them towards a solution (the “right” product or service), without allowing bias to influence them.
As FutureFounders state, it looks something like this:
Observing and defining a phenomenon (problem or market need)
Developing a hypothesis about a solution to the problem (business idea)
Conducting an experiment to test the hypothesis (getting “out of the building”)
However, the process doesn’t necessarily use these three steps and then stop. Instead, parts of it may repeat. Step three — testing your solution/hypothesis — should at first be done with a low-fidelity and then a high-fidelity prototype. This will allow you to assess whether there is product-market fit, without wasting a lot of time and money.
At this point, you will either verify that your hypothesis is correct and move forward with your product or service, or you will have to pivot it and move back to step two.
Following on from this, you should conduct Customer Validation.
What is Customer Validation?
This phase is really crucial, as it’s when you can asses whether or not the assumptions you have about the people that you think will buy your product/service are correct. Whilst customer discovery is about finding out who your customer are and how to help them, customer validation is about finding out whether your research is correct.
This will allow you to create the most water-tight business model possible.
Here’s what customers validation will look like:
Get ready to sell: You should activate or acquire customers and build a high-fidelity model (an MVP).
Get out the building: This can be virtual or in the “real world”. Either way, it’s all about getting out there and selling to your users, your customers or both.
Develop positioning: Work on how you can best describe the product or service.
Verify or repeat: This is where you begin to scale marketing spend and get ready for customer creation (the most expensive part). You will uncover whether there is a scaleable, repeatable business model or whether you need to take this as your opportunity to pivot.
Both customer discovery and customer validation are crucial steps in the journey of a startup, in our opinion. However, it’s also really helpful to understand the principles of agile project management in order to be able to make these as successful as possible.
Design thinking — which we covered last week — is a way to designing solutions to problems. Lean startup turns these solutions into business models tested with actual customers. Finally, agile is a way of working to reassess and adapt these plans.
Each are important and compliment each other!
What is Agile Project Management?
We are big fans of agile project management, a “modern, flexible approach to project management. It allows you to break large projects down into more manageable tasks, which are tackled in short iterations or sprints.” (Source, Workfront).
Ultimately, It strives for more frequent communication and being open about ‘blockers’. This is a huge contrast to waterfall project management, which is a linear process with less flexibility, following the order of: Gathering information, designing, implementing/deploying and, finally, testing.
The key principles of agile project management on the other hand are:
Individual interaction over projects and tools
Working through software rather than thorough documentation
Collaboration with customer instead of contract negotiations
More than a plan as you focus on responding with change
This translates into everyday work life and project management in a few ways. Typically, we organise ourselves by working in design sprints for a 2-week period with daily stand-up for 10–15 minutes and fortnightly ‘Show and Tells’. The focus is on what hasn’t been done, rather than what has been achieved.
The Key Takeaways
Lean Startup and Agile Project Management are not two methodologies to be used seperately. Instead, they feed into and compliment each other to allow startups to create the best possible product, in the most efficient and effective way.
Whilst lean startup turns solution ideas into business models tested with real people, agile allows you to reassess and adapt these plans going forward, ultimately leading to a customer-centric business which will no doubt be a huge success.
If you have any questions, be sure to drop them in the comments!
