Learning as Fast as We Can
If learning is the essential unit of progress for start-ups, any effort that is not absolutely necessary for learning what customers want should be eliminated. So how do we do that? By building what I call a minimum viable product—or MVP. It helps entrepreneurs start the process of learning as quickly as possible. Unlike a prototype or concept test, an MVP is designed not just to answer product design or technical questions. Its goal is to test fundamental business hypotheses.
Yes, MVPs are sometimes perceived as low quality by customers. When that happens, it's an opportunity to learn what attributes customers care about. This is infinitely better than mere speculation or whiteboard strategizing, because it provides a solid empirical foundation on which to build.
Sometimes, however, customers react quite differently. Many famous products were released in what might be called a low-quality state, and customers loved them. Imagine if Craig Newmark, in the early days of Craigslist, had refused to publish his humble e-mail newsletter because it lacked high design.
Customers don't care how long something takes to build. They care only that it serves their needs.
In the early days of IMVU, our avatars were locked in one place, unable to move around the screen. The reason? We had not yet tackled the difficult task of creating the technology that would allow avatars to walk around their virtual environments. In the video game industry, the standard is that avatars should move fluidly as they walk, avoid obstacles in their path, and take an intelligent route toward their destination. Best-selling games such as Electronic Arts's The Sims work on this principle. We didn't want to ship a low-quality version of this feature, so we opted instead to ship with stationary avatars.
Feedback from the customers was very consistent: They wanted the ability to move their avatars around. We took this as bad news, because it meant we would have to spend considerable amounts of time and money on a high-quality solution similar to The Sims. But before we committed ourselves to that path, we decided to try an experiment. We used a simple hack, which felt almost like cheating. We changed the product so that customers could click where they wanted their avatar to go, and the avatar would teleport there instantly. No walking, no obstacle avoidance. The avatar disappeared and then reappeared an instant later in the new place. We couldn't afford fancy teleportation graphics or sound effects.
Imagine our surprise when we started to get positive customer feedback. We never asked about the movement feature directly (we were too embarrassed). But when asked to name the things about IMVU they liked best, customers consistently listed avatar teleportation among the top three. It outperformed features that had taken much more time and money to make.
Customers don't care how much time something takes to build. They care only that it serves their needs. Our customers preferred the quick teleportation feature because it allowed them to get where they wanted to go as fast as possible. In retrospect, this makes sense. Wouldn't we all like to get wherever we're going in an instant? Our expensive real-world approach was beaten handily by a cool fantasy-world feature that cost much less but that our customers preferred. So which version of the product is low quality, again?
Going Lean
At its heart, a start-up is a catalyst that transforms ideas into products and services. As customers interact with those products and services, they generate feedback and data. The feedback is both qualitative (what they like and don't like) and quantitative (how many people use it and find it valuable). As we learned the hard way at IMVU, the products a start-up builds are really experiments. Learning about how to build a sustainable business is the outcome of those experiments. Each experiment essentially follows a three-step process: Build, measure, learn.
Many people have professional training that emphasizes one element of this three-step loop. For engineers like me, it's learning to build things as efficiently as possible. Plenty of entrepreneurs obsess over data and metrics. The truth is that none of these activities by itself is of paramount importance. Instead, we need to focus our energies on minimizing the total time through this loop. That way, we can avoid much of the waste that plagues start-ups today. As in lean manufacturing, learning where and when to invest energy results in saving time and money.
The Lean Startup method builds capital-efficient companies because it allows start-ups to recognize that it's time to pivot—or change direction—sooner, creating less waste of time and money. I named this loop "build, measure, learn" because the activities happen in that order. But the planning really works in the reverse order: We figure out what we need to learn, then figure out what we need to measure to get that knowledge, and then figure out what product we need to build to run that experiment and get that measurement.
So what would organizations look like if everyone were armed with Lean Startup principles? For one thing, we would all insist that assumptions about what customers want be stated explicitly and tested rigorously. We would look to eliminate waste, not build castles in the sky. We would respond to failures and setbacks with honesty and learning, not with recriminations and blame. Most of all, we would stop wasting people's time.
This article is adapted from The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, by Eric Ries, published this fall by Crown Business.
Eric Ries will discuss his new book and answer questions during a live video chat on October 5 at noon Eastern Time. To watch the chat and participate, go to www.inc.com/live.
