How can entrepreneurs who face both uncertainly and limited resources overcome these constraints and deliver products that everyone wants? In the article “Testing Business Hypotheses: The Lean Startup”, we discussed a solution based on lean startup principles and introduced specific steps entrepreneurs should take to formulate a set of falsifiable hypotheses. Now, it’s time to move forward and discuss how those hypotheses can be used to maximize learning through a series of minimum viable products (MVPs).
One thing you should always keep in mind before investing in MVP development is that MVPs come in two different forms: the ones intended to prove business hypotheses—commonly referred as constraint functionality MVPs—and those whose goal is to disprove assumptions—known as constrained operations or concierge MVPs. Understanding the difference is critical because they approach the task differently. To add to this potential confusion, there are MVPs that combine the qualities of both forms, such as the so-called smoke tests, which are methods for determining whether there is sufficient demand for a given value proposition. Fortunately, developing the set of MVPs necessary to test business hypotheses is the easiest part of the lean startup process—all you need to do is contact Yarandin, Inc. to obtain the necessary MVPs, which, in some cases, are delivered in as quickly as seven days!
Testing business hypotheses with MVPs is a trying process consisting of gaining and evaluating market feedback through iterations. In each iteration, an entrepreneur evaluates the results and decides whether to keep the particular business hypothesis intact, change it, or abandon it. This is how the proposed business model is evaluated through market feedback on the smallest set of features. The outcome is always binary: in the first-case scenario, the rejection of key business hypotheses will make an entrepreneur shut down the business because the business model was proven ineffective. In the second-case scenario, there will come a moment when all the business hypotheses are either changed or verified. Getting to this point means that an entrepreneur has a product that is a good fit for the market and that a startup has a chance to become a market leader. This is the point at which lean startup entrepreneurs will start thinking about scaling out their businesses and employing aggressive marketing and advertising. This is the time for them to build a team and make infrastructure investments. This point is also what differentiates them from their traditional, business plan–driven counterparts who try to achieve everything from the beginning.
At this point, some of you may wonder that given that the whole point of lean startup is to help enter the market quickly and with the least effort, is it really necessary to go through all of these steps? This is a legitimate question, to which the answer is “yes, following the methodology is necessary.” It is important to realize that the true value of the lean startup approach is deeper than just developing best-selling products. Through a series of MVPs and market feedback, lean startup makes entrepreneurs evaluate their entire business models at the very early stages of their businesses and make changes to the elements that fail the hypothesis testing. Through its principles, lean startup guarantees the balance between entrepreneurs’ imaginations and market needs. However, the lean process does not stop with the successful verification of business assumptions or the achievement of a product that perfectly fits the market. The process of optimization in lean startup never ends, making business models evolve and adapt to market changes—thus providing businesses the edge while keeping their competitive advantages intact. The real value of lean startup is that is helps entrepreneurs to build sustainable businesses—ones that can remain in the market for years—rather than to develop products demanded only today.