Things Lean Startups Do Differently

Strategy

The strategy of a lean startup is based on a Business Model – a plan for the successful operation of business, identifying sources of revenue, the intended customer base, products, and details of financing. Their plan is Hypothesis Driven, which means it’s a supposition or proposed explanation made of limited evidence as a starting point for further investigation. The strategy of a traditional startup is based on a Business Plan. A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organization or team attempting to reach these aims. Their plan is Implementation Driven, which means they are putting a decision or plan into execution.

Financial Reporting

Lean startup presumes that the strategy should be focused on metrics. The average of customer’s acquisition cost, lifetime, customer value, churn, virals are analyzed. This data plays an important role for lean startups. Traditional startups primarily focus on accounting. Information such as income statements, balance sheets, and cash flow statements are valuable to traditional startups. 

New-Product Process

The New-Product Process of a lean startup is based off a Customer Development – a four-step framework developed by serial entrepreneur and business school Professor Steve Blank. Its primary goal is to gain customer’s opinions on a product so that they can modify the product based on their customer’s need. The traditional way builds on a Product Management – an organizational lifecycle function within a company dealing with the planning, forecasting, and production, or marketing of products at all stages of the product lifecycle. They prepare an offering for markets following a step-by-step plan.

Failure

Lean startup companies are prepared for a failure. There is a definite plan behind their actions. With each upcoming issue, the mistakes are fixed by repeating ideas and pivoting away from ones that don’t work. The traditional startup is based on the exception. They attempt to fix an issue by firing their executives.

Engineering

The Engineering of a lean startup is based off Agile Development – an alternative to traditional project management where an emphasis is placed on empowering people to collaborate and make team decisions in addition to continuous planning, continuous testing, and ongoing integration. They build the product iteratively and incrementally. The Engineering of a traditional startup is based on Agile or Waterfall Development meaning develop the product iteratively, or fully specify the product before building it.

Organization

In a lean startup, the focus is on a Customer and Agile Development Teams – an alternative to traditional project management where an emphasis is placed on empowering people to collaborate and make team decisions in addition to continuous planning, continuous testing, and ongoing integration. Employees are hired for learning, nimbleness, and speed. In a traditional startup, the importance is put on Departments by Function. There, people are hired for their experience and the ability to execute.

Speed

The lean startup is focused on a rapid speed. They tend to operate on “good-enough” data and try to prepare as much material as possible. The traditional startup works on complete data, making sure that there is no missing information in any of their systems.