We know that a startup can existing in a large corporations and we know that Lean Startup can be applied to non-web based business, a great example of this is Eric Reis’ work with the US Government. However, what is not so clear is how Lean Startup principles can be applied to starting up a business. As I have been going through the Lean Startup process and discussing it on and off-line I have been asked this question.
I may have lost you a little- the difference between starting business and a ‘startup’ is subtle yet often overlooked. I had already been thinking of this based on conversations with friends when I read Scott Allison’s first blog post for Forbes.
To re-iterate, the two most common definitions of a startup are:
“a human institution designed to deliver a new product or service under conditions of extreme uncertainty.”
“a company in search of a repeatable and scalable business model”
While Scott Allison focused on the difference between the two, particularly focusing on what a startup lacks compared to a business- certainty and a repeatable, scalable business model.
All this week I have been focusing on the one thing they most definitely share in common- they are both based largely on assumptions.
All decisions one makes in the early stages of a business are based on assumptions- the biggest problem is that most businesses don’t have a process in place for highlighting and testing these assumptions and too often businesses don’t find out their assumptions are wrong until it is too late.
As with uncertainty the presence of assumptions is only more apparent in startups because most of the time nothing has been produced. It is a deadly trap for businesses to get into to think that because they have a ‘proven’ business model, some degree of product market fit and some paying customers that they have everything sorted.
Luckily I have had the chance to sit down with an early stage (off-line) businesses run by a friend of mine this weekend and get some first hand experience of this problem.
This business would not fall into the descriptions of a startup above but it is definitely facing uncertainty and was in danger of making significant and as it turned out incorrect decisions based on assumptions masquerading as facts.
By questioning the reasoning for actions, the assumptions these decisions were made on and how to test these assumption it allowed us to gain perspective.
I have far from gotten my head around this subtle but important distinction but this week has been really enlightening as it put a whole different perspective on my business outlook. This is an on-going project and I will continue to work with my friend and her business and as I start to shed some light I will share my experiences and learning.
I have found that this is a topic that generates much debate and discussion and I would love to hear your thoughts and opinions.