"Lean
Startup" is an approach for launching businesses and products, that
relies on validated learning, scientific experimentation, and iterative product releases
to shorten product
development cycles, measure progress, and gain valuable customer
feedback. In this way, companies, especially startups, can design their
products or services to meet the demands of their customer base without requiring large amounts of initial funding or
expensive product launches.
Minimum
viable product
A minimum viable
product (MVP) is the "version of a new product which allows
a team to collect the maximum amount of validated learning about customers with
the least effort. The goal of an MVP is to test fundamental business
hypotheses (or leap-of-faith assumptions) and to help entrepreneurs begin the
learning process as quickly as possible. As an example, Zappos founder Nick Swinmurn wanted to test the
hypothesis that customers were ready and willing to buy shoes online. Instead
of building a website and a large database of footwear, Swinmurn approached
local shoe stores, took pictures of their inventory, posted the pictures
online, bought the shoes from the stores at full price, and sold them directly
to customers if they purchased the shoe through his website. Swinmurn
deduced that customer demand was present, and Zappos would eventually grow into
a billion dollar business based on the model of selling shoes online.
Continuous deployment
Continuous deployment is a process “whereby all
code that is written for an application is immediately deployed into
production,” which results in a reduction of cycle times.
Split
testing
A split or A/B test is an experiment in which
"different versions of a product are offered to customers at the same
time." The goal of a split test is to observe changes in behavior
between the two groups and to measure the impact of each version on an
actionable metric.
A/B testing can also be performed in serial fashion
where a group of users one week may see one version of the product while the
next week users see another. This can be criticized in circumstances where
external events may influence user behavior one time period but not the other.
For example a split test of two ice cream flavors performed in serial during the
summer and winter would see a marked decrease in demand during the winter where
that decrease is mostly related to the weather and not to the flavor offer.
Actionable
metrics
Actionable metrics can lead to informed business decisions
and subsequent action.These are in contrast to 'vanity metrics' - measurements
that give “the rosiest picture possible” but do not accurately reflect the key
drivers of a business.
Vanity metrics for one company may be actionable
metrics for another. For example, a company specializing in creating web based
dashboards for financial markets might view the number of web page views per
person as a vanity metric as their revenue is not based on number of page
views. However, an online magazine with advertising would view web page views
as a key metric as page views as directly correlated to revenue.
Typical examples of a vanity metric are the number
of new users gained per day. While a high number of users gained per day seems
beneficial to any company, if the cost of acquiring each user through expensive
advertising campaigns is significantly higher than the revenue gained per user,
then gaining more users could quickly lead to bankruptcy.
Pivot
A pivot is a “structured course correction designed
to test a new fundamental hypothesis about the product, strategy, and engine of
growth. A notable example of a company employing the pivot is Groupon; when the company first started, it
was an online activism platform called The Point. After receiving almost
no traction, the founders opened a WordPress blog and launched their first
coupon promotion for a pizzeria located in their building lobby. Although
they only received 20 redemptions, the founders realized that their idea was
significant, and had successfully empowered people to coordinate group action.
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