Why Economic Developers Need Lean Startups

An underground movement stirs in isolated groups of entrepreneurs across the country. It aims to reduce failure when starting a new business, and when failure does occur, to force it to happen faster so less time and money gets wasted.

That movement is called The Lean Startup.

Started in the world of high growth Internet startups, entrepreneurs are applying its practices to all types of businesses. And just as lean manufacturing transformed manufacturing, the Lean Startup movement will transform new business development.

Economic developers pay heed. By teaching your burgeoning entrepreneurs the lean startup methodology, you can increase your success rate and reduce the impact that failed businesses have on their owners.

The Premise

The Lean Startup methodology pulls together best practices from Toyota, Apple and others to help entrepreneurs:

  • Identify a set of customers who will pay for a product or service
  • Discover those customer’s needs
  • Build a minimum product or service targeted to those needs
  • Validate assumptions about those customers and the market
  • Iterate their product or service to increase its value
  • Pivot into a new product or service if customers won’t buy the original idea
  • Grow a business with less startup capital
  • Abandon a business destined for failure earlier

At the core, lean startups apply lean thinking to the process of innovation and business development. The Lean Startup methodology helps entrepreneurs trim the fat from their businesses and focus on value creation.

The Principles

The Lean Startup methodology focuses on disciplines that help entrepreneurs:

  • Focus on customers
  • Get to market fast
  • Learn & iterate quickly
  • Validate assumptions
  • Make data-driven decisions
  • Adapt to changes

The Lean Startup methodology provides a framework that helps entrepreneurs learn these disciplines and apply these best practices within their startups.

The Terminology

The Lean Startup methodology coalescences existing best practices and names them so they can be taught and understood. Lean startup concepts include:

  • Customer Development
    A methodology developed by Steve Blank and adopted by the Lean Startup movement that helps entrepreneurs discover customers, validate their idea with those customers, acquire more customers and grow into a self-sustaining company. Learn more at Venture Hacks or buy his book The Four Steps to the Ephiphany.
  • Minimum Viable Product / Service
    A way of approaching product development to maximize learning from customers as early as possible. Despite it’s name, a minimum viable product may not even be a product. It might be a paper prototype or draft marketing collateral used to gauge interest in the product or service.
  • Validated Learning
    Learning acquired through experiments, measurements and analytics, rather than gut feel or intuition. Used to test the assumptions of a new business venture and help iterate the product or service and the business model.
  • The Pivot
    The process of changing the vision of a business based on validated learning about customers.  Done when its clear the current vision of the business won’t succeed, but an entrepreneur has learned from customers what might work.

This only scratches the surface. To learn more, see the resources below.

To Learn More

Books about the Lean Startup methodology or its inspirations include:

Videos and podcasts teaching aspects of the Lean Startup methodology include:

Articles about the Lean Startup movement include:

Articles, blogs and wikis teaching lean startup methodologies include:

Take Action

The Lean Startup methodology can help make entrepreneurs more effective and increase the leverage of scarce economic development funds. So, what can you as an economic developer do to leverage the Lean Startup movement?

  1. Buy copies of the books above & distribute them to entrepreneurs in your community
  2. Attend a Lean Startup Meetup near you or start your own
  3. Join one of the Lean Startup groups on LinkedIn or the Lean Startup Circle on Google Groups
  4. Direct entrepreneurs to the resources above so they can learn on their own

Whatever you do, don’t avoid action. Read up on lean startups and decide how and when you should apply these lessons to the entrepreneurs in your own region.

Oh, and read Why Governments Don’t Get Startups. It’s a timely primer on the six types of startups and how each require a different ecosystem to develop and thrive in.

Comment below to let me know what you think.

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