When it comes to launching a new product or service, risk management is paramount. We work with our clients to minimize expenses and the resources consumed so that risk can be properly managed. But, that’s not the only concern when it comes to new product development. The other major question we’re constantly asking clients and ourselves is, “are we building the right thing?” That’s where a “Lean Startup” methodology comes in.
The Risk of Innovation and Lean Startup
Entrepreneurs and intrapreneurs are constantly trying to balance the risks and rewards of innovation. Developing and releasing a new product that is both beautifully designed and perfectly engineered can be expensive and time-consuming.
These new products could be completely untested with customers, so pursuing their development can be risky.
For some, the risk is simply too high – meaning that companies avoid innovation altogether, leaving themselves open to being displaced by competition from new and disruptive market players.
So, what can companies do to mitigate risk without becoming stagnant?
When it comes to launching a new product or service, risk management is paramount. We work with our clients to minimize expenses and the resources consumed so that risk can be properly managed. But, that’s not the only concern when it comes to new product development.
The other major question we’re constantly asking clients and ourselves is, “are we building the right thing?”. That’s where a “Lean Startup” methodology comes in.
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Lean Startup in Action
The Lean Startup methodology minimizes waste by focusing on building only desired features during the product development phase.
By developing a Minimum Viable Product (MVP) that customers can interact with, the business can hypothesize and experiment in iterations with further improvements. Measuring data from customers after each iteration results invalidated learnings from real users – the first step to achieving product-market fit.
Architech partnered with an American information management services company to launch a new service that offers secure document shredding to residential customers.
The offering would enable the company to service a new customer segment, but the size of the market and desirability of the service were unclear.
With this in mind, we knew that we needed to interact with potential customers from the new user segment and learn how to build a product they would want.
When we designed our first release of the service, we had moments that every business and entrepreneur experiences; for example, while discussing a specific feature or requirement, we sometimes got pulled into more and more detail and, before we knew it, we had designed a solution far more complex than what was required.
Whenever we saw this happening, someone in the room would speak up and say “MVP!”. This simple gesture enabled everyone to take a step back and think, “What did we learn from implementing this feature and is it really needed for the MVP?”.
If the feature wouldn’t result in any valuable learning from our customers, we’d deem it out of scope.
This process kept us accountable by continually checking our assumptions and reducing waste.
Bottom line, teams need to be able to collaborate effectively and adhere to the strict mindset the Lean Startup methodology demands in order to be the most effective.
The result: Using this methodology, we built a fully functioning, secure MVP, complete with a booking platform able to accept credit card payments, in 3 weeks.
With the insights you gain from your users, you’re able to create hypotheses around generating further customers. The Build-Measure-Learn feedback loop focusses on experimenting in short, fast iterations and validating each hypothesis with real customer data. The Build-Measure-Learn loop should be repeated to achieve the right product-market fit and optimize the business model.
Essentially, your ideas become a part of the MVP and, as customers interact with the product, you measure their behaviour and will decide whether your hypothesis is valid or invalid.
Here’s an example of this in action; at one stage of the project, we noticed that more than 50% of our users were dropping off the platform immediately after landing on the home page, a pretty high bounce rate.
Our hypothesis was that the home page content needed to align more with the messaging and imagery we had deployed on our digital marketing campaigns.
We deployed a redesigned home page and, after one week of measuring customer behaviour, we saw the bounce rate drop to below 4%, validating our hypothesis and the build we deployed.
Why it worked
The Lean Startup approach provides a framework for testing and quantifying assumptions.
However, a number of other skills are crucial to launching a successful business. The ability to build and modify your product quickly, and the ability to analyze data and create a hypothesis is at the heart of good client work.
Architech specializes in Agile Engineering and Design Thinking, both of which complement the Lean Startup methodology perfectly.
Building an MVP quickly and iterating in short, fast feedback loops requires a deep understanding of Agile Engineering and is critical to the process as businesses aim to reduce wasted time and resources.
Even getting to the MVP requires making some initial assumptions about your customer profile. Our strategy team employs Design Thinking to put themselves into our customers’ shoes and understand their needs and wants. This approach allows us to produce an MVP that resonates with the client and the market.]
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Overall, during this engagement, we were able to launch a new business with our client in a few short weeks. We learned from real customers and real data meaning that the modifications and pivots we made were based on validated learning.
Each change provided customers with only desirable and valuable features that would drive results. The business was launched with minimal risk of over-investment since customers were included and listened to during the development process.
Too many entrepreneurs and intrapreneurs begin with a great idea for a product that falls flat after launch because it’s built on what they think their users want.
They then spend time and resources developing this product without validating its desirability with real customers. When they fail to gain any real uptake from customers, it is often because they never integrated the validated learnings from real users.
Failing to involve customers early and often results in the new business failing to resonate in the market.
Curious how Architech can help you with your digital transformation journey? Let’s Chat.