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The Lean Startup – Doing Away with the Myth of the Business Plan

lean startup

Business founders have to first of all write a business plan. With “The Lean Startup”, Eric Ries debunks this common myth. In reality, business plans rarely survive first contact with the customers. As boxing champion Mike Tyson once said, quite fittingly: “Everyone has a plan ’till they get punched in the mouth.”

In his philosophy, Eric Ries advocates the “proof of market”. He recommends testing products and ideas as early as possible, before a lot of money and resources have been poured into the project. 

So, what does this mean, exactly? Here are three key principles to help you with your own lean startup:

  • Create a model, chart, or mind map of your hypotheses rather than writing out a complicated business plan. The Business Model Canvas framework created by Osterwalder & Pigneur is a simple tool you can use to show how your company wants to create value for itself and its customers.
  • Start paying attention to your customers early, and go outside in the early stages. Test your hypotheses on potential customers, buyers, and partners at every level (product features, pricing, distribution channels and affordable customer acquisition strategies).
  • Juice up your development process and integrate potential customers early in an iterative product development process.

This means, in a nutshell: Lean startups are temporary organizations developed for the purpose of finding a reproducible, scalable business model with the ability to react quickly. This concept works particularly well where products are easy to test (such as software).