Launching a new business has always been a hit-or-miss proposition. Traditionally, you write a business plan, pitch it to investors, assemble a team, introduce a product, and start selling as hard as you can. And somewhere in this sequence of events, you’ll probably suffer a fatal setback, as 75% of all start-ups fail.
But, one can make the process of starting a company less risky. It’s a methodology called the “lean start-up,” and it favors experimentation over elaborate planning, customer feedback over intuition, and iterative design.
The lean method has three key principles: First, entrepreneurs accept that all they have on day one is a series of untested hypotheses—basically, good guesses. Second, lean start-ups use a “get out of the building” approach called customer development to test their hypotheses. The emphasis is on nimbleness and speed. Third, lean start-ups practice something called agile development, which originated in the software industry.
Agile development works hand-in-hand with customer development. It’s the process by which start-ups create the minimum viable products they test. Using lean methods across a portfolio of start-ups will result in fewer failures than using traditional methods.