I choose to think of myself as "consciously optimistic". I know there is a lot wrong with the world, a lot to be sad and negative about. I want to be positive, despite this knowledge, despite invitations to be pessimistic.
One of the main reasons I can remain optimistic is because we can grow, learn and change. Which brings me to start-ups.
For me, start-ups, innovative and disruptive businesses, resemble the necessary vehicle for change. Big oil companies won't stop the climate crisis. An innovative renewable energy start-up at least stands a fighting chance.
The lean start-up method encourages testing the desirability and viability of an idea.
Back to reality... start-ups tend to fail. Like, a lot. Luckily, there are methods for entrepreneurs to reduce their exposure to this risk. Or at the very least reduce the impact of a possible start-up failure.
One example that has seen rapid rising popularity in the digital age is the lean start-up method.
Eric Ries, author of “The Lean Start-up”, took inspiration from the success of the Toyota Production System (TPS). The TPS is also referred to as “lean manufacturing”. The key takeaway for Ries was that most start-ups fail because of investment in ideas that do not work.
The lean start-up method encourages testing the desirability and viability of an idea. Based on the feedback of the test, you either pivot or persevere. This repeats through an iterative process known as the “lean start-up cycle”.
The lean start-up cycle consists of a four-step process:
- Step 1: Business model canvas. Using the business model canvas allows entrepreneurs to be introspective about their idea. It helps organise assumptions, and is the basis for further testing.
- Step 2: Formulating a hypothesis. With a logical basis in place, a hypothesis, or a starting point, is needed to test further. Use hypotheses to test the desirability, viability and feasibility of the idea.
- Step 3: Minimum viable product (MVP). The MVP represents a stripped down variation of the idea. It offers the core product value to customers. Using the MVP, it is possible to measure, learn and validate the hypothesis.
- Step 4: Learning. What are the valuable insights gained from customers using the MVP? Was the hypothesis validated or invalidated? What does this say about the initial idea? Is it worth persevering with the core offer presented, or pivoting to something new?
Entrepreneurs use the four-step process to confirm preconceived assumptions about business ideas. Express assumptions as an explicit hypothesis. Test the hypothesis by measuring customers' reaction to an MVP. Then analyse this feedback and decide whether to persevere or pivot.
In the rest of this series, I will dig deeper into how cloud computing can be used as a tool to enable the lean start-up method. In particular, I will look at the “build, measure, learn” cycle, how to gather metrics, what are some valuable metrics to look at, how to analyse these metrics and gather meaningful insights.
I choose to remain optimistic in tough times. I choose to love start-ups, because the best is yet to come, and I'm excited to be a part of this journey.
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