Kicking off a new business involves risks that can be hard to estimate for the new entrepreneurs.
Will I have enough customers? Will my product find distribution channels? Will I be able to create a support structure that can grow and maintain itself? Will I have enough economic, human and technological resources? These are just some of the questions that a new business and its managers have to ask themselves. Above all, innovative companies, which focus pre-eminently on the product and on the level of technology and innovation it contains, expose themselves to the risk of early bankruptcy, especially if at the first experiences or dealing with a truly innovative product, which the market could not adopt quickly enough.
The start-up experts have studied which companies succeed in their intent and which fail, establishing what are the keys to the success or failure of an entrepreneurial initiative. The result of this research is the Lean Start-up methodology. Proposed by Eric Ries in 2008, the methodology allows technology companies to develop and test the new product or service quickly, with cyclical updates, small changes and a company structure that grows in synch with the needs of the product. According to Ries, start-ups fail if they fail to understand fully their customer’s needs. The goal must not be to work beyond the acquired technology and to go forward, but to look back to satisfy the clients’ needs and to achieve the desired economic results.
The Lean methodology eliminates the waste of time and money in the process that defines the real value of the product, especially during the initial phase of company life; in this way the need to resort to large investments or complicated business plans is reduced.
The vital asset is the feedback of the final consumer, which ensures the company won’t invest time and money in developing services or functions that the user does not want. Feedback is stimulated through small incremental improvements of the product / service and is recorded through a set of key performance indicators. In this way, the elements that guarantee sufficient satisfaction or value perception of the product are maintained, the others are discarded. The company does not produce a static service, on the contrary, it sends to market a product that has already reached a minimum level of functionality, the so-called Minimum viable product, and completes it over time by adding or modifying its features based on market response. The methodology has nothing to do with the actual amount of resources put in place by the company or by investors, but focuses on the active and proactive listening of the client, with the goal to satisfy his requests using the resources available in a rational manner.