The Lean Startup or an appeal to rethink entrepreneurship

Blog #2

Dear reader,

In the course of Prof. Daze’s Entrepreneurship class, I was given the opportunity to deeply explore the "The Lean Startup" concept promoted by Eric Ries. I anticipated that it would be pleasing to put together another article to share the takeaways that I have grasped from the method as well as relate my experience applying the technique into my group's business idea. Besides this official purpose, I fascinatingly discovered a new passion: blogging. I hope this blog is one of a long series.

Going back to "The Lean Startup", note that this approach fosters rapid experimentation, validated learning,  iterative process,  in addition to getting potential end-users’ feedbacks throughout the product development cycles or venture creation.  Actually, this technique offers entrepreneurs as well as product developers a practical way to assess consumers interest in the product, so it can be refined accordingly. Additionally, through validated learning, entrepreneurs aim to avoid the waste of resources, time, and energy during the product creation and development. Now, I invite you to take a look at how "The Lean Startup" methodology helps my group throughout the process of the creation of our creperie venture.

As described in my previous post, my team's project implicates the creation of a creperie that will serve tasteful specialized crepes to Ottawa residents. We supposed that our project would be an excellent occasion to experiment the "The Lean Startup" approach throughout the creation process of our new venture. Hence, we scrupulously applied each piece of the method and we were truly able to obtain a real sense of its soundness.

First, rather than writing an intricate business plan, the Lean Startup method suggests summarizing the business hypotheses in a strategic framework called the "business model canvas" (BMC). With its nine sections (value proposition, customer segments, distribution channels, customer relationships, revenue streams, key resources, key partners, key activities, and cost structure), the BMC depicts the key components of the enterprise and highlights how the business creates value for itself and its customers. Thus, we devised the BMC of our endeavor and established that our value proposition was to enhance Ottawa's food experience with tasty specialized crepes. Also, we affirmed that our channel was a sit-down restaurant and our revenue stream was basically the markup on sales. Furthermore, our key activities included creating the crepes recipes together with promoting the company. Further, we identified that our cost structure mainly included restaurant rent, utility cost, salaries, and raw materials, while our major partners were suppliers, media, and industry experts.

Second, Ries urges customer development which consists for entrepreneurs to test their hypotheses or vision by engaging with potential customers, purchasers, and partners and ask for their feedback on all elements of the business model. Taking this recommendation, we designed a website, created surveys, conducted in-person interviews and interviewed three industry experts. Through these means, we also intended to validate the need for a specialized creperie in Ottawa, the food and channel preferences, the product attributes and pricing.  We could not be more amazed by the pertinence of the data that we received. Indeed, we learned that the majority of the people reached, acknowledged the need for a specialized creperie in Ottawa but they were mostly in favor of food truck instead of a sit-down restaurant. Besides, they insisted on the customer experience and asserted that they had more interest in low prices.

Third, Ries advises entrepreneurs to use customers' input to revise their assumptions and make small modifications referred to as "iterations" or substantial adjustments called "pivots" to products to better serve the prospective customer. That is exactly what we did. In fact, enriched by the first validated learning from potential customers and industry experts,  we revised our BMC and incorporated the feedback received. Hence, we made a major decision concerning our channel and essentially shifted it from a restaurant to a food truck which triggered a readjustment with the cost structure. We then replaced the rent and the utilities by the food truck cost and the required permits to operate a food truck.  Likewise, we integrated customer experience and affordable price in our proposition value and selected key activities aligned with that new vision.

Last, one of the core components of the Lean Startup methodology is developing a minimum viable product (MVP) which allows entrepreneurs to introduce it to potential customers to gauge their reaction and carry on with the process of learning. This method undoubtedly appears faster and less expensive than developing the final product for testing. With that in mind, we organized a crepe degustation at one of my colleagues' apartment. We invited a dozen people among our friends, work colleagues and classmates to come to taste a few of our specialized crepes. We presented our guests with three different flavors of crepes (eggs-avocado, strawberry-brownies, pork-mac &cheese). After the degustation, we administrated a survey to all participants to gather their comments on the taste and the quality of the crepes they tried, to validate the best location for the food truck, the pricing, and the attributes of the business. We were pleased to collect fruitful feedbacks from the participants. We learned that people valued a rapid service, an outstanding customer service, and a low price.   Moreover, people indicated that the Byward market was the ideal location for the food truck. We used all the comments and feedbacks collected from the participants to enhance our BMC and come closer to what the customers are truly looking for. Now what our prospective customers really want, we feel more comfortable going head and establishing our food truck business. Therefore,  we are now working towards collecting all information about the City of Ottawa’s food truck regulation, the food truck cost along with the initial supplies cost. 

In sum, Eric Ries in his book "The Lean Startup" proposes a scientific approach to the development of a product as well as the creation of a new venture. This powerful methodology relies on a specific process that the author describes as a loop as follows: build-measure-learn. For having employed the method, I can affirm that the purpose of the Lean Startup is to get the desired product to customers' hands faster by eliminating uncertainty together with resources waste, developing an MVP, and adopting validated Learning. I feel fortunate to have learned this powerful method and I will certainly use it as a guide in the creation of my own business.