Why the Lean Start-Up Changes Everything

  • Reference: HBS-R1305C-E

  • Number of pages: 9

  • Publication Date: May 1, 2013

  • Source: HBSP (USA)

  • Type of Document: Article

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Description

In the past few years, a new methodology for launching companies, called "the lean start-up," has begun to replace the old regimen. Traditionally, a venture's founders would write a business plan, complete with a five-year forecast, use it to raise money, and then go into "stealth mode" to develop their offerings, all without getting much feedback from the people they intended to sell to. Lean start-ups, in contrast, begin by searching for a business model. They test, revise, and discard hypotheses, continually gathering customer feedback and rapidly iterating on and reengineering their products. This strategy greatly reduces the chances that start-ups will spend a lot of time and money launching products that no one actually will pay for. Blank, a consulting associate professor at Stanford, is one of the architects of the lean start-up movement and has seen this approach help businesses get off the ground quickly and successfully. He believes that if it's widely adopted, it would reduce the incidence of start-up failure. In combination with other trends, such as open source software and the democratization of venture financing, it could ignite a new, more entrepreneurial economy. There are numerous indicators that the approach is catching on: Business schools and universities are incorporating lean start-up principles into their curricula. Even more interesting, large companies like GE are applying them to internal innovation initiatives.

Keywords

Customer input Development stage enterprises Entrepreneurship Independent ventures Start-ups