Do you have an interesting product idea but don’t know when to commercialize it? If the answer is “yes”, you need to apply the Lean Startup method. One of the reasons why you should choose the lean startup method is to reduce the potential for mistakes during a product launch.
Many people are idealistic and want to quickly build a startup after discovering an interesting product idea. You can follow this line of thinking, it’s just that it’s still quite risky for inexperienced startup owners. The solution is that you need to try the lean startup method so that you don’t take a big risk when launching a product.
What exactly is a lean startup? How do they differ from traditional startups? Find the full answer in the discussion below.
Learn what Lean Startup Is
Lean Start-up is a method of building a new business or product. This method is not only beneficial for new companies, even old companies can try lean start-ups when they want to bring new products to the public.
Lean start-up is a product development step in a short time that aims to get feedback from customers. The feedback is an indicator to assess the suitability of the manufactured product prototype for people’s preferences. Business people can also use this method to assess the feasibility of the built business model.
The lean startup process is done in a relatively short time so that the company can focus more on making its products. Next, they test the product prototype on an exemplary target market, such as a specific community or organization. The company continues to produce the final version of the product if the target market accepts the product prototype well.
So what is the main goal of a lean startup? Eric Ries, an American entrepreneur, developed this method intending to minimize the risks involved in creating a start-up company. Companies will not suffer huge losses if their products do not meet the taste of the target market after launch.
3 Phases in Lean Startup
Lean Start-up consists of three phases that entrepreneurs must perform during their product development process. The three phases of building, measuring, and learning are done systematically. What is the explanation?
1. Build
The build is the first phase that includes a simple product creation and development process. This product is called a minimum viable product (MVP). The company certainly has an idea or product description that you want to make before you make it.
2. Measuring
In this phase, the company starts testing the MVP created for customers. They collect feedback and responses from customers as material for analysis in the next phase. Companies can create questionnaires or seek advice directly from product development.
3. Learning
The final phase of the Lean Start-up is to learn and analyze the feedback data collected in the previous phase. The results of this analysis become a benchmark for continuing the MVP creation process or exiting the process.
The company may continue the process if it receives a good response with suggestions for product development. However, if there is a lot of negative feedback from the target customer, the process must be abandoned to avoid wasting more cost and time.
Difference Between Lean Startup and Traditional Startup
After understanding the above definitions and phases, you must know that Lean Startup is a different method than traditional startup. This difference can also be seen in other metrics such as the number of employees and balance sheet ratios. What are the differences?
1. Employee Qualifications
Lean startups prefer employees who are easy to learn and willing to work faster. The reason is that they need to follow the manufacturing and product development process in such a way that it does not take much time and cost. Traditional startups, on the other hand, do not have certain skills in terms of employee dexterity while working.
2. Financial Report Key Figures
The financial flow of lean startups is more customer-oriented. Its financial ratios revolve around customer value and customer acquisition cost because its business is focused on product testing. Meanwhile, finance for traditional startups is more complex as it includes product manufacturing processes, marketing, and other operating costs.
Advantages and disadvantages of lean startups
Just like traditional startups, the lean startup method has its advantages and disadvantages. You can use the following explanation as material for consideration before applying lean startup.
Advantages of Lean Startup
Lean startups have the advantage that the process does not take long. The product development cycle is also shorter, so you can get the product to market faster.
In addition, lean startups can also reduce the risk of products not pleasing the public when they are launched. Lean startups are also ideal as a sustainable business model thanks to these advantages.
Disadvantages of Lean Startup
Behind the above advantages, there are also disadvantages of Lean Startups that need to be considered. You need to be aware that not all customers want to give feedback on the tested prototype.
In addition, the manufactured product technology may experience a decrease in quality as you produce it in a short time. The last weakness, you may experience burnout because you want to meet deadlines.
Regardless of the pros and cons, Lean Startup is the right method for those of you who want to launch a new product without fear of failure. Just like traditional startups, Lean Startups need the right marketing strategy to promote their products or services.