Have an idea, what next?

This is one question (or some version of it) that is asked on Quora quite often.

And, here is a long version of its reply.

Launching a new business

When you plan to startup, according to the old formula, you write a business plan, pitch it to investors, assemble a team, introduce a product, and start selling as hard as you can. And somewhere in this sequence of events, you’ll probably suffer a fatal setback.

But in the recent few years, a methodology called the “lean start-up,” has emerged and it favors experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional “big design up front” development.

New ventures of all kinds are attempting to improve their chances of success by following its principles of failing fast and continually learning.

Startup = experiment 

The lean startup methodology believes that startups do not have a business model that works, yet.  A ‘startup’ is still a company that is confused about –What its product is. Who its customers are. How to make money. As soon as it figures out all 3 things, it ceases being a startup and becomes a real business. We start with assumptions or hunches about most if everything, to begin with. More early you start to get a sense for theories against reality, the safer you are.

Unlike in earlier times, today’s founders start small and make smart micro-experiments, besides customer interviews to test the assumptions.

MVP experiments 

MVP stands for the minimum viable product. At any stage when you go through Learn-Build-Test loop, your most critical assumption that you want to test drives what features you build in the product. And, this essentially is the core of MVP. MVP concept was devised – to build a functional but “minimally-produced” kind of micro-prototype, ship it and battle-test our concept.

Lean startup building steps 

To use the lean startup methodology, follow these steps when you have an idea.

Create a lean business model canvas for your idea (if you do not know what is a lean canvas, learn it from this free course available here.

Identify the most critical assumption into it (mostly it would be the validation of pain point at this stage)

Build a hypothesis to be tested for the assumption

Build and run MVP experiment to test the hypothesis in 3.

If the hypothesis is validated, go further to 6 or else go back to 1 (with a new / modified idea)

Identify the next critical assumption about your business model

Build a hypothesis to be tested for this assumption

Build and run MVP experiment to test the hypothesis in 7.

If the hypothesis is validated, go back to 6, or else modify your business model and go back to 6. Continue 6 to 9 until all critical assumptions are validated. By this time, you would have discovered your early users/ customers.

Takeaway 

Lean startup methodology may sound like an unnecessary effort, but that’s the safest way to start-up when you have an idea.