On Innovation and Startups in Australia

A recent study by data marketing firm FRACTL shows what we’ve always suspected. More than half of startup failures are due to an nonviable Business Model and another third due to a lack of traction.

Taking a Lean startup approach to validate the business model and achieve product market fit would have helped at least 85% of the businesses from this study.

Build-Measure-Learn feedback loop is a core element of the Lean Startup model.

Your goal as the Founder as is to go around this loop as quickly as possible.

Each turn helps you test ideas about your startup and learn from your early adopter customers. This Learn-As-You-Go approach lets you to catch flaws in your thinking and adjust your proposition with every iteration.

The Build phase

Once you’ve figured out the problem that needs to be solved, the next step is to develop a Minimum Viable Product (MVP). An MVP is made up of the minimum set of features you need to learn about your customer, your market or about the problem you are solving.

Remember the goal of developing an MVP is not to scale or generate revenue. It is to generate data to test your assumptions so you don’t waste time and money building something no one wants, and maximize the amount of learning per dollar spent.

What goes into an MVP

Each version of the MVP must make sense to the customer on it’s own. You cannot understand how the customer feels about a car by asking for their feedback on a single wheel. You have to offer them something that represents a real feature of the final product, like the skateboard in the above example.

When developing an MVP, it can be hard to decide what goes and what stays out. Figuring out the MVP can be a task in itself – you decide what is minimum, the customer decides if it is viable.

How Buffer tested their concept with a simple MVP 

Buffer app is a great example of using an MVP to test the concept before writing any code. Joel Gascoigne, CEO and Founder of Buffer tested the idea of a social media scheduling app by tweeting out a simple landing page.

The page contained nothing more than a list of benefits and an email capture form. Once potential users provided feedback on the base concept, next stage was to use a pricing list to see if the market was willing to pay for this service.

 It was only after enough people clicked on the paid option and left their email addresses did Joel start building the app.

Read the whole story here.

What next

Though the name MVP says ‘Product’ it is really a Process. The process of continually testing your ideas and assumptions and adapting your product with each experiment.

The MVP lacks many features that may prove essential later on. However, in some ways, creating an MVP requires extra work: we must be able to measure its impact.

– Eric Reis in’The Lean Startup’

Once you have your MVP in front of potential users, the next step is to measure the results. That’s for another post.

What is a Startup?  Ask ten people this question and you’ll get twenty different answers.

No matter the definition, a Startup has one specific characteristic that distinguishes it from an established business. It is an organisation still in search of Product-Market fit.

Typically a Startup emerges when it’s founders spot an under-served opportunity that they can address. They run their idea past some friends, maybe consult a mentor or two and then rush on to build the solution.

Stats show 9 out of 10 startups fail. We’ve just seen why.

What is missing above is a key step between having the idea and building the solution. Once you spot an opportunity, the next question to ask is not ‘Can we build this?’ but ‘Should we build this?’.

Enter Lean Startup.

Lean Startup is a set of tools developed by Eric Reis. It enables ‘validated learning’ through customer conversations and quick experiments to drive continuous innovation.

Being able to quickly validate hypotheses about your business is one way to improve your chances of success; and you don’t waste energy building things people don’t want.

Lean Startup works in the oddest of industries and roles. You can apply the Build-Measure-Learn cycle in any situation that involves untested waters and a risky environment.

• Bootstrappers and startups
• Corporate intrapreneurs
• Educators
• Government innovators
• Non-profit and social impact leaders
• Developers

At the end of the day, Lean Startup is about speed. About quickly testing hypotheses against customer needs. About finding the revenue sweet spot early, before the big expenses kick in. About beating the odds and giving your startup a better chance to succeed.