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Feb 24

Lean Startup != Cheap Startup

One of the biggest misconceptions about the Lean startup concept is “Lean = Cheap”, i.e. the startup will be under-capitalized, the team should live off little, etc.

Encouraging a start-up to run on a little budget is almost redundant, by nature a start-up has very little capital and especially when pre-revenue, founders often work very hard to bring in every dollar either by donation or investment so money inherently isn’t going to be wasted.  Teaching a team to live off little and go for quick wins can often be distracting and even keep the product from making a drastic and costly pivot that could make a bigger impact with exponential value.
Ellie Cachette @ SocialTimes

While the misconception is understandable given the loaded meaning of lean, quickly googling can easily solve the misconception, especially given the history of the “lean” movement.

The concept of lean comes out from Lean manufacturing, which arise from Toyota’s management and manufacturing process that focuses on reducing “waste”.  Without going through the details of Lean manufacturing, it should be immediately clear that Toyota was not an under-capitalized company, and automobile manufacturing is also not a process that can be compressed easily for the so-called “quick wins”, since customers are not lining up to buy prototype cars.

Anyone who has been through software developments know that there are a lot of wastes inherent in the process, regardless of the budget, and whether there are clearly defined requirements.  Agile methodologies arise to help address/reduce the waste, by shortening the feedback cycle, and increase agility in case the requirements change.

The lean movement attempts to do the same for startups.  Just as the requirements are ill-defined, ill-understood, and can change in software projects, the markets and customers are also ill-defined, ill-understood, and can change.  And until the startups can lock those down to a point of certainty, any execution/scaling are premature and wasteful.

And that’s the waste that should be eliminated.

Thus – the lean concept can be summed down to the following:

Validate your business before scaling

If FedEx or HP decides to open national offices before they have an inkling that customers will be lining up to buy their products and services, we will never hear about them today.

This concept has nothing to do with whether the product is incremental or disruptive innovations, or whether the product takes little or large funding to get out of the door.

Lean has nothing to do with whether your startup requires little or lots of funding to run, nor does it have to do with whether you have an incremental or disruptive innovation at hand.  It just has to do with ensuring that you actually has a business case before you go all-in on this hand.

Can startups success without following the lean process?  Of course.  Though it can be shown that they implicitly follow the validation process anyways.

Can lean process guarantee startups’s success?  Of course not.  There are too many variables at play for startups to succeed, and processes/best practices are just one of them.

But it can help – if one is only willing to understand that “Lean != Cheap”.

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