The Harvard Business Review recently published research on business start-ups. Harvard University’s Shikhar Ghosh proved that 75% of all new businesses fail. While there were numerous reasons for failure, a key factor was the lack of a viable business plan.
While traditional approaches focus on elaborate planning prior to starting the new business, emerging thought based on the study of thousands of start-ups is that a successful new business actually fails many times en route to success. The difference between the failures that succeed and the failures that ultimately fail is a mindset referred to as “the lean start-up”.
The lean start-up favors experimentation over elaborate planning and customer feedback over intuition. Concepts like having a “minimally viable product” and “pivoting” are key to the lean start-up learning, adjusting, adapting, surviving and ultimately succeeding.
After analyzing thousands of failed start-ups, three overarching conclusions were reached: First, business plans rarely survive the first contact with customers. Second, a long term business plans are a waste of time. Third, successful start-ups go from failure to failure, adjusting and adapting to customer feedback en route to success.
The lean start-up relies on three key principles: First, entrepreneurs need to embrace that fact that they possess no more than a series of good guesses. The best business plan is a sketch that visually outlines how you will serve your customers and make money. Second, by rapidly deploying minimally viable products, the lean start-up makes small adjustments to successful products while making larger changes (called pivoting) on products with poor customer feedback. Third, lean start-ups engage in agile development which is the use of third parties in the deployment of the business whenever possible. This reduces start-up costs while allowing for faster adjustments and adaptation.
For more information on how to create a lean start-up, contact us at www.ShareKitchen.org.
