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Lean Startup – Agile Innovation, High Product-Market Fit and Risk Minimization Through Business Experiments

Lean Startup CycleIn 2006 Steve Blank's book "The Four Steps to the Epiphany" was published. It triggered a movement. In 2011 Eric Ries made the concept known worldwide with his book "The Lean Startup".

Central elements are business experiments that lead to validated learning in the process of development. Similar to Scrum or Design Thinking, innovation is created recursively in cycles. Ideas are very quickly transformed into simple prototypes (Realize). Then it can be tested with real customers (Measure). Observing and measuring generates data that can be used to further develop the product or service. In this way, the hypotheses behind a product idea can be systematically tested (Learn).

Going through the iteration cycles of Lean Startup, it is possible to create an ever better fit between the problem that a solution is intended to solve and the solution itself (problem-solution fit). The method not only helps to optimize products and services, but the same procedure can also be used to optimize the fit of products to the market (product-market fit).

Within a very short time, this idea found its way into the management teams of established companies. The essential advantage of reducing risks and increasing the probability of success when realizing innovations is tempting, because it solves a core problem of innovations: the risk of investing in an idea of which no one yet knows whether it will succeed in the market.

The fact that an idea sometimes does not survive the confrontation with reality is part of it, but it happens early and cheaply. A adjustment of the project is then possible in time.

An essential step in the Lean Startup process is the provision of a so-called MVP (minimum viable product). This is the development stage of a prototype that realizes the basic functionality to such an extent that customers are willing to spend money on it. An MVP is neither fully developed nor particularly pretty. True Lean Startup enthusiasts even say: "If you're not ashamed of your MVP, you've gone to market too late".

The MVP concept has become an integral part of many product development processes. The big advantage is that an MVP can be used to generate real market data that is much more meaningful than pure market studies. The innovation can thus be further developed and marketed in a data-driven manner.

 

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