Now that you've had a largely buzzword-free introduction to lean startup methods, you may be interested in a bit deeper understanding of the concepts and terminology. Lean startup methods incorporate scientific methods and principles of agile development to help practitioners learn markets quickly and reliably and deliver successful products. But lean startup enthusiasts and practitioners throw around a lot of terminology and concepts that may seem alien or not particularly meaningful to you.
Let's examine and demystify the basic lean startup terminology with a rich and concise conceptual model. To view the model of lean startup concepts, click the image below:
Lean startup concepts fall within four different clusters: hypotheses, learning, market, and product.
Forming hypotheses is a component of lean startup methods. The business model represents the strategy driving more tactical product decisions, and it consists of a set of hypotheses. These hypotheses are rooted in the market problems the product is intended to solve. The product serves as a set of solutions to these problems.
Prospects and customers typically have existing alternatives to at least partially address or work around the same problems. The unique value proposition conveys an overarching theme of addressing the problems, and it leverages the unfair advantage the company possesses relative to any competition. A high-level concept summarizes the unique value proposition using a metaphor likely to be familiar to members of the targeted customer segments.
Metrics measure the key activities from which the company and customers derive value, such as adoption, usage, and purchases. Customer segments represent the target market for the product, and sales and marketing channels reach these customer segments. Revenue streams come from such sources as product purchases and advertising, and they offset the cost structure for the product.
Lean startup methods are first, and foremost, about efficient learning. We conduct interviews of subjects, which include prospects and existing customers, to uncover initial insights. Hypotheses rest on assumptions. These assumptions entail predictions that we can test with purposeful experiments. The results of these experiments yield further insights that we use to adjust our assumptions and hypotheses.
We sell products to prospects who face problems, and those prospects become customers. Early adopters are initial customers that can be key partners in helping lean startup practitioners form, test, and refine hypotheses.
The business model outlines the strategy for a successful product. Developing a minimum viable product (MVP) enables us to minimize the amount of time needed to deliver value to customers, to determine whether prospects will pay to solve their problems, to determine whether the product satisfactorily addresses those problems, and to determine whether the product is usable.
Most lean startup concepts aren't new. Taken as a whole, however, they incorporate and enhance the common ways that companies make product decisions in a manner that can accelerate, and improve the reliability of, learning and implementation. The scientific and agile approach fosters a greater likelihood of product success.
Is your company incorporating all or most of these concepts in the ways it makes product decisions? If so, what sorts of successes and challenges have you had? If not, why not?