Welcome to the eighth article of our Entrepreneurial Wednesdays series. In this series, I share my thoughts on lean entrepreneurship as I take my first steps in my journey. I will be sharing my lessons learned with you.
Know where you are heading
Imagine that you just got an idea. Right in this moment. What will you do next? What are the right actions to take in order for you to have an idea where the business is heading? The Lean Startup came with the theory of The Learning Milestones. This will help you grow your business in an organized way, while you will be able to keep an eye on what’s going on and what’s more, you will be building a continuos business.
Firstly you have to set the Base Line. It is a great way of how to keep track of the changes in the project. Build your MVP, get useful info from customers who tried your MVP, schedule interviews with your customers, communicate with them. More so, building an MVP will help drive the project forward and you will be able to meet with your customers. Overall, when you are doing everything right you should have enough information to see what is the current situation of the project. This way, you create your Base Line. Now you know what was the original state of the product and will be able to see what changes were applied.
As soon as you have your Base Line, you can work on tuning your engine. Your MVP most probably gave you a specific type of customer feedback. And that is the one and only feature which creates the highest value for your product in the eyes of your customers. This is what you want to focus on. You want to build upon that feature. If there is something you feel needs changing, don’t be afraid to do it. But remember, a good change has a positive impact only when it changes the behavior of the customers in an expected way. Don’t debate over changes and don’t waste time waiting to make them. Plan a change, do some experiments, get customer feedback and you have the results right there. You don’t have to make the decision. Your customers will. You only have to offer them the option.
Don’t be afraid of changes
When your startup is functioning and the numbers and sales are growing everything seems to be on the right track. But from time to time it may happen that your project will get stuck on the same numbers with you not having a clue why. Using innovation accounting will give you useful hints and this is the right time to consider pivot. Simply said, pivot is a change. It is a change of the course of the whole project. Of the core of the product and sometimes even your potential group of customers. Pivot is needed for growth and sometimes may lead to such big changes that it will change the whole idea of the product. That is not something you should worry about because your main goal is to build a growing business. And pivots are the right tools to use. Some people see pivots as frustrating but there is no need to. Pivots are usually undertaken when you are sure that you are not on the right track. Pivots give you opportunities to experiment differently and look for your spot with a different approach and things to offer.
Lie to me!
Cohort Analysis. What is that? Sounds like a weapon from Star Wars right? Don’t be surprised, it is a weapon. A startup weapon which shoots information at you that you can use to clarify how is your project doing. Typical charts or diagrams have the tendency to look at users as one unit (in the language of The Lean Startup these are called “broad metrics” because they are misleading), cohort analysis separates users into related groups. Each group has similar characteristics according to which users are divided. Thanks to cohort analysis you know for sure how many people bought your product, how many registered at your website, how many actually paid for it or how many just opened your website and left right away. This is how you clearly see what’s going on. Cohort analysis is a very, very important tool because it tells you what is not working well and you can decide whether pivot is needed or not.
Overall, the main objective to point out in this article is to keep track of your work/progress and don’t lie to yourself when it’s going bad. You can still do a pivot and I know that are many startups that started with one idea and ended up being successful completely differently. There is no reason to be frustrated, unless you are lazy to work!