A big reason why startups fail is they create something they can't sell, according to Eric Ries, originator of the lean startup method. The entrepreneurs have not produced the right product or service, or there is no market for it. Had they applied the lean startup process, they might have removed much of the uncertainty of product acceptance in the marketplace.
Lean Startup Theory
The reason for product failure is the entrepreneurs spend time and money planning, designing, manufacturing, marketing and end up not selling enough products to make a profit. Ries feels this is because they didn't incrementally develop the product, using lean startup methods, to quickly remove the uncertainty in their startup project. His theory is that the sooner you arrive at a use-tested product, through production and testing of small batches, the sooner you eliminate uncertainty in your startup. They key is continual production and testing of small batches, and redesign according to the results of testing.
As you build your company, continually evaluate each new idea. The process is to deploy your product or service quickly, see if it works, fix any problems, work in small batches and, if it is a large project, break it down to a series of small batches. For example, you plan to go into business making red wagons. Make your first red wagon and show it to a child. If the child has a problem playing with it, or ignores it, evaluate why the red wagon failed and change it to meet what you think the child wants. Paint it blue. Then give it to the child and see what happens. Incrementally deploy new small batches of newly changed wagons until you reach a product that works.The important element is to perform this process quickly so you can arrive at a useful product without manufacturing a full lot of wagons that don't appeal to children.
Rapid Split Testing
In developing your product or service, testing is important to create something your customers actually want to buy. Your reports regarding the results of testing should be actionable, accessible and auditable. In the red wagon example, don't test all changes. Select one change to make, test that, compile results and analyze those results. A smaller number of tests can be done quickly, keeps the results report to a size that can be easily cognated and can be easily checked for accuracy or tabulated to be added to a total evaluation, eventually comprising a large number of tests.
The five whys root-cause analysis method is a practice for arriving at the true cause of a problem. In the red wagon example, your five whys might go like this: Why didn't the child play with the wagon? He started crying. Why did he start crying? It scared him. Why did it scare him? He didn't know what it was. Why didn't he know what it was? He had no reference point from past experience to know it was a toy. Why didn't he know it was a toy? Because it didn't look like any of the toys he knows. After the five why-questions, the real cause of the problem is discovered and the red wagon is redesigned to look more like Thomas the Tank Engine.
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