What The Lean Startup Method Gets Right And Wrong + Biggest Wins and Epic Fails
What do Twitter, Dropbox, and Google Glass have in common? They all used the Lean Startup method—with mixed results! Get the full story and make smarter business decisions!
Like any methodology, it has its limitations and should be adapted to fit the unique challenges and opportunities of each venture.
In this article, we'll showcase examples of what the Lean Startup method nails and where it might miss the mark. Understanding both its strengths and weaknesses can empower entrepreneurs to make smarter, more strategic decisions as they develop and grow their businesses.
1. Speed and Agility
What It Gets Right
The Lean Startup's core philosophy is "build-measure-learn." This cycle encourages startups to speed up their product development to quickly test ideas and adapt based on feedback.Spped and agility helps companies avoid spending years perfecting a product without ever testing its market viability.
Twitter initially started as Odeo, a network where people could find and subscribe to podcasts. The company swiftly pivoted to a microblogging platform in response to changing market dynamics, exemplifying the strength of agility.
What It Gets Wrong
This rush can sometimes lead to a superficial understanding of market needs. The speed of iteration may push startups to make changes based on short-term reactions rather than long-term viability.This can result in a product that evolves without a clear, strategic direction.
Color Labs
Color Labs launched with a social photo app that raised $41 million before launch but failed quickly due to a lack of clear direction and a too-rapid development cycle that ignored deeper user engagement strategies.
2. Customer Feedback
What It Gets RightThe
Lean Startup method prioritizes customer feedback over intuition, which helps businesses build products that people actually want.This customer-centric approach avoids the common pitfall of developing a product based on assumptions.
Dropbox Dropbox's early use of a demo video aimed at tech enthusiasts on Digg and Reddit helped them gauge interest and gather valuable feedback, leading to a simple product that precisely met user needs.
What It Gets Wrong
Relying heavily on customer feedback can also be a double-edged sword. Customers don't always know what they want, especially for innovative products that don't yet exist.This can lead to a "feature-creep" or a constant modification of the product based on every piece of feedback, which can dilute the original vision.
Coca-Cola
A classic example of misused customer feedback is the New Coke fiasco of the 1980s. Coca-Cola changed its original formula based on market research but ignored the emotional attachment users had with the original taste, resulting in a backlash.
3. Minimal Viable Product (MVP)
What It Gets Right
The concept of the MVP - launching the simplest version of a product that is capable of learning from - allows startups to test hypotheses about a product's necessity in the market without fully developing the product.Zappos
Zappos founder Nick Swinmurn initially tested the concept of selling shoes online by taking photos of shoes in local stores, posting them online, and buying the shoes from the store at full price to fulfil orders. This MVP validated the idea with minimal upfront investment.
What It Gets Wrong
The MVP can sometimes be too minimal, leading to a poor first impression that turns users away permanently. It's a delicate balance between 'minimal' and 'viable', and getting it wrong can tarnish a brand's reputation.The release of Google Glass as an MVP was poorly received because it was too futuristic without enough practical application, leading to a negative first impression that ultimately doomed the product before it could evolve.
Read also:
How To Reduce Risks In MVP Development?
How To Reduce Risks In MVP Development?
4. Pivoting
What It Gets Right
The ability to pivot - or shift strategy when a product isn't meeting the market's needs - encourages flexibility and responsiveness, which are crucial if you want to succeedPaypal
PayPal began as a cryptography company and shifted to a Palm Pilot payments service before finally pivoting to become one of the web's leading payment processors, an excellent example of successful pivoting based on market feedback.
What It Gets Wrong
Frequent pivoting can signal instability and a lack of a clear vision, which can confuse both customers and investors. It can also lead to pivot fatigue among team members.Fab
Fab.com pivoted from a social network for gay men to a flash sales site for designer gear, and then again to a general e-commerce platform. These frequent shifts confused customers and diluted brand identity, leading to its downfall.
5. Use of Data
What It Gets Right
The Lean Startup method advocates for a data-driven approach to decision-making, which helps remove biases and assumptions from the development process. This reliance on hard data supports more informed decisions.Netflix
Netflix's shift from DVD rentals to streaming was driven by user data that showed a growing preference for digital consumption.
What It Gets Wrong
Data can be misleading if not correctly interpreted or if the data set is not comprehensive. Relying solely on data can also ignore the nuanced human factors that are not easily quantifiable but are essential for a product's success.Quibi
Quibi, a short-form streaming platform, relied heavily on data suggesting millennials were into short, quick content. They misunderstood the context - millennials watched short clips as a secondary activity, not as a primary entertainment source, leading to Quibi's quick collapse.
6. Scaling the Business
What It Gets Right
By making sure your product fits the market before scaling, the Lean Startup method saves resources and reduces risk. It's a safeguard against scaling too soon, which can be disastrous.LinkedIn focused on creating a viable professional network platform before scaling globally. Once they established a solid user base and a clear value proposition, they expanded methodically and became the world's largest professional network.
What It Gets Wrong
The iterative approach might delay scaling, causing startups to miss out on critical opportunities to capture the market. Competitors might scale faster and take market share, which can be detrimental in fast-moving industries.
Groupon
Groupon scaled rapidly without sufficiently testing the long-term sustainability of its business model or merchant satisfaction. This led to a significant downturn when the market became saturated, and merchants and users grew disillusioned.
7. Overall Sustainability
What It Gets Right
The Lean Startup promotes sustainability by reducing waste through validated learning. This can lead to more efficient use of resources and a better alignment with market demand.Toyota
Toyota's approach to Lean Manufacturing, which inspired the Lean Startup method, focuses on continuous improvement and responding to customer feedback, ensuring long-term sustainability and industry leadership in automotive manufacturing.
What It Gets Wrong
The intense focus on short-term iterations can sometimes overshadow the need for long-term strategic planning. This might limit the growth potential of a business that becomes too reliant on small adjustments without a roadmap for future expansion.MySpace
MySpace failed to plan strategically for the long term, focusing instead on rapid growth and immediate user acquisition. They neglected innovations and improvements necessary to keep up with competitors like Facebook, leading to their decline.
Summary
- The Lean Startup Method excels in validating business ideas quickly, though it may sacrifice depth for speed.
- Continuous feedback and data-driven adjustments are central, yet they require balance to avoid overwhelming the core product vision.
- Strategic pivoting supports adaptability in dynamic markets, but frequent shifts can undermine long-term business stability.