Entrepreneurs Corner: 5 Ways A "Lean" Start-Up Can Fail

Lean Start-up philosophies are all the rage for the last few years, its almost seen as a sense of pride of how cheaply your team can build features and products and pivot when necessary but here's the problem: lean start-up teaches instant gratification not long term value

(This article is part of a series by our resident SocialTimes entrepreneur, Ellie Cachette. Cachette is the founder of ConsumerBell and also writes on topics covering Consumer Web. For more articles by Ellie, click here.)

Courtesy of Crumpetsa.comLean Start-up philosophies are all the rage for the last few years, its almost seen as a sense of pride of how cheaply your team can build features and products and pivot when necessary but here’s the problem: lean start-up teaches instant gratification not long term value. Encouraging a start-up to run on a little budget is almost redundant, by nature a start-up has very little capital and especially when pre-revenue, founders often work very hard to bring in every dollar either by donation or investment so money inherently isn’t going to be wasted. Teaching a team to live off little and go for quick wins can often be distracting and even keep the product from making a drastic and costly pivot that could make a bigger impact with exponential value. Disruption is often the biggest blessing of a business, if current successful multi-billion dollar corporations followed the Lean Startup methodologies then HP would still be making various versions of lightbulbs and FedEx would not exist. (see this video on Tenacity vs. Intellect)

The truth is, similar to project management there is no one exact way to run a project. As a project manager or PMP you are often taught the exact steps to take during development but if everything was followed via textbook then the project would be late. Why? Because projects like start-ups involve people and dreams, if you are building for the sake of building then quick wins are false band-aids that block sustainable success.

Here’s 5 tactics of a Lean Start-up that don’t work and why:

1) Customer Validation

Making customers happy is important to a business, though in web and software often your happiest customers are the quiet ones. Feedback is often based upon gaps in a product that could be fixed indirectly from other areas than what the customer thinks is the “problem.” Customers often don’t know what they want or how to explain it technically and making quick changes to the most verbal group can ostresize the steady product-loving group. Balanced user feedback is optimal, take the time. Trying to make screaming Sally happy might end up making Paying user Paul upset. Understand the larger gaps and how they align with the main product vision. A pivot might take you down the wrong path when more clear content or visual cues could resolve the confusion.

2) Reducing Waste, Re-use Everthing

Have you ever cooked something awful, then added ketchup, sauce, spice or something to make it taste better? Think, how did it taste? Like the same awful thing but with more spices. I’m not saying throw everything out but often taking a prototype and continually trying mold it can be costly long-term, create spaghetti code, and keep everyone from thinking in the box. If something is bad go back to the whiteboard, understand why you thought it was a good idea in the first place. Start over.

3) Minimum Viable Product

The problem with shooting for the “minimum” is like trying to get a C in an honors course. Massive features should not be layered upon each other without cause but if too minimum of a product is released its hard to tell what to build next and what the customer actually likes. Throw in a few extra items and metrics will fill in the blank for you. In fact its always useful to make a feature a “wildcard.” Throw in one thing that probably won’t be successful and see what happens, numbers won’t lie.

4) Continous Development

Having a steady workflow of resources is always optimal. In project management resource areas are broken down into units and making sure there are no spikes can ensure harmony and reduce risk, however when dealing with development, especially salaried employees, the advantage to having steady deployments daily create a false sense of corporate security. Should a feature or deployment become wildly successful it will be hard to pinpoint, as with timezones and schedules there’s a delay of interaction with users which then takes intensive surveys or investigation (time waste) to go back and track to figure out what was a hit if not stagnantly obvious.

5) A/B Testing

Lean Startup is all about iterations and testing things in parallel but testing for small differences is expensive and often won’t lead to a relevant enough change. AppSumo recently found that only 1 out of 8 tests produce results. So what’s the point at slaving away, making minor tweaks, testing, and the ROI could actually be negative to the product budget?

The Real Issue

Lean Start-up methodologies if taken verbatim can produce a Donner Party-like mentality. Eating breadcrumbs until everyone in the cabin is snowed in and eventually cannibalizing one another. Suppose all the minor tweaks to product do lead to a massively successful product, another hump will follow: your start-up won’t know how to spend money wisely to grow. I’ve seen start-ups take $200k and try to stretch it out as far as possible, yet when it came to getting a large chunk of capital that could help create a hockey stick of growth, the “lean” mindframe can actually make it hard to spend what is needed for uber growth.

Bottomline is to trust one’s gut, listen to the data, and see what traffic is doing not saying. In the end you get what you pay for and if you pay nothing, then well expect as much.