How to build a sustainable business in an environment of extreme uncertainty

Whether it consists of a single individual or is a branch of a large company, a startup is an organization engaged in building something new in an environment of extreme uncertainty. This is because everything is new: the ideas, the products, the market or target, the conditions for success.

Why Startups fail

The classic plan to develop a product is as follows:

  • Identify a problem (or a need)
  • Draft an investment plan
  • Seek financing rather than partnerships
  • Implement all functionalities
  • Prepare marketing and commercial materials
  • Take care of every little detail until the product is perfect
  • Launch the product

Then, after months of work, you discover that:

  • The market does not exist or is different from what was envisioned
  • Users don’t use most of the functions considered to be basic.
  • The users ask for different things

Most startups fail because they don’t stand when the assumptions upon which the work was done don’t hold up in the face of reality: a long running start, a big bang.

The Lean Method

The lean method addresses the fundamental problem of startups directly: the context of extreme uncertainty.

A basic point is to redefine the purpose of the startup: rather than the sale of goods or services to make money, it is at first necessary to validate the hypotheses on which the value and growth are based to learn to build a sustainable business. To do this requires a scientific approach based on solid, measurable data rather than a risky approach based on gambles and intuitions.

The learning cycle

The Lean method is based on a cycle: we start from an idea to build a product whose use is measurable returning data from which to learn and verify if the starting hypothesis was valid or not. At that point, the hypothesis will change and the cycle begins again. The result is that we have obtained something solid: learning based on data.

The speed of the cycle, and thus the speed with which we learn, becomes fundamental and is that value which enables us to overcome competitors and achieve success.

MVP

The Lean method is based on a cycle: we start from an idea to build a product whose use is measurable returning data from which to learn and verify if the starting hypothesis was valid or not. At that point, the hypothesis will change and the cycle begins again. The result is that we have obtained something solid: learning based on data.

The speed of the cycle, and thus the speed with which we learn, becomes fundamental and is that value which enables us to overcome competitors and achieve success.

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