What is Lean Startup? – Definition and Origin
Lean Startup is a methodology for business creation and product development introduced by Eric Ries in his eponymous book (2011). It is based on three pillars: scientific experimentation instead of gut feeling, rapid iteration instead of long-term planning, and validated learning instead of mere opinions.
The approach was originally developed in a startup context but has long since established itself as an innovation methodology for companies of all sizes. The basic idea: every business idea is based on assumptions—about customer needs, willingness to pay, and technical feasibility. Lean Startup provides a framework to test these assumptions quickly and cost-effectively before large sums are invested.
In the context of business model innovation, Lean Startup is particularly valuable: it reduces the risk of investing a lot of money in a business model that fails in the market. Instead, product-market fit is sought iteratively.
The 5 Principles of Lean Startup
- Entrepreneurs are everywhere: Innovation can emerge anywhere—in garage startups as well as in large corporations. Anyone who creates something new under conditions of uncertainty is an entrepreneur.
- Entrepreneurship is management: A startup is not a “cool version” of a company, but an organization that operates under extreme uncertainty and requires its own management methods.
- Validated Learning: The central indicator of progress is not revenue or features, but validated learning—what have we learned about our customers and our business model?
- Build-Measure-Learn: The fundamental activity is the build-measure-learn cycle—to be completed as quickly as possible.
- Innovation Accounting: New metrics are needed to measure progress under uncertainty—moving away from vanity metrics toward actionable metrics.
The Build-Measure-Learn Cycle
The heart of Lean Startup is the iterative build-measure-learn cycle:
1. Build: Create the simplest possible version of your idea—a Minimum Viable Product (MVP). Not a perfect product, but an experiment that tests a specific hypothesis.
2. Measure: Collect data on how real users interact with your MVP. Define in advance which metrics will indicate success or failure.
3. Learn: Analyze the results. Was the hypothesis confirmed or refuted? What have you learned about your customers, their needs, and their willingness to pay?
The goal: to go through this cycle as quickly as possible. The shorter the feedback loop, the faster you learn and the fewer resources you waste. Methods such as rapid prototyping and design thinking accelerate the build phase.
The Minimum Viable Product (MVP)
The MVP is one of the most important concepts in Lean Startup. It is the simplest version of a product that is sufficient to start the build-measure-learn cycle:
| MVP Type | Description | Suitable for |
|---|---|---|
| Landing Page MVP | A website that describes the product and measures interest | Demand validation |
| Concierge MVP | Service is provided manually, simulating the final product | Service business models |
| Wizard of Oz MVP | Looks automated but is operated manually | Technology-intensive products |
| Piecemeal MVP | Combination of existing tools simulates the product | Platforms, SaaS products |
| Single Feature MVP | Only the core feature is built | Value proposition testing |
Pivot or Persevere – When to Change Direction?
After each build-measure-learn cycle, a central decision must be made: continue (persevere) or change the strategy (pivot)?
Typical types of pivots in Lean Startup:
- Customer Segment Pivot: The product solves a problem—but for a different target group than expected. The buyer persona changes.
- Value Capture Pivot: Changing the revenue model—e.g., from a single purchase to a subscription.
- Channel Pivot: A different sales channel is more effective than the one originally planned.
- Technology Pivot: Same value proposition, but on a different technological basis.
- Business Architecture Pivot: Switching from a B2B to a B2C model or vice versa.
The courage to pivot distinguishes successful innovation projects from failed ones. It is crucial to make the pivot based on data—not out of impatience or panic.
Tools and Methods in Lean Startup
- Lean Canvas: A variant of the Business Model Canvas, specifically optimized for the validation phase—focusing on problem, solution, and unfair advantage.
- Design Thinking: Complements Lean Startup in the problem understanding and ideation phase with user-centered methods.
- Customer Development: Structured customer interviews according to Steve Blank—for validating problem and solution hypotheses.
- A/B Testing: Experimental comparisons of different variants for data-driven decision-making.
- OKR: Objectives and Key Results as a goal system for managing Lean Startup experiments.
- Cohort Analysis: Analysis of user behavior over time—to distinguish real improvements from vanity metrics.
Lean Startup for Austrian SMEs
The Lean Startup methodology is particularly valuable for SMEs—and exceptionally well-suited:
- Resource Efficiency: SMEs cannot afford to invest millions in unvalidated ideas. Lean Startup minimizes risk through early, low-cost validation.
- Speed: Short decision-making paths in SMEs allow for faster build-measure-learn cycles than in large corporations.
- Customer Proximity: SMEs often have direct access to customers—ideal for customer development and MVP testing.
- Testing New Business Models: Before an SME transforms its existing business model, it can test new models as parallel lean experiments.
A typical starting point: identify a business hypothesis (e.g., “Our B2B customers would pay for self-service analytics access”), build a simple MVP in 2 weeks, and test it with 5–10 pilot customers. Innovation consulting and coaching can accelerate the process.
Using Lean Startup for Your Business
Whether it’s a new business model, a digital product, or innovation in the core business—we support you in the systematic validation of your ideas using Lean Startup methodology.
Frequently Asked Questions about Lean Startup
Is Lean Startup only suitable for tech startups?
No. Although Lean Startup originated in Silicon Valley, the methodology is now successfully used across all industries and company sizes—from food manufacturers and financial service providers to manufacturing SMEs. The basic principle (hypothesis → experiment → learning) is universally applicable. However, it must be adapted to the respective context: an MVP in software development looks different than one in the industrial sector.
What is the difference between Lean Startup and Design Thinking?
Design Thinking focuses on a deep understanding of user needs and creative problem-solving—it answers the question “What should we build?”. Lean Startup focuses on economic validation—”Does our business model work?”. In practice, they complement each other perfectly: Design Thinking in the early phase (understanding the problem, designing the solution), Lean Startup for validation and scaling.
How fast does a build-measure-learn cycle need to be?
As fast as possible without compromising the quality of learning. For digital products, a cycle can take 1–2 weeks. For physical products or B2B services, 4–8 weeks is realistic. The key is that each cycle tests a clear hypothesis and delivers a usable learning outcome. Three fast cycles with clear insights are more valuable than a six-month project with vague feedback.
When do I know that I have achieved product-market fit?
Product-market fit is evident when customers actively use your product, recommend it to others, and are willing to pay for it—without you having to persuade them. Quantitative indicators include: growing user numbers without proportionally increasing marketing costs, high retention rates, and a Net Promoter Score over 40. Qualitatively: customers would complain if you took the product away. Marc Andreessen put it aptly: “You can always feel product-market fit when it’s happening.”