Innovation is vital for the success of any business, be it a startup or an established company. This book builds on 3 well-known concepts—Lean Startup, Customer Development, and Bootstrapping—to provide a step-by-step blueprint to improve your chances of successfully developing new products or services.
In this Running Lean summary, we’ll give an overview of the key concepts and 3-part approach to Running Lean. For the full details, examples and tips, do get a copy of the book, or get a detailed step-by-step overview with our complete book summary bundle.
Most startups fail. Among those that succeed, two-thirds were found to have changed their plans drastically. This means that having a great initial plan is not as vital as the ability to switch to a viable alternative before you run out of resources. Part of the challenge is figuring out what can and should be built.
Running Lean: Key Foundations
Running Lean is built on 3 key thought processes:
• Customer Development (by Steve Blank) is a framework for incorporating customers’ inputs into your product development cycle.
• Bootstrapping is about taking the right action at the right time, so you can make progress with minimal external debt or funding.
• Lean Startup (by Eric Ries) is about maximizing learning and minimizing waste in the innovation process; it combines Customer Development, Agile software development methods and Toyota’s Lean practices.
Maurya synthesized these ideas into 3 key meta-principles and a process to maximize your chances of creating a successful new product/service:
• Document your initial plan in 1 page;
• Identify the riskiest parts of the plan; and
• Systematically test the plan.
This Running Lean blueprint is not a magic bullet that guarantees success. It is a proven process to maximize improvement and learning so you can increase your chances of success. The key is to apply and adapt it to steepen your own learning curve.
Learning vs Scaling
Before we move into the innovation process, it’s important to understand that every startup goes through 3 key stages. In the book / complete summary, we explain more about each of the 3 stages. The basic idea is this: initially, you should be focusing on learning and pivots to make sure you have a “must-have” solution and a viable plan to deliver it. You’re only ready to scale and attract investors after you’ve validated your business model. Don’t waste your time with optimization or automation before you’re ready. And that’s what the bulk of Running Lean is about–getting you to a plan that actually works.
Part 1: Document Plan A (your initial plan)
Most initial plans don’t work. In order to test and refine your plan, you must first capture your business plan and hypotheses. The Lean Canvas (adapted from Alex Osterwalder’s Business Model Canvas) is a key tool in the Running Lean framework–the idea is to have a fast, concise and portable 1-page tactical blueprint that you can easily share and review. This is important because fundamentally, your real product is not the product you’re selling, but your entire integrated business model. The canvas helps you to define 9 vital aspects of your business, so you can systematically test them in order of priority and ensure they’re aligned.
In the full 17-pg summary, we explain each of the 9 components + tips on filling up the canvas. In the book, Maurya also gives a detailed walkthrough using his product CloudFire as an example. You can create your canvas online at https://LeanCanvas.com, on your computer or sketch it on paper. Fill the canvas in 1 sitting (ideally <15 min) in the order indicated:
• #1/2: Problem & Customer Segments.
• #3: Unique Value Proposition (UVP).
• #4: Solution.
• #5: Channels.
• #6/7: Revenue Streams & Cost Structure.
• #8: Key Metrics.
• #9: Unfair Advantage.
Part 2: Identify the Riskiest Aspects of your Plan
With enough time and resources, anything can be built. The biggest risk of a startup isn’t building something that doesn’t work; it’s building something that no one wants.
PRIORITIZE WHERE TO START
All startups face 3 key types of risks: product risk (not getting the product right), customer risk (not being able to reach your customers) and market risk (not building a viable business). By the time you’ve fleshed out your canvases (Step 1), you’ll have a range of customer segments/business models to choose from. In the book / full summary, we explain how to rank your business models so you can decide which one to start testing.
GET READY TO EXPERIMENT
FORM PROBLEM-SOLUTION TEAMS
Instead of functional roles/labels, put people into 2 teams: a problem team that mainly handles external interfaces (e.g. interview customers, run usability tests), and a solution team that mainly handles internal activities (e.g. write codes, plan the launch. Ensure the 2 teams work together.
Part 3: Systematically Test your Plan
You’re now ready to use a series of experiments (each with a Build-Measure-Learn loop) to test your plan. In the book / compete 17-page summary, we cover:
• Details of the 4-part testing process: Understand the Problem => Define the Solution => Validate Qualitatively => Verify Quantitatively (then repeat the loop);
• Specific tips for running effective experiments; and
• How to talk to customers/run customer interviews
The 4-part process helps you to systematically test the 9 components of your business plan in phases. Here’s briefly what it entails:
UNDERSTAND THE PROBLEM
At this phase, you’re interviewing/observing customers to validate the problems and customer segments before you develop your solution. Get more details on the specific objectives, how to find people to talk to/setup the interviews, as well as sample problem-interview structures and scripts from the book/full summary. You can stop the problem interviews when you have interviewed at least 10 people and can identify the demographics of an early adopter, a must-have problem and how it’s solved today.
DEFINE THE SOLUTION
Before building the actual product, test your solution with a demo that helps the customers to visualize the solution. Here, you’re confirming the minimum features you need, who the early adopters are and if your pricing model works. Get more details from the book/complete summary on the specific objectives, tips for reviewing your demo/pricing model, and what a Solution Interview looks like. You can stop the solution interviews when you’re confident you have the demographics of an early adopter, a must-have problem, can define the minimum features for the solution, the price the customer will pay and can build a business around it. We also explain in more detail in the book/summary why you should get to the first version of your minimum viable product (MVP) asap, some key considerations and the components that should go into your initial marketing website.
Build your MVP, soft-launch it to the early adopters, and refine it before releasing to the masses. Again, you can get more details from the book / full summary on the specific objectives, the sample structure of an MVP Interview and how to follow up to identify issues, track improvements and refine your MVP. You’re ready to launch when at least 80% of your early adopters consistently make it through your conversion funnel, are able to clearly articulate your UVP, are ready to sign up for your service, accept your pricing model, make it through your activation flow and provide positive testimonials
Before launching the refined product to a larger audience, minimize your risks by verifying that you’ve built something people want, you can reach your customers on a larger scale and you have a viable business model. The book / complete summary go into more details on how to manage new features vs refine existing features, and iterate toward early traction. You know you have product-market fit and are ready to move into Stage 3 (Growth Stage) when you’re retaining 40% of your activated users and pass the Sean Ellis Test.
Other Details in “Running Lean”
This book is packed with details and information including:
• Diagrams and samples of canvases, hypotheses, tools/tips, email and interview scripts;
• Detailed examples of how Maurya applied the principles/processes to Cloudflare and the creation of this book; and
• Recommended links/resources and bonus material in the Appendix, such as tips on how to build a low-burn startup, how to build a teaser page/conversion dashboard etc.
Do get our Running Lean summary bundle for a detailed overview of the key components, steps and tips from Running Lean, or get a copy of the book for the full details. More information and resources are also available at www.leanstack.com.
Develop a plan that works and innovate successfully!