Risk is one of the biggest reasons more people don’t become entrepreneurs. You can’t guarantee income while you’re starting up; and if your idea fails, you (or your investors) could lose every dollar spent building it.
But what if you could effectively assess your chance at success before spending what’s needed to bring your product or service to market? The lean startup movement enables this kind of foresight. Eric Ries – a Silicon Valley entrepreneur and author of The Lean Startup – encourages aspiring entrepreneurs to see their product as a tool for figuring out what business they should be in, not as this thing everyone should love just because they do.
To do this, he essentially suggests that companies identify the riskiest part of their business idea first, find a way to test that risk, then refine their product based on those results. Flickr, for example, started out as a massively-multiplayer online game. Then users started uploading photos. Leadership decided to emphasize that feature and pivoted.
Startup veteran, speaker, and author Alistair Croll recently released a book with Benjamin Yoskovitz called Lean Analytics that describes how you find the data to support this learning cycle. This involves knowing what questions to ask and when. Then you figure out the best way to apply those results.
Croll visited the Software Advice offices recently to discuss these strategies further. He provided examples of startups that have done this successfully, as well as ways established brands can apply the concept to test new marketing campaigns, or a fresh product line. Check out the interview in the video below.