When circumstances change, and trends evolve, business leaders and innovators find new approaches to success. They attempt to reinvent the status quo, and while some of these methods may seem fantastical and even ludicrous when viewed through the prism of the past, they can be – and have been – proven to be hugely successful.
The lean startup approach is an excellent example of this. Honed and perfected over the last two decades, it flies in the wind of many established norms and conventions in traditional business management.
While it still has detractors – and it's not necessarily the perfect model for every business – the approach has gained widespread traction in Silicon Valley and other tech hubs, where the agile nature of the lean approach is ideally suited. It's no fad, either; even huge multinational corporations such as GE has adopted lean principles within certain divisions.
Indeed, to illustrate how this concept can be applied in your business – and the potential results it can yield – we've compiled a list of several lean startup examples that have enjoyed success.
Goliaths Adopting David's Strategy
Although established tech giants such as Google and Facebook have utilised lean principles in the past, it was not until 2011 – when entrepreneur and management expert Eric Ries published The Lean Startup – that the concept became bona fide in the entrepreneurial world. Since then, several other major organisations have adopted the lean approach, partly to drive innovation but also to fend off the threat of disruption from digitally driven startups.
Therefore, it's worth looking at both sides of the coin. Here are some of the ways in which established companies have utilised the lean approach:
GE's 'Fastworks' programme deserves mention here, as the company actively brought in Ries as a consultant to apply his theory in practice. They trained over 5000 senior managers in lean principles and created autonomous divisions, resulting in the development of a new product (a refrigerator) with 50% cost and time savings.
The Japanese multinational is already famous for pioneering the "lean approach to manufacturing", adopting Ries' principles in the development of their Android-based navigation systems. The development team closely interacted with customers to iteratively develop a minimum viable product (MVP), to great success.
As at GE, Ries is also responsible for overseeing the introduction of the lean approach at US software giant, Intuit. Under his guidance, the company developed Lean StartIN, an intensive brainstorming session where small teams of Intuit staff are required to come up with new product ideas and validation metrics. It directly led to the creation of a new payment tool for Intuit's Mint financial management service.
Startup Success Stories with the Lean Approach
However, the lean principles are primarily designed to facilitate effective product development and quick market entry for fledgeling enterprises. Dropbox and Slack are both perfect examples of how this process should work, as detailed below:
The popular file hosting service is one of the lean method's greatest success stories, especially given that it started life in a notoriously difficult business segment with multiple competitors. To make matters worse, there was no demand for the service that Dropbox was offering, either, as customers at the time had no experience of seamless filesharing.
Dropbox overcame this issue by creating an MVP, highlighted in a simple video that clearly described and demonstrated what their technology was capable of doing. The impact was immediate and electric; the video attracted tens of thousands of new users to the Dropbox beta and created a buzz.
This was interest validation in action – the Dropbox team being able to gauge the level of customer interest in their novel technology. While file synchronisation was a service that customers didn't know they needed, the video ensured that they did.
The official launch of Dropbox soon followed, drawing over a million new users within seven months. The team continued to receive feedback and improve their MVP along the way, with new services and features being added, while others were tweaked based on user data.
Eventually, the number of users touched 14 million, sparking a company IPO that valued the startup at over $12bn in 2018. Thanks to the lean startup model, Dropbox achieved these milestones within a mere 11 years as a startup.
Things don't always turn out as planned for your original business idea or product. Sometimes, despite your best efforts, it may not evolve into an MVP; in such moments, the lean approach teaches us to abandon the idea altogether, or pivot towards something more viable in the market.
Encouragingly, this is the story of Slack, the multi-billion dollar instant messaging service that started life as an internal office tool for gaming startup, TinySpeck. Launched by Stewart Butterfield (one of the minds behind Flickr), TinySpeck's goal was to create an innovative new online multiplayer game with a subscription-based business model.
Called Glitch, the game had a short life span, launching in 2011 and going back to beta in 2012. There was no MVP to be found, but TinySpeck did still have something with potential: the internal office messaging tool that they had been using.
Proving hugely popular with staff in the company's US and Canadian offices, TinySpeck asked external users to try it and to provide feedback – their own attempt at gauging the market demand and viability of the app.
This feedback – especially from companies with bigger teams – enabled TinySpeck to develop and improve Slack further, triggering a highly productive feedback loop. The team released the app to progressively larger groups of users and then used their impressions and opinions to keep upgrading and to improve Slack ready for the next cycle.
Eventually, the app's userbase exceeded eight million, with an additional freemium model converting one-third of these users into paying subscribers. Unsurprisingly, an enormously successful IPO soon followed, with the brand valued north of $10bn.
Although Ries codified the idea, the lean startup approach can be considered a distillation of some of the core principles that allowed many startups from the 1990s and early 2000s to achieve tremendous success. Names such as Facebook, YouTube, Uber, Airbnb, and Amazon have all used at least certain parts of the approach to become billion-dollar enterprises.
For all of these success stories, however, countless others have failed to gain any traction. Therefore, the lesson here is simple: strict adherence to the lean startup approach is no guarantee of success. In fact, the method depends to some extent on having a "go big or go home" attitude, with the high degree of associated risk that comes with this.
So, should you use the lean startup approach in your business? Ultimately, there is no right or wrong answer. Rather, it depends on your company's niche and circumstances, such as the area of business (tech and software startups undeniably fare better with lean approaches), access to capital (it can be costly to implement), and of course, your appetite for risk. One thing is clear, though: the ability of this model to nurture business ideas into billion-dollar unicorns.
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