Overview of the Lean Startup approach - Sketch Tutorial

- The Lean startup is an approach to building products and businesses that aims to reduce risk by incorporating cycles of experimentation and incremental validation. After the dot com bubble burst, it became apparent that you couldn't follow the business models of old. Companies were wasting time and money building things that didn't translate into business success and entrepreneurs started looking for ways to get out of that loop. Eric Ries was one of those struggling entrepreneurs that experimented with new methods and wrote up his learnings in the iconic 2011 book The Lean Startup. He lays out a number of core principals and a framework for entrepreneurs to be more successful in their ventures. His first major concept is that entrepreneurship is everywhere. What he means is that you can be considered a startup in any size or type of organization as long as you're working on creating something new under conditions of extreme uncertainty. In a traditional business environment, you might know enough about the customers or the markets to calculate your risks and adjust your strategy accordingly. In a startup, you don't know enough about the people, their problems, or the solutions, to calculate risk. That's the situation the Lean startup is aimed at addressing. The next Lean startup concept is that entrepreneurship is management. This simply means that traditional management practices don't necessarily work well in a startup setting, but nor should a startup go without processes, oversight, or discipline. Startups need to have structure in place that allows for experimentation and learning, but also holds itself accountable for success. To that end, there's a corollary concept called innovation accounting, which calls for entrepreneurs to hold themselves accountable by measuring potential drivers of success. First, you have to establish a baseline measurement of current performance. Then, you make assumptions about what would improve business viability, and test out tweaks to see if performance improves. Measuring progress by what's learned in each experiment is called validated learning. The idea is to look at metrics to help you learn how viable your business is, which means to look at both how users are reacting and whether you're creating value. Working on anything that doesn't create value to you or your users is considered wasteful and therefore should be cut. The process the Lean startup suggests for conducting this kind of experiment is known as the build-measure-learn loop. The idea is to build some minimally viable product, test out how what you've built impacts the bottom line, and then decide what to do next based on that experiment. The faster you can move through this feedback cycle, the faster you can make progress to becoming a more successful company. This experimentation framework will be the core of what we discuss throughout the course so we'll dig into the details in further sections. The Lean startup approach invites entrepreneurs to look at their business as a series of experiments with each experiment aimed at understanding how to build a sustainable, successful business centered around a core vision.