Lean startups fit uncertain markets

Build - Measure - Learn is a model and mindset valuable for businesses in uncertain circumstances.

The core process in Ries' lean startup is Build-Measure-Learn. This cycle is reversed when planning: first one determines the hypothesis (what to learn), then selects the metrics that will validate that hypothesis (what to measure), and finally creates the minimum viable product (MVP) to complete the experiment. The speed at which a company is able to iterate over these steps correlates to the speed they’re able to innovate. At the start, this process may be cumbersome and foreign, many of the players being unfamiliar with the process and the learning goals being vague. With practice; however, a business that centers its focus upon this feedback loop can accelerate to the point of out-innovating their competition.

Any venture whose outcome is uncertain may benefit from Ries' model. The replication of a proven business may not require the tests and validation this model proposes, but this model excels when the environment and customers are uncertain. Any business in a cross-cultural atmosphere qualifies as ‘uncertain’, making this model one of the best for the circumstance. Add to culture the introduction of a service or product with no predecessor and the uncertainty is through the roof.

The build-measure-learn model is a mindset even more than it is a tool, and something which an entrepreneur or consultant will benefit from if it’s in their toolkit. The experimental nature of it fits well with innovation and uncertainty.

Ries' descriptions are easy for me to relate to since they’re in my field - software. The challenge lies in converting the ideas across business and cultural boundaries. For example, a good friend of mine has been considering a venture with an extensive up-front cost. He wants to purchase a large tract of land, say 1000 acres, and build several small houses upon it. He plans to invite missionaries to stay there after returning from overseas to rest and recuperate. He’s got several assumptions, not least of which is that people will come.

I’ve got some ideas for him. First of all, he’s already serving cross-culturally minded people in his home by letting them stay for weeks at a time. He also has families who come live with him at times. I think if he can define the core of what he desires to do, probably love and serve those who go to the nations, he might be willing to begin smaller to test his assumptions. For example, he needs to know whether anyone who is coming back to the States from another country will purchase a plane ticket to Denver and stay there. If he can just get one person, he can sort out may of his ideas about serving them with a real customer and validate some of it with them. This is certainly less costly than purchasing 1000 acres of land and hoping people will come stay on it.

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