Risky Business – Lean Startup
In the class prep, I was at first kind of surprised the by the concept of the lean startup. I mean, it made sense to me to try to minimize costs by using customer feedback to guide product development, and I liked the approach of continuous learning. But I found it kind of counter-intuitive to try to minimize risk by taking risks (trying completely new products, models, and approaches). You’ve already invested money in your original plan – isn’t it riskier to change your plan completely?
It wasn’t until we had to make our group business plans that I understood. It was difficult to forecast exactly what our consumers’ response would be, if we could achieve our goals of an excellent customer experience, and if we would be able to make a profit. It showed me that in every business, there will be major unknowns that the company will have to learn about and then adapt to. I could definitely see how using customer feedback for management decisions would actually guide the business to suit their needs better, making the business less risky overall. It may not have to be as drastic as overhauling the business structure – it may be broad strategic goals such as marketing more to a certain market segment.
For example, one classmate blogged about how she would hypothetically start a business with the “UBC events app” that one group pitched in our entrepreneurship class. I agree that a lean start-up approach could be very effective. I would try to get as much consumer feedback as possible, which would be fairly easy because my target market is my peers. I would also have to experiment with different kinds of marketing – social media, a booth at clubs events, coordinating with UBC REC events.
Picture: http://lean.st/